Oct 28, 2026 earnings call — Pricing strength, healthcare integration, sustainability ramp
Free cash flow exceeded $3 billion, up more than 42% through the first 9 months of the year.
Revenue $6.8B (est $6.8B) · EPS $2.15 (est $2.18)
Key quotes
"Core price again was strong at 5.8% for the quarter."
"Turning to health care solutions, I am very pleased with the progress we have made in the business in the third quarter with revenue up by 3.7%, and operating EBITDA increasing 33%."
"On the renewable energy front, we added a new renewable natural gas facility in New York during the quarter, marking the 18th facility completed since 2022."
Analyst Q&A 18
Q4 EBITDA range and drivers
Q (Raymond James): He asked how Q4 EBITDA should shape within the $100 million range and whether they should expect margins to step down into Q4 or the lower end of guidance.
A: They said Q4 should be consistent with the results posted all year and that margins improved sequentially throughout the year, with Q4 normally their best margin quarter. They noted a roughly 40 basis point drag from fuel year over year and pointed to renewable energy pickup, pricing strength, volume improvement, and recycling prices as things that could push results toward or above the midpoint.
"And fourth quarter should be consistent with the results we posted all year." — David L. Reed (COO)
Risk costs and location
Q (Jerry Revich · Wells Fargo): He asked whether the sizable risk headwind was in corporate, whether it was accident or insurance premium related, and whether it would persist into Q4 and 2027.
A: Management said the issue was not safety performance but an out-of-period actuarial adjustment and other items. They explained the company-wide increase was about a $63 million year-over-year rise in Q3, with about $40 million in corporate and other and $23 million in collection and disposal.
Technology benefits and next steps
Q (Toni Kaplan · Morgan Stanley): She asked about benefits seen from pricing technology and what technology investments are next.
A: They said technology is already embedded in operations (smart truck, routing algorithms, NBO) and helps find overages, improve safety, routing, and dispatcher support. They expect continued tech adoption and AI to expand margins by about 50 to 100 basis points over time and noted health care is in early innings for these tools.
"this is something that is been a part of our fabric for several years now, and it is going to be what we lean into to continue to expand margins in that 50- to 100-basis-point range consistently over time." — Tara J. Hemmer (COO)
Health care outlook into Q4
Q (Tammy Zakaria · JPMorgan): She asked whether health care should still exit the year at a mid single-digit percent growth rate.
A: They said they are proud of first-half progress and continued focus on improving SG&A and pricing, and they will keep pushing improvements into Q4. They view health care as a strategic investment and are not taking their foot off the gas.
"We are really proud about the progress we made in the first half of the year." — John J. Morris Jr. (PRESIDENT)
CEO priorities and free cash flow drivers
Q (Faiza Alwy · Deutsche Bank): She asked John's strategic priorities as CEO, and asked David what is driving higher free cash flow versus expectations.
A: John said priorities are returning cash to shareholders, pursuing core solid waste tuck-in M&A, and continuing to build the health care business and cross-sell. David said free cash flow strength reflects harvesting year earnings growth, lower capital spending, favorable cash taxes, and improved working capital, though Q4 CapEx will be sequentially higher.
"As referenced in my prepared remarks, what we have done through the year to date, what we expect to close in Q4, we have already got teed up for the first quarter." — John J. Morris Jr. (PRESIDENT)
CapEx run rate and sustainability
Q (Citi): He asked whether the lower base CapEx this year is sustainable and whether fleet age or tech needs imply catch-up spending.
A: They said technology spend is baked into the capital run-rate, fleet spending has come down after catch-up, but long-term capital run rate should be about 10% to 10.5%. They view this year's lower level as partly timing and completion of sustainability investments.
"I think long term capital run rate's still probably 10% to 10.5%." — John J. Morris Jr. (PRESIDENT)
Interest in larger asset spin-offs
Q (Konark Gupta · Scotia Capital): He asked if they would be interested in assets from a larger player spin-off and if any specific asset types or geographies would be targeted.
A: They said they would be interested in core solid waste assets and haz/industrial assets that fit their services, and they could pursue deals across geographies. They noted the balance sheet is in great shape to pursue small or large opportunities that fit strategy.
"I think the way I would answer, Konark, is if it is certainly solid waste core assets, we would be interested in those." — John J. Morris Jr. (PRESIDENT)
SMB churn and pricing fatigue
Q (Seth Weber · BNP Paribas): He asked if strong core pricing is causing churn in the SMB/consumer side.
A: They said churn has improved about 30 basis points to 9.3% year over year, and pricing has not been impacted; some near-term headwinds came from deliberate national account decisions which should lap around end of Q1. They noted commercial formation and housing trends are putting some pressure on the commercial line.
"To your point, our churn actually improved about 30 basis points year over year to 9.3%." — John J. Morris Jr. (PRESIDENT)
Landfill operating cost and pricing response
Q (Noah Kaye · Oppenheimer): He asked how they view rising landfill operating costs (AB-28 context) and how they plan to mitigate and price for those costs.
A: They said landfill costs are ticking up in places like California, often due to leachate, and they know how to handle and process it responsibly. They will pass costs to customers through price increases, using next-best-alternative analysis and pricing analytics; this is an industry-wide issue.
