Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This section includes a discussion of our results of operations for the year ended December 31, 2025. This discussion may contain forward-looking statements. See “Cautionary Statement about Forward-Looking Statements” in Part I of this Annual Report on Form 10-K for more information. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties include, but are not limited to, those described in Part I, Item 1A. Risk Factors and elsewhere in this report and may also be described from time to time in our future reports filed with the U.S. Securities and Exchange Commission (“SEC”). The following discussion should be read considering those disclosures and together with the Consolidated Financial Statements and the notes thereto.
For further discussion regarding our results of operations for the year ended December 31, 2024 as compared to the year ended December 31, 2023, refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 .
Overview
We are North America’s leading provider of comprehensive environmental solutions, primarily providing services throughout the United States (“U.S.”) and Canada. We partner with our customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. We own or operate the largest network of landfills throughout the U.S. and Canada. In order to make disposal more practical for larger urban markets, where the distance to landfills is typically farther, we manage transfer stations that consolidate, compact and transport waste efficiently and economically. Our solid waste business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, recycling and resource recovery services. Through our Waste Management Renewable Energy (“Renewable Energy”) segment, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas (“RNG”), which is a significant source of fuel that we allocate to our natural gas fleet. Following our 2024 acquisition of Stericycle, Inc. (“Stericycle”), our Healthcare Solutions segment provides regulated waste and compliance services (“RWCS”) and secure information destruction (“SID”) services in the U.S., Canada and Western Europe that protect people and brands, promote health and well-being and safeguard the environment. Additionally, through our Recycling Processing and Sales segment, we are a leading recycler in the U.S. and Canada, handling materials that include paper, cardboard, glass, plastic and metal.
Our senior management evaluates, oversees and manages the financial performance of our business through five reportable segments, referred to as (i) Collection and Disposal - East Tier (“East Tier”); (ii) Collection and Disposal - West Tier (“West Tier”); (iii) Recycling Processing and Sales; (iv) Renewable Energy and (v) Healthcare Solutions. Our East and West Tiers, along with certain ancillary services (“Other Ancillary”) that are not managed through our Tier segments but that support our collection and disposal operations, form our “Collection and Disposal” businesses. We also provide additional services not managed through our five reportable segments, which are presented as Corporate and Other.
Stericycle Acquisition
On November 4, 2024, we completed our acquisition of all outstanding shares of Stericycle for $62.00 per share in cash, pursuant to an Agreement and Plan of Merger dated June 3, 2024. Total enterprise value of the acquisition was $7.2 billion (net of cash acquired) when including the assumption of $0.5 billion of debt and the repayment of approximately $0.8 billion of net debt. The acquisition expanded our offerings in the U.S., Canada and parts of Western Europe. The post-closing operating results of Stericycle have been included in our Consolidated Financial Statements within our Healthcare Solutions segment.
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For the year ended December 31, 2025, we incurred acquisition and integration related costs of $120 million, comprised of $89 million of selling, general and administrative costs and $31 million of restructuring costs. For the year ended December 31, 2024, we incurred acquisition and integration related costs of $160 million, which were primarily classified as selling, general and administrative expenses.Refer to Note 19 for more information on the performance of our Healthcare Solutions segment.
Collection and Disposal
Our Collection and Disposal businesses provide integrated environmental services, including collection, transfer and disposal. We evaluate our Collection and Disposal businesses primarily through two geographic segments, East Tier and West Tier. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western, Southern and Central U.S., including the upper Midwest region, and British Columbia, Canada. Additionally, we provide Other Ancillary services that are not managed through the Tier segments but that support our collection and disposal operations. Other Ancillary includes specialized services performed for customers that have differentiated needs. These specialized services are targeted at large industrial customers managed through our Sustainability and Environmental Solutions (“SES”) business or geographically dispersed customers managed through our Strategic Business Solutions (“WMSBS”) business. Also included within Other Ancillary are the results of non-operating entities that provide financial assurance and self-insurance support for our business, net of intercompany activity.
Our Collection and Disposal businesses’ operating revenues are primarily generated from fees charged for our collection, transfer and disposal. Revenues from our collection operations are influenced by factors such as collection frequency, type of collection equipment furnished, type and volume or weight of the waste collected, distance to the disposal facility or recycling facility and our disposal costs. Revenues from our landfill operations consist of tipping fees, which are generally based on the type and weight or volume of waste deposited, considering our cost of loading, transporting and disposing of the solid waste at a disposal site. Fees charged at transfer stations are generally based on the weight or volume of waste deposited, considering our cost of loading, transporting and disposing of the solid waste at a disposal site. The fees we charge for our services generally include applicable fees, such as our energy surcharge, which are intended to pass through to customers for direct and indirect costs incurred.
Included within our Collection and Disposal businesses are landfills having (i) 19 third-party power generating facilities converting our landfill gas to fuel electricity generators; (ii) 17 third-party RNG facilities processing landfill gas to be sold to natural gas suppliers and (iii) nine third-party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. In return for providing our landfill gas, we receive royalties from each facility, including the benefit of a 15% royalty from our Renewable Energy segment based on net operating revenue generated through the sale of RNG, renewable identification numbers (“RINs”), electricity and capacity, Renewable Energy Credits (“RECs”) and related environmental attributes from the 86 landfill beneficial use renewable energy projects owned by Renewable Energy on our active landfills, which is eliminated in consolidation.
Recycling Processing and Sales
Our Recycling Processing and Sales segment includes the processing and sales of materials collected from residential, commercial and industrial customers. The materials are delivered to and processed at one of our many recycling facilities. Through our brokerage business, we also manage the marketing of recycling commodities that are processed in our facilities and by third parties by maintaining comprehensive service centers that continuously analyze market prices, logistics, market demands and product quality.
Recycling Processing and Sales revenues generally consist of tipping fees and the sale of recycling commodities to and/or on behalf of third parties. Our Recycling Processing and Sales segment excludes the collection of recycled materials from our residential, commercial, and industrial customers which is included within our Collection and Disposal businesses.
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Renewable Energy
Our Renewable Energy segment develops, operates and promotes projects for the beneficial use of landfill gas. Landfill gas is produced naturally as waste decomposes in a landfill. The methane component of the landfill gas is a readily available, renewable energy source that can be gathered and used beneficially as an alternative to fossil fuel. Renewable Energy converts landfill gas into several sources of renewable energy which include RNG, electricity and capacity, heat and/or steam. Renewable Energy also generates (i) RINs under the Renewable Fuel Standard (“RFS”) program; (ii) other credits under a variety of state programs associated with the use of RNG in our compressed natural gas fleet and (iii) RECs associated with the production of electricity. The RINs, RECs, and other credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs, RECs, and other credits proportionate to their fossil fuel production and imports. RINs and RECs prices generally fluctuate in response to regulations enacted by the Environmental Protection Agency (“EPA”) or other regulatory bodies, as well as changes in supply and demand.
As of December 31, 2025, we had 103 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 62 of these projects, the processed gas is used to fuel electricity generators. The electricity is then sold to public utilities, municipal utilities or power cooperatives. For 24 of these projects, the gas is used at the landfill or delivered by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. For 17 of these projects, the landfill gas is processed to pipeline quality RNG and then sold to natural gas suppliers. Additionally, three projects are on third-party landfills. The revenues from these facilities are primarily generated through (i) the sale of captured and converted landfill methane gas; (ii) the sale of RINs under the RFS program implemented by the EPA; (iii) sale of Low Carbon Fuel credits designed to stimulate the use of low-carbon fuels and (iv) the sale of energy (electricity and capacity) and associated RECs. Renewable Energy is charged a 15% royalty on net operating revenue from these facilities residing on our active and closed landfills from our Collection and Disposal and Corporate and Other businesses, which is eliminated in consolidation. Additionally, Renewable Energy operates and maintains six third-party landfill beneficial gas use projects in return for service revenue. Our Collection and Disposal and Corporate and Other businesses from these projects as well as 54 additional third-party landfill gas use projects in the form of royalties.
Healthcare Solutions
Our Healthcare Solutions segment includes (i) RWCS which provide compliance programs and collection, processing, and disposal of regulated and specialized waste, including medical, pharmaceutical and hazardous waste and (ii) SID services, which provide for the collection of personal and confidential information for secure destruction and recycling of sorted office paper. While the Healthcare Solutions businesses manage large volumes of waste and other materials, the average volume per customer site is relatively small.
