WM posts higher Q2 cash flow, cuts revenue outlook for 2026

WM reported higher earnings, stronger cash flow, and improved profit margins in the second quarter of 2026, even as it lowered its full-year revenue forecast due to weaker-than-expected volumes.

The waste management company generated $1.10 billion in free cash flow, a 34.5% increase from the same period last year, while revenue rose 4.0% to reflect higher pricing, growth in recycling and renewable energy operations, and increased energy surcharges.

Although WM reduced its 2026 revenue outlook to between $26.275 billion and $26.475 billion, it kept its guidance for adjusted operating EBITDA at $8.15 billion to $8.25 billion and free cash flow at $3.75 billion to $3.85 billion, citing continued cost management and productivity improvements.

Higher pricing and sustainability businesses supported revenue growth

WM's second-quarter revenue increased 4.0% year over year. The company said growth was driven primarily by core price increases of 5.7%, Collection and Disposal yield of 3.6%, higher recycling volumes, increased renewable natural gas production, and higher energy surcharges.

Collection and Disposal volume declined 1.8% compared with the prior year, largely because the second quarter of 2025 included wildfire cleanup work that did not repeat this year.

Excluding those wildfire-related volumes, landfill volumes increased 1.7%, while overall Collection and Disposal volume declined just 0.4%. The company also continued reducing lower-margin residential accounts, although residential volume losses slowed during the quarter.

Profit margins improved despite higher costs

Operating expenses remained steady at 59.2% of revenue, despite higher fuel-related costs.

Selling, general, and administrative (SG&A) expenses improved to 10.2% of revenue, or 9.9% on an adjusted basis, compared with the same period last year.

Total operating EBITDA margin expanded by 90 basis points on a reported basis and 40 basis points on an adjusted basis, despite the absence of last year's wildfire cleanup work and higher energy surcharge costs.

Recycling and renewable energy posted the strongest growth

WM's recycling and renewable energy businesses delivered some of the strongest gains during the quarter.

Combined operating EBITDA increased by $39 million, or 32% year over year, driven by higher recycling volumes, automation projects, and increased renewable natural gas production.

The Collection and Disposal business reported operating EBITDA growth of $104 million, supported by pricing and cost management.

Healthcare Solutions also contributed to earnings growth, with operating EBITDA increasing by $25 million, reflecting lower overhead costs and continued integration with WM's core operations.

Cash flow increased more than 34%

Operating cash flow rose to $1.73 billion, up from $1.55 billion in the second quarter of 2025.

Free cash flow increased to $1.10 billion, up from $818 million a year earlier, representing a 34.5% increase.

During the quarter, WM returned $1.04 billion to shareholders through $659 million in share repurchases and $379 million in dividends.

WM expanded renewable natural gas and recycling capacity

The company completed three renewable natural gas facilities during the quarter—two in South Carolina and one in Florida—adding approximately 3.5 million MMBtu of expected annual production capacity.

WM also opened a new recycling facility in Denver, Colorado, adding approximately 60,000 tons of annual processing capacity.

2026 outlook

WM lowered its expected 2026 revenue range to $26.275 billion to $26.475 billion, primarily because of lower expected Collection and Disposal volumes.

Despite the lower revenue outlook, the company maintained its adjusted operating EBITDA guidance of $8.15 billion to $8.25 billion and free cash flow guidance of $3.75 billion to $3.85 billion.

WM also expects its adjusted operating EBITDA margin to improve to between 31.0% and 31.2% for the full year.