Waste ManagementWM

Waste Management reported a strong second quarter, with profit margins reaching about 31 percent. While revenue of $6.68 billion was slightly lower than what analysts expected, the company is earning more profit on every dollar of sales. This efficiency helped generate nearly 12 percent more cash from operations than the same time last year.

The company finished four sustainability projects during the quarter, which involve turning landfill gas into renewable energy and automating recycling centers. These projects are a key part of the plan to grow profits without relying solely on picking up more trash. Management returned over $1 billion to shareholders through dividends and buybacks, showing they remain focused on sending cash back to owners while investing in these new facilities.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Profitability outlook raised: Management raised its full year guidance for adjusted operating EBITDA margin, which is the percentage of revenue left after core operating costs, to a range of 31.0% to 31.2%. This increase of 20 basis points comes even as the company lowered its 2026 revenue forecast to between $26.275 billion and $26.475 billion due to lower waste volumes.
• Core pricing strength: Core price growth remained high at 5.7%, which helped drive a 4.0% increase in total revenue even as actual waste volumes fell. This ability to raise prices faster than inflation is essential for protecting profits while the company intentionally sheds lower margin residential contracts.
• Sustainability projects scaling: Adjusted operating EBITDA in the recycling and renewable energy segments jumped 32.5% to $40 million compared to the same period last year. This growth was fueled by the completion of four new facilities this quarter, including three renewable natural gas plants that add 3.5 million units of annual fuel production.
• Efficiency gains expanding margins: Adjusted operating EBITDA margin expanded by 40 basis points to 30.9% as the company used automation to control costs. This improvement is notable because it overcame a 60 basis point drag from last year's wildfire cleanup work that did not repeat this quarter.
• Free cash flow surge: Free cash flow, the money left after all business expenses and equipment purchases, rose 34.5% to $1.10 billion for the quarter. This increased cash generation supported the return of $1.04 billion to shareholders through dividends and $659 million in stock buybacks.

Our take: This was a strong quarter that proved the business can grow profits even when revenue slows. By using technology to lower costs and successfully raising prices on core customers, management protected its margins despite lower trash volumes. The healthy 34.5% jump in cash flow reinforces the long term case for this steady dividend payer.