Our customers typically enter into a contract for the provision of services on a scheduled basis, including weekly, monthly or on an as-needed basis over the contract term. Under the contract terms, the Healthcare Solutions businesses receive fees based on a monthly, quarterly or annual rate and/or fees based on contractual rates depending upon measures including the type and volume or weight of waste. Operating revenues are invoiced based on the terms of the underlying contract either on a regular basis, or as services are performed and are generally due within a short period of time after invoicing based upon normal terms and conditions for our business type and the geography of the services performed.
As of December 31, 2025, our Healthcare Solutions segment operates out of approximately 307 leased and owned facilities worldwide with 51 autoclaves or other alternative medical waste treatment facilities, 17 medical waste incinerator facilities, 99 SID processing facilities and 140 transfer stations.
Corporate and Other
We also provide additional services that are not managed through our operating segments, which are presented in this report as Corporate and Other. This includes the activities of our corporate office, including costs associated with our long-term incentive program, expanded service offerings and solutions (such as our investments in businesses and technologies that are designed to offer services and solutions ancillary or supplementary to our current operations) as well as our closed sites. Also included within our Corporate and Other businesses closed sites are (i) five third-party power
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generating facilities converting our landfill gas to fuel electricity generators; (ii) two third-party projects delivering our landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes and (iii) two third-party RNG facilities processing landfill gas to be sold to natural gas suppliers in return for a royalty. Additionally, Corporate and Other benefits from a 15% royalty from our Renewable Energy segment based on net operating revenue generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes from the 17 landfill beneficial use renewable energy projects owned by Renewable Energy on our closed sites, which is eliminated in consolidation.
Business Environment
The waste industry is a comparatively mature and stable industry. However, customers increasingly expect more of their waste materials to be recovered and those waste streams are becoming more complex. In addition, many state and local governments mandate diversion, recycling and waste reduction at the source and prohibit the disposal of certain types of waste at landfills. We monitor these developments to adapt our service offerings. As companies, individuals and communities look for ways to be more sustainable, we promote our comprehensive services that go beyond our core business of collecting and disposing of waste in order to meet their needs. This includes expanding traditional recycling services, increasing organics collection and processing, providing medical waste services and expanding our renewable energy projects to meet the evolving needs of our diverse customer base. As North America’s leading provider of comprehensive environmental solutions, we are taking big, bold steps to catalyze positive change – change that will impact our Company as well as the communities we serve. Consistent with our Company’s long-standing commitment to sustainability and environmental stewardship, we have published our 2025 Sustainability Report, providing details on our sustainability-related performance and outlining progress towards our 2030 sustainability goals. The Sustainability Report conveys the linkage between the Company’s sustainability goals and our growth strategy, inclusive of the expansion of the Company’s Recycling Processing and Sales and Renewable Energy segments. The information in this report can be found at sustainability.wm.com but it does not constitute a part of, and is not incorporated by reference into, this Annual Report on Form 10-K. For further discussion see Item 1. Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation .
We encounter intense competition from governmental, quasi-governmental and private service providers based on pricing, and to a much lesser extent, the nature of service offerings, particularly in the residential line of business. Our industry is directly affected by changes in general economic factors, including increases and decreases in consumer spending, business expansions and construction activity. These factors generally correlate to volumes of waste generated and impact our revenue. Negative economic conditions and other macroeconomic trends can and have caused customers to reduce their service needs. Such negative economic conditions, in addition to competitor actions, can impact our strategy to negotiate, renew, or expand service contracts and grow our business. We also encounter competition for acquisitions and growth opportunities. General economic factors and the market for consumer goods, in addition to regulatory developments, can also significantly impact commodity prices for the recyclable materials we sell. Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and inflation. Volume changes can fluctuate significantly by line of business and volume changes in higher margin businesses can impact key financial metrics. We must dynamically manage our cost structure in response to volume changes and cost inflation.
We believe the Company’s industry-leading asset network and strategic focus on investing in our people and our digital platform will give the Company the necessary tools to address the evolving challenges impacting the Company and our industry. In line with our commitment to continuous improvement and a differentiated customer experience, we remain focused on our automation and optimization investments to enhance our operational efficiency and change the way we interact with our customers. Advancements made through these initiatives are intended to seamlessly and digitally connect all enterprise functions required to service customers and provide the best experience. We have made significant progress in executing this technology enablement strategy to automate and optimize certain elements of our service delivery model. The key benefits are reduced labor dependency on certain high-turnover jobs, particularly in customer experience, recycling and residential collection, while further elevating our customer self-service through digitalization and implementation of technologies to enhance the safety, reliability and within our collection operations.
We sometimes experience margin pressures and variability in earnings and margins from our commodity-driven businesses, specifically within our Recycling Processing and Sales and Renewable Energy segments. During 2025, we
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experienced decreases in market prices for recycled commodities when compared to prior year caused by a number of factors, including the closure of domestic paper mills, a decrease in demand for recycled content by certain consumer goods producers, focused reduction in cardboard packaging and overall market conditions. While the combined impacts of commodity price fluctuations from the prior year had a modestly favorable impact on the Renewable Energy segment, we may experience more significant impacts from fluctuations in the prices of RINs and natural gas in the future. We continue to take proactive steps to adjust our business models to protect against the down-side risk of changes in commodity prices.
Variability in economic conditions, including inflation, interest rates, employment trends and supply chain reliability, can create risk and uncertainty in financial outlook. We take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity and investments in technology to automate certain aspects of our business. We remain committed to putting our people first to ensure that they are well positioned to execute our daily operations diligently and safely. We remain focused on delivering outstanding customer service, managing our variable costs with changing volumes and investing in technology that will enhance our customers’ experience and provide operating efficiencies intended to reduce our cost to serve.
Financial Results
During 2025, we continued to focus on our priorities to advance our strategy – enhancing employee engagement, permanently reducing our cost to serve our customers through the use of technology and automation, investing in growth through our Recycling Processing and Sales and Renewable Energy segments and integrating the Stericycle business. We continue to invest in our people through paying a competitive market wage, investing in our digital platform and providing training for our team members. We remain committed to our investment in recycling automation, which reduces costs and increases throughput, positioning us to overcome commodity price headwinds and deliver a differentiated service. As part of the ongoing integration of Stericycle, which constitutes our Healthcare Solutions segment, we achieved synergies by reducing costs of duplicative business processes, established a performance management approach aimed at accountability and continued to improve customer engagement, billing and collection processes to deliver cash flow.
Key elements of our 2025 financial results include:
Revenues of $25,204 million for 2025 compared with $22,063 million in 2024, an increase of $3,141 million, or 14.2%. The increase was primarily due to (i) our recent acquisitions, particularly Stericycle; (ii) higher yield in our Collection and Disposal businesses and (iii) higher volumes primarily in our landfill, renewable energy and recycling businesses. The increase was partially offset by lower residential collection volumes and a reduction in single-stream and brokerage recycled commodity prices;
Operating expenses of $15,012 million in 2025, or 59.6% of revenues, compared with $13,383 million, or 60.7% of revenues, in 2024. The $1,629 million increase in operating expense compared to prior year related primarily to (i) our recent acquisitions, particularly Stericycle; (ii) incremental costs attributable to RNG facilities brought on line during 2025; (iii) increased landfill volumes and (iv) a decrease in the gains on sale of non-strategic assets. These increases were offset by (i) lower residential volumes; (ii) decreased costs of goods sold due to lower recycling commodity prices and (iii) continued efficiency and cost control in our Collection and Disposal business. Despite the increase in operating expenses, we significantly reduced our operating expenses as a percentage of revenue when compared to prior year through efficiency gains, improved employee turnover, momentum in truck deliveries, the benefit of customer price increases and higher margin special waste volumes;
Selling, general and administrative expenses of $2,722 million in 2025, or 10.8% of revenues, compared with $2,264 million, or 10.3% of revenues, in 2024. The $458 million increase was primarily due to our recent acquisitions, particularly Stericycle, including consulting and technology costs incurred to support Stericycle’s integration;
Income from operations of $4,308 million, or 17.1% of revenues, in 2025 compared with $4,063 million, or 18.4% of revenues, in 2024. The $245 million increase in the current year earnings was primarily due to (i) growth in our Collection and Disposal businesses; (ii) non-recurring transaction costs incurred in the prior year in connection with our Stericycle acquisition and (iii) higher volumes in our Renewable Energy business due to the completion of projects that increase the beneficial use of landfill gas sold to third parties. This growth was
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partially offset by an impairment charge in our Recycling Processing and Sales business and higher depreciation and amortization costs and integration related expenses arising from our Stericycle acquisition;
Net income attributable to Waste Management, Inc. was $2,708 million, or $6.70 per diluted share, compared with $2,746 million, or $6.81 per diluted share, in 2024. The $38 million decrease is primarily due to an increase in interest expense related to the additional debt incurred to finance our Stericycle acquisition. This decline was partially offset by the increase in income from operations, discussed above;
Net cash provided by operating activities was $6,043 million in 2025, compared with $5,390 million in 2024. The $653 million increase in net cash provided by operating activities was primarily due to (i) higher earnings in our Collection and Disposal businesses; (ii) contributions from our recent acquisitions and (iii) lower cash tax payments. This increase was partially offset by (i) higher cash interest payments primarily due to additional debt incurred to fund our acquisition of Stericycle; (ii) unfavorable changes in working capital, net of effects from acquisitions and divestitures and (iii) higher annual incentive compensation payments;
Free cash flow was $2,937 million in 2025, compared with $2,317 million in 2024. The $620 million increase in free cash flow was primarily due to the increases in operating cash described above and planned reductions in capital investment in our sustainability growth projects as we move from peak construction of this portfolio into a period where we will harvest strong returns on these businesses. These increases were partially offset by increased capital expenditures to support the business as well as within our Healthcare Solutions segment and lower proceeds from the sale of certain non-strategic assets. Free cash flow is a non-GAAP measure of liquidity. Refer to Free Cash Flow below for our definition of free cash flow, additional information about our use of this measure, and a reconciliation to net cash provided by operating activities, which is the most comparable GAAP measure.
