UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Quarterly Period Ended September 30, ~~2022~~2023

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission file number 1-12154

Waste Management, Inc.

(Exact name of registrant as specified in its charter)


Delaware	73-1309529
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

800 Capitol Street

Suite 3000

Houston, Texas 77002

(Address of principal executive offices)

(713) 512-6200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	WM	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☑		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☐
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

The number of shares of Common Stock, $0.01 par value, of the registrant outstanding at October ~~21, 2022~~20, 2023 was ~~410,477,096~~402,775,427 (excluding treasury shares of ~~219,805,365)~~227,507,034).

PART I.

Item 1. Financial Statements.

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Millions, Except Share and Par Value Amounts)


	September 30,		December 31,		September 30,		December 31,
	2022		2021		2023		2022
	(Unaudited)				(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	137	$	118	$	150	$	351
Accounts receivable, net of allowance for doubtful accounts of $26 and $25, respectively		2,452		2,278
Other receivables, net of allowance for doubtful accounts of $7 and $8, respectively		224		268
Accounts receivable, net of allowance for doubtful accounts of $26 and $26, respectively						2,646		2,461
Other receivables, net of allowance for doubtful accounts of $4 and $7, respectively						271		291
Parts and supplies		159		135		175		164
Other assets		292		270		320		284
Total current assets		3,264		3,069		3,562		3,551
Property and equipment, net of accumulated depreciation and amortization of $21,438 and $20,537, respectively		14,742		14,419
Property and equipment, net of accumulated depreciation and depletion of $22,702 and $21,627, respectively						16,229		15,719
Goodwill		9,092		9,028		9,398		9,323
Other intangible assets, net		847		898		779		827
Restricted funds		374		348		424		348
Investments in unconsolidated entities		593		432		542		578
Other assets		929		903		1,001		1,021
Total assets	$	29,841	$	29,097	$	31,935	$	31,367
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,489	$	1,375	$	1,738	$	1,766
Accrued liabilities		1,496		1,428		1,596		1,625
Deferred revenues		591		571		587		589
Current portion of long-term debt		258		708		297		414
Total current liabilities		3,834		4,082		4,218		4,394
Long-term debt, less current portion		13,805		12,697		15,133		14,570
Deferred income taxes		1,629		1,694		1,811		1,733
Landfill and environmental remediation liabilities		2,436		2,373		2,727		2,700
Other liabilities		1,125		1,125		1,080		1,106
Total liabilities		22,829		21,971		24,969		24,503
Commitments and contingencies (Note 6)
Equity:
Waste Management, Inc. stockholders’ equity:
Common stock, $0.01 par value; 1,500,000,000 shares authorized; 630,282,461 shares issued		6		6		6		6
Additional paid-in capital		5,299		5,169		5,385		5,314
Retained earnings		12,933		12,004		14,124		13,167
Accumulated other comprehensive income (loss)		(92)		17
Treasury stock at cost, 219,742,939 and 214,158,636 shares, respectively		(11,136)		(10,072)
Accumulated other comprehensive (loss) income						(58)		(69)
Treasury stock at cost, 227,456,833 and 222,396,166 shares, respectively						(12,507)		(11,569)
Total Waste Management, Inc. stockholders’ equity		7,010		7,124		6,950		6,849
Noncontrolling interests		2		2		16		15
Total equity		7,012		7,126		6,966		6,864
Total liabilities and equity	$	29,841	$	29,097	$	31,935	$	31,367

See Notes to Condensed Consolidated Financial Statements.

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Millions, Except per Share Amounts)

(Unaudited)


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Operating revenues	$	5,075	$	4,665	$	14,763	$	13,253	$	5,198	$	5,075	$	15,209	$	14,763
Costs and expenses:
Operating		3,156		2,906		9,201		8,156		3,188		3,156		9,460		9,201
Selling, general and administrative		473		469		1,451		1,372		470		473		1,413		1,451
Depreciation and amortization		503		517		1,493		1,489
Depreciation, depletion and amortization										519		503		1,545		1,493
Restructuring		1		1		1		6		—		1		4		1
(Gain) loss from divestitures, asset impairments and unusual items, net		—		(34)		17		(17)		—		—		(3)		17
		4,133		3,859		12,163		11,006		4,177		4,133		12,419		12,163
Income from operations		942		806		2,600		2,247		1,021		942		2,790		2,600
Other income (expense):
Interest expense, net		(91)		(87)		(269)		(282)		(127)		(91)		(372)		(269)
Loss on early extinguishment of debt		—		—		—		(220)
Equity in net losses of unconsolidated entities		(17)		(14)		(49)		(34)		(18)		(17)		(41)		(49)
Other, net		(6)		1		(7)		(4)		(4)		(6)		—		(7)
		(114)		(100)		(325)		(540)		(149)		(114)		(413)		(325)
Income before income taxes		828		706		2,275		1,707		872		828		2,377		2,275
Income tax expense		189		167		535		396		210		189		570		535
Consolidated net income		639		539		1,740		1,311		662		639		1,807		1,740
Less: Net income (loss) attributable to noncontrolling interests		—		1		1		1		(1)		—		(4)		1
Net income attributable to Waste Management, Inc.	$	639	$	538	$	1,739	$	1,310	$	663	$	639	$	1,811	$	1,739
Basic earnings per common share	$	1.55	$	1.28	$	4.20	$	3.11	$	1.64	$	1.55	$	4.46	$	4.20
Diluted earnings per common share	$	1.54	$	1.28	$	4.18	$	3.09	$	1.63	$	1.54	$	4.44	$	4.18

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Millions)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,


2022

2021

2022

2021
Consolidated net income

$
639

$
539

$
1,740

$
1,311
Other comprehensive income (loss), net of tax:








Derivative instruments, net

—

1

3

8
Available-for-sale securities, net

(9)

(1)

(29)

(3)
Foreign currency translation adjustments

(66)

(57)

(83)

(31)
Post-retirement benefit obligations, net

—

(1)

—

(1)
Other comprehensive income (loss), net of tax

(75)

(58)

(109)

(27)
Comprehensive income

564

481

1,631

1,284
Less: Comprehensive income (loss) attributable to noncontrolling interests

—

1

1

1
Comprehensive income attributable to Waste Management, Inc.

$
564

$
480

$
1,630

$
1,283


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Consolidated net income	$	662	$	639	$	1,807	$	1,740
Other comprehensive income (loss), net of tax:
Derivative instruments, net		3		—		14		3
Available-for-sale securities, net		(4)		(9)		1		(29)
Foreign currency translation adjustments		(25)		(66)		(3)		(83)
Post-retirement benefit obligations, net		—		—		(1)		—
Other comprehensive income (loss), net of tax		(26)		(75)		11		(109)
Comprehensive income		636		564		1,818		1,631
Less: Comprehensive income (loss) attributable to noncontrolling interests		(1)		—		(4)		1
Comprehensive income attributable to Waste Management, Inc.	$	637	$	564	$	1,822	$	1,630

See Notes to Condensed Consolidated Financial Statements.

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

(Unaudited)


	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2023		2022
Cash flows from operating activities:
Consolidated net income	$	1,740	$	1,311	$	1,807	$	1,740
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization		1,493		1,489
Deferred income tax (benefit) expense		(53)		(91)
Depreciation, depletion and amortization						1,545		1,493
Deferred income tax expense (benefit)						69		(53)
Interest accretion on landfill and environmental remediation liabilities		84		82		97		84
Provision for bad debts		36		28		36		36
Equity-based compensation expense		71		81		71		71
Net gain on disposal of assets		(5)		(16)		(33)		(5)
(Gain) loss from divestitures, asset impairments and other, net		17		(17)		(3)		17
Equity in net losses of unconsolidated entities, net of dividends		49		36		41		49
Loss on early extinguishment of debt		—		220
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Receivables		(101)		(56)		(197)		(101)
Other current assets		(47)		(35)		(26)		(47)
Other assets		19		32		67		19
Accounts payable and accrued liabilities		325		389		63		325
Deferred revenues and other liabilities		(141)		(106)		(200)		(141)
Net cash provided by operating activities		3,487		3,347		3,337		3,487
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired		(207)		(11)		(139)		(207)
Capital expenditures		(1,725)		(1,130)		(1,853)		(1,725)
Proceeds from divestitures of businesses and other assets, net of cash divested		18		70		68		18
Other, net		(122)		(35)		(83)		(122)
Net cash used in investing activities		(2,036)		(1,106)		(2,007)		(2,036)
Cash flows from financing activities:
New borrowings		5,916		6,428		17,319		5,916
Debt repayments		(5,429)		(7,237)		(16,991)		(5,429)
Premiums and other paid on early extinguishment of debt		—		(211)
Common stock repurchase program		(1,061)		(1,000)		(990)		(1,061)
Cash dividends		(811)		(730)		(855)		(811)
Exercise of common stock options		39		60		29		39
Tax payments associated with equity-based compensation transactions		(39)		(28)		(28)		(39)
Other, net		(6)		32		(9)		(6)
Net cash used in financing activities		(1,391)		(2,686)		(1,525)		(1,391)
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents		(6)		2		—		(6)
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents		54		(443)
(Decrease) increase in cash, cash equivalents and restricted cash and cash equivalents						(195)		54
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period		194		648		445		194
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	248	$	205	$	250	$	248

Reconciliation of cash, cash equivalents and restricted cash and cash equivalents at end of period:
Cash and cash equivalents	$	137	$	116	$	150	$	137
Restricted cash and cash equivalents included in other current assets		44		16		25		44
Restricted cash and cash equivalents included in restricted funds		67		73		75		67
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	248	$	205	$	250	$	248

See Notes to Condensed Consolidated Financial Statements.

