With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

Industries included in the sector are advertising, diversified outsourcing services, and financial data services.

Fortune Sector Leaders: Business Services

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

F500 2021-202-Waste Management Inc.

Waste Management offers environmental services to nearly 21 million residential, industrial, municipal, and commercial customers in the U.S., Canada, and Puerto Rico. The company experienced a modest downturn in 2020 as sales fell 1.5% and profits dropped by 10.4% compared to the year before, but Waste Management still rose five spots in the Fortune 500 rankings to No. 202 on relative strength.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-207-Waste-Management

Creeping six spots up this year's ranking, Waste Management collects, recycles, and disposes of garbage in the United States and Canada. It also owns and operates landfill gas-to-energy facilities via subsidiaries in the U.S.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Nike, Cisco, MasterCard, SABMiller, Vodafone, Google—and 45 other companies that are doing well by doing good.

Change the World

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Fortune Global 500

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Waste Management is an environmental solutions and waste management company that provides collection services for residential, commercial, industrial, and municipal customers. It owns and operates hundreds of active landfills and transfer stations and offers materials processing and recycling; it also operates landfill gas-to-energy facilities for renewable electricity and gas. Waste Management completed a $7.2 billion acquisition of Stericycle in 2024.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Waste Management (WM): Company Profile, Stock Price, News, Rankings

legacy

Waste Management

waste management

Good day. Thank you for standing by. Welcome to WM Fourth Quarter twenty twenty four Earnings Conference Call. At this time, all participants are in a listen only mode.

After the speakers' presentation, there will be a question and answer session.

Please note that today's conference may be recorded. I would now like to turn the conference over to your speaker host, Ed Nagel, Vice President of Investor Relations. Please go ahead.

Thank you, Olivia. Good morning, everyone, and thank you for joining us for our fourth quarter and full year twenty twenty four earnings conference call. With me this morning are Jim Fish, President and Chief Executive Officer John Morris, Executive Vice President and Chief Operating Officer and Devina Rankin, Executive Vice President and Chief Financial Officer. You will hear prepared comments from each of them today. Jim will cover high level financials and provide a strategic update.

John will cover an operating overview and Devina will cover the details of the financials in our 2025 outlook. Before we get started, please note that we have filed a Form 8 K that includes the earnings press release and is available on our website at www.wm.com. The Form 8 K, the press release and the schedules of the press release include important information. During the call, you will hear forward looking statements, which are based on current expectations, projections or opinions about future periods. All forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Some of these risks and uncertainties are discussed in today's press release and in our filings with the SEC, including our most recent Form 10 ks and Form 10 Qs. John will discuss our results in the area of yield and volume, which unless stated otherwise, are more specifically references to internal revenue growth or IRG from yield or volume. During the call, Jim, John and Devina will discuss operating EBITDA, which is income from operations before depreciation and amortization. You will also hear references to WM Healthcare Solutions. This new segment includes the acquired Stericycle Medical based and Secure Information Destruction businesses.

References to the WM Legacy business are total WM results excluding the WM Healthcare Solutions segment. Any comparisons unless otherwise stated will be with the prior year period. Net income, EPS, income from operations and margin, operating EBITDA margin, operating expense and margin and SG and A expense and margin results have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations. These adjusted measures and adjusted projections in addition to free cash flow are non GAAP measures. Please refer to the earnings press release and tables, which can be found on the company's website at www.wm.com for reconciliations to the most comparable GAAP measures and additional information of our use of non GAAP measures and non GAAP projections.

This call is being recorded and will be available twenty four hours a day beginning approximately 1PM Eastern Time today. To hear a replay of the call, access the WM website at www.investors.wm.com. Time sensitive information provided during today's call, which is occurring on Jan. 30, 2025, may no longer be accurate at the time of a replay. Any redistribution, retransmission or rebroadcast of this call in any format of the expressed written consent of WM is prohibited.