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Results of Operations
Operating Revenues
The mix of operating revenues for the years ended December 31 are as follows (in millions):
Net
Intercompany
Gross
Operating
Operating
Operating
Revenues
Revenues(a)
Revenues
Year Ended December 31:
Commercial
Industrial
Residential
Other collection
Total collection
Landfill
Transfer
Total Collection and Disposal
Recycling Processing and Sales
Renewable Energy
Healthcare Solutions(b)
Corporate and Other
Total
Commercial
Industrial
Residential
Other collection
Total collection
Landfill
Transfer
Total Collection and Disposal
Recycling Processing and Sales
Renewable Energy
Healthcare Solutions(b)
Corporate and Other
Total
Includes each segment’s intercompany activity, including transactions within a segment and between segments. Transactions within and between segments are generally made on a basis intended to reflect the market value of the service.
In the third quarter of 2025, as a result of continued integration efforts and to enhance transparency and accountability, the Company began reflecting intra-segment activity within our Healthcare Solutions segment. These charges were designed to measure profitability at more granular levels of the enterprise and to facilitate clearer financial accountability within operating units. Accordingly, adjustments to the years ended December 31, 2025 and 2024 activity were made to properly reflect intra-segment activity for both periods. Intra-segment operating revenues within Healthcare Solutions for the years ended December 31, 2025 and 2024 are $425 million and $58 million, respectively.
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The following table provides details associated with the period-to-period change in revenues and average yield for the year ended December 31 (dollars in millions):
Related
Total
Amount
Business(a)
Amount
Company(b)
Collection and disposal
Recycling Processing and Sales and Renewable Energy (c)
Energy surcharge and mandated fees
Total average yield (d)
Volume (e)
Healthcare Solutions (f)
Internal revenue growth
Acquisitions
Divestitures
Foreign currency translation
Total
Calculated by dividing the increase or decrease for the current year by the prior year’s related business revenues adjusted to exclude the impacts of divestitures for the current year.
Calculated by dividing the increase or decrease for the current year by the prior year’s total Company revenues adjusted to exclude the impacts of divestitures for the current year.
Includes combined impact of commodity price variability in both our Recycling Processing and Sales and Renewable Energy segments, as well as changes in certain recycling fees charged by our collection and disposal operations.
The amounts reported herein represent the change in our revenues attributable to average yield for the total Company.
Includes activities from our Corporate and Other businesses.
The amounts reported herein represent the change in our revenues attributable to our Healthcare Solutions business in the period following the anniversary of the acquisition.
The following provides further details about our period-to-period change in revenues:
Average Yield
Collection and Disposal Average Yield — This measure reflects the effect on our revenues from the pricing activities of our collection, transfer and landfill operations, exclusive of volume changes. Revenue growth from Collection and Disposal average yield includes not only base rate changes and environmental and service fee fluctuations, but also (i) certain average price changes related to the overall mix of services, which are due to the types of services provided; (ii) changes in average price from new and lost business and (iii) price decreases to retain customers.
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The details of our revenue growth from Collection and Disposal average yield for the year ended December 31 are as follows (dollars in millions):
Related
Amount
Business
Commercial
Industrial
Residential
Total collection
Landfill
Transfer
Total Collection and Disposal
Our overall pricing efforts are focused on keeping pace with the increasing costs and capital intensity of our business. We continue to focus on yield growth in our landfill business. This growth was primarily driven by municipal solid waste, which achieved yield of 6.5% in 2025.
Recycling Processing and Sales and Renewable Energy — Recycling Processing and Sales revenues attributable to yield decreased $166 million in 2025 as compared to prior year. Average market prices for single-stream recycled commodities declined approximately 20% in 2025 as compared to the prior year. Revenues attributable to yield in our Renewable Energy segment increased $11 million in 2025 as compared to prior year primarily driven by increases in natural gas and electricity pricing partially offset by declines in RINs pricing. While there may be short-term fluctuations in our commodity-driven businesses as prices change, we believe that our business models and processes appropriately mitigate the downside risk of changes in commodity prices.
Energy Surcharge and Mandated Fees — These fees increased $44 million as compared to prior year. Mandated fees increased $33 million while fluctuations in energy surcharges drove an increase of $11 million as compared to prior year. The mandated fees are primarily related to fees and taxes assessed by various state, county and municipal government agencies at our landfills and transfer stations, particularly in our West Tier as a result of wildfire activity.
Volume
Our revenues from volume (excluding volumes from acquisitions and divestitures) increased $206 million, or 0.9%, in 2025 as compared to prior year. Volume growth during 2025 was led by our landfill business, with notable increases in special waste and municipal solid waste volumes in the West Tier, particularly driven by wildfire clean-up efforts. Contributions from growth projects also drove gains in our Renewable Energy and Recycling Processing and Sales segments, and volumes in our Strategic Business Solutions business continued to see growth due to our differentiated service model. These gains were partially offset by declines in residential collection volumes, reflecting our strategic exit from lower-margin contracts.
Acquisitions and Divestitures
Acquisitions and divestitures resulted in a net increase in revenues of $2,334 million, or 10.6%, in 2025 as compared to prior year. The increase was primarily due to our acquisition of Stericycle in November 2024. The remaining increase was primarily related to our ongoing investment in tuck-in acquisitions of collection and disposal businesses.
Operating Expenses
Our operating expenses are comprised of (i) labor and related benefits costs (excluding labor costs associated with maintenance and repairs discussed below), which include salaries and wages, bonuses, related payroll taxes, insurance and benefits costs and the costs associated with contract labor; (ii) transfer and disposal costs, which include tipping fees paid to third-party disposal facilities and transfer stations; (iii) maintenance and repairs costs relating to equipment, vehicles
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and facilities and related labor costs; (iv) subcontractor costs, which include the costs of independent haulers who transport waste collected by us to disposal facilities and are affected by variables such as volumes, distance and fuel prices; (v) cost of goods sold, which includes the cost to purchase recycling materials for our Recycling Processing and Sales segment, including certain rebates paid to suppliers; (vi) fuel costs, net of tax credits for alternative fuel, which represent the costs of fuel to operate our truck fleet and landfill operating equipment; (vii) disposal and franchise fees and taxes, which include landfill taxes, municipal franchise fees, host community fees, contingent landfill lease payments and royalties; (viii) landfill operating costs, which include interest accretion on landfill liabilities, interest accretion on and discount rate adjustments to environmental remediation liabilities, leachate and methane collection and treatment, landfill remediation costs and other landfill site costs; (ix) risk management costs, which include general liability, automobile liability and workers’ compensation claims programs costs and (x) other operating costs, which include gains and losses on sale of assets, telecommunications, equipment and facility lease expenses, property taxes, utilities and supplies. Variations in volumes year-over-year, as discussed above in Operating Revenues , in addition to cost inflation, affect the comparability of the components of our operating expenses.
