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WM Q3 Earnings Call Highlights Healthcare Gains and Volume Pressure
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Key Takeaways
WM's Q3 revenues of $6.85B beat estimates, but $2.15 adjusted EPS missed as management held 2026 guidance.
WM's healthcare EBITDA jumped 33% on pricing and integration savings, while core waste volumes fell 0.5%.
WM's nine-month free cash flow rose more than 42%, despite fuel and claims costs pressuring margins.
Waste Management, Inc. (WM - Free Report) emphasized improving healthcare profitability and firm pricing during its third-quarter 2026 earnings call, while acknowledging sluggish waste volumes and elevated fuel costs. Management maintained its annual outlook, supported by stronger cash generation.
Adjusted earnings of $2.15 per share missed the Zacks Consensus Estimate of $2.18. Revenues of $6.85 billion topped the consensus estimate of $6.80 billion. Executives focused on margin durability and 2027 growth.
Waste Management, Inc. Price, Consensus and EPS Surprise
CEO Jim Fish expects 2026 revenue and free cash flow at the high ends of guidance, with adjusted operating EBITDA within range.
WM projects revenues of $26.275 billion to $26.475 billion, adjusted operating EBITDA of $8.15 billion to $8.25 billion and free cash flow of $3.75 billion to $3.85 billion.
An Oppenheimer analyst questioned fourth-quarter EBITDA pressure. CFO David Reed expects sequential margin improvement but said fuel could weigh on year-over-year comparisons. Better pricing, volumes or recycling prices could lift results.
Waste Management's Healthcare Pricing Gains
President John Morris highlighted 3.7% revenue growth and a 33% increase in Healthcare Solutions operating EBITDA, citing pricing discipline and integration savings.
Healthcare core price reached 5.5%, while its selling, general and administrative expense ratio fell to 15.2%. Both reached management's year-end targets ahead of schedule.
Answering a Barclays analyst, Morris said medical waste and secure information destruction volumes were improving, with the latter recovering faster. He stopped short of forecasting when either would turn positive. Healthcare synergy targets remain on track for mid-2027.
WM Defends Pricing as Volumes Soften
Core price rose 5.8%, but workday-adjusted Collection and Disposal volumes declined 0.5%. Management prioritizes higher-margin contracts.
A Morgan Stanley analyst pressed Morris on residential losses. He said residential volumes fell 2.6%, while commercial volumes declined 1.3% amid prior broker-account exits and weaker small-business formation.
A BNP Paribas analyst asked whether pricing was increasing customer departures. Morris said that commercial churn improved 30 basis points to 9.3%, even as the company anticipates roughly 1% full-year volume declines.
Waste Management Faces Fuel and Claims Costs
Reed attributed 40 basis points of margin support to Collection and Disposal pricing and another 30 basis points to Healthcare. Fuel and risk management each imposed 40-basis-point headwinds.
A Raymond James analyst examined higher insurance-related expenses. Reed quantified a $63 million year-over-year increase, citing an actuarial adjustment, large claims and a difficult comparison with a prior-year insurance recovery.
Responding to Stifel, Reed assumed fourth-quarter diesel prices above $5.50 per gallon, roughly 40% above last year. COO Tara Hemmer identified an approximately one-month lag in fuel surcharge recovery.
WM Sees More From Recycling and Renewable Gas
Hemmer said that WM has completed 18 renewable natural gas facilities since 2022, with another planned for the fourth quarter and the final project expected in early 2027.
More than 90% of expected 2026 production and about 40% of 2027 production are contracted. Recycling Processing and Sales operating EBITDA rose 40% to $91 million.
When Barclays questioned sequential renewable-energy margin weakness, Hemmer pointed to lower-priced voluntary-market sales and start-up costs. She highlighted quarterly margin volatility.
Waste Management Funds Deals and Cash Returns
Free cash flow reached $3.01 billion over the past nine months, up more than 42%. Reed credited earnings growth, reduced capital expenditure, favorable taxes and working-capital improvements.
Share repurchases totaled $1.58 billion, alongside $1.14 billion in dividends. Management still expects $2 billion of repurchases for 2026.
Morris cited $239 million in completed acquisitions, another $140 million expected in the fourth quarter and a signed $250 million transaction for early 2027. Responding to William Blair, Reed said roughly 90% of interest-rate exposure is fixed.
WM Prepares for CEO Succession
Fish plans to retire in early January, when Morris becomes CEO. Morris signaled continuity, with pricing discipline, technology adoption, healthcare integration and core solid waste acquisitions remaining priorities.
Management expects further investment benefits but sees limited visibility into 2027 waste volumes. Cost discipline and cash conversion remain priorities.
Waste Management's Growth Score of B is stronger than its Value Score of C, Momentum Score of D and combined VGM Score of C. Those mixed readings temper the growth signal. The Zacks Rank can change as analysts revise estimates following the latest results.
