Waste Management Q4 Revenue Up 7.1% to $6.31B, EBITDA Margin Hits 31.3%
Waste Management reported fourth-quarter revenue of $6.31 billion, up 7.1% year-over-year, and adjusted operating EBITDA of $1.974 billion, yielding a 31.3% margin. Full-year free cash flow rose 26.8% to $2.94 billion, and 2026 guidance projects 29% free cash flow growth with a $0.48 dividend increase.
1. Q4 2025 Financial Performance
Waste Management reported Q4 revenue of $6.31 billion, a 7.1% year-over-year increase driven by core price gains of 6.3% and yield growth of 3.8% in its Collection and Disposal business. Adjusted operating EBITDA rose 15.5% to $1.97 billion, resulting in an adjusted EBITDA margin of 31.3%, up from 28.9% a year ago. Diluted EPS came in at $1.93 on an adjusted basis, slightly below the prior year’s adjusted EPS of $1.70 but demonstrating double-digit margin expansion.
2. Segment Breakdown and Cost Efficiency
The Legacy Business delivered Q4 operating EBITDA of $1.87 billion (32.8% margin), up 10.1% year-over-year on an adjusted basis, as disciplined cost initiatives and fleet investments improved operating expense ratios by 160 basis points. Healthcare Solutions posted $105 million of adjusted EBITDA (17.1% margin), reflecting integration synergies that drove a 180-basis-point margin improvement. SG&A expenses for the total company decreased 40 basis points on an adjusted basis to 10.3% of revenue, highlighting strong cost management.
3. Cash Flow Generation and Capital Allocation
In 2025, WM generated $6.04 billion of operating cash flow, up 12.1% year-over-year, and free cash flow of $2.94 billion, a 26.8% increase. The company invested approximately $400 million in solid waste and recycling acquisitions and completed seven renewable natural gas facilities and nine recycling automation projects. WM plans to return about $3.5 billion to shareholders in 2026 through dividends and share repurchases, with targeted dividend payments of $1.5 billion and share repurchases filling the remainder.
4. 2026 Outlook and Guidance
WM projects 2026 revenue of $26.425–$26.625 billion, representing 5.2% growth, and adjusted operating EBITDA of $8.15–$8.25 billion, up 6.2% on a comparable basis. Core price is expected between 5.4% and 5.8%, yield between 3.2% and 3.6%, and volume growth of 0.2%–0.6%. The company anticipates free cash flow of $3.75–$3.85 billion (29.4% growth) and plans sustainability capital of about $200 million. The board intends to increase the annual dividend by $0.48 per share to $3.78, while maintaining a target leverage ratio of 2.5x–3.0x net debt to EBITDA.