The following table summarizes the major components of our operating expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
Labor and related benefits
Transfer and disposal costs
Maintenance and repairs
Subcontractor costs
Cost of goods sold
Fuel
Disposal and franchise fees and taxes
Landfill operating costs
Risk management
Other
During 2025, efficiency gains, improved employee turnover, momentum in truck deliveries, the benefit of customer price increases and higher margin special waste volumes, positioned us to significantly reduce our operating expenses as a percentage of operating revenue. The increase in total operating expenses as compared to prior year related primarily to (i) our recent acquisitions, particularly Stericycle; (ii) incremental costs attributable to RNG facilities brought on line during 2025; (iii) increased landfill volumes and (iv) a decrease in gains on the sale of non-strategic assets in 2025. These increases were partially offset by (i) lower residential volumes; (ii) decreased cost of goods sold attributable to lower recycling commodity prices and (iii) continued operating efficiency and cost control initiatives in our Collection and Disposal businesses.
Significant items affecting the comparison of operating expenses between reported periods include:
Labor and Related Benefits — The increase in labor and related benefits costs was driven by the addition of employees as a result of our recent acquisitions and annual employee wage increases. These increases were offset in part, by (i) lower annual incentive compensation and employee benefit expenses; (ii) collection efficiency improvements; (iii) lower residential volumes attributable to intentional shedding of lower margin contracts and (iv) improved driver retention.
Transfer and Disposal Costs — The increase in transfer and disposal costs was primarily due to our recent acquisitions and inflationary cost pressures, which includes increased disposal fees at third-party sites and higher rates from our third-party haulers. These increases were offset, in part, by lower residential volumes attributable to intentional shedding of lower margin contracts.
Maintenance and Repairs — The increase in maintenance and repairs costs was primarily due to (i) additional costs incurred as part of our recent acquisitions; (ii) inflation in parts, supplies and third-party services; (iii) annual wage
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increases and (iv) higher technician headcount. These increases were offset, in part, by an increase in new truck deliveries, which lowered the average fleet age and reduced demand for parts, supplies and third-party services.
Subcontractor Costs — The increase in subcontractor costs was primarily due to additional costs incurred as a part of our recent acquisitions and inflationary cost pressures, particularly labor costs from third-party haulers.
Cost of Goods Sold — The decrease in cost of goods sold was primarily due to a nearly 20% decrease in average market prices for single-stream recycling commodities. This decrease was partially offset by additional pipeline transportation costs attributable to new RNG facilities brought on line during 2025.
Fuel — The increase in fuel costs was primarily due to our recent acquisitions and the expiration of the federal alternative fuel tax credit on December 31, 2024. This increase was partially offset by a decrease of approximately 3% in average market prices for diesel fuel and reduced diesel consumption due to declines in residential collection volumes.
Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes was primarily due to an increase in landfill volumes and an overall rate increase in fees and taxes paid to municipalities on our disposal volumes.
Landfill Operating Costs — The increase in landfill operating costs was primarily due to an increase in volumes and higher leachate treatment costs in our West Tier.
Risk Management — The increase in risk management costs was primarily due to additional claims and premiums attributable to our recent acquisitions and higher insurance recoveries for property claims in the prior year as compared to 2025 offset, in part, by improved claims experience.
Other — The increase in other operating costs was primarily due to (i) additional expenses attributable to our recent acquisitions; (ii) gains on the sale of real estate in 2024 and, to a much lesser extent, (iii) increased utility costs and property taxes largely attributable to new RNG plants brought on line during 2025.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist of (i) labor and related benefits costs, which include salaries, bonuses, related insurance and benefits, contract labor, payroll taxes and equity-based compensation; (ii) professional fees, which include fees for consulting, legal, audit and tax services; (iii) provision for bad debts, which includes allowances for uncollectible customer accounts and collection fees and (iv) other selling, general and administrative expenses, which include, among other costs, facility-related expenses, voice and data telecommunication, advertising, bank charges, computer costs, travel and entertainment, rentals, postage and printing. In addition, the financial impacts of litigation reserves generally are included in our “Other” selling, general and administrative expenses.
The following table summarizes the major components of our selling, general and administrative expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
Labor and related benefits
Professional fees
Provision for bad debts
Other
Selling, general and administrative expenses increased from prior year primarily due to our recent acquisitions, particularly Stericycle.
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Significant items affecting the comparison of our selling, general and administrative expenses between reported periods include:
Labor and Related Benefits — The increase in labor and related benefits costs was primarily due to (i) our recent acquisitions; (ii) higher long-term incentive compensation costs and (iii) annual employee wage increases. These increases were partially offset by lower annual incentive compensation and employee benefit expense.
Professional Fees — The increase in professional fees was primarily due to our acquisition and integration of Stericycle.
Provision for Bad Debts — The increase in the provision for bad debts was primarily attributable to our Healthcare Solutions segment, driven by data and system challenges, and an overall increase in revenue and increase in customer account write-offs.
Other — The increase in other expenses was primarily due to increased spend across multiple cost categories, including technology, risk management and advertising, largely driven by the acquisition and integration of Stericycle.
Depreciation, Depletion and Amortization Expenses
The following table summarizes the components of our depreciation, depletion and amortization expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
Depreciation of tangible property and equipment
Depletion of landfill airspace
Amortization of intangible assets
The increase in depreciation of tangible property and equipment was primarily due to our recent acquisitions and increased investments in capital assets such as equipment, primarily within our sustainability businesses, and trucks. The increase in depletion of landfill airspace from prior year was primarily due to increased volumes at our landfills, particularly in our West Tier, and changes in amortization rates from revisions in landfill estimates. The increase in amortization of intangible assets from prior year was primarily due to the incremental amortization of customer relationships and other intangibles acquired as part of the Stericycle acquisition.
Restructuring
Restructuring charges for the year ended December 31, 2025 were primarily due to employee costs related to integration of our acquisition of Stericycle as well as employee retention and severance costs incurred to support automation at our recycling facilities and in certain back-office functions.
(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net
The following table summarizes the major components of (gain) loss from divestitures, asset impairments and unusual items, net for the year ended December 31 (in millions):
Gain from divestitures, net
Asset impairments
Other, net
During the year ended December 31, 2025, we recognized $248 million of net charges primarily consisting of (i) a $160 million impairment charge related to the decision to temporarily suspend the operations of a business engaged in
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accelerating plastic film and wrap recycling capabilities within our Recycling Processing and Sales segment resulting from significant deterioration of market pricing and demand for post-consumer plastics; (ii) a $45 million impairment charge related to the decision to accelerate the closure of a landfill within our East Tier; (iii) a $16 million goodwill impairment charge related to a business engaged in oil recovery and sludge processing services reflected in Other Ancillary within our Collection and Disposal businesses and (iv) $11 million negotiated payment for early termination of a contract in our Renewable Energy segment.
During the year ended December 31, 2024, we recognized $82 million of net charges primarily consisting of (i) a $54 million charge required to increase the estimated fair value of a liability associated with the expected disposition of an investment the Company holds in a waste diversion technology business; (ii) a $14 million loss associated with the divestiture of a minority investment in a medical waste company within Corporate and Other, in connection with our acquisition of Stericycle and (iii) a $13 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site.
See Note 2 to the Consolidated Financial Statements for additional information related to the accounting policy and analysis involved in identifying and calculating impairments. See Note 19 to the Consolidated Financial Statements for additional information related to the impact of impairments on the results of operations of our reportable segments.
Income from Operations
The following table summarizes income from operations for the year ended December 31 (dollars in millions):
Period-to-
Period
Change
Collection and Disposal:
East Tier
West Tier
Other Ancillary
Collection and Disposal
Recycling Processing and Sales
Renewable Energy
Healthcare Solutions
Corporate and Other
Total
Percentage of revenues
* Percentage change does not provide a meaningful comparison.
Significant items affecting the comparison of income from operations for our segments between the reported periods include:
Collection and Disposal — Income from operations in our Collection and Disposal businesses increased primarily due to (i) revenue growth from price increases, which translate into increased yield or average unit price; (ii) actions to improve the efficiency and operating costs incurred to serve our customers and (iii) elevated special waste volume in our West Tier, which was favorably impacted by the wildfire clean-up activities. These increases were partially offset by higher depreciation and depletion costs, as discussed in Depreciation, Depletion and Amortization Expenses above, as well as a decrease on the gains on the sale of non-strategic assets when compared to prior year.
Recycling Processing and Sales — Income from operations in our Recycling Processing and Sales segment decreased primarily due to a $160 million impairment charge related to the decision to temporarily suspend the operations of a business engaged in accelerating plastic film and wrap recycling capabilities due to significant deterioration of market pricing and demand for post-consumer plastics and declining commodity prices compared
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to prior year. This decrease was partially offset by increased volumes, which can be attributed to the improved throughput of our facilities, the addition of new market facilities and improved operating costs from the automation of our recycling facilities.