Now, I'll turn the call over to WM's President and CEO, Jim Fish.

All right. Thanks, Ed. Good morning, everyone, and thank you for joining us today. I'm pleased to report another year of outsized operational and financial performance driven by our team's focus on top line growth and cost discipline. This combination along with our ongoing investments in technology, automation and sustainability have positioned WM to continue delivering long term value to our shareholders.

In 2024, we remained dedicated to optimizing the cost structure, expanding our sustainability platform and enhancing shareholder returns. This focus led us to achieve operating EBITDA growth of more than 10% in our legacy business for the year and achieving 30% full year operating EBITDA margin for the first time in our history. Our collection and disposal business led the way driven by consistent organic revenue growth, disciplined cost initiatives and a continued focus on business mix optimization. 2024 marked a year of significant milestones in progressing sustainability growth investments. We brought 5 renewable natural gas facilities online, expanding our renewable energy platform and further positioning WM as a leader in environmental sustainability.

And we're confident in the demand for renewable natural gas, especially from sources like our landfills and in our overall investment thesis for these transformative assets. Additionally, in 2024, we advanced automation upgrades at 10 recycling facilities, improving throughput and lowering operating costs across our recycling network and added recycling facilities in 2 new markets. These investments are unlocking opportunities with customers and delivering positive environmental outcomes, while also putting us on a path to broader long term financial growth. We're progressing well on the remaining renewable natural gas and recycling projects and expect our growth investments to contribute operating EBITDA approaching $800,000,000 in 2027. We have a great deal of confidence in the value of these projects that are underway and we're enthusiastic about the strong complement they provide to our existing business.

In addition to achieving strong organic growth across our business in 2024, it was a sizable year for acquisitions, including the successful completion of the Stericycle acquisition in Nov. 0. Adding Stericycle's leading platform in medical waste management and secure information destruction to WM broadens our suite of solutions, allowing us to more comprehensively serve our customers across a wider range of environmental services. Our integration efforts are underway and in a short three months we've integrated the commercial, operations support and back office functions into WM Structures led by our seasoned disciplined leaders. 1 of our new employees summed up our excitement for this acquisition saying, it really feels good to be working for a management team that's looking to grow and optimize the business.

We have a well resourced, experienced WM team engaged in making the necessary operational and cultural changes, and we're encouraged by the progress we've made so far. With respect to synergy capture, we now expect $2.50,000,000 dollars of synergies over a three year period and we're confident we can deliver up to $100,000,000 in 2025. The WM Healthcare Solutions business is expected to grow about 9% before synergies, driven by organic revenue growth and operations initiatives. Overall, we remain confident and focused on ensuring a smooth transition for both employees and customers, while driving synergies and unlocking value. This acquisition exemplifies our disciplined approach to capital allocation and strategic growth, and we're excited about the long term benefits it will bring to WM.

Looking ahead to 2025, we're confident that the momentum we built will lead to another year of outpaced growth. At the midpoint of our guidance, we expect our collection and disposal business to produce more than 7% operating EBITDA growth in the year ahead, even as we face a headwind from the expiration of alternative fuel tax credits. Our disciplined focus on pricing and cost management will ensure that we maintain healthy margins with a positive price to cost spread. Our renewable energy and recycling platforms will continue to scale with additional projects coming online and incremental contributions from sustainability investments expected to accelerate this year adding $150,000,000 of operating EBITDA growth in our sustainability segments. Combining all of this, we expect to deliver total company operating EBITDA growth of 15% at the midpoint of our range or nearly $1,000,000,000 of growth in 2025 compared to 2024.

Before I turn the call over to John to cover operating results, I want to express my gratitude to the entire WM team, including our new team members from Stericycle. Their commitment to our mission and values continues to be the foundation of our success. As we look forward, we're excited about the opportunities ahead and remain steadfast in our goal of creating long term value for all of our stakeholders. I'll now hand it over to John to provide more detail on our operational performance.

