Cost efficiency program structurally lowered operating expense ratio below 60% for first time ever
WM reported another strong quarter with record margins, driven by pricing and operational efficiencies. The company is guiding to continued growth in 2026 with significant margin expansion. Q4 2025 was a record quarter for margins, with the legacy business expanding EBITDA margin by 160 bps.
Buzzberg readCost efficiency program structurally lowered operating expense ratio below 60% for first time everWM reported another strong quarter with record margins, driven by pricing and operational efficiencies. The company is guiding to continued growth in 2026 with significant margin expansion. Q4 2025 was a record quarter for margins, with the legacy business expanding EBITDA margin by 160 bps.Read full analysisCollapse analysis
WM reported another strong quarter with record margins, driven by pricing and operational efficiencies. The company is guiding to continued growth in 2026 with significant margin expansion. Q4 2025 was a record quarter for margins, with the legacy business expanding EBITDA margin by 160 bps.
For 2026, WM guides to total company EBITDA margin expansion of 30 bps (or 50 bps excluding wildfire impacts).
The integration of Stericycle (Healthcare Solutions) is progressing, with expected revenue growth of 3% (all price) and continued SG&A reductions.
The company is guiding to $3.8 billion in free cash flow for 2026, a ~30% increase year-over-year.
Revenue$6.313B
reported
EPS$1.93
reported
Gross margin29.3%
reported
Op margin18.63%
reported
What changed this quarter
01
Margins
Cost efficiency program structurally lowered operating expense ratio below 60% for first time ever
Reported gross margin was 29.3%, reinforcing the quarter's better-than-guided profitability.
The integration of Stericycle (Healthcare Solutions) is progressing, with expected revenue growth of 3% (all price) and continued SG&A reductions.
Demand & capex
Demand
Bookings & conversion
Industrial volumes bounced back to nearly flat after years of decline. Management emphasized record operating results, strong margin expansion, and a positive outlook for 2026, expressing optimism about the macro economy and their ability to continue improving efficiency.
Capex
Investment and capacity
Management guided 2026 capital expenditures to $2.65-$2.75 billion, including about $200 million for high-return sustainability projects (two RNG facilities and one recycling project) expected to contribute EBITDA by 2028. They framed this as a reduction in sustainability growth capital versus 2025 (~$400 million lower), while noting that normal course capex should be around 10% of sales longer te
Tone · Confident
Management emphasized record operating results, strong margin expansion, and a positive outlook for 2026, expressing optimism about the macro economy and their ability to continue improving efficiency.
Supply-chain alpha
A1
WM expects to benefit from a lag in index-based pricing as CPI declines, which will act as a headwind to price growth in 2026 as these contracts reprice.
“as CPI or some of these indexes come down... there is a lag in those index-based price increases that we can take... that lag can be up to six months.”
The closed healthcare solutions business lost accounts is pulling down near-term revenue growth, but these comps ease in H2 2026, and cross-selling synergies are showing up in the legacy solid waste business, not the healthcare segment.
“as we get to the back half of next year... you take out those lost accounts, and you're almost there right now... some of that cross-selling benefit shows up in the collection and disposal line of business.”
WM continues to extract synergies from Stericycle (healthcare solutions) and integrate its operations into WM's field structure, driving margin improvement.
“We're making consistent progress in reducing SG&A expenses as we integrate and optimize the business.”
The closed healthcare solutions business lost accounts is pulling down near-term revenue growth, but these comps ease in H2 2026, and cross-selling synergies are showing up in the legacy solid waste business, not the healthcare segment.