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Millions, Except Shares in Thousands)

(Unaudited)

Waste Management, Inc. Stockholders’ Equity

Accumulated

Additional

Other

Common Stock

Paid-In

Retained

Comprehensive

Treasury Stock

Noncontrolling


Total

Shares

Amounts

Capital

Earnings

Income (Loss)

Shares

Amounts

Interests
Three Months Ended September 30:

2022

Balance, June 30, 2022

$
7,192

630,282

$
6

$
5,257

$
12,563

$
(17)

(217,006)

$
(10,619)

$
2
Consolidated net income

639

—

—

—

639

—

—

—

—
Other comprehensive income (loss), net of tax

(75)

—

—

—

—

(75)

—

—

—
Cash dividends declared of $0.65 per common share

(267)

—

—

—

(267)

—

—

—

—
Equity-based compensation transactions, net

62

—

—

42

(2)

—

494

22

—
Common stock repurchase program

(539)

—

—

—

—

—

(3,232)

(539)

—
Other, net

—

—

—

—

—

—

1

—

—
Balance, September 30, 2022

$
7,012

630,282

$
6

$
5,299

$
12,933

$
(92)

(219,743)

$
(11,136)

$
2

2021

Balance, June 30, 2021

$
7,354

630,282

$
6

$
5,104

$
11,444

$
70

(209,467)

$
(9,272)

$
2
Consolidated net income

539

—

—

—

538

—

—

—

1
Other comprehensive income (loss), net of tax

(58)

—

—

—

—

(58)

—

—

—
Cash dividends declared of $0.575 per common share

(241)

—

—

—

(241)

—

—

—

—
Equity-based compensation transactions, net

81

—

—

57

(1)

—

558

25

—
Common stock repurchase program

(500)

—

—

(50)

—

—

(3,087)

(450)

—
Other, net

(1)

—

—

—

—

—

—

—

(1)
Balance, September 30, 2021

$
7,174

630,282

$
6

$
5,111

$
11,740

$
12

(211,996)

$
(9,697)

$
2


			Waste Management, Inc. Stockholders’ Equity
										Accumulated
						Additional				Other
			Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Noncontrolling
	Total		Shares	Amounts		Capital		Earnings		(Loss) Income		Shares	Amounts		Interests
Three Months Ended September 30:
2023
Balance, June 30, 2023	$	6,928	630,282	$	6	$	5,341	$	13,744	$	(32)	(225,407)	$	(12,150)	$	19
Consolidated net income		662	—		—		—		663		—	—		—		(1)
Other comprehensive income (loss), net of tax		(26)	—		—		—		—		(26)	—		—		—
Cash dividends declared of $0.70 per common share		(283)	—		—		—		(283)		—	—		—		—
Equity-based compensation transactions, net		60	—		—		44		—		—	297		16		—
Common stock repurchase program		(373)	—		—		—		—		—	(2,347)		(373)		—
Other, net		(2)	—		—		—		—		—	—		—		(2)
Balance, September 30, 2023	$	6,966	630,282	$	6	$	5,385	$	14,124	$	(58)	(227,457)	$	(12,507)	$	16

2022
Balance, June 30, 2022	$	7,192	630,282	$	6	$	5,257	$	12,563	$	(17)	(217,006)	$	(10,619)	$	2
Consolidated net income		639	—		—		—		639		—	—		—		—
Other comprehensive income (loss), net of tax		(75)	—		—		—		—		(75)	—		—		—
Cash dividends declared of $0.65 per common share		(267)	—		—		—		(267)		—	—		—		—
Equity-based compensation transactions, net		62	—		—		42		(2)		—	494		22		—
Common stock repurchase program		(539)	—		—		—		—		—	(3,232)		(539)		—
Other, net		—	—		—		—		—		—	1		—		—
Balance, September 30, 2022	$	7,012	630,282	$	6	$	5,299	$	12,933	$	(92)	(219,743)	$	(11,136)	$	2

See Notes to Condensed Consolidated Financial Statements.

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN EQUITY ─ (Continued)

(In Millions, Except Shares in Thousands)

(Unaudited)


			Waste Management, Inc. Stockholders’ Equity																Waste Management, Inc. Stockholders’ Equity
										Accumulated																Accumulated
						Additional				Other												Additional				Other
			Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Noncontrolling				Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Noncontrolling
	Total		Shares	Amounts		Capital		Earnings		Income (Loss)		Shares	Amounts		Interests		Total		Shares	Amounts		Capital		Earnings		(Loss) Income		Shares	Amounts		Interests
Nine Months Ended September 30:
2023
Balance, December 31, 2022																	$	6,864	630,282	$	6	$	5,314	$	13,167	$	(69)	(222,396)	$	(11,569)	$	15
Consolidated net income																		1,807	—		—		—		1,811		—	—		—		(4)
Other comprehensive income (loss), net of tax																		11	—		—		—		—		11	—		—		—
Cash dividends declared of $2.10 per common share																		(855)	—		—		—		(855)		—	—		—		—
Equity-based compensation transactions, net																		135	—		—		71		1		—	1,220		63		—
Common stock repurchase program																		(1,001)	—		—		—		—		—	(6,283)		(1,001)		—
Other, net																		5	—		—		—		—		—	2		—		5
Balance, September 30, 2023																	$	6,966	630,282	$	6	$	5,385	$	14,124	$	(58)	(227,457)	$	(12,507)	$	16

2022
Balance, December 31, 2021	$	7,126	630,282	$	6	$	5,169	$	12,004	$	17	(214,159)	$	(10,072)	$	2	$	7,126	630,282	$	6	$	5,169	$	12,004	$	17	(214,159)	$	(10,072)	$	2
Consolidated net income		1,740	—		—		—		1,739		—	—		—		1		1,740	—		—		—		1,739		—	—		—		1
Other comprehensive income (loss), net of tax		(109)	—		—		—		—		(109)	—		—		—		(109)	—		—		—		—		(109)	—		—		—
Cash dividends declared of $1.95 per common share		(811)	—		—		—		(811)		—	—		—		—		(811)	—		—		—		(811)		—	—		—		—
Equity-based compensation transactions, net		130	—		—		60		1		—	1,497		69		—		130	—		—		60		1		—	1,497		69		—
Common stock repurchase program		(1,063)	—		—		70		—		—	(7,084)		(1,133)		—		(1,063)	—		—		70		—		—	(7,084)		(1,133)		—
Other, net		(1)	—		—		—		—		—	3		—		(1)		(1)	—		—		—		—		—	3		—		(1)
Balance, September 30, 2022	$	7,012	630,282	$	6	$	5,299	$	12,933	$	(92)	(219,743)	$	(11,136)	$	2	$	7,012	630,282	$	6	$	5,299	$	12,933	$	(92)	(219,743)	$	(11,136)	$	2

2021
Balance, December 31, 2020	$	7,454	630,282	$	6	$	5,129	$	11,159	$	39	(207,481)	$	(8,881)	$	2
Consolidated net income		1,311	—		—		—		1,310		—	—		—		1
Other comprehensive income (loss), net of tax		(27)	—		—		—		—		(27)	—		—		—
Cash dividends declared of $1.725 per common share		(730)	—		—		—		(730)		—	—		—		—
Equity-based compensation transactions, net		167	—		—		82		1		—	1,957		84		—
Common stock repurchase program		(1,000)	—		—		(100)		—		—	(6,472)		(900)		—
Other, net		(1)	—		—		—		—		—	—		—		(1)
Balance, September 30, 2021	$	7,174	630,282	$	6	$	5,111	$	11,740	$	12	(211,996)	$	(9,697)	$	2

See Notes to Condensed Consolidated Financial Statements.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The financial statements presented in this report represent the consolidation of Waste Management, Inc., a Delaware corporation; its wholly-owned and majority-owned subsidiaries; and certain variable interest entities for which Waste Management, Inc. or its subsidiaries are the primary beneficiaries as described in Note 13. Waste Management, Inc. is a holding company and all operations are conducted by its subsidiaries. When the terms “the Company,” “we,” “us” or “our” are used in this document, those terms refer to Waste Management, Inc., together with its consolidated subsidiaries and consolidated variable interest entities. When we use the term “WMI,” we are referring only to Waste Management, Inc., the parent holding company.

We are North America’s leading provider of comprehensive environmental solutions, providing services throughout the United States (“U.S.”) and Canada. We partner with our ~~residential, commercial, industrial and municipal~~ 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. Our “Solid Waste” business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, and recycling and resource recovery services. Through our subsidiaries, ~~and~~including our Waste Management Renewable Energy (“WM Renewable ~~Energy~~Energy”) business, 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, which is a significant source of fuel ~~for~~that we allocate to our natural gas fleet.

~~In 2021, our~~Our senior management ~~began evaluating, overseeing~~evaluates, oversees and ~~managing~~manages the financial performance of our Solid Waste operations through two operating segments. 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 U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. ~~We finalized the assessment of our segments during the fourth quarter of 2021.~~ The East and West Tiers are presented in this report and constitute our existing Solid Waste business. We also provide additional services that are not managed through our Solid Waste business, which are presented in this report as “Other.” Additional information related to our segments is included in Note 7.

The Condensed Consolidated Financial Statements as of September 30, ~~2022~~2023 and for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 are unaudited. In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows, and changes in equity for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The financial statements presented herein should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

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. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue Recognition

We generally recognize revenue as services are performed or products are delivered. For example, revenue typically is recognized as waste is collected, tons are received at our landfills or transfer stations, or recycling commodities are collected or delivered as product. We bill for certain services prior to performance. Such services include, among others, certain commercial and residential contracts, and equipment rentals. These advanced billings are included in deferred revenues and recognized as revenue in the period service is provided. Substantially all our deferred revenues during the reported periods are realized as revenues within one to three months, of when the related services are performed.

Contract Acquisition Costs

Our incremental direct costs of obtaining a contract, which consist primarily of sales incentives, are generally deferred and amortized to selling, general and administrative expense over the estimated life of the relevant customer relationship, ranging from five to 13 years. Contract acquisition costs that are paid to the customer are deferred and amortized as a reduction in revenue over the contract life. Our contract acquisition costs are classified as current or noncurrent based on the timing of when we expect to recognize amortization and are included in other assets in our Condensed Consolidated Balance Sheets.

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we had ~~$187~~$207 million and ~~$175~~$192 million, respectively, of deferred contract costs, of which ~~$134~~$145 million and ~~$126~~$137 million, respectively, was related to deferred sales incentives. During the three and nine months ended September 30, 2022, we amortized $6 million and $18 million of sales incentives to selling, general and administrative expense, respectively. During the three and nine months ended September 30, 2021, we amortized $6 million and $17 million of sales incentives to selling, general and administrative expense, respectively.

Leases

Amounts for our operating lease right-of-use assets are recorded in long-term other assets and the current and long-term portion of our operating lease liabilities are reflected in accrued liabilities and other long-term liabilities, respectively, in our Condensed Consolidated Balance Sheets. ~~Right-of-use assets obtained in exchange for lease obligations for our operating leases for the nine months ended September 30, 2022 and 2021 were $44 million and $57 million, respectively.~~ Amounts for our financing leases are recorded in property and equipment, net of accumulated depreciation and depletion, and current or long-term debt in our Condensed Consolidated Balance Sheets, as appropriate.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments held within ~~our~~ restricted funds, and accounts receivable. We make efforts to control our exposure to credit risk associated with these instruments by (i) placing our assets and other financial interests with a diverse group of credit-worthy financial institutions; (ii) holding high-quality financial instruments while limiting investments in any one instrument and (iii) maintaining strict policies over credit extension that include credit evaluations, credit limits and monitoring procedures, although generally we do not have collateral requirements for credit extensions. We also control our exposure associated with trade receivables by discontinuing service, to the extent allowable, to non-paying customers. However, our overall credit risk associated with trade receivables is limited due to the large number and diversity of customers we serve.