Before discussing our performance, I want to thank our team for their dedication during the devastating California wildfires. These fires have impacted our employees and the communities we serve and we're committed to supporting recovery efforts and restoring normalcy for everyone affected. Turning to our results, WM delivered another fantastic quarter to close 2024, reflecting our focus on operational discipline and price execution. Operating expenses as a percentage of revenue were 60.3%, marking the fifth consecutive quarter below 61%. Our full year result of 60.7% was below 61% for the first time in WM's history and improved 100 basis points from 2023.

This improvement was driven by strong execution by our team as well as automation and technology adoption. Labor efficiency continued to improve during 2024 with labor costs as a percentage of revenue declining by 60 basis points for the full year compared to 2023, which is particularly notable considering the dilutive impacts from the Winters Brothers and Stericycle acquisitions. Our labor cost improvements stem from our commitment to human centered leadership, process discipline and importantly, the introduction of technology that allows our operational leaders to spend more time in the field. Our annualized driver turnover as of Dec. 0 was the lowest ever at 15%, marking an improvement of over 300 basis points from 2023.

Additionally, advances in route automation and resource planning tools have driven labor savings. Since we started our residential optimization effort in 2022, we have automated over 500 residential routes and exited an additional 400 routes where conversion was not an option or profit margins were challenged.

has been reduced labor dependency, while greatly enhanced safety performance and improved customer service. Combining these efforts have translated in our residential line of business operating EBITDA margin growing more than 400 basis points and approaching 20% for the full year. We're pleased with the considerable progress we made in 2024 on automating routes, shedding lower margin business and improving driver turnover, and we'll be focused in the year ahead on maintaining the value we've captured from these efforts. Repair and maintenance costs also decline as a percentage of revenue, thanks to increased truck deliveries, fleet optimization and a streamlined maintenance approach that increased technician productivity and reduced reliance on rental units and third party services. We remain focused on optimizing our business using data, technology and process discipline to enhance our customers' experience while reducing our cost to serve.

Our operational achievements combined with disciplined pricing led to a 10.4% growth in operating EBITDA in our collection and disposal business in 2024, achieving a 37.2% margin for the year, our highest ever. These results exceeded our original growth projections with margins expanding 200 basis points and delivering nearly $700,000,000 in operating EBITDA growth in our collection and disposal business. This impressive performance underscores our team's focused execution of strategic priorities. Our revenue grew across all lines of business supported by a collection and disposal yield of 4.5 and core price of 6.7% with churn remaining at about 9%. We continue to refine the use of data and analytics to maximize customer lifetime value to deliver pricing performance in line with our cost to serve our customers, while meeting our margin objectives.

Throughout the year, volume grew consistently in our key lines of business, commercial and MSW landfill. Our workday adjusted volume finished the year as expected and net service increases remained positive. For the year, MSW volumes grew steadily with an observed acceleration in the second half of the year. The 4.4% annual increase in MSW volumes demonstrate the value of our expanding network and logistical capabilities as evidenced by our expanded rail operations serving the Midwest. Special waste also showed positive momentum indicating growth potential for 2025 as our pipelines remain strong.

While our industrial business remains soft, we are rolling out disciplined growth programs to enhance volume capture at appropriate pricing levels, which gives us confidence in our outlook for 2025. As we look ahead to 2025, our focus is on building upon our success in 2024. Our priorities include further improving operational efficiency in our core collection and disposal business and maximizing growth opportunities from acquisitions and sustainability investments. Additionally, our core fleet, business optimization and revenue management leadership are now embedded into the WM Healthcare Solutions organization, driving a disciplined integration process. With these efforts, we are confident in our ability to drive continued revenue and operating EBITDA growth, while delivering value to our shareholders and customers.