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WM Q3 Earnings Call Highlights Healthcare Gains and Volume Pressure
Key Takeaways
Waste Management, Inc. (WM - Free Report) emphasized improving healthcare profitability and firm pricing during its third-quarter 2026 earnings call, while acknowledging sluggish waste volumes and elevated fuel costs. Management maintained its annual outlook, supported by stronger cash generation.
Adjusted earnings of $2.15 per share missed the Zacks Consensus Estimate of $2.18. Revenues of $6.85 billion topped the consensus estimate of $6.80 billion. Executives focused on margin durability and 2027 growth.
Waste Management, Inc. Price, Consensus and EPS Surprise
Waste Management, Inc. price-consensus-eps-surprise-chart | Waste Management, Inc. Quote
WM Holds Its Full-Year Outlook
CEO Jim Fish expects 2026 revenue and free cash flow at the high ends of guidance, with adjusted operating EBITDA within range.
WM projects revenues of $26.275 billion to $26.475 billion, adjusted operating EBITDA of $8.15 billion to $8.25 billion and free cash flow of $3.75 billion to $3.85 billion.
An Oppenheimer analyst questioned fourth-quarter EBITDA pressure. CFO David Reed expects sequential margin improvement but said fuel could weigh on year-over-year comparisons. Better pricing, volumes or recycling prices could lift results.
Waste Management's Healthcare Pricing Gains
President John Morris highlighted 3.7% revenue growth and a 33% increase in Healthcare Solutions operating EBITDA, citing pricing discipline and integration savings.
Healthcare core price reached 5.5%, while its selling, general and administrative expense ratio fell to 15.2%. Both reached management's year-end targets ahead of schedule.
Answering a Barclays analyst, Morris said medical waste and secure information destruction volumes were improving, with the latter recovering faster. He stopped short of forecasting when either would turn positive. Healthcare synergy targets remain on track for mid-2027.
WM Defends Pricing as Volumes Soften
Core price rose 5.8%, but workday-adjusted Collection and Disposal volumes declined 0.5%. Management prioritizes higher-margin contracts.
A Morgan Stanley analyst pressed Morris on residential losses. He said residential volumes fell 2.6%, while commercial volumes declined 1.3% amid prior broker-account exits and weaker small-business formation.
A BNP Paribas analyst asked whether pricing was increasing customer departures. Morris said that commercial churn improved 30 basis points to 9.3%, even as the company anticipates roughly 1% full-year volume declines.
Waste Management Faces Fuel and Claims Costs
Reed attributed 40 basis points of margin support to Collection and Disposal pricing and another 30 basis points to Healthcare. Fuel and risk management each imposed 40-basis-point headwinds.
A Raymond James analyst examined higher insurance-related expenses. Reed quantified a $63 million year-over-year increase, citing an actuarial adjustment, large claims and a difficult comparison with a prior-year insurance recovery.
Responding to Stifel, Reed assumed fourth-quarter diesel prices above $5.50 per gallon, roughly 40% above last year. COO Tara Hemmer identified an approximately one-month lag in fuel surcharge recovery.
WM Sees More From Recycling and Renewable Gas
Hemmer said that WM has completed 18 renewable natural gas facilities since 2022, with another planned for the fourth quarter and the final project expected in early 2027.
More than 90% of expected 2026 production and about 40% of 2027 production are contracted. Recycling Processing and Sales operating EBITDA rose 40% to $91 million.
When Barclays questioned sequential renewable-energy margin weakness, Hemmer pointed to lower-priced voluntary-market sales and start-up costs. She highlighted quarterly margin volatility.
Waste Management Funds Deals and Cash Returns
Free cash flow reached $3.01 billion over the past nine months, up more than 42%. Reed credited earnings growth, reduced capital expenditure, favorable taxes and working-capital improvements.
Share repurchases totaled $1.58 billion, alongside $1.14 billion in dividends. Management still expects $2 billion of repurchases for 2026.
Morris cited $239 million in completed acquisitions, another $140 million expected in the fourth quarter and a signed $250 million transaction for early 2027. Responding to William Blair, Reed said roughly 90% of interest-rate exposure is fixed.
WM Prepares for CEO Succession
Fish plans to retire in early January, when Morris becomes CEO. Morris signaled continuity, with pricing discipline, technology adoption, healthcare integration and core solid waste acquisitions remaining priorities.
Management expects further investment benefits but sees limited visibility into 2027 waste volumes. Cost discipline and cash conversion remain priorities.
Waste Management's Zacks Rank and Style Signals
WM presently carries a Zacks Rank #3 (Hold). The ranking emphasizes earnings-estimate revisions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Waste Management's Growth Score of B is stronger than its Value Score of C, Momentum Score of D and combined VGM Score of C. Those mixed readings temper the growth signal. The Zacks Rank can change as analysts revise estimates following the latest results.