Reclassifications

When necessary, reclassifications have been made to our prior period financial information to conform to the current year presentation and are not material to our consolidated financial statements.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. Landfill and Environmental Remediation Liabilities

Liabilities for landfill and environmental remediation costs are presented in the table below (in millions):


	September 30, 2022						December 31, 2021						September 30, 2023						December 31, 2022
			Environmental						Environmental						Environmental						Environmental
	Landfill		Remediation		Total		Landfill		Remediation		Total		Landfill		Remediation		Total		Landfill		Remediation		Total
Current (in accrued liabilities)	$	124	$	29	$	153	$	137	$	29	$	166	$	142	$	32	$	174	$	137	$	31	$	168
Long-term		2,263		173		2,436		2,189		184		2,373		2,574		153		2,727		2,527		173		2,700
	$	2,387	$	202	$	2,589	$	2,326	$	213	$	2,539	$	2,716	$	185	$	2,901	$	2,664	$	204	$	2,868

The changes to landfill and environmental remediation liabilities for the nine months ended September 30, ~~2022~~2023 are reflected in the table below (in millions):

Environmental


Landfill

Remediation
December 31, 2021

$
2,326

$
213
Obligations incurred and capitalized

86


—
Obligations settled

(83)


(18)
Interest accretion

81


3
Revisions in estimates and interest rate assumptions (a) (b)

(15)


4
Acquisitions, divestitures and other adjustments

(8)


—
September 30, 2022

$
2,387

$
202

~~(a)~~

~~The amount reported for our landfill liabilities includes decreases related to revisions in estimated costs and timing of capping, closure and post-closure liabilities.~~

~~(b)~~

The amount reported for our environmental remediation liabilities includes a $17 million charge 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, as discussed in Note 6. Partially offsetting this charge was a decrease of $16 million due to an increase from 1.50% at December 31, 2021 to 3.75% at September 30, 2022 in the risk-free discount rate used to measure these liabilities.


			Environmental
	Landfill		Remediation
December 31, 2022	$	2,664	$	204
Obligations incurred and capitalized		61		—
Obligations settled		(106)		(20)
Interest accretion		92		5
Revisions in estimates and interest rate assumptions		5		(4)
Acquisitions, divestitures and other adjustments		—		—
September 30, 2023	$	2,716	$	185

At several of our landfills, we provide financial assurance by depositing cash into restricted trust ~~fund accounts~~funds for purposes of settling final capping, closure, post-closure and environmental remediation obligations. Generally, these trust ~~fund accounts~~funds are established to comply with statutory requirements and operating agreements. See Note 13 for additional information related to these ~~trust fund accounts.~~trusts.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. Debt and Derivatives

The following table summarizes the major components of debt at principal amounts as of each balance sheet date (in millions) and provides the maturities and interest rate ranges of each major category as of September 30, ~~2022:~~2023:


	September 30,		December 31,		September 30,		December 31,
	2022		2021		2023		2022
Commercial paper program (weighted average interest rate of 2.1% as of September 30, 2022 and 0.4% as of December 31, 2021)	$	840	$	1,778
Term Loan maturing May 2024, interest rate of 3.8% as of September 30, 2022		1,000		—
Senior notes, maturing through 2050, interest rates ranging from 0.75% to 7.75% (weighted average interest rate of 3.2% as of September 30, 2022 and 3.1% as of December 31, 2021)		8,626		8,126
Commercial paper program (weighted average interest rate of 5.5% as of September 30, 2023 and 4.9% as of December 31, 2022)					$	490	$	1,730
Senior notes, maturing through 2050, interest rates ranging from 0.75% to 7.75% (weighted average interest rate of 3.7% as of September 30, 2023 and 3.2% as of December 31, 2022)						11,376		8,626
Term Loan, interest rate of 5.1% as of December 31, 2022						—		1,000
Canadian senior notes, C$500 million maturing September 2026, interest rate of 2.6%		362		395		368		369
Tax-exempt bonds, maturing through 2048, fixed and variable interest rates ranging from 0.3% to 4.3% (weighted average interest rate of 2.2% as of September 30, 2022 and 1.4% as of December 31, 2021)		2,619		2,619
Financing leases and other, maturing through 2085, weighted average interest rate of 4.7% as of September 30, 2022 and 4.5% as of December 31, 2021 (a)		698		567
Tax-exempt bonds, maturing through 2048, fixed and variable interest rates ranging from 0.55% to 4.4% (weighted average interest rate of 2.9% as of September 30, 2023 and 2.7% as of December 31, 2022)						2,633		2,648
Financing leases and other, maturing through 2071 (weighted average interest rate of 4.8% as of September 30, 2023 and 4.7% as of December 31, 2022) (a)						686		699
Debt issuance costs, discounts and other		(82)		(80)		(123)		(88)
		14,063		13,405		15,430		14,984
Current portion of long-term debt		258		708		297		414
	$	13,805	$	12,697
Long-term debt, less current portion					$	15,133	$	14,570

(a)	Excluding our landfill financing leases, the maturities of our financing leases and other debt obligations extend through 2059.

Debt Classification

As of September 30, ~~2022,~~2023, we had approximately ~~$2.2~~$2.4 billion of debt maturing within the next 12 months, including (i) ~~$839~~$489 million of short-term borrowings under our commercial paper program (net of related discount on issuance); (ii) ~~$625 million~~$1.6 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (iii) ~~$500~~$156 million of ~~2.4%~~3.5% senior notes that mature in May ~~2023~~2024 and (iv) ~~$258~~$174 million of other debt with scheduled maturities within the next 12 months, including ~~$136~~$60 million of tax-exempt bonds. As of September 30, ~~2022,~~2023, we have classified ~~$2.0~~$2.1 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”), as discussed below. The remaining ~~$258~~$297 million of debt maturing in the next 12 months is classified as current obligations.

Additionally, as of September 30, 2022, we also had $54 million of variable-rate tax-exempt bonds with long-term scheduled maturities that are supported by letters of credit under our $3.5 billion revolving credit facility. The interest rates on our variable-rate tax-exempt bonds reset on a weekly basis through a remarketing process. All recent variable-rate tax-exempt bond remarketings have been successful at market-driven rates. However, if the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us. In the event of a failed remarketing, we have the availability under our $3.5 billion revolving credit facility to fund these bonds until they are remarketed successfully. Accordingly, we have classified the $54 million of variable-rate tax-exempt bonds with maturities of more than one year as long-term in our Condensed Consolidated Balance Sheet.

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Access to and Utilization of Credit Facilities, ~~and~~ Commercial Paper Program and Term Loan

$3.5 Billion Revolving Credit Facility — In May 2022, we amended and restated our $3.5 billion U.S. and Canadian revolving credit facility extending the term through May 2027. The agreement includes a $1.0 billion accordion feature that may be used to increase total capacity in future periods, and we have the option to request up to two one-year extensions. Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly-owned subsidiary of WMI, are borrowers under theOur $3.5 billion revolving credit facility, and the agreement permits borrowing in Canadian dollars up to the U.S. dollar equivalent of $375 million, with such borrowings to be repaid in Canadian dollars. WM Holdings, a wholly-owned subsidiary of WMI, guarantees all the obligations under the $3.5 billion revolving credit facility.

~~The $3.5 billion revolving credit facility~~maturing May 2027, provides us with credit capacity to be used for cash borrowings, to support letters of credit orand to support our commercial paper program. The interest rates we pay on outstanding U.S. or Canadian loans are ~~generally~~ based on ~~a secured overnight financing rate~~the Secured Overnight Financing Rate (“SOFR”) administered by the Federal Reserve Bank of New York ~~(“SOFR”)~~ or the Canadian Dollar Offered Rate (“CDOR”), respectively, plus a spread depending on WMI’s senior public debt rating assigned by Moody’s Investors Service, Inc. and Standard and Poor’s Global Ratings. The spread above SOFR or CDOR can range from 0.585% to 1.025% per annum, plus a credit adjustment spread of 0.10% per annum on SOFR-based rates (the “SOFR Credit Adjustment Spread”) to account for the transition from the use of LIBOR to SOFR in such rate calculations. We also pay certain other fees set forth in the $3.5 billion revolving credit facility agreement, including a facility fee based on the aggregate commitment, regardless of usage. As of September 30, ~~2022,~~2023, we had no outstanding borrowings under this facility. We had ~~$164~~$181 million of letters of credit issued and ~~$839~~$489 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program, both supported by the facility, leaving unused and available credit capacity of ~~$2.5~~

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$2.8 billion as of September 30, ~~2022.~~

~~Pursuant to~~2023. WM Holdings, a wholly-owned subsidiary of WMI, guarantees all the ~~terms of~~obligations under the $3.5 billion revolving credit facility, and as a mechanism to align our environmental, social and governance (“ESG”) focus and strategy across external and internal stakeholders, the Company, in consultation with one or more banks selected by the Company to be the sustainability coordinator under the applicable credit agreement (the “Sustainability Coordinator”), has the ability to establish specified key performance indicators (“KPIs”) with respect to certain ESG targets of the Company and its subsidiaries. The Sustainability Coordinator, the Company and the administrative agent may amend the credit agreement, unless such amendment is objected to by banks holding more than 50% of the commitments under such credit agreement, solely for the purpose of incorporating the KPIs so that certain adjustments to the otherwise applicable fees or interest rates may be made based on our performance against the KPIs.

~~$1.0 Billion, Two-Year, Term Credit Agreement~~— In May 2022, we entered into a $1.0 billion, two-year, U.S. term credit agreement (“Term Loan”) to be used for general corporate purposes. The interest rate we pay on our outstanding balance is generally based on SOFR, plus a spread depending on WMI’s senior public debt rating assigned by Moody’s Investors Service, Inc. and Standard and Poor’s Global Ratings. The spread above SOFR can range from 0.50% to 0.90% per annum, plus the SOFR Credit Adjustment Spread. As discussed above with respect to our $3.5 billion revolving credit facility, the Term Loan also permits the Company to pursue an amendment of the credit agreement to incorporate certain ESG KPIs and related adjustments to applicable fees or interest rates based on performance against the KPIs. As of September 30, 2022, we had $1.0 billion of outstanding borrowings under our Term Loan. WM Holdings also guarantees all of the obligations under the Term Loan.facility.

Commercial Paper Program — We have a commercial paper program that enables us to borrow funds for up to 397 days at competitive interest rates. The rates we pay for outstanding borrowings are based on the term of the notes. The commercial paper program is fully supported by our $3.5 billion revolving credit facility. As of September 30, ~~2022,~~2023, we had ~~$839~~$489 million of outstanding borrowings (net of related discount on issuance) under our commercial paper program.

Term Loan— In May 2022, we entered into our $1.0 billion, two-year, U.S. term credit agreement maturing May 2024 (“Term Loan”) to support general corporate purposes. WM Holdings guaranteed all obligations under the Term Loan. The interest rate we paid on our Term Loan was generally based on SOFR, plus a spread depending on WMI’s senior public debt rating assigned by Moody’s Investors Service, Inc. and Standard and Poor’s Global Ratings. The Term Loan had a contractual maturity of May 2024, but we elected to repay all outstanding balances under the Term Loan in August 2023 with proceeds from our July 2023 senior notes issuance, which is discussed further below.

Other Letter of Credit Lines — As of September 30, ~~2022,~~2023, we had utilized ~~$761~~$801 million of other uncommitted letter of credit lines with terms maturing through ~~April 2024.~~December 2026.

Debt Borrowings and Repayments

Commercial Paper Program — During the nine months ended September 30, 2023, we made cash repayments of $15.3 billion, which were partially offset by $14.1 billion of cash borrowings (net of related discount on issuance). A portion of these borrowings were repaid with proceeds from senior note issuances as discussed below.