At the midpoint of our guidance, we expect sustained momentum in our disciplined pricing programs resulting in a core price increase of between five point eight percent and six point two percent and yielded between 4%, four point two % with collection and disposal volume between 0.250.75% compared to 2024. We remain committed to maximizing customer lifetime value, securing pricing that exceeds our cost inflation and driving disciplined volume growth. In closing, I extend my gratitude to our dedicated team members whose hard work and commitment have been instrumental in our success. Together, we'll continue to build on this year's achievements, striving for excellence in all that we do. I'll now turn the call over to Davina to discuss our 2024 financial results and 2025 financial outlook in further detail.

Thanks, John, and good morning. We're proud of our 2024 results, building on our commitments to operational excellence, sustainability, leadership and shareholder value creation through targeted growth. We improved operating EBITDA margin by 80 basis points for the year. This strong result was driven by margin expansion of 200 basis points in the collection and disposal business with about 180 basis points from the benefits of price, cost optimization and intentional shutting of low margin residential business. The remaining improvement in collection and disposal margin was from lower fuel costs.

The record growth from collection and disposal business our collection and disposal business was partially offset by the impact of higher commodity pricing in the recycling brokerage business, increased incentive compensation costs, higher employee health and welfare costs and the addition of Stericycle, each affecting the margin measure by about 30 basis points. Cost efficiency remained a central theme in 2024. Our SG and A as a percentage of revenue was 9.6% for the full year, including a 30 basis point headwind from the addition of WM Healthcare Solutions. Compared to 2023, we achieved a 10 basis point improvement in SG and A as a percentage of revenue for our legacy business, largely through discipline and discretionary spending and targeted optimization of customer engagement costs. Our strong operating performance translated into robust cash flow generation in 2024.

Cash flow from operations grew more than 14% to $5,390,000,000,.00 and free cash flow before sustainability growth investments reached $3,270,000,000,.00 marking a 22.5% increase over 2023. These outcomes highlight our focuses on margin expansion, working capital optimization and disciplined capital expenditure investment. In 2024, we returned $1,470,000,000,.00 to shareholders, including more than $120,000,000,0.0 in dividends. Additionally, we acquired Stericycle and invested about $800,000,000 in tuck in acquisitions to expand our traditional solid waste and recycling footprint, all while funding $9.50,000,000 dollars in sustainability growth initiatives. Our disciplined approach to allocating capital prioritizes growing shareholder returns by identifying investment opportunities that will drive long term growth at attractive returns.

The strategic growth of our sustainability business and a targeted investment in healthcare demonstrate this focus and we expect 2025 to be a year of outsized operating EBITDA growth as a result. As Jim outlined, we expect to grow operating EBITDA by 15% in the year, which we anticipate translating into robust cash from operations and free cash flow. Capital expenditures for 2025 are targeted at between $31,750,000,00.,000 and $32,750,000,00.,000 with about $6.25,000,000 dollars directed toward high return sustainability growth projects and about $2.25,000,000 dollars for our WM Healthcare Solutions business. We expect free cash flow to grow more than 17% to $27,250,000,00.,000 at the midpoint of our outlook. This outlook includes an anticipated benefit from investment tax credits of about $2.20,000,000 dollars WM's strong balance sheet and our cash flow growth outlook position us to continue our commitment to sound capital allocation.

Our outlook includes $100,000,000 to $200,000,000 of investment in solid waste acquisitions and estimated dividend payments of about $130,000,000,0.0 We've paused share buyback as we expect to focus on getting the balance sheet back to targeted leverage levels with a combination of earnings growth and debt reduction. By the we expect leverage to be approximately 3.1 times. In summary, 2024 showcased the strength and resilience of WM's people and our business model, driven by our commitment to operational excellence, disciplined capital management and sustainability leadership. I'd like to extend my gratitude to our dedicated team members whose hard work make these achievements possible. We're excited about the opportunities ahead and confident in our ability to deliver strong results for 2025 and in future years.

With that, Livia, let's open the line for questions.