Renewable Energy — Income from operations in our Renewable Energy segment increased primarily due to higher volumes resulting from the completion of projects that increase the beneficial use of landfill gas sold to third parties and higher electricity pricing.
Healthcare Solutions — The positive earnings contributions from the Healthcare Solutions business were more than offset by depreciation and amortization expenses and integration related expenses, driving a loss in both periods.
Corporate and Other — Income from operations in our Corporate and Other segment increased primarily due to (i) non-recurring transaction costs incurred in the prior year in connection with our Stericycle acquisition; (ii) lower annual incentive compensation, and (iii) a decline in risk management expenses. The increase was partially offset by (i) annual employee wage increases; (ii) higher long term incentive compensation and (iii) increases in consulting fees driven by integration and business optimization activities related to the acquisition of Stericycle.
Interest Expense, Net
Our interest expense, net was $912 million and $598 million in 2025 and 2024, respectively. The increase in interest expense, net was primarily related to an increase in our average debt balances and borrowing rates resulting from debt incurred to fund our acquisition of Stericycle. See Note 6 to the Consolidated Financial Statements for more information related to our debt balances.
Income Tax Expense
We recorded income tax expense of $717 million and $713 million in 2025 and 2024, respectively, resulting in effective income tax rates of 20.9% and 20.6% for the years ended December 31, 2025 and 2024, respectively. The comparability of our income tax expense for the reported periods has been primarily affected by the following:
Renewable Natural Gas — Through our Renewable Energy segment, we have invested in building landfill gas-to-energy facilities in the U.S. and Canada that produce renewable electricity and RNG. We expect our new RNG facilities to qualify for federal tax credits and to realize those credits through 2027 under Section 48 of the Internal Revenue Code. We completed construction of seven RNG facilities in 2025 and five RNG facilities in 2024, resulting in a reduction to our income tax expense of $184 million and $137 million, respectively (additional information related to these tax credits is included below under the Tax Legislation section);
Low-Income Housing — During the years ended December 31, 2025 and 2024, we recognized income tax expense of $96 million and $78 million, respectively, related to amortization under ASU 2023-02, and a reduction in our income tax expense of $137 million and $104 million, respectively, primarily due to federal tax credits realized from these investments. See Notes 2, 8, and 18 to the Consolidated Financial Statements for additional information related to these unconsolidated variable interest entities;
Tax Implications of Impairments — During the year ended December 31, 2024, we recognized additional income tax expense of $14 million due to non-cash impairment charges that were not deductible for tax purposes in the year of impairment. See Note 11 to the Consolidated Financial Statements for more information related to our impairment charges; and
Tax Legislation — On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (the “OBBBA”) into law. We have evaluated the business tax provisions in the legislation, none of which had a material impact on our effective tax rate. However, we had a beneficial impact to cash taxes related to bonus depreciation.
The Inflation Reduction Act of 2022 (“IRA”) contains several tax-related provisions, including with respect to (i) alternative fuel tax credits; (ii) tax incentives for investments in renewable energy production, carbon capture,
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and other climate actions and (iii) the overall measurement of corporate income taxes. Given the complexity and uncertainty around the applicability of the legislation to our specific facts and circumstances, we continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation. The provisions of the IRA related to alternative fuel tax credits secured approximately $60 million of annual pre-tax benefit (recorded as a reduction in our operating expense) from tax credits in 2024. The alternative fuel credit expired at the end of 2024 and will not provide any future benefit to the Company without further legislative action. With respect to the investment tax credit, we expect the cumulative benefit to be between $400 million and $425 million, the remainder of which we expect to recognize through 2027. The expected benefit from the investment tax credit is dependent on a number of estimates and assumptions, including the timing of project completion. Finally, we believe that the production tax credit incentives for investments in renewable energy and carbon capture, as expanded by the IRA, may result in an incremental benefit to the Company, although at this time, the anticipated amount of such has not been quantified due, in part, to the of regulatory guidance.
See Note 8 to the Consolidated Financial Statements for more information related to income taxes.
Landfill and Environmental Remediation Discussion and Analysis
We owned or operated 253 solid waste landfills and four hazardous waste landfills as of December 31, 2025 and 257 solid waste landfills and five hazardous waste landfills as of December 31, 2024. For these landfills, the following table reflects changes in capacity, as measured in tons of waste, for the year ended December 31 and remaining airspace, measured in cubic yards of waste, as of December 31 (in millions):
Remaining
Remaining
Permitted
Expansion
Total
Permitted
Expansion
Total
Capacity
Capacity
Capacity
Capacity
Capacity
Capacity
Balance as of beginning of year (in tons)
Acquisitions, divestitures, newly permitted landfills and closures
Changes in expansions pursued (a)
Expansion permits granted (b)
Depletable tons received
Changes in engineering estimates and other (c)
Balance as of end of year (in tons) (d)
Balance as of end of year (in cubic yards) (d)
Amounts reflected here relate to the combined impacts of (i) new expansions pursued; (ii) increases or decreases in the airspace being pursued for ongoing expansion efforts; (iii) adjustments for differences between the airspace being pursued and airspace granted and (iv) decreases due to decisions to no longer pursue expansion permits, if any.
We received expansion permits at 13 of our landfills during 2025 and 11 of our landfills during 2024, demonstrating our continued success in working with municipalities and regulatory agencies to expand the disposal airspace of our existing landfills.
Changes in engineering estimates can result in changes to the estimated available remaining airspace of a landfill or changes in the utilization of such landfill airspace, affecting the number of tons that can be placed in the future. Estimates of the amount of waste that can be placed in the future are reviewed annually by our engineers and are based on a number of factors, including standard engineering techniques and site-specific factors such as current and projected mix of waste type; initial and projected waste density; estimated number of years of life remaining; depth of underlying waste; anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. We continually focus on improving the utilization of airspace through efforts that may include recirculating landfill leachate where allowed by permit; optimizing the placement of daily cover materials and increasing initial compaction through improved landfill equipment, operations and training.
See Note 2 to the Consolidated Financial Statements for discussion of converting remaining cubic yards of airspace to tons of capacity.
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The depletable tons received at our landfills for the year ended December 31 are shown below (tons in thousands):
Depletable
Tons per
Depletable
Tons per
Sites
Tons
Day
Sites
Tons
Day
Solid waste landfills (a)
Hazardous waste landfills
Solid waste landfills closed, divested, held for sale, or lease or other contractual agreement expired during related year
As of December 31, 2025 and 2024, we had 16 and 15 landfills, respectively, which were not accepting waste.
As of December 31, 2025, we owned or managed 244 sites that are either in closure or post-closure, have received a certification post-closure, or are regulated under a remedial action plan.
Based on remaining permitted airspace as of December 31, 2025 and projected annual disposal volume, the weighted average remaining landfill life for all of our owned or operated landfills is approximately 38 years. Many of our landfills have the potential for expanded airspace beyond what is currently permitted. We monitor the availability of permitted airspace at each of our landfills and evaluate whether to pursue an expansion at a given landfill based on estimated future disposal volume, disposal prices, construction and operating costs, remaining airspace and likelihood of obtaining an expansion permit. We are seeking expansion permits at 15 of our landfills that meet the expansion criteria outlined in the Critical Accounting Estimates and Assumptions — Landfills section below. Although no assurances can be made that all future expansions will be permitted or permitted as designed, the weighted average remaining landfill life for all owned or operated landfills is approximately 39 years when considering remaining permitted airspace, expansion airspace and projected annual disposal volume.
The number of landfills owned or operated as of December 31, 2025, segregated by their estimated operating lives based on remaining permitted and expansion airspace and projected annual disposal volume, was as follows:
# of Landfills
0 to 5 years
6 to 10 years
11 to 20 years
21 to 40 years
41+ years
Total
Of the 257 landfills, 219 are owned, 26 are operated under lease agreements and 12 are operated under other contractual agreements. For the landfills not owned, we are usually responsible for final capping, closure and post-closure obligations.
Landfill Assets — We capitalize various costs that we incur to prepare a landfill to accept waste. These costs generally include expenditures for land (including the landfill footprint and required landfill buffer property), permitting, excavation, liner material and installation, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, and on-site road construction and other capital infrastructure costs. The cost basis of our landfill assets also includes estimates of future costs associated with landfill final capping, closure and post-closure activities, which are discussed further below.