Senior Notes — In February 2023, WMI issued $750 million and $500 million of 4.625% senior notes due February 2030 and February 2033, respectively, the net proceeds of which were $1.24 billion. We used the net proceeds to reduce outstanding borrowings under our commercial paper program, repay $500 million of WMI’s 2.4% senior notes upon maturity in May 2023, and for general corporate purposes, including our sustainability capital investment program.

In July 2023, WMI issued $750 million and $1.25 billion of 4.875% senior notes due February 2029 and February 2034, respectively, the net proceeds of which were $1.97 billion. We used the net proceeds to reduce outstanding borrowings under our commercial paper program, repay $1.0 billion of outstanding borrowings under our Term Loan and for general corporate purposes.

Term Loan — In August 2023, we repaid $1.0 billion of outstanding borrowings under our Term Loan with proceeds from our July 2023 senior notes issuance discussed above and contemporaneously terminated the facility.

Tax-Exempt Bonds — We issued $50 million of tax-exempt bonds during the nine months ended September 30, 2023. The proceeds from the issuance of these bonds were deposited directly into a restricted trust fund to be used for the specific purpose for which the money was raised, which is generally to finance expenditures for solid waste disposal facility, material recovery facility and renewable natural gas facility construction and development. In 2023, we also repaid $65 million of our tax-exempt bonds with available cash at their scheduled maturities.

Financing Leases and Other — The decrease in our financing leases and other debt obligations during the nine months ended September 30, 2023 is due to $91 million of cash repayments of debt at maturity, partially offset by an increase of $78 million primarily related to non-cash financing leases.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Debt Borrowings and Repayments~~Interest Rate Derivatives

~~Commercial Paper Program~~ — During ~~the nine months ended September 30, 2022,~~2023, we ~~made cash repayments~~entered into treasury rate locks with a total notional value of ~~$4.9 billion, which were partially offset by $3.9 billion of cash borrowings (net of related discount on issuance).~~

~~Term Loan~~ ~~— In May 2022, we borrowed $1.0 billion under~~$800 million to secure underlying interest rates associated with our ~~Term Loan to be used for general corporate purposes.~~

~~Senior Notes~~ ~~— In May 2022, WMI issued $1.0 billion of 4.15%~~ senior notes ~~due April 15, 2032,~~issuances discussed above. We designated our treasury rate locks as cash flow hedges. These treasury rate locks were terminated contemporaneously with the ~~net proceeds~~related issuances of ~~which were $992 million. We used the net proceeds to redeem our $500 million of 2.9%~~ senior notes ~~due September 2022 in advance~~and we received cash of ~~their scheduled maturity,~~$19 million to ~~repay a portion of outstanding borrowings under our commercial paper program and for general corporate purposes.~~

~~Financing Leases and Other~~ ~~— The increase in our financing leases and other debt obligations during~~settle the ~~nine months ended September 30, 2022 is primarily~~ related to our new federal low-income housing investment discussed in Note 4, which increased our debt obligations by $183 million. The increase in our debt obligations was partially offset by $65 million of cash repayments of debt at maturity.assets.

4. Income Taxes

Our effective income tax rate was 24.1% and 24.0% for the three and nine months ended September 30, 2023, respectively, compared with 22.8% and 23.5% for the three and nine months ended September 30, 2022, ~~respectively, compared with 23.7% and 23.2% for the three and nine months ended September 30, 2021,~~ respectively.

The decrease in our effective income tax rate when comparing the three months ended September 30, 2022 and 2021 was primarily driven by an unfavorable adjustment to accruals and related deferred taxes in 2021 due to a change from our initial expectations of the tax effects of our acquisition of Advanced Disposal Services, Inc. (“Advanced Disposal”) and related divestitures. The decrease was offset in part by the divestiture of certain non-strategic Canadian operations in 2021, which was not taxable and did not reoccur in the current period, and an increase in pre-tax income in 2022 resulting in a reduced rate benefit from federal tax credits.

The increase in our effective income tax rate when comparing the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 was primarily driven by (i) an unfavorable increase in ~~pre-tax~~permanent differences between taxable income and accounting income associated with our treatment of landfill closure and post-closure costs and (ii) a decrease in ~~2022 resulting in a reduced rate benefit from~~the excess tax benefits associated with equity-based compensation. The impacts of these items were partially offset by increased federal tax credits.

We evaluate our effective income tax rate at each interim period and adjust it as facts and circumstances warrant.

Permanent Differences — During the three and nine months ended September 30, 2023, we recognized additional income tax expense when compared to prior periods of $10 million and $16 million, respectively, related to permanent differences between taxable income and accounting income. This increase is largely due to an increase in taxable interest income associated with the Company’s election to deduct landfill closure and post-closure costs for income tax purposes when incurred and accrued. The increase in taxable interest income is due to the increase in the applicable federal rate published by the IRS.

Equity-Based Compensation – During the three and nine months ended September 30, 2023, we recognized a reduction in our income tax expense of $1 million and $11 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards compared with $5 million and $17 million, respectively, for the comparable prior year periods.

Investments Qualifying for Federal Tax Credits — We have significant financial interests in entities established to invest in and manage low-income housing properties. In February 2022, we acquired an additional noncontrolling interest in a limited liability company established to invest in and manage low-income housing properties. Total consideration for this investment is expected to be $253 million, comprised of a $183 million note payable discussed in Note 3, an initial cash payment of $28 million and $42 million of interest payments expected to be paid over the life of the investment. At the time of the investment, we increased our investments in unconsolidated entities in our Condensed Consolidated Balance Sheet by $211 million, representing the principal balance of the note and the initial cash investment. We support the operations of these entities in exchange for a pro-rata share of the tax credits they generate. The low-income housing investments qualify for federal tax credits that we expect to realize through 2033 under Section 42 or Section 45D of the Internal Revenue Code.

We account for our investments in these entities using the equity method of accounting, recognizing our share of each entity’s results of operations and other reductions in the value of our investments in equity in net losses of unconsolidated entities, within our Condensed Consolidated Statements of Operations.

During the three and nine months ended September 30, 2023, we recognized $18 million and $43 million of net losses, respectively, and a reduction in our income tax expense of $28 million and $76 million, respectively, primarily due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. In addition, during the three and nine months ended September 30, 2023, we recognized interest expense of $3 million and $10 million, respectively, associated with our investments in low-income housing properties.

During the three and nine months ended September 30, 2022, we recognized $16 million and $47 million ~~respectively,~~ of net losses, ~~for these investments. We also recognized~~respectively, and a reduction in our income tax expense ~~for the three and nine months ended September 30, 2022~~ of $26 million

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

and $74 million, respectively, primarily due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. In addition, during the three and nine months ended September 30, 2022, we recognized interest expense of $5 million and $10 million, ~~respectively, associated with our investments in low-income housing properties.~~

WASTE MANAGEMENT, INC.

During the three and nine months ended September 30, 2021, we recognized $15 million and $36 million, respectively, of net losses for these investments. We also recognized a reduction in our income tax expense for the three and nine months ended September 30, 2021 of $21 million and $53 million, respectively, due to federal tax credits realized from these investments as well as the tax benefits from the pre-tax losses realized. In addition, during the three and nine months ended September 30, 2021, we recognized interest expense of $2 million and $7 million, NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

respectively, associated with our investments in low-income housing properties. See Note 13 for additional information related to these unconsolidated variable interest entities.

~~Adjustments to Accruals and Related Deferred Taxes~~ — During the three and nine months ended September 30, 2022, there were immaterial adjustments to accruals and related deferred taxes. During the three and nine months ended September 30, 2021, adjustments to accruals and related deferred taxes increased our income tax expense by $10 million primarily due to a change from our initial expectations of the tax effects of our acquisition of Advanced Disposal and related divestitures.

~~Tax Implications of Divestitures~~ – During the third quarter of 2021, we recognized a pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations. This gain was not taxable, which benefited our effective income tax rate for the three and nine months ended September 30, 2021. See Note 9 for further discussion.

~~Equity-Based Compensation~~ – During the three and nine months ended September 30, 2022, we recognized a reduction in income tax expense of $5 million and $17 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards compared with $5 million and $16 million, respectively, for the comparable prior year periods.

~~Tax Legislation~~ – The Inflation Reduction Act of 2022 (“IRA”) was signed into law by President Biden on August 16, 2022 and contains a number of tax-related provisions. We are in the process of evaluating the IRA and identifying all potential impacts that may be applicable.

5. Earnings Per Share

Basic and diluted earnings per share were computed using the following common share data (shares in millions):


	Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2022	2021	2022	2021	2023	2022	2023	2022
Number of common shares outstanding at end of period	410.5	418.3	410.5	418.3	402.8	410.5	402.8	410.5
Effect of using weighted average common shares outstanding	1.5	1.2	3.5	3.0	1.2	1.5	3.0	3.5
Weighted average basic common shares outstanding	412.0	419.5	414.0	421.3	404.0	412.0	405.8	414.0
Dilutive effect of equity-based compensation awards and other contingently issuable shares	2.3	2.5	2.2	2.3	1.9	2.3	1.8	2.2
Weighted average diluted common shares outstanding	414.3	422.0	416.2	423.6	405.9	414.3	407.6	416.2
Potentially issuable shares	5.3	5.8	5.3	5.8	5.3	5.3	5.3	5.3
Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding	0.6	0.6	1.2	0.6	1.0	0.6	1.4	1.2

Refer to the Condensed Consolidated Statements of Operations for net income attributable to Waste Management, Inc.

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

6. Commitments and Contingencies

Financial Instruments — We have obtained letters of credit, surety bonds and insurance policies and have established trust funds and issued financial guarantees to support tax-exempt bonds, contracts, performance of landfill final capping, closure and post-closure requirements, environmental remediation and other obligations. Letters of credit generally are supported by our $3.5 billion revolving credit facility and other credit lines established for that purpose. These facilities are discussed further in Note 3. Surety bonds and insurance policies are supported by (i) a diverse group of third-party surety and insurance companies; (ii) an entity in which we have a noncontrolling financial interest or (iii) a wholly-owned insurance captive, the sole business of which is to issue surety bonds and/or insurance policies on our behalf.

Management does not expect that any claims against or draws on these instruments would have a material adverse effect on our financial condition, results of operations or cash flows. We have not experienced any unmanageable difficulty in obtaining the required financial assurance instruments for our current operations. In an ongoing effort to mitigate risks of future cost increases and reductions in available capacity, we continue to evaluate various options to access cost-effective sources of financial assurance.

Insurance — We carry insurance coverage for protection of our assets and operations from certain risks including general liability, automobile liability, workers’ compensation, real and personal property, directors’ and officers’ liability, pollution legal liability, cyber incident liability and other coverages we believe are customary to the industry. Our exposure to loss for insurance claims is generally limited to the per incident deductible under the related insurance policy and any amounts that exceed our insured limits. Our exposure could increase if our insurers are unable to meet their commitments on a timely basis.