Our first question coming from the line of Tyler with Raymond James. Your line is now open.

Hey, I promised to ask a question on the business, but Davin, can you help me with a couple of bridge items? So first, I think I heard it, but you are assuming a CNG tax credit headwind. Is that correct? And is that like $60,000,000

Yes, that's correct. It's a $63,000,000 headwind in dollars and a 30 basis point headwind in margin.

Excellent. Okay. And then on Stericycle, I think you're including $400,000,000 of incremental EBITDA, which means you're going to do something like $4.60,000,000 dollars if I take the number.

But does that okay. So number 1, is that including $100,000,000 of realized synergies or is that a run rate? And then 2, was there a definitional change in how you calculate EBITDA for Stericycle versus their convention? Because it feels like the base EBITDA is just lower than what they were reporting. Or am I off on that?

Yes. Those are great questions, Tyler, and thanks for pointing them out. So I'll take the second one first. And yes, there was a definitional change in EBITDA between the 2 companies. We have, I would say, I guess, a more conventional approach to what we adjust out of earnings and we found that they adjusted things that look more like normal course of business costs.

And so we've recast that. And so the 2024 run rate number that we had for the business exiting the year was that representative of that $61,000,000 with about $4,000,000 of realized synergies in the for us. And so I would recommend using that as the starting point for 2025. We're optimistic about synergy capture in the year ahead, and we think up to $100,000,000 will be realized in the year. Our midpoint assumes $85,000,000 to $90,000,000 of realization.

Excellent. Okay, great. Okay. I don't know if Tara is there and I apologize, but I just kind of can't get the Waste Management sustainability contribution to foot Because I think last quarter you said sustainability was $92,000,000 benefit year to date, but then in the release today you said again $92,000,000 for $24,000,000 So was there no incremental sustainability contribution in or am I missing something, which I probably am? But if I look at your table and allocate the recycling fees and the royalties, it looks more like EBITDA was up $110,000,000 I hate to throw that many numbers out, but maybe you're following what I'm saying.

Yes, you're following the right math. There's a couple of things that are going on in the between the segments and what we report. And of course, on the recycling side of the business, a piece of it ends up in collection and disposal and then you have the 15% royalty that flows to the collection and disposal business. What we really want to emphasize for 2025 is there's a lot of tailwinds in both of these businesses that gives us a lot of optimism about what we're going to contribute in 2025, 01/00 '90 coming from those growth investments. And like Jim said, if you look at how much we've delivered at the that's going to roll into 2025 with the new RNG plants and the 12 recycling facilities, plus we have another 8 on the RNG side in 2025, there's a lot of positive impact that's going to roll through the P and L.

Okay. That is helpful. Last question. This is for Jim or John. Because it sounds like collection and disposal organic EBITDA is expected to be up something like 7% despite the CNG tax credit headwind.

Obviously, that is super solid. I mean, you guys said back at your last Analyst Day, you're a 5% to 7% organic grower and quite frankly, you've got pretty tough comps. So that's really good. So can you talk about the core dynamics, maybe the outlook for pricing, maybe more importantly cost inflation and productivity because it just feels like there's a very solid price to cost spread in collection and disposal? Thank you.

Yes, Tyler, it's Jim. I think you've highlighted 1 of the probably the area that maybe we're most proud of, which is the core business itself. And we talk a lot about Stericycle and the sustainability businesses, which are exciting. But the core business, if you think about it from 22% to 23% grew 7%, grew 10% last year, just the core. And then we're looking at another kind of over 7% this year on the core.

So well ahead of that 5% to 7% number that we gave way back in 2019. And that is coming as you point out really from several areas. We talk a lot about pricing and our pricing team does a great job, But look, that cost to price spread is not just price, it is cost. And John mentioned it in his script and John is kind of a modest guy, but I mean his team has done a spectacular job of taking that cost number. If you think about that OpEx as a percent of revenue coming under 61%, years ago, we kind of aspirationally talked about a 60% number and then kind of laughed in the room about that and said, yes, well that will never happen.