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The changes to the cost basis of our landfill assets and accumulated landfill airspace depletion for the year ended December 31, 2025 are reflected in the table below (in millions):
Accumulated
Net Book
Cost Basis of
Landfill Airspace
Value of
Landfill Assets
Depletion
Landfill Assets
December 31, 2024
Capital additions
Asset retirement obligations incurred and capitalized
Depletion of landfill airspace
Foreign currency translation
Asset retirements and other adjustments
December 31, 2025
As of December 31, 2025, we estimate that we will spend approximately $874 million in 2026, and approximately $1.8 billion in 2027 and 2028 combined, for the construction and development of our landfill assets. The specific timing of landfill capital spending is dependent on future events and spending estimates are subject to change due to fluctuations in landfill waste volumes, changes in environmental requirements and other factors impacting landfill operations.
Landfill and Environmental Remediation Liabilities — As we accept waste at our landfills, we incur significant asset retirement obligations, which include liabilities associated with landfill final capping, closure and post-closure activities. These liabilities are accounted for in accordance with authoritative guidance on accounting for asset retirement obligations and are discussed in Note 2 to the Consolidated Financial Statements. We also have liabilities for the remediation of properties that have incurred environmental damage, which generally was caused by operations or for damage caused by conditions that existed before we acquired operations or a site. We recognize environmental remediation liabilities when we determine that the liability is probable and the cost for the likely remedy can be reasonably estimated.
The changes to landfill and environmental remediation liabilities for the year ended December 31, 2025 are reflected in the table below (in millions):
Environmental
Landfill
Remediation
December 31, 2024
Obligations incurred and capitalized
Obligations settled
Interest accretion
Revisions in estimates
Acquisitions, divestitures and other adjustments
December 31, 2025
Landfill Operating Costs — The following table summarizes our landfill operating costs for the year ended December 31 (in millions):
Interest accretion on landfill and environmental remediation liabilities
Leachate and methane collection and treatment
Landfill remediation costs and discount rate adjustments to environmental remediation liabilities and recovery assets
Other landfill site costs
Total landfill operating costs
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Depletion of Landfill Airspace — Depletion of landfill airspace, which is included as a component of depreciation, depletion and amortization expenses, includes the following:
the depletion of landfill capital costs, including (i) costs that have been incurred and capitalized and (ii) estimated future costs for landfill development and construction required to develop our landfills to their remaining permitted and expansion airspace; and
the depletion of asset retirement costs arising from landfill final capping, closure and post-closure obligations, including (i) costs that have been incurred and capitalized and (ii) projected asset retirement costs.
Depletion expense is recorded on a units-of-consumption basis, applying cost as a rate per ton. The rate per ton is calculated by dividing each component of the depletable basis of a landfill (net of accumulated depletion) by the number of tons needed to fill the corresponding asset’s remaining permitted and expansion airspace. Landfill capital costs and closure and post-closure asset retirement costs are generally incurred to support the operation of the landfill over its entire operating life and are, therefore, depleted on a per-ton basis using a landfill’s total permitted and expansion airspace. Final capping asset retirement costs are related to a specific final capping event and are, therefore, depleted on a per-ton basis using each discrete final capping event’s estimated permitted and expansion airspace. Accordingly, each landfill has multiple per-ton depletion rates.
The following table presents our landfill airspace depletion expense on a per-ton basis for the year ended December 31:
Depletion of landfill airspace (in millions)
Tons received, net of redirected waste (in millions)
Average landfill airspace depletion expense per ton
Different per-ton depletion rates are applied at each of our 257 landfills, and per-ton depletion rates vary significantly from one landfill to another due to (i) inconsistencies that often exist in construction costs and provincial, state and local regulatory requirements for landfill development and landfill final capping, closure and post-closure activities and (ii) differences in the cost basis of landfills that we develop versus those that we acquire. Accordingly, our landfill airspace depletion expense measured on a per-ton basis can fluctuate due to changes in the mix of volumes we receive across the Company each year.
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Liquidity and Capital Resources
The Company consistently generates annual cash flow from operations that meets and exceeds our working capital needs, allows for payment of our dividends, investment in the business through capital expenditures and tuck-in acquisitions and funding of strategic sustainability growth investments. We continually monitor our actual and forecasted cash flows, our liquidity and our capital resources, enabling us to plan for our present needs and fund unbudgeted business requirements that may arise during the year. The Company believes that its investment grade credit ratings, diverse investor base, large value of unencumbered assets and modest leverage enable it to obtain adequate financing, and refinance upcoming maturities, as necessary to meet its ongoing capital, operating, strategic and other liquidity requirements. We also have the ability to manage liquidity during periods of significant financial market disruption through temporary modification of our capital expenditure and share repurchase plans.
Summary of Contractual Obligations
The following table summarizes our significant contractual obligations as of December 31, 2025 (other than recorded obligations related to liabilities associated with environmental remediation costs and non-cancelable operating lease obligations, which are discussed further in Notes 3 and 7 to the Consolidated Financial Statements, respectively) and the anticipated effect of these obligations on our liquidity in future years (in millions):
Thereafter
Total
Recorded Obligations:
Final capping, closure and post-closure liabilities (a)
Debt payments (b)
Unrecorded Obligations:
Interest on debt (c)
Estimated unconditional purchase obligations (d)
Anticipated liquidity impact as of December 31, 2025
Includes liabilities for final capping, closure and post-closure costs recorded in our Consolidated Balance Sheet as of December 31, 2025, without the impact of discounting and inflation. Our recorded liabilities for final capping, closure and post-closure costs will increase as we continue to place additional tons within the permitted airspace at our landfills.
These amounts represent the scheduled principal payments based on their contractual maturities related to our long-term debt and financing leases, excluding interest. Refer to Note 6 to the Consolidated Financial Statements for additional information regarding our debt obligations.
Interest on our fixed-rate debt was calculated based on contractual rates and interest on our variable-rate debt was calculated based on interest rates as of December 31, 2025. As of December 31, 2025, we had $233 million of accrued interest related to our debt obligations.
Our obligations represent purchase commitments from which we expect to realize an economic benefit in future periods. We have also made certain guarantees that we do not expect to materially affect our current or future financial position, results of operations or liquidity. See Note 10 to the Consolidated Financial Statements for discussion of the nature and terms of our unconditional purchase obligations and guarantees.
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Summary of Cash and Cash Equivalents, Restricted Funds and Debt Obligations
The following is a summary of our cash and cash equivalents, restricted funds and debt balances as of December 31 (in millions):
Cash and cash equivalents
Restricted funds:
Insurance reserves
Final capping, closure, post-closure and environmental remediation funds
Other
Total restricted funds (a)
Debt:
Current portion
Long-term portion
Total debt
As of December 31, 2025 and 2024, $109 million and $100 million, respectively, of these account balances was included in other current assets in our Consolidated Balance Sheets.
Debt — We use long-term borrowings in addition to the cash we generate from operations as part of our overall financial strategy to support and grow our business. We primarily use senior notes and tax-exempt bonds to borrow on a long-term basis, but we also use other instruments and facilities, when appropriate. The components of our borrowings as of December 31, 2025 are described in Note 6 to the Consolidated Financial Statements.
As of December 31, 2025, we had approximately $3.7 billion of debt maturing within the next 12 months, including (i) $1.8 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (ii) $1.1 billion of short-term borrowings under our commercial paper program (net of related discount on issuance); (iii) $223 million of 7.1% senior notes that mature in August 2026; (iv) $364 million of 2.6% Canadian senior notes that mature in September 2026 and (v) $200 million of other debt with scheduled maturities within the next 12 months. As of December 31, 2025, we have classified $3.0 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”). The remaining $711 million of debt maturing in the next 12 months is classified as current obligations.
We have credit lines in place to support our liquidity and financial assurance needs. The following table summarizes our outstanding letters of credit, categorized by type of facility as of December 31 (in millions):
Revolving credit facility (a)
Other letter of credit lines (b)
As of December 31, 2025 and 2024, we had an unused and available credit capacity of $2.2 billion and $2.1 billion, respectively.
As of December 31, 2025, these other letter of credit lines are uncommitted with terms extending through December 2029.