We have retained a significant portion of the risks related to our health and welfare, general liability, automobile liability and workers’ compensation claims programs. “General liability” refers to the self-insured portion of specific third-party claims made against us that may be covered under our commercial general liability insurance policy. For our self-insured portions, the exposure for unpaid claims and associated expenses, including incurred but not reported losses, is based on an actuarial valuation or internal estimates. The accruals for these liabilities could be revised if future

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

occurrences or loss development significantly differ from such valuations and estimates. We use a wholly-owned insurance captive to insure the deductibles for our general liability, automobile liability and workers’ compensation claims programs.

We do not expect the impact of any known casualty, property, environmental or other contingency to have a material impact on our financial condition, results of operations or cash flows.

Guarantees — In the ordinary course of our business, WMI and WM Holdings enter into guarantee agreements associated with their subsidiaries’ operations. Additionally, WMI and WM Holdings have each guaranteed all of the senior debt of the other entity. No additional liabilities have been recorded for these intercompany guarantees because all of the underlying obligations are reflected in our Condensed Consolidated Balance Sheets.

As of September 30, ~~2022,~~2023, we have guaranteed the obligations and certain performance requirements of third parties in connection with both consolidated and unconsolidated entities, including guarantees to cover the difference, if any, between the sale value and the guaranteed market or contractually-determined value of certain homeowner’s properties that are adjacent to or near 1719 of our landfills. We have also agreed to indemnify certain third-party purchasers against liabilities associated with divested operations prior to such sale. We do not believe that ~~these~~the remaining contingent obligations will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

Environmental Matters — 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

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

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.

Estimating our degree of responsibility for remediation is inherently difficult. We recognize and accrue for an estimated remediation liability when we determine that such liability is both probable and reasonably estimable. Determining the method and ultimate cost of remediation requires that a number of assumptions be made. There can sometimes be a range of reasonable estimates of the costs associated with the likely site remediation alternatives identified in the environmental impact investigation. In these cases, we use the amount within the range that is our best estimate. If no amount within a range appears to be a better estimate than any other, we use the amount that is the low end of such range. If we used the high ends of such ranges, our aggregate potential liability would be approximately ~~$140~~$120 million higher than the ~~$202~~$185 million recorded in the Condensed Consolidated Balance Sheet as of September 30, ~~2022.~~2023. Our ultimate responsibility may differ materially from current estimates. It is possible that technological, regulatory or enforcement developments, the results of environmental studies, the inability to identify other PRPs, the inability of other PRPs to contribute to the settlements of such liabilities, or other factors could require us to record additional liabilities. Our ongoing review of our remediation liabilities, in light of relevant internal and external facts and circumstances, could result in revisions to our accruals that could cause upward or downward adjustments to our balance sheet and income from operations. These adjustments could be material in any given period.

As of September 30, ~~2022,~~2023, we have been notified by the government that we are a PRP in connection with 73 locations listed on the Environmental Protection Agency’s (“EPA’s”) Superfund National Priorities List (“NPL”). Of the 73 sites at which claims have been made against us, 14 are sites we own. Each of the NPL sites we own was initially developed by others as a landfill disposal facility. At each of these facilities, we are working in conjunction with the government to characterize or remediate identified site problems, and we have either agreed with other legally liable parties on an arrangement for sharing the costs of remediation or are working toward a cost-sharing agreement. We generally expect to receive any amounts due from other participating parties at or near the time that we make the remedial expenditures. The

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

other 59 NPL sites, which we do not own, are at various procedural stages under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, known as CERCLA or Superfund.

The majority of proceedings involving NPL sites that we do not own are based on allegations that certain of our subsidiaries (or their predecessors) transported hazardous substances to the sites, often prior to our acquisition of these subsidiaries. CERCLA generally provides for liability for those parties owning, operating, transporting to or disposing at the sites. Proceedings arising under Superfund typically involve numerous waste generators and other waste transportation and disposal companies and seek to allocate or recover costs associated with site investigation and remediation, which costs could be substantial and could have a material adverse effect on our consolidated financial statements. At some of the sites at which we have been identified as a PRP, our liability is well defined as a consequence of a governmental decision and an agreement among liable parties as to the share each will pay for implementing that remedy. At other sites, where no remedy has been selected or the liable parties have been unable to agree on an appropriate allocation, our future costs are uncertain.

On October 11, 2017, the EPA issued its Record of Decision (“ROD”) with respect to the previously proposed remediation plan for the San Jacinto River Waste Pits Site in Harris County, Texas. McGinnes Industrial Maintenance Corporation (“MIMC”), a subsidiary of Waste Management of Texas, Inc., operated some of the waste pits from 1965 to 1966 and has been named as a site PRP. In 1998, WMI acquired the stock of the parent entity of MIMC. MIMC has been working with the EPA and other named PRPs as the process of addressing the site proceeds. On April 9, 2018, MIMC and International Paper Company entered into an Administrative Order on Consent agreement with the EPA to develop a remedial design for the EPA’s proposed remedy for the site, and we recorded a liability for MIMC’s estimated potential share of the EPA’s proposed remedy and related costs, although allocation of responsibility among the PRPs for the

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

proposed remedy has not been established. MIMC and International Paper Company have continued to work on a remedial design to support the EPA’s proposed remedy; however, design investigations indicate that fundamental changes are required to the proposed remedy and MIMC maintains its prior position that the remedy set forth in the ROD is not the best solution to protect the environment and public health. Due to further increases in the estimated cost of the remedy set forth in the ROD, we recorded an additional liability of $17 million as of March 31, 2022 for MIMC’s estimated potential share of such costs. As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the recorded liability for MIMC’s estimated potential share of the EPA’s proposed remedy was $68 ~~million and $53 million, respectively.~~million. MIMC’s ultimate liability could be materially different from current estimates and MIMC will continue to engage the EPA regarding its proposed remedy.

Item 103 of the SEC’s Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings, or such proceedings are known to be contemplated, unless we reasonably believe that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, below a stated threshold. In accordance with this SEC regulation, the Company uses a threshold of $1 million for purposes of determining whether disclosure of any such environmental proceedings is required. As of the date of this filing, we are not aware of any matters that are required to be disclosed pursuant to this standard.

From time to time, we are also named as defendants in personal injury and property damage lawsuits, including purported class actions, on the basis of having owned, operated or transported waste to a disposal facility that is alleged to have contaminated the environment or, in certain cases, on the basis of having conducted environmental remediation activities at sites. Some of the lawsuits may seek to have us pay the costs of monitoring of allegedly affected sites and health care examinations of allegedly affected persons for a substantial period of time even where no actual damage is proven. While we believe we have meritorious defenses to these lawsuits, the ultimate resolution is often substantially uncertain due to the difficulty of determining the cause, extent and impact of alleged contamination (which may have occurred over a long period of time), the potential for successive groups of complainants to emerge, the diversity of the individual plaintiffs’ circumstances, and the potential contribution or indemnification obligations of co-defendants or other third parties, among other factors. Additionally, we often enter into agreements with landowners imposing obligations on us to meet certain regulatory or contractual conditions upon site closure or upon termination of the agreements. Compliance with these agreements inherently involves subjective determinations and may result in disputes, including litigation.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Litigation — We are subject to various proceedings, lawsuits, disputes and claims arising in the ordinary course of our business. Many of these actions raise complex factual and legal issues and are subject to uncertainties. Actions that have been filed against us, and that may be filed against us in the future, include personal injury, property damage, commercial, customer, and employment-related claims, including purported state and national class action lawsuits related to: alleged environmental contamination, including releases of hazardous material and odors; sales and marketing practices, customer service agreements and prices and fees; and federal and state wage and hour and other laws. The plaintiffs in some actions seek unspecified damages or injunctive relief, or both. These actions are in various procedural stages, and some are covered, in part, by insurance. We currently do not believe that the eventual outcome of any such actions will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

In June 2022, we and certain of our officers were named as defendants in a complaint alleging violation of the federal securities laws and seeking certification as a class action in the U.S. District Court for the Southern District of New York. A lead plaintiff has been appointed and an amended complaint was filed in January 2023. The amended complaint seeks damages on behalf of a putative class of secondary market purchasers of our senior notes with a special mandatory redemption feature issued in May 2019, asserting claims under the Securities Exchange Act based on alleged misrepresentations and omissions concerning the time for completion of our acquisition of Advanced Disposal. Our motion to dismiss is pending. We will vigorously defend against this pending suit. We believe any potential recovery by the plaintiffs, in excess of applicable deductibles, will be covered by insurance, and we do not believe that the eventual outcome of this suit will have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

WMI’s charter and bylaws provide that WMI shall indemnify against all liabilities and expenses, and upon request shall advance expenses to any person, who is subject to a pending or threatened proceeding because such person is or was a director or officer of the Company. Such indemnification is required to the maximum extent permitted under Delaware law. Accordingly, the director or officer must execute an undertaking to reimburse the Company for any fees advanced if it is later determined that the director or officer was not permitted to have such fees advanced under Delaware law. Additionally, the Company has direct contractual obligations to provide indemnification to each of the members of WMI’s Board of Directors and each of WMI’s executive officers. The Company may incur substantial expenses in connection with the fulfillment of its advancement of costs and indemnification obligations in connection with actions or proceedings that may be brought against its former or current officers, directors and employees.

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Multiemployer Defined Benefit Pension Plans — About 20% of our workforce is covered by collective bargaining agreements with various local unions across the U.S. and Canada. As a result of some of these agreements, certain of our subsidiaries are participating employers in a number of trustee-managed multiemployer defined benefit pension plans (“Multiemployer Pension Plans”) for the covered employees. In connection with our ongoing renegotiation of various collective bargaining agreements, we may discuss and negotiate for the complete or partial withdrawal from one or more of these Multiemployer Pension Plans. A complete or partial withdrawal from a Multiemployer Pension Plan may also occur if employees covered by a collective bargaining agreement vote to decertify a union from continuing to represent them. Any other circumstance resulting in a decline in Company contributions to a Multiemployer Pension Plan through a reduction in the labor force, whether through attrition over time or through a business event (such as the discontinuation or nonrenewal of a customer contract, the decertification of a union, or relocation, reduction or discontinuance of certain operations) may also trigger a complete or partial withdrawal from one or more of these pension plans.

We do not believe that any future liability relating to our past or current participation in, or withdrawals from, the Multiemployer Pension Plans to which we contribute will have a material adverse effect on our business, financial condition or liquidity. However, liability for future withdrawals could have a material adverse effect on our results of operations or cash flows for a particular reporting period, depending on the number of employees withdrawn and the financial condition of the Multiemployer Pension Plan(s) at the time of such withdrawal(s).

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Tax Matters — We participate in the IRS’s Compliance Assurance Process, which means we work with the IRS throughout the year towards resolving any material issues prior to the filing of our annual tax return. Any unresolved issues as of the tax return filing date are subject to routine examination procedures. ~~We are currently in~~In the ~~post-examination and post-appeals phase~~fourth quarter of 2022, the ~~IRS audit~~Company received a notice of tax due for the 2017 tax year ~~and considering the options available~~related to ~~resolve~~a remaining ~~disagreements~~disagreement with the IRS. In response to the notice, the Company made a deposit of approximately $103 million with the IRS. The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund. As of September 30, 2023 and December 31, 2022, the IRS deposit, net of reserve for uncertain tax positions, is classified as a component of other long-term assets in the Company’s Condensed Consolidated Balance Sheets.