We're kind of scratching at that right now. We're close. So a lot of the cost to price spread and a lot of the margin growth that you've seen in the business over the last few years and ultimately those growth EBITDA growth numbers that I just cited are coming on the cost side at the same time as we're doing well on price. And I think once you start to see volume pick up because volume has been pretty muted over the last couple of years, You really can see the core business taking off at the same time as the old Stericycle business, the new WM Healthcare Solutions takes off and at the same time as the sustainability investments really start to add EBITDA and free cash flow. And the only thing I would add, Tyler, Jim covered it all is I think a lot of the benefits you're seeing play out in the middle of the P and L for WM.

I think Rafa and the team are really excited to do the same with the WM Healthcare business. There's a lot of the processes and practices and technology advantages we've developed that we can lay right over the top of that business and start to drive some meaningful results. And Rafa could comment on that, but you heard you saw in the press release our confidence around the synergy capture over the next handful of years.

Yes, perfect. So it feels like, call it, 4% yield in collection and disposal, maybe a couple percent unit cost inflation net of productivity, something like that?

Yes. I think what you saw from a spread perspective and it showed up in our OpEx and our EBITDA margins and our labor ratios, you're going to see that you're going to see continued benefits into 2025.

Okay. Excellent. Thank you for the time guys.

Thank you. Our next question coming from the line of Noah Kaye with Oppenheimer. Your line is now open.

Hi, thanks. I'll pick up on Tyler's line of questioning. Just the 2025 yield guide 4% to 4.2%, obviously we've seen CPI come down a little bit. So just help us understand maybe the different components of core price and yield assumptions that you're factoring in open market versus the sort of restricted index part of the business?

Sure. So at a high level, I think what's really important on the core price to yield conversion, that's something that we talk a lot about. And the commentary in John's prepared remarks about what's happening in the landfill part of the business is a really important example of that conversion. And what you see is it really comes down to business mix. And that's very good profitable business for us, but it does come at a lower yield because it's a lower average unit rate than some of the rest of the network.

And so the core price guide is 5.8% to 6.2%, a little lower conversion this year at 4% to 4.2% with business mix being 1 of the things that's leading that.

Yes. I guess the only thing I would add is on the resi side. I mean, we've done such a great job on resi, but I was maybe a little surprised to even see this number myself. But no, when we look at we've been going through this, call it, a business improvement process with residential, it's improved margins significantly in that line of business. And the number that surprised me was that 25% of our residential customers still have an EBIT margin of 0 or less.

And sometimes we ask, what inning are we in terms of this residential, I don't know what to call it cleanup, I guess, but it's 25% then I was assuming we were kind of in the eighth inning. We're probably more like in the sixth inning to use a baseball analogy and that all helps us on the price front.

Yes, helpful. Thank you. Stericycle, now WMHS, you previously I think did a nice job of bucketing the different areas where you were going to see those synergies. Can you maybe give us an updated breakdown now, obviously, between sort of going from $50,000,000 to now maybe $100,000,000 this year and going to $2.50,000,000 dollars overall. Just kind of how does that break down?

Yes, I think I can take a stab at that Noah. This is Rafael Carrasco. I'm now leading the WM Healthcare Solutions business. So what I'll tell you is the doubling of the synergy estimates is centered essentially around the same 3 buckets that we offered at the time of the acquisition. That was internalization, SG and A and OpEx, which we said at the time was about 33% each.

Internalization is about the same value now, but we now see meaningfully larger SG and A opportunities and higher OpEx opportunities. Examples I'll give you on the SG and A side, optimization of the sales coverage, which we've already embarked on, on the shredded business. And on the OpEx side, we've uncovered new opportunities for consolidating recycling capacity in the network and then reducing fleet number while working on bringing the maintenance and repair in house.

