WM Q2 Deep Dive: Strong Volumes, Synergy Capture, and Technology Investments Drive Growth

Waste management services provider Waste Management (NYSE:WM) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 19% year on year to $6.43 billion. The company expects the full year’s revenue to be around $25.38 billion, close to analysts’ estimates. Its non-GAAP profit of $1.92 per share was 1.7% above analysts’ consensus estimates.

Is now the time to buy WM? Find out in our full research report (it’s free).

StockStory’s Take

Waste Management’s second quarter results were met positively by investors, underpinned by robust growth in its core collection and disposal business and continued synergy realization from its Healthcare Solutions acquisition. Management pointed to strong landfill volumes, aided by wildfire cleanup efforts in California, as well as efficiency gains from technology investments in routing and fleet management. CEO James Fish emphasized, “Landfill volumes were particularly strong in the quarter, demonstrating the value of our advantaged disposal network.” Additionally, the company benefited from margin-enhancing performance in sustainability businesses, despite softer recycled commodity prices.

Looking ahead, Waste Management’s full-year outlook is supported by ongoing cost discipline, technology-driven efficiencies, and accelerated integration of its Healthcare Solutions segment. Management expects synergy capture to reach the high end of its $80 to $100 million target for 2025, with additional benefits anticipated as internalization and automation initiatives ramp up. CFO Devina Rankin explained, “Our team's focus on optimizing what we control, delivering on our top strategic priorities and reducing our cost to serve, position us to overcome this small revenue headwind and deliver more than 15% EBITDA growth in the year.” The company is also investing in new renewable energy and recycling projects, which are expected to further contribute to earnings and margin expansion in the coming quarters.

Key Insights from Management’s Remarks

Management attributed second quarter performance to strong landfill and commercial collection volumes, ongoing cost optimization, and the early benefits of Healthcare Solutions integration.

• Landfill and volume strength: Strong landfill volumes, particularly from municipal solid waste (MSW) and construction and demolition (C&D) streams, drove growth, with special waste boosted by wildfire cleanup. Landfill volumes were described by management as a key differentiator for the company’s network, enabling above-market capture rates in targeted geographies.
• Technology-led cost efficiencies: Investments in routing, telematics, and fleet management technology reduced operating costs and improved maintenance, with operating expenses dropping below 60% of revenue. Real-time tracking allowed for predictive maintenance, decreasing downtime and repair costs while enhancing service reliability.
• Healthcare Solutions integration: The acquisition of a regional solid waste firm in Washington, D.C. and progress integrating the Healthcare Solutions business led to synergy capture, especially in SG&A (selling, general, and administrative) cost reductions. Management reiterated confidence in reaching the high end of its synergy target for the year.
• Sustainability platform progress: New projects in renewable natural gas (RNG) and automated recycling facilities came online, helping drive 17% EBITDA growth in recycling despite a 15% fall in commodity prices. Over 90% of RNG offtake for the year is contracted, supporting margin stability in the renewable energy segment.
• Residential contract optimization: The loss of a large residential contract in Florida was a strategic decision, as management focused on maintaining acceptable margins rather than volume at any cost. This move is part of an ongoing effort to optimize the residential business for long-term profitability.

Drivers of Future Performance

Management expects future performance to be shaped by continued synergy realization, volume discipline, and expansion in sustainability initiatives, amid a moderating residential market.

• Synergy capture from acquisitions: Waste Management expects to achieve the upper end of its $80 to $100 million synergy target for Healthcare Solutions in 2025, with further improvements anticipated as internalization and automation initiatives mature. CFO Devina Rankin noted that ongoing SG&A optimization and back-office integration are driving cost efficiencies, with an eventual goal of reducing SG&A to below 20% of revenue.
• Sustainability and technology investments: Management is ramping up investments in renewable energy and recycling automation, with eight renewable energy plants slated to come online by year-end. These projects are expected to be margin accretive, with over 90% of renewable natural gas offtake already contracted for 2025, providing visibility into earnings.
• Volume and pricing discipline: The company is maintaining a focus on optimizing customer mix, especially in residential and industrial segments, to preserve margins even as certain waste streams see softer demand. Management is prioritizing customer lifetime value and leveraging technology to differentiate its service offerings, which supports pricing power as market dynamics evolve.

Catalysts in Upcoming Quarters

Going forward, our analyst team will track (1) the pace and impact of Healthcare Solutions synergy capture and integration, (2) the execution and ramp-up of new renewable energy and recycling automation projects, and (3) volume stabilization in residential and industrial segments following recent optimization efforts. Progress on SG&A reduction and potential new acquisitions will also be important markers for future performance.

Waste Management currently trades at $233.94, up from $228.04 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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