In addition, we are in the examination phase of IRS audits for the ~~2021~~2022 and ~~2022~~2023 tax years and expect ~~these~~the audits to be completed within the next 18 months. We are also currently undergoing audits by various state and local jurisdictions for tax years that date back to 2014. We maintain a liability for uncertain tax positions, the balance of which management believes is adequate. Results of audit assessments by taxing authorities are not currently expected to have a material adverse effect on our financial condition, results of operations or cash flows.

7. Segment and Related Information

~~In 2021, our~~Our senior management ~~began evaluating, overseeing~~evaluates, oversees and ~~managing~~manages the financial performance of our Solid Waste operations through two operating segments. 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 U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal. The ~~Company finalized the assessment of our segments during the fourth quarter of 2021. The~~ East and West Tiers are presented in this report and constitute our existing Solid Waste business. This did not result in a change in our reporting units for purposes of evaluating our goodwill. Reclassifications have been made to our prior period consolidated financial information to conform to the current year presentation.

The operating segments not evaluated and overseen through our East and West Tiers are presented herein as “Other” as these operating segments do not meet the criteria to be aggregated with other operating segments and do not meet the quantitative criteria to be separately ~~reported.~~reported and are not qualitatively significant at this time.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Summarized financial information concerning our reportable segments is shown in the following table (in millions):


	Gross		Intercompany		Net		Income		Gross		Intercompany		Net		Income
	Operating		Operating		Operating		from		Operating		Operating		Operating		from
	Revenues		Revenues(d)		Revenues		Operations(e)		Revenues		Revenues(d)		Revenues		Operations
Three Months Ended September 30:
2023
Solid Waste:
East Tier									$	2,789	$	(575)	$	2,214	$	671
West Tier										2,694		(580)		2,114		653
Solid Waste (a)										5,483		(1,155)		4,328		1,324
Other (b)										930		(60)		870		(13)
										6,413		(1,215)		5,198		1,311
Corporate and Other (c)										—		—		—		(290)
Total									$	6,413	$	(1,215)	$	5,198	$	1,021

2022
Solid Waste:
East Tier	$	2,652	$	(508)	$	2,144	$	616	$	2,652	$	(508)	$	2,144	$	616
West Tier		2,620		(543)		2,077		622		2,620		(543)		2,077		622
Solid Waste (a)		5,272		(1,051)		4,221		1,238		5,272		(1,051)		4,221		1,238
Other (b)		912		(58)		854		—		912		(58)		854		—
		6,184		(1,109)		5,075		1,238		6,184		(1,109)		5,075		1,238
Corporate and Other (c)		—		—		—		(296)		—		—		—		(296)
Total	$	6,184	$	(1,109)	$	5,075	$	942	$	6,184	$	(1,109)	$	5,075	$	942

2021
Solid Waste:
East Tier	$	2,407	$	(456)	$	1,951	$	550
West Tier		2,429		(494)		1,935		548
Solid Waste (a)		4,836		(950)		3,886		1,098
Other (b)		807		(28)		779		10
		5,643		(978)		4,665		1,108
Corporate and Other (c)		—		—		—		(302)
Total	$	5,643	$	(978)	$	4,665	$	806

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Gross		Intercompany		Net		Income		Gross		Intercompany		Net		Income
	Operating		Operating		Operating		from		Operating		Operating		Operating		from
	Revenues		Revenues(d)		Revenues		Operations(e)		Revenues		Revenues(d)		Revenues		Operations
Nine Months Ended September 30:
2023
Solid Waste:
East Tier									$	8,192	$	(1,678)	$	6,514	$	1,846
West Tier										7,897		(1,716)		6,181		1,843
Solid Waste (a)										16,089		(3,394)		12,695		3,689
Other (b)										2,686		(172)		2,514		(30)
										18,775		(3,566)		15,209		3,659
Corporate and Other (c)										—		—		—		(869)
Total									$	18,775	$	(3,566)	$	15,209	$	2,790

2022
Solid Waste:
East Tier	$	7,644	$	(1,449)	$	6,195	$	1,728	$	7,644	$	(1,449)	$	6,195	$	1,728
West Tier		7,638		(1,573)		6,065		1,779		7,638		(1,573)		6,065		1,779
Solid Waste (a)		15,282		(3,022)		12,260		3,507		15,282		(3,022)		12,260		3,507
Other (b)		2,670		(167)		2,503		19		2,670		(167)		2,503		19
		17,952		(3,189)		14,763		3,526		17,952		(3,189)		14,763		3,526
Corporate and Other (c)		—		—		—		(926)		—		—		—		(926)
Total	$	17,952	$	(3,189)	$	14,763	$	2,600	$	17,952	$	(3,189)	$	14,763	$	2,600

2021
Solid Waste:
East Tier	$	6,874	$	(1,289)	$	5,585	$	1,514
West Tier		6,974		(1,424)		5,550		1,577
Solid Waste (a)		13,848		(2,713)		11,135		3,091
Other (b)		2,201		(83)		2,118		36
		16,049		(2,796)		13,253		3,127
Corporate and Other (c)		—		—		—		(880)
Total	$	16,049	$	(2,796)	$	13,253	$	2,247

(a)

Income from operations provided by our Solid Waste business is generally indicative of the margins provided by our collection, landfill, transfer and recycling lines of ~~business.~~business and includes elements of profitability from our “Other” segment. From time to time, the operating results of our reportable segments are significantly affected by certain transactions or events that management believes are not indicative or representative of our results.

Income from operations in our Solid Waste business increased primarily due to ~~(i)~~ revenue growth in our collection and disposal ~~businesses~~business driven by both yield and volume and (ii) a $26 million catch-up benefit from the extension of alternative fuel tax credits that was retroactive to January 1, 2022. Our income from operations for the nine months ended September 30, 2022 was favorably impacted by an increase in our recycling line of business as a result of an overall increase in average market prices for recycling commodities during the first half of 2022.yield. These increases were partially offset by (i) inflationary cost pressures; (ii) labor cost increases from frontline employee wage adjustments and annual merit increases and (iii) ~~commodity-driven~~reduced profitability in our recycling business ~~impacts from higher fuel prices. Additionally, the prior year included a pre-tax net gain~~ from the ~~recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations~~decline in ~~our East Tier segment and a charge~~recycling commodity prices. In addition, fuel tax credits in 2022 were not recognized until August 2022 due to ~~management’s decision to close a landfill in our West Tier segment earlier than expected, resulting in acceleration of~~ the timing of ~~capping, closure and post-closure activities in~~ the ~~third quarter~~Inflation Reduction Act of ~~2021.~~2022 (“IRA”). This created a $26 million negative impact to income from operations for the three months ended September 30, 2023, but is broadly flat for the nine months ended September 30, 2023.

(b)

“Other” includes (i) elements of our Strategic Business Solutions (“WMSBS”) business that are not included in the operations of our reportable segments; (ii) elements of our sustainability business that includes landfill gas-to-energy operations managed by our WM Renewable Energy business, our ~~environmental solutions services~~Sustainability and Environmental Solutions business and recycling brokerage services and not included in the operations of our reportable segments; (iii) certain other expanded service offerings and solutions and (iv) the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.

The decrease in income from operations was due to (i) reduced profitability in our WM Renewable Energy business primarily driven by decreases in the value of energy prices and renewable fuel standard credits and (ii) the decline in recycling brokerage commodity prices affecting profitability in our recycling business.

(c)

“Corporate and Other” operating results reflect certain costs incurred for various support services that are not allocated to our reportable segments. These support services include, among other things, treasury, legal, digital, tax, insurance, centralized service center processes, other administrative functions and the maintenance of our closed landfills.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Income from operations for “Corporate and Other” also includes costs associated with our long-term incentive program.

The ~~increase~~improvement in income from operations ~~from our Corporate and Other segment for the three months ended September 30, 2022, as compared with the prior year period,~~ was primarily driven by (i) lower ~~long-term~~annual incentive compensation ~~costs and~~costs; (ii) lower ~~integration costs from our acquisition of Advanced Disposal. Increased costs to support strategic~~professional fees in connection with investments in our digital ~~platform, including those that support our ongoing sustainability initiatives,~~program, as certain strategic projects have now been implemented and ~~increased labor~~(iii) a charge during the first quarter of 2022 to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site. These lower costs ~~from higher~~were partially offset by annual ~~incentive costs and~~ merit increases ~~partially offset the three months ended September 30, 2022,~~ and ~~more than offset the nine months ended September 30, 2022, as compared with the prior year periods.~~litigation costs.

(d)	Intercompany operating revenues reflect each segment’s total intercompany sales, including intercompany sales 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.

~~(e)~~

In the fourth quarter of 2021, we discontinued certain allocations from our Corporate and Other segment to our Solid Waste operating segments and Other segment. Reclassifications have been made to our prior period information for comparability purposes.

The mix of operating revenues from our major lines of business are as follows (in millions):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Commercial	$	1,392	$	1,214	$	4,034	$	3,523	$	1,464	$	1,392	$	4,300	$	4,034
Industrial		966		829		2,744		2,383		982		966		2,889		2,744
Residential		846		795		2,483		2,371		875		846		2,595		2,483
Other collection		187		140		521		391		193		187		556		521
Total collection		3,391		2,978		9,782		8,668		3,514		3,391		10,340		9,782
Landfill		1,197		1,100		3,442		3,090		1,261		1,197		3,678		3,442
Transfer		562		550		1,602		1,547		594		562		1,719		1,602
Recycling		420		464		1,341		1,203		366		420		1,094		1,341
Other (a)		614		551		1,785		1,541		678		614		1,944		1,785
Intercompany (b)		(1,109)		(978)		(3,189)		(2,796)		(1,215)		(1,109)		(3,566)		(3,189)
Total	$	5,075	$	4,665	$	14,763	$	13,253	$	5,198	$	5,075	$	15,209	$	14,763

(a)

The “Other” line of business includes (i) certain services provided by our WMSBS business; (ii) certain services within our sustainability business including our landfill ~~gas to energy~~gas-to-energy operations managed by our WM Renewable Energy ~~business, our construction and remediation services and our services associated with the disposal of fly ash and~~business; (iii) certain other expanded service offerings and ~~solutions. In addition, our “Other” line of business reflects~~solutions and (iv) the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity. Revenue attributable to collection, landfill, transfer and recycling services provided by our “Other” businesses has been reflected as a component of the relevant line of business for purposes of presentation in this table.

(b)	Intercompany revenues between lines of business are eliminated in the Condensed Consolidated Financial Statements included within this report.