Very helpful. Just 1 last 1 for Davina. You gave us some nice pieces around what provides free cash flow this year in the guide. But just wondering if there's any other moving pieces we could consider to bridge from EBITDA to at least operating cash flow. Maybe you can touch on interest expense, tax and some of the other items we would normally look at.

Yes. So it's going to be another great year of free cash flow growth. There's a couple of points that I'd like to make. 1 is we always talk about EBITDA being the long pole in the tent with regard to free cash flow conversion and with almost $1,000,000,000 of EBITDA growth expected in the year ahead, we're going to have another great conversion to more cash flow from operations. The 2 things that will offset that are increased cash interest and we expect that to be $3.50,000,000 dollars to $400,000,000 higher in 2025.

And about $300,000,000 of that is related to the Stericycle acquisition. The remainder is just timing related and so we had more of that pulled in or we had more help from that in 2024 and you'll have more of a run rate for a full year in the year ahead. And then on the cash tax side, it's an interesting story because this growth in pretax income is fantastic and usually comes at a pretty high incremental cost, from a cash tax perspective. But we're seeing some offsets of that because we have a higher expectation for ITC in 2025. So total cash taxes will go up about $75,000,000 to $100,000,000 and that's the plus from higher ITC slightly offsetting the higher pretax income impacts.

And then, the only other thing I would point to is working capital was a fantastic result in 2024. And we do think that some of the strong execution by the team on improving our key steps like DSO and DPO is what's contributing to that. But some of it is also timing related and we think we got some of that timing benefit in that's impacting rollover into the which is why 2025 may look a little muted in terms of the level of growth.

Well, thank you for all of this. And I just want to say thanks as well for providing all the additional details in the release that the business has obviously continued to transform and grow and you've given us a lot of information. So appreciate it. Thank you.

Thank you. Our next question coming from the line of Jerry Revich with Goldman Sachs. Your line is now open.

I'm wondering Rafa, I wonder if we could just talk about the commercial opportunity. Really interesting to hear about the synergy target moving higher without the commercial piece even kicking in yet. Can you just talk about how that looks to you given your route economics work on the core business. It sounds like there's really significant runway there. Just can you talk about what would any of that process we're at and what sort of contribution can you get by getting the right pricing on the right routes as you internalize the business?

Yes, Jerry, hi, how are you? Look, what I'll tell you is with respect to cross selling, we virtually have nothing built into our existing $20.25 contribution right now. That is something that the team, the joint team is engaged in evaluating and we see some of that actually coming in 2026, I should say. I can also tell you that with respect to kind of the routing, 1 of the important things we're working on is driving P and L accountability down all the way into the business units. That's something that didn't exist at Stericycle before.

When we do that, we're actually going to also generate P and Ls by customer. That's going to allow us to implement a disciplined growth discipline that we actually have already built into our WM facilities and that's going to inform quality of revenue.

Sorry, this is Jim. I just want to kind of put an exclamation point on what Rafa said about cross selling. He said we don't really have anything in there in 2025 and it starts to ramp up in 2026. I would say that might be the single biggest opportunity we have over the long term for this business. I'll give a couple of examples.

I've been in a couple of doctors' offices recently, not for any health problems, but just for my physical. But in both cases, in 1 case, we were present, meaning WM Legacy business was there and stair cycle was not. And in the other office, stair cycle was there and we were not. So both of those will be opportunities for cross selling that we really haven't fully baked into anything at this point, but we feel like is a big opportunity for us.

I'm glad you got the green light, Jim. And in terms of the base business performance, I think we're all holding our breath this quarter for the group heading into earnings because last time commodity prices took a hit. We had a bit of a recalibration to go through across the sector. Now we're looking at really attractive margin expansion 25 versus 24. Can you just talk about how you folks are maybe taking a more aggressive approach to make sure you're pushing pricing in the base business to compensate for potential downside risk in recycling?