"Well, first and foremost, when you look at landfill operating costs and we are seeing them tick up a bit, in California and in other places." — Tara J. Hemmer (COO)
Volume trends and regional differences
Q (Sabahat Khan · RBC): He asked for more color on where volumes are showing green shoots versus where weakness remains, especially on solid waste.
A: They said market-by-market differences exist, with some regions showing positive growth and others affected by lower housing and construction; roll off/industrial held up slightly positive. They noted many areas report strong special waste pipelines that have not yet fully materialized, so volumes could pick up later in Q4 or early 2027.
"I would say it is a good question because I think when you look, you know, market by market, there is plenty of markets we are in, and I could rattle them off." — John J. Morris Jr. (PRESIDENT)
Regulatory risks like PFAS
Q (Kevin Chen · CIBC): He asked if regulatory changes (PFAS etc.) are a risk and whether upcoming elections or regulation might change trends.
A: They said PFAS rulemaking is not finalized and could be a cost headwind, but they are watching closely; landfill-related costs can be passed to customers. They view regulatory change as something they track and that could create both costs and opportunities depending on outcomes.
"We feel like, you know, it could be a little bit of a cost headwind to us." — John J. Morris Jr. (PRESIDENT)
M&A details and interest rate effects
Q (Trevor Romeo · William Blair): He asked for region or asset type details on recent signed deals and how higher interest rates affect M&A activity and sellers.
A: They said recent deals are core solid waste where they can drive synergies via internalization and routing, and there is a robust geographic pipeline across US and Canada. They noted the balance sheet is strong, about 90% of interest exposure is fixed, and higher rates may make sellers more willing to exit, increasing M&A opportunities.
"Close to 90% of our interest rate exposure is fixed." — David L. Reed (COO)
Margin algorithm into next year
Q (Adam Fusis · Goldman Sachs): He asked conceptually how to think about margins next year given fuel, landfill costs, RNG ramp, and health care synergies.
A: They said they will provide guidance next quarter but expect to keep focusing on maintaining the price-to-cost spread; some carryover/rollover from RNG and recycling could be favorable, while volume growth is the main call and visibility remains low. They reiterated health care margin progress will benefit exiting Q3 into Q4.
"You will continue to see us focus on maintaining that price-to-cost spread." — David L. Reed (COO)
RNG margin change
Q (William Grippin · Barclays): He asked why RNG EBITDA margin was weaker sequentially and whether startup or new facility mix caused dilution.
A: They said two reasons: they sold more volume into the voluntary market in Q3 at a lower price per MMBtu, and they incurred startup costs that flowed through the P&L, making quarter-to-quarter margins lumpy and why full-year view is more informative.
"1, we sold more volume in the voluntary market in Q3." — David L. Reed (COO)
WM Healthcare G&A target
Q (James Schumm · TD Cowen): He asked what the updated G&A goal is for WM Healthcare after achieving about 15%.
A: They said the team exceeded the previous target and the updated goal would be better than 15.2%, with further room to improve; they expect to have a clearer view when giving next year's guidance. Management noted the business could approach core corporate levels over time but some customer service intensity may keep it somewhat higher.
"I would say it would be better than 15.2%." — John J. Morris Jr. (PRESIDENT)
Internalization rate and labor/automation
Q (Stephanie Benjamin Moore · Jefferies): She asked whether internalization rates can stay structurally higher and how technology and AI will change labor demand and productivity.
A: They said recycling growth and routing algorithms are directing more volumes to owned assets and that internalization will positively impact price. They are investing in automation (automated side loaders, remote heavy equipment pilots) to reduce labor dependence, tap new labor pools, and structurally lower cost over time.
"We are absolutely looking at how can we bring technologies to the forefront of our operations to reduce labor dependence given that there is going to be a labor shortage long term." — Tara J. Hemmer (COO)
Health care pricing outlook and CA landfill rules
Q (Tobey Sommer · Truist): He asked about health care pricing outlook given hospital margin pressures and whether California landfill rules will spread nationally.
A: They said long-term health care pricing can approximate the solid waste business and they are building spread between cost to serve and price; Q3 margin expansion came from lower SG&A and pricing, and secular benefits of the business are long term. On California rules, they noted rulemaking is early and they do not expect widespread proliferation but will track it.
"I think, Tobey, we worked hard, obviously, as I mentioned, to get to where we are." — John J. Morris Jr. (PRESIDENT)
Diesel assumption and health care improvements
Q (Shlomo Rosenbaum · Stifel): He asked what diesel price assumption is for Q4 and whether inflation will push labor costs into 2027; then asked what drove the health care EBITDA and SG&A improvement.
A: They said the Q4 diesel assumption is about 40% higher versus Q4 last year, a little over $5.50 per gallon; fuel surcharge recovers more than direct fuel cost though there can be a roughly one-month timing lag. On health care, they pointed to better pricing, more accurate billing, reduced manual processes, and SG&A reduction as drivers of margin improvement.
"In terms of Q4 for diesel prices, we are assuming about 40% increase over Q4 of last year." — David L. Reed (COO)