Fluctuations in our operating results may be caused by many factors, including period-to-period changes in the relative contribution of revenue by each line of business, changes in commodity prices and general economic conditions. Our revenues and income from operations typically reflect seasonal patterns. Our operating revenues tend to be somewhat higher in summer months, primarily due to the higher construction and demolition waste volumes. The volumes of industrial and residential waste in certain regions where we operate also tend to increase during the summer months. Our second and third quarter revenues and results of operations typically reflect these seasonal trends.

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Service or operational disruptions caused by severe storms, extended periods of inclement weather or climate events can significantly affect the operating results of the geographic areas affected. OnExtreme weather events may also lead to supply chain disruption and delayed project development, or disruption of our customers’ businesses, reducing the ~~other hand,~~amount of waste generated by their operations.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Conversely, certain destructive weather and climate conditions, such as wildfires in the Western U.S. and hurricanes that most often impact our operations in the Southern and Eastern U.S. during the second half of the year, can increase our revenues in the geographic areas affected as a result of the waste volumes generated by these events. While weather-related and other event-driven special projects can boost revenues through additional work for a limited time, due to significant start-up costs and other factors, such revenue can generate earnings at comparatively lower margins.

8. Acquisitions

During the nine months ended September 30, ~~2022,~~2023, we ~~acquired seven businesses primarily related to our Solid Waste business. Total~~completed solid waste and recycling acquisitions with total consideration ~~for all acquisitions was $216~~of $138 million, which included ~~$202~~$129 million in cash paid and ~~$14~~$9 million of other consideration, ~~primarily~~specifically purchase price holdbacks. In addition, we paid $5$10 million of holdbacks, ~~primarily~~of which $6 million related to prior year acquisitions.

Total consideration for our ~~2022~~2023 acquisitions was ~~primarily~~ allocated to ~~$60~~$22 million of property and equipment, ~~$51~~$46 million of other intangible assets, ~~and $102 million of goodwill. Other intangible assets included $34 million of~~primarily customer relationships, and ~~$17~~$76 million of ~~covenants not-to-compete.~~goodwill with the remaining allocated to liabilities assumed from the ordinary course of business. We remain in the measurement period for most of our acquisitions, ~~therefore further adjustment~~and adjustments to our preliminary purchase price allocation may occur. The goodwill was primarily a result of expected synergies from combining the acquired businesses with our existing operations and substantially all was tax deductible.

9. (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net

~~For~~(Gain) loss from divestitures, asset impairments and unusual items, net for the nine months ended September 30, 2023 were nominal. During the first quarter of 2022, we recognized a $17 million charge ~~in the first quarter~~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, as discussed in Note 6.

For the nine months ended September 30, 2021, we recognized net gains of $17 million consisting of (i) an $8 million gain in the first quarter from divestitures of certain ancillary operations in our Other segment and (ii) a $35 million pre-tax gain in the third quarter from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations in our East Tier segment. These gains were partially offset by (i) a $20 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $6 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment.

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

10. Accumulated Other Comprehensive (Loss) Income ~~(Loss)~~

The changes in the balances of each component of accumulated other comprehensive (loss) income, ~~(loss),~~ net of tax, which is included as a component of Waste Management, Inc. stockholders’ equity, are as follows (in millions, with amounts in parentheses representing decreases to accumulated other comprehensive income):


					Foreign		Post-								Foreign		Post-
			Available-		Currency		Retirement						Available-		Currency		Retirement
	Derivative		for-Sale		Translation		Benefit				Derivative		for-Sale		Translation		Benefit
	Instruments		Securities		Adjustments		Obligations		Total		Instruments		Securities		Adjustments		Obligations		Total
Balance, December 31, 2021	$	—	$	43	$	(29)	$	3	$	17
Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $0, $(10), $0 and $0, respectively		—		(29)		(83)		—		(112)
Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $(1), $0, $0 and $0, respectively		3		—		—		—		3
Balance, December 31, 2022											$	3	$	19	$	(94)	$	3	$	(69)
Other comprehensive income (loss) before reclassifications, net of tax expense (benefit) of $5, $0, $0 and $0, respectively												16		1		(3)		—		14
Amounts reclassified from accumulated other comprehensive (income) loss, net of tax (expense) benefit of $0, $0, $0 and $0, respectively												(2)		—		—		(1)		(3)
Net current period other comprehensive income (loss)		3		(29)		(83)		—		(109)		14		1		(3)		(1)		11
Balance, September 30, 2022	$	3	$	14	$	(112)	$	3	$	(92)
Balance, September 30, 2023											$	17	$	20	$	(97)	$	2	$	(58)

11. Common Stock Repurchase Program

The Company repurchases shares of its common stock as part of capital allocation programs authorized by our Board of Directors.

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the ~~fourth~~first quarter of ~~2021,~~2023, we ~~executed~~entered into an accelerated share repurchase (“ASR”) agreement to repurchase $350 million of our common stock. At the beginning of the repurchase period, we delivered $350 million in cash and received ~~1.7~~1.9 million shares based on a stock price of ~~$160.67.~~$150.34. The ASR agreement completed in ~~January 2022, at which time~~May 2023 and we received 0.4 million additional shares based on a final weighted average price of ~~$160.33.~~$153.90.

~~During~~In the ~~nine months ended September 30, 2022,~~second quarter of 2023, we entered into ~~and completed three~~an ASR ~~agreements~~agreement to repurchase ~~$1.0 billion~~$250 million of our common stock and we received ~~6.3~~1.5 million shares based on a final weighted average stock price of ~~$160.56.~~

~~In addition,~~$163.62. Subsequent to the completion of the ASR, we ~~also~~ repurchased ~~an additional 0.4~~0.1 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act for ~~$63~~$22 million, inclusive of per-share commissions, at a weighted average price of ~~$151.30,~~$164.79, of which $2 million was paid in July 2023.

In the third quarter of 2023, we entered into an ASR agreement to repurchase $350 million of our common stock and received 2.2 million shares based on a final weighted average stock price of $156.87. Additionally, we repurchased 0.1 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act for $19.5 million, inclusive of per-share commissions, at a weighted average price of $168.04, of which $1.5 million was paid in October 2023.

The Inflation Reduction Act of 2022 (“IRA”), which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. We reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased. The discussion of our common stock repurchase program above is exclusive of the 1% excise tax.

As of September 30, ~~2022,~~2023, the Company has authorization for ~~$437~~$508.5 million of future share ~~repurchases.~~repurchases, exclusive of the 1% excise tax discussed above. Any future share repurchases pursuant to this authorization of our Board of Directors will be made at the discretion of management and will depend on factors similar to those considered by the Board of Directors in making dividend declarations, including our net earnings, financial condition and cash required for future business plans, growth and acquisitions.

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

12. Fair Value Measurements

Assets and Liabilities Accounted for at Fair Value

Our assets and liabilities that are measured at fair value on a recurring basis include the following (in millions):


	September 30,		December 31,		September 30,		December 31,
	2022		2021		2023		2022
Quoted prices in active markets (Level 1):
Cash equivalents and money market funds	$	119	$	38	$	61	$	240
Equity securities		32		25		47		37
Significant other observable inputs (Level 2):
Available-for-sale securities (a)		370		395		426		360
Significant unobservable inputs (Level 3):
Redeemable preferred stock (b)		56		49		56		56
Total Assets	$	577	$	507	$	590	$	693

(a)	Our available-for-sale securities primarily relate to debt securities with maturities over the next ten years.

(b)

Our investment, which is classified as an available-for-sale debt security, has been measured based on third-party investors’ recent or pending transactions in these securities, which are considered the best evidence of fair value. When this evidence is not available, we use other valuation techniques as appropriate and available. These valuation

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

methodologies may include transactions in similar instruments, discounted cash flow techniques, third-party appraisals or industry multiples and public company comparable transactions.

~~See Note 9 for information related to our nonrecurring fair value measurements and the impact of impairments.~~

Fair Value of Debt

As of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the carrying value of our debt was ~~$14.1~~$15.4 billion and ~~$13.4~~$15.0 billion, respectively. The estimated fair value of our debt was approximately ~~$12.6 billion and $14.1~~$13.8 billion as of September 30, ~~2022~~2023 and December 31, ~~2021, respectively. The decrease in the fair value of debt is primarily related to increases in current market rates of our senior notes.~~2022.

Although we have determined the estimated fair value amounts using available market information and commonly accepted valuation methodologies, considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, our estimates are not necessarily indicative of the amounts that we, or holders of the instruments, could realize in a current market exchange. The use of different assumptions or estimation methodologies could have a material effect on the estimated fair values. The fair value estimates are based on Level 2 inputs of the fair value hierarchy available as of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022. These amounts have not been revalued since those dates, and current estimates of fair value could differ significantly from the amounts presented.

13. Variable Interest Entities

~~Following~~The following is a description of our financial interests in unconsolidated and consolidated variable interest entities that we consider significant:

Low-Income Housing Properties

We do not consolidate our investments in entities established to manage low-income housing properties because we are not the primary beneficiary of these entities as we do not have the power to individually direct the activities of these

~~WASTE MANAGEMENT, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

entities. Accordingly, we account for these investments under the equity method of accounting. Our aggregate investment balance in these entities was ~~$339~~$278 million and ~~$178~~$321 million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The debt balance related to our investments in low-income housing properties was ~~$310~~$243 million and ~~$156~~$295 million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Additional information related to these investments is discussed in Note 4.

Trust Funds for Final Capping, Closure, Post-Closure or Environmental Remediation Obligations

Unconsolidated Variable Interest Entities — Trust funds that are established for both the benefit of the Company and the host community in which we operate are not consolidated because we are not the primary beneficiary of these entities as (i) we do not have the power to direct the significant activities of the trusts or (ii) power over the trusts’ significant activities is shared. Our interests in these trusts are accounted for as investments in unconsolidated entities and receivables. These amounts are recorded in other receivables, investments in unconsolidated entities and long-term other assets in our Condensed Consolidated Balance Sheets, as appropriate. We also reflect our share of the unrealized gains and losses on available-for-sale securities held by these trusts as a component of our accumulated other comprehensive ~~income~~ (loss). income. Our investments and receivables related to these trusts had an aggregate carrying value of ~~$90~~$94 million and ~~$110~~$93 million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Consolidated Variable Interest Entities — Trust funds for which we are the sole beneficiary are consolidated because we are the primary beneficiary. These trust funds are recorded in restricted funds ~~accounts~~ in our Condensed Consolidated Balance Sheets. Unrealized gains and losses on available-for-sale securities held by these trusts are recorded as a component of accumulated other comprehensive income (loss). These trusts had a fair value of ~~$112~~$116 million and ~~$117~~$113 million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

2423

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included under Item 1 and our Consolidated Financial Statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