Feels like that's part of what's playing out here, but I want to make sure I have that right.

Well, look, this is probably something everybody at the table could answer. We're looking around going, do you want to take it, should I take it? But I think the point here is such a good point, which is the base business and I made this point earlier, the base business is really the superstar in this report. And I think as we look at pricing, we like the fact that our price team has developed a level of sophistication to be able to really price on a much more granular basis. So where you have customers, for example, that have had missed pickups or whatever, we're able to say we're not going to give those customers the same level of price increase.

I mean that level of granularity didn't exist within the company several years ago. So I think the sophistication within the pricing group is palpable. And to Rava's point about pricing within SareCycle, I mean, I think we can take that same level of sophistication to the SareCycle business. Really in that $2.50,000,000 dollars that Rava talks about, the large, large majority of that is really cost related or internalization. And so there isn't a whole lot there is some, but not a whole lot in there with respect to price.

So we feel good about price not only in the core business, but also with Stericycle. And I think I've talked a lot about cost. I will say 1 thing about cost and that is that we had talked about not replacing a certain number of positions several years ago and we've been chipping away at that. I think through the end of last year, we're up to about 2500 positions that we've chosen not to replace. That spans different functional areas.

But I think, John, it's right. We have about another 1000 coming out 2 primary areas. 1 is recycling as we upgrade these facilities, but the other is these conversions from Rielo to ASL.

And can I ask Tara, the landfill gas really get to see the production coming in online on schedule that you laid out last quarter? It looks like maybe the OpEx for M and BTU is higher in 2025 as you ramp that up. Is that right? Can you talk about that given the EBITDA ramp '26 versus '25 feels like that might be happening or maybe we're not getting the full environmental credits. Could you just comment on if that's what's going on in the numbers?

Yes. It's a great point, Sherry. And if you also look at our 2027 update and that updated range, it is driven by OpEx. If you think about our highest cost category within our renewable natural gas plants, it's electricity. So we are working very closely to figure out ways to reduce our power consumption and lock in on rates.

So that's 1 item. We're very confident in our gas curve. The team that John leads on the landfill side has done a fantastic job in optimizing flows. And we feel really good about the 8 plants we're going to bring online in 2025. But a really important note is that by the end of 2025, we will have all but 2 of our plants that have completed construction.

We won't necessarily see the revenue on that into 2026 because of timing on commissioning. But most of these plants are going to be done and completed. We have solid momentum there.

Super. I appreciate the discussion, everyone. Thank you.

Our next question coming from the line of Trevor Romeo with William Blair. Your line is now open.

Hi, good morning. Appreciate you taking the questions. First, just going back to Stericycle, maybe more on the organic side. I was just wondering if you could maybe talk about the like for like performance from a revenue and margin perspective for Stericycle and then the 9% organic growth you expect for 25% pre synergies. Just to clarify, is that a revenue or an EBITDA growth number?

And either way, could you kind of just talk about some of the drivers of that organic performance in 2025, especially if it doesn't include any cross sell benefits?

Sure. So when we look at the Stericycle performance in the I think like I said earlier, about $4,000,000 of that was synergy capture. And so the rest of it, you can look at being the performance of the business. And when we look forward to the growth that we will generate in the year ahead in the Healthcare Solutions business, 9% is a step change from what they've generated for the last several years. And we see that step change is possible for 2 primary reasons, 1 being the asset network expansion with the McCarran facility coming online and the other being fleet optimization.

They were underway with regard to some recharacterization of their fleet. They historically have used operating leases in order to fund their fleet and they knew and had started to execute upon some recapitalize that at a better cost and we accelerated some of that into the And so, we see the ability to reduce those costs by up to 30% in some instances by being able to have a better cost of capital for the organization and a more intentional approach to funding our fleet.

Waste Management (WM) Q4 2024 Earnings Call Transcript

Company Participants