Guarantor Financial Information
WM Holdings has fully and unconditionally guaranteed all of Waste Management, Inc.’s (“WMI’s”) senior indebtedness. WMI has fully and unconditionally guaranteed all of WM Holdings’ senior indebtedness. None of WMI’s
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other subsidiaries have guaranteed any of WMI’s or WM Holdings’ debt. In lieu of providing separate financial statements for the subsidiary issuer and guarantor (WMI and WM Holdings), we have presented the accompanying supplemental summarized combined balance sheet and income statement information for WMI and WM Holdings on a combined basis after elimination of intercompany transactions between WMI and WM Holdings and amounts related to investments in any subsidiary that is a non-guarantor (in millions):
December 31,
Balance Sheet Information:
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities:
Advances due to affiliates
Other noncurrent liabilities
Year Ended
December 31, 2025
Income Statement Information:
Revenue
Operating income
Net loss
Summary of Cash Flow Activity
The following is a summary of our cash flows for the year ended December 31 (in millions):
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
Net Cash Provided by Operating Activities — Our operating cash flows increased $653 million in 2025 compared to 2024, primarily due to (i) higher earnings in our Collection and Disposal businesses; (ii) contributions from our recent acquisitions and (iii) lower cash tax payments. This increase was partially offset by (i) higher cash interest payments primarily due to additional debt incurred to fund our acquisition of Stericycle; (ii) higher annual incentive compensation payments and (iii) unfavorable changes in working capital, net of effects from acquisitions and divestitures. We continue to execute well in optimizing working capital, particularly in the reduction of days sales outstanding for our Healthcare Solutions business and alignment of our days-to-pay measure with contract terms, though overall working capital changes have been pressured by the Stericycle acquisition.
Net Cash Used in Investing Activities — The most significant items affecting the comparison of our investing cash flows for the periods presented are summarized below:
Acquisitions — Our spending on acquisitions was $404 million and $7,503 million in 2025 and 2024, respectively, of which $395 million and $7,488 million, respectively, are considered cash used in investing activities. The remaining spend is cash used in financing activity related to the timing of contingent consideration paid. Excluding our acquisition of Stericycle in 2024, substantially all of the remaining acquisitions are related to our solid waste and recycling businesses.
Capital Expenditures — We used $3,227 million and $3,231 million for capital expenditures in 2025 and 2024, respectively. The decrease in capital spending in 2025 compared to 2024 is primarily due to planned reductions in capital investment in our sustainability growth projects as we move from peak construction of this portfolio into a period where we will harvest strong returns on these businesses . The decrease in capital spending was mostly offset by increased capital expenditures to support the business and incremental spend within our Healthcare Solutions segment driven by the timing of the acquisition in late 2024.
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Divestitures — Proceeds from divestitures of businesses and other assets, net of cash divested, were $121 million and $158 million in 2025 and 2024, respectively. Proceeds in 2025 primarily related to the sale of our Healthcare Solutions segment’s Spain and Portugal subsidiaries. The remaining 2025 and 2024 proceeds were from the sale of certain non-strategic assets.
Other, Net — Our spending within other, net was $65 million and $40 million in 2025 and 2024, respectively. During 2025 and 2024, we used $56 million and $4 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities. During 2024, we used $33 million to make initial cash payments associated with a low-income housing investment.
Net Cash Provided by (Used in) Financing Activities — The most significant items affecting the comparison of our financing cash flows for the periods presented are summarized below:
Debt Borrowings (Repayments) — The following summarizes our cash borrowings and repayments of debt for the year ended December 31 (in millions):
Borrowings :
Commercial paper program
Term loan (a)
Senior notes
Tax-exempt bonds
Repayments :
Commercial paper program
Term loan (a)
Senior notes
Tax-exempt bonds
Other debt
Net cash borrowings (repayments)
In October 2024, we drew $5.2 billion of borrowings under a term credit agreement that were applied to funding our acquisition of Stericycle. In November 2024, we repaid all outstanding borrowings and contemporaneously terminated the term credit agreement.
Refer to Note 6 to the Consolidated Financial Statements for additional information related to our debt borrowings and repayments.
Common Stock Repurchase Program — For the periods presented, all share repurchases have been made in accordance with financial plans approved by our Board of Directors. No share repurchases were made in 2025. During 2024, we allocated $262 million of available cash to common stock repurchases. See Note 13 to the Consolidated Financial Statements for additional information about our share repurchase activity.
We announced in December 2025 that our Board of Directors has authorized up to $3.0 billion in future share repurchases, exclusive of fees, commissions and taxes. This new authorization supersedes and replaces remaining authority under the prior Board of Directors’ authorization for share repurchases announced in December 2023. The amount of future share repurchases executed under our Board of Directors’ authorization is determined in management’s discretion, based on various factors, including our leverage level, net earnings, financial condition and cash required for future business plans, growth and acquisitions.
Cash Dividends — For the periods presented, all dividends have been declared by our Board of Directors. Cash dividends declared and paid were $1.3 billion in 2025, or $3.30 per common share and $1.2 billion in 2024, or $3.00 per common share.
In December 2025, we announced that our Board of Directors expects to increase the quarterly dividend from $0.825 to $0.945 per share for dividends declared in 2026. However, all future dividend declarations are at the
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discretion of the Board of Directors and depend on various factors, including our leverage level, net earnings, financial condition, cash required for future business plans, growth and acquisitions and other factors the Board of Directors may deem relevant.
Exercise of Common Stock Options — The exercise of common stock options generated financing cash inflows of $61 million and $53 million from the exercise of 676,000 and 693,000 of employee stock options during 2025 and 2024, respectively.
Other, Net — During 2024, we acquired the remaining minority interests in a business engaged in accelerating film and plastic wrap recycling capabilities for $41 million.
Free Cash Flow
We are presenting free cash flow, which is a non-GAAP measure of liquidity, in our disclosures because we use this measure in the evaluation and management of our business. We define free cash flow as net cash provided by operating activities, less capital expenditures, plus proceeds from divestitures of businesses and other assets, net of cash divested. We believe it is indicative of our ability to pay our quarterly dividends, repurchase common stock, fund acquisitions and other investments and, in the absence of refinancings, to repay our debt obligations. Free cash flow is not intended to replace net cash provided by operating activities, which is the most comparable GAAP measure. We believe free cash flow gives investors useful insight into how we view our liquidity, but the use of free cash flow as a liquidity measure has material limitations because it excludes certain expenditures that are required or that we have committed to, such as declared dividend payments and debt service requirements.
Our calculation of free cash flow and reconciliation to net cash provided by operating activities is shown in the table below for the year ended December 31 (in millions), and may not be calculated the same as similarly-titled measures presented by other companies:
Net cash provided by operating activities
Capital expenditures to support the business
Capital expenditures - sustainability growth investments (a)
Total capital expenditures
Proceeds from divestitures of businesses and other assets, net of cash divested
Free cash flow
These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing RNG generation and we expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve.
Critical Accounting Estimates and Assumptions
In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with precision from available data or simply cannot be calculated. In some cases, these estimates are difficult to determine, and we must exercise significant judgment. In preparing our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, long-lived asset impairments, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. Each of these items is discussed in additional detail below and in Note 2 to the Consolidated Financial Statements. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.
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Landfills
Accounting for landfills requires that significant estimates and assumptions be made regarding (i) the cost to construct and develop each landfill asset; (ii) the estimated fair value of final capping, closure and post-closure asset retirement obligations, which must consider both the expected cost and timing of these activities and (iii) the determination of each landfill’s remaining permitted and expansion airspace.
Landfill Costs — We estimate the total cost to develop each of our landfill sites to its remaining permitted and expansion airspace. This estimate includes such costs as landfill liner material and installation, excavation for airspace, landfill leachate collection systems, landfill gas collection systems, environmental monitoring equipment for groundwater and landfill gas, directly related engineering, capitalized interest, on-site road construction and other capital infrastructure costs. Additionally, landfill development includes all land purchases for the landfill footprint and landfill buffer property. The projection of these landfill costs is dependent, in part, on future events. The remaining depletable basis of each landfill includes costs to develop a site to its remaining permitted and expansion airspace and includes amounts previously expended and capitalized, net of accumulated airspace depletion, and projections of future purchase and development costs.
Final Capping Costs — We estimate the cost for each final capping event based on the area to be capped and the capping materials and activities required. The estimates also consider when these costs are anticipated to be paid and factor in inflation and discount rates. Our engineering personnel allocate landfill final capping costs to specific final capping events and the capping costs are depleted as waste is disposed of at the landfill. We review these costs annually, or more often if significant facts change. Changes in estimates, such as timing or cost of construction, for final capping events immediately impact the required liability and the corresponding asset. When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a final capping event at a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion.
Closure and Post-Closure Costs — We base our estimates for closure and post-closure costs on our interpretations of permit and regulatory requirements for closure and post-closure monitoring and maintenance. The estimates for landfill closure and post-closure costs also consider when the costs are anticipated to be paid and factor in inflation and discount rates. The possibility of changing legal and regulatory requirements and the forward-looking nature of these types of costs make any estimation or assumption less certain. Changes in estimates for closure and post-closure events immediately impact the required liability and the corresponding asset. When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense. When the change in estimate relates to a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace .
Remaining Permitted Airspace — Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted airspace is determined by an annual survey, which is used to compare the existing landfill topography to the expected final landfill topography.
Expansion Airspace — We also include currently unpermitted expansion airspace in our estimate of remaining permitted and expansion airspace in certain circumstances. First, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely. Second, we must generally expect the initial expansion permit application to be submitted within one year and the final expansion permit to be received within five years, in addition to meeting the following criteria:
Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use and local, state or provincial approvals;
We have a legal right to use or obtain land to be included in the expansion plan;
There are no significant known technical, legal, community, business, or political restrictions or similar issues that could negatively affect the success of such expansion; and
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Financial analysis has been completed based on conceptual design, and the results demonstrate that the expansion meets Company criteria for investment.
These criteria are evaluated by our field-based engineers, accountants, managers and others to identify potential obstacles to obtaining the permits. Once the unpermitted airspace is included, our policy provides that airspace may continue to be included in remaining permitted and expansion airspace even if certain of these criteria are no longer met as long as we continue to believe we will ultimately obtain the permit, based on the facts and circumstances of a specific landfill. In these circumstances, continued inclusion must be approved through a landfill-specific review process that includes approval by our Chief Financial Officer on a quarterly basis.
When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure and post-closure of the expansion in the depletable basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor (“AUF”) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using the measured density obtained from previous annual surveys and is then adjusted to account for future settlement. The amount of settlement that is forecasted will consider several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices. In addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group and the AUF used is reviewed on a periodic basis and revised as necessary. Our historical experience generally indicates that the impact of settlement at a landfill is greater later in the life of the landfill when the waste placed at the landfill approaches its highest point under the permit requirements.
After determining the costs and remaining permitted and expansion capacity at each of our landfills, we determine the per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the corresponding number of tons. We calculate per ton depletion rates for each landfill for assets associated with each final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future. These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions. To the extent that such estimates, or related assumptions, prove to be significantly different than actual results, lower earnings may be experienced due to higher depletion rates or higher expenses; or higher earnings may result if the opposite occurs. Most significantly, if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required to recognize an asset impairment or incur significantly higher depletion expense. If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.
Environmental Remediation Liabilities
A significant portion of our operating costs and capital expenditures could be characterized as costs of environmental protection. The nature of our operations, particularly with respect to the construction, operation and maintenance of our landfills subjects us to an array of laws and regulations relating to the protection of the environment. Under current laws and regulations, we may have liabilities for environmental damage caused by our operations, or for damage caused by conditions that existed before we acquired a site. In addition to remediation activity required by state or local authorities, such liabilities include potentially responsible party (“PRP”) investigations. The costs associated with these liabilities can include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly associated with site investigation and clean up.
Where it is probable that a liability has been incurred, we estimate costs required to remediate sites based on site-specific facts and circumstances. We routinely review and evaluate sites that require remediation and determine our estimated cost for the likely remedy based on a number of estimates and assumptions. Next, we review the same type of
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information with respect to other named and unnamed PRPs. Estimates of the costs for the likely remedy are then either developed using our internal resources or by third-party environmental engineers or other service providers. Internally developed estimates are based on:
Management’s judgment and experience in remediating our own and unrelated parties’ sites;
Information available from regulatory agencies as to costs of remediation;
The number, financial resources and relative degree of responsibility of other PRPs who may be liable for remediation of a specific site; and
The typical allocation of costs among PRPs, unless the actual allocation has been determined.
Refer to Note 10 to the Consolidated Financial Statements for additional information on our environmental liabilities.
Fair Value of Nonfinancial Assets and Liabilities
Significant estimates are made in determining the fair value of long-lived tangible and intangible assets (i.e., property and equipment, intangible assets and goodwill) during the impairment evaluation process. In addition, the majority of assets acquired and liabilities assumed in a business combination are required to be recognized at fair value under the relevant accounting guidance.
Fair value is computed using several factors, including projected future operating results, economic projections, anticipated future cash flows, comparable marketplace data and the cost of capital. There are inherent uncertainties related to these factors and to our judgment in applying them in our analysis. However, we believe our methodology for estimating the fair value of our reporting units is reasonable.
Property and Equipment, Including Landfills and Definite-Lived Intangible Assets — We monitor the carrying value of our long-lived assets for potential impairment on an ongoing basis and test the recoverability of such assets generally using significant unobservable (“Level 3”) inputs whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. These events or changes in circumstances, including management decisions pertaining to such assets, are referred to as impairment indicators. If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If cash flows cannot be separately and independently identified for a single asset, we will determine whether an impairment has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value and the difference is recorded in the period that the impairment indicator occurs. Fair value is generally determined by considering (i) internally developed discounted projected cash flow analysis of the asset or asset group; (ii) third-party valuations and/or (iii) information available regarding the current market for similar assets. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized, which could impact our ability to accurately assess whether an asset has been .
The assessment of impairment indicators and the recoverability of our capitalized costs associated with landfills and related expansion projects require significant judgment due to the unique nature of the waste industry, the highly regulated permitting process and the sensitive estimates involved. During the review of a landfill expansion application, a regulator may initially deny the expansion application although the expansion permit is ultimately granted. In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace, or a landfill may be required to cease accepting waste, prior to receipt of the expansion permit. However, such events occur in the ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because, after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit. As a result, our tests of recoverability, which generally make use of a probability-weighted cash flow estimation approach, may indicate that no impairment loss should be recorded.
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Indefinite-Lived Intangible Assets, Including Goodwill — At least annually using a measurement date of October 1, and more frequently if warranted, we assess the indefinite-lived intangible assets including the goodwill of our reporting units for impairment using Level 3 inputs.
We may perform either a qualitative or quantitative assessment; however, if a qualitative assessment is performed and we determine that the fair value of a reporting unit is more likely than not to be less than its carrying amount, a quantitative assessment is performed. The quantitative assessment compares the estimated fair value of a reporting unit to its carrying amount, including goodwill. An impairment charge is recognized if the reporting unit’s estimated fair value was less than its carrying amount. Fair value is typically estimated using an income approach using Level 3 inputs. However, when appropriate, we may also use a market approach. The income approach is based on the long-term projected future cash flows of the reporting units. We discount the estimated cash flows to present value using a weighted average cost of capital that considers factors such as market assumptions, the timing of the cash flows and the risks inherent in those cash flows. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting units’ expected long-term performance considering the economic and market conditions that generally affect our business. The market approach estimates fair value by measuring the aggregate market value of publicly-traded companies with similar characteristics to our business as a multiple of their reported earnings. We then apply that multiple to the reporting units’ earnings to estimate their fair values. We believe that this approach may also be appropriate in certain circumstances because it provides a fair value estimate using valuation inputs from entities with operations and economic characteristics comparable to our reporting units.
Reporting units within our Healthcare Solutions segment are more sensitive than others to changes in estimated fair values, specifically changes driven by revenue growth, cost and discount rate assumptions, as compared to our other reporting units due to the fact that the Stericycle business comprising these reporting units was recently acquired. As such, the reporting units within our Healthcare Solutions segment have a greater risk of impairment should their operations or market conditions experience a significant downturn.
Acquisitions — In accordance with the acquisition method of accounting, the purchase price paid for an acquisition is allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill. When we are in the process of valuing all of the assets and liabilities acquired in an acquisition, there can be subsequent adjustments to our estimates of fair value and resulting preliminary purchase price allocation. Generally, the valuation of our acquired assets and liabilities rely on complex estimates and assumptions.
Acquisition-date fair value estimates are revised as necessary if, and when, additional information regarding these contingencies becomes available to further define and quantify assets acquired and liabilities assumed. Subsequent to finalization of purchase accounting, these revisions are accounted for as adjustments to income from operations. All acquisition-related transaction costs are expensed as incurred. See Note 17 to the Consolidated Financial Statements for additional information related to our acquisitions.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net . See Note 11 to the Consolidated Financial Statements for additional information related to Asset Impairments and Unusual Items.
Inflation
Variability in economic conditions, including inflation, interest rates, employment trends, and supply chain reliability, can create risk and uncertainty in financial outlook. We take proactive steps to recover and mitigate inflationary cost pressures through our overall pricing efforts and by managing our costs through efficiency, labor productivity, and investments in technology to automate certain aspects of our business. These efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, market responses, and contractual limitations, such as the timing lag in our ability to recover increased costs under certain contracts that are tied to a price escalation index with a lookback provision.
Refer to Item 1A. Risk Factors for further discussion.
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