This Quarterly Report on Form 10-Q contains certain forward-looking statements that are made subject to the safe harbor protections provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often identified by the words, “will,” “may,” “should,” “continue,” “anticipate,” “believe,” “expect,” “target,” “plan,” “forecast,” “project,” “estimate,” “intend,” “commit,” “potential,” and words of a similar nature and include estimates or projections of financial and other data; comments on expectations relating to future periods; plans or objectives for the future; and statements of opinion, view or belief about current and future events, circumstances or performance. You should view these statements with caution. They are based on the facts and circumstances known to us as of the date the statements are made. These ~~forward looking~~forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those set forth in such forward-looking statements, including but not limited to failure to implement our optimization, automation, growth, and cost savings initiatives and overall business strategy; failure to obtain the results anticipated from strategic initiatives, investments, acquisitions or new lines of business; failure to identify acquisition targets, consummate and integrate ~~acquisitions; failure to obtain the results anticipated from~~ acquisitions; environmental and other regulations, including developments related to emerging contaminants, gas emissions, renewable energy and ~~renewable fuel;~~environmental, social and governance performance and disclosure; increasing attention to sustainability matters and heightened scrutiny of sustainability measurements, objectives and disclosures, which could lead to increased litigation risk related to our sustainability efforts; significant environmental, safety or other incidents resulting in liabilities or brand damage; failure to obtain and maintain necessary ~~permits;~~permits due to land scarcity, public opposition or otherwise; diminishing landfill capacity, resulting in increased costs and the need for disposal alternatives; failure to attract, hire and retain key team members and a high quality workforce; increases in labor costs due to union organizing activities or changes in wage and labor related regulations; ~~significant storms~~disruption and costs resulting from extreme weather and destructive climate events; failure to achieve our sustainability goals or execute on our sustainability-related strategy and initiatives; public health risk, ~~and other impacts of COVID-19 or similar pandemic conditions, including related regulations, resulting in~~ increased costs and ~~social, labor~~disruption due to a future resurgence of pandemic conditions and ~~commercial disruption;~~restrictions; macroeconomic ~~pressures~~conditions, geopolitical conflict and market disruption resulting in labor, supply chain and transportation constraints, ~~and~~ inflationary cost ~~pressure; increased competition; pricing actions; commodity price fluctuations; impacts from Russia’s invasion of Ukraine~~pressures and ~~the resulting geopolitical conflict and international response, including increased risk of cyber incidents and exacerbation of market disruption, inflationary cost pressure and changes~~fluctuations in commodity prices, fuel and other energy costs; increased competition; pricing actions; impacts from international trade restrictions; competitive disposal alternatives, ~~and~~diversion of waste ~~diversion;~~from landfills and declining waste volumes; weakness in general economic conditions and capital ~~markets;~~markets, including potential for an economic recession; instability of financial institutions; adoption of new tax legislation; fuel shortages; failure to develop and protect new technology; failure of technology to perform as ~~expected, including implementation of a new enterprise resource planning and human capital management system;~~expected; failure to prevent, detect and address cybersecurity incidents or comply with privacy regulations; negative outcomes of litigation or governmental proceedings; and decisions or developments that result in impairment charges and other risks discussed in our filings with the SEC, including Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022 as updated by Part II, Item 1A. Risk Factors, included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023. We assume no obligation to update any forward-looking statement, including financial estimates and forecasts, whether as a result of future events, circumstances or developments or otherwise.

Overview

We are North America’s leading provider of comprehensive environmental solutions, providing services throughout the United States (“U.S.”) and Canada. We partner with our ~~residential, commercial, industrial, and municipal~~ 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. WeThrough our subsidiaries, including our Waste Management Renewable Energy (“WM Renewable Energy”) business, 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, which is a significant source of fuel ~~for~~that we allocate to our natural gas fleet. Additionally, we are a leading recycler

in the U.S. and Canada, handling materials that include paper, cardboard, glass, plastic and metal. Our “Solid Waste” business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, and recycling and resource recovery services.

~~In 2021, our~~Our senior management ~~began evaluating, overseeing,~~evaluates, oversees and ~~managing~~manages the financial performance of our Solid Waste operations through two operating segments. 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 U.S., including the upper Midwest region, and British Columbia, Canada. Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal.

Our Solid Waste operating revenues are primarily generated from fees charged for our collection, transfer, disposal, and recycling and resource recovery services, and from sales of commodities by our recycling and landfill gas-to-energy operations. 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 material recovery 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 being disposed of at our disposal facilities. 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. Recycling revenues generally consist of tipping fees and the sale of recycling commodities to third parties. The fees we charge for our services generally include our environmental, ~~fuel~~energy surcharge and regulatory recovery fees which are intended to pass through to customers direct and indirect costs incurred. We also provide additional services that are not managed through our Solid Waste business, described under Results of Operations below.

Strategy

Our fundamental strategy has not changed; we remain dedicated to providing long-term value to our stockholders by successfully executing our core strategy of focused differentiation and continuous improvement. ~~As North America’s leading provider of comprehensive environmental solutions, sustainability and environmental stewardship is embedded in all that we do.~~ We have enabled a people-first, technology-led focus to drive our mission to maximize resource value, while minimizing environmental impact, soand sustainability and environmental stewardship is embedded in all that ~~both our economy and our environment can thrive.~~we do. Our strategy leverages and sustains the strongest asset network in the industry to drive best-in-class customer experience and growth. Our strategic planning processes appropriately consider that the future of our business and the industry can be influenced by changes in economic conditions, the competitive landscape, the regulatory environment, asset and resource availability and technology. We believe that focused differentiation, which is driven by capitalizing on our unique and extensive network of assets, will deliver profitable growth and position us to leverage competitive advantages. Simultaneously, we believe ~~the combination of cost control and~~that investing in automation to improve processes and drive operational efficiency combined with a focus on the cost to serve our customer will yield an attractive ~~total cost structure~~profit margin and enhanced service quality. ~~While we continue to improve existing diversion technologies, such as~~We are furthering our strategy of focused differentiation and continuous improvement beyond our traditional waste operations through our sustainability growth strategy that includes significant planned investments in our WM Renewable Energy and recycling ~~operations, we~~businesses, while increasing automation and reducing labor dependency. We are also evaluating and pursuing emerging diversion technologies that may generate additional value.

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, and expanding our renewable energy projects to meet the evolving needs of our diverse customer base. As ~~the~~North America’s leading ~~waste management~~provider of comprehensive environmental ~~services provider in North America,~~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

published our ~~2022~~2023 Sustainability Report providing details on our ~~Environmental, Social~~environmental, social and ~~Governance~~governance (“ESG”) performance and outlining ~~new~~progress towards our 2030 ~~priorities.~~ESG goals. The Sustainability Report conveys the strong linkage between the Company’s ESG goals and our growth strategy, inclusive of the planned expansion of the Company’s recycling and ~~renewable energy~~WM Renewable Energy businesses. The information in this report can be found at https://sustainability.wm.com but it does not constitute a part of, and is not incorporated by reference into, this Quarterly Report on Form 10-Q.

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 ~~a heightened pace of~~ inflation. Volume changes can fluctuate ~~dramatically~~significantly by line of business and volume changes in higher margin businesses ~~such as what we saw with COVID-19,~~ 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. Enhancements made through ~~this initiative~~these initiatives are intended to seamlessly and digitally connect all the Company’s functions required to service our customers in order to provide the best experience and service. In late 2021, we began to execute on the next phase of this technology enablement strategy to automate and optimize certain elements of our service delivery model. ~~This~~Our next and ongoing phase ~~will~~is to prioritize reduced labor dependency on certain high-turnover jobs, particularly in customer experience, recycling, and residential ~~collection. We continue to make these investments to~~collection, while further ~~digitalize~~elevating our customer self-service through digitalization and ~~implement~~implementing technologies to ~~further~~ enhance the safety, reliability and efficiency of our collection operations. Additionally, in 2022, we implemented ~~our~~a new general ledger accounting system, complementary finance enterprise resource planning ~~systems that~~system and a human capital management system, which will ~~contribute~~continue to drive operational and service excellence by empowering our people through a modern, simplified and connected ~~finance, accounting~~employee experience.

Macroeconomic pressures, including inflation and ~~human capital management platforms.~~

~~Certain macroeconomic pressures~~rising interest rates, and market disruption ~~driven~~resulting in ~~part by the COVID-19 pandemic~~labor, supply chain and ~~other external events and conditions, including rising inflation and a constrained labor market, intensified during the second half of 2021 and~~transportation constraints have continued throughout 2022. The constrained labor market has resulted in increased costs for wage adjustments, overtime hours and training new hires to address frontline employee turnover, increased volume, and operational challenges. The COVID-19 pandemic and other external events and conditions have also contributed to significantimpacted our results. Significant global supply chain disruption has reduced availability of certain assets used in our business and ~~inflationary pressure~~inflation has increased costs for the goods and services we purchase, ~~with a particular impact on our~~particularly for labor, repair and maintenance, and subcontractor costs. Supply chain constraints have ~~also~~ caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely on third-party transportation providers, and such services have become more limited and expensive. ~~Additionally, demand for recycled material strengthened through 2021 and into early 2022, moderating during~~

With the significant decline in commodity prices that started in the second ~~quarter~~half of 2022 and ~~began to decline in the third quarter of 2022. Continued significant headwinds are expected for the remainder of the year and~~has continued into 2023, ~~amid significant price declines resulting from the slowdown in the global economy, which is reducing retail demand and the need for package shipping. We~~we are ~~also~~ currently experiencing margin pressures from our commodity-driven businesses, specifically within our recycling and WM Renewable Energy businesses. While there may be short-term fluctuations in our commodity-driven businesses as prices change, we continue to focus on adjusting our business ~~impacts, particularly from higher fuel prices.~~models to protect against the down-side risk by spreading the inherent risk of changes in commodity prices across the vertically integrated value chain. The extent and duration of the impact of ~~these~~ labor, ~~market,~~ supply chain, transportation and ~~recycling~~commodity price challenges are subject to numerous external factors beyond our control, including broader macroeconomic conditions; recessionary fears and/or an economic recession; size, location, and qualifications of the labor pool; wage and price structures; adoption of new or revised regulations; ~~future resurgence in pandemic conditions and restrictions;~~ geopolitical conflicts and responses and supply and demand for ~~recycled materials.~~commodities. As we experience inflationary cost pressures, we focus on our ~~strategic~~ pricing efforts, as well as operating efficiencies and cost controls, to maintain ~~and grow~~ our earnings and cash ~~flow.~~flow and facilitate growth. With these macroeconomic pressures, we remain ~~focused on~~committed to putting our people first to ensure that

they are well positioned to execute our daily operations diligently and safely. We ~~are encouraged by our results in 2022 and~~ 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.

Current Quarter Financial Results

During the third quarter of ~~2022,~~2023, we ~~delivered~~continued to focus on our priorities to advance our strategy—growing price to offset cost inflation, enhancing employee engagement, permanently reducing our cost to serve through the use of technology and automation, and investing in growth through our recycling and WM Renewable Energy businesses. This strategic focus, combined with strong operational execution resulted in increased revenue, income from operations and income from operations ~~as we continued to experience yield and volume improvement in our collection and disposal business.~~margin during the third quarter of 2023. We remain diligent in offering a ~~competitively profitable~~competitive and differentiated service that meets the needs of our customers, and are focused on driving operating efficiencies and reducing discretionary spend. We continue to invest in our people through market wage adjustments, investments in our digital platform and training for ~~new~~our team members. Despite the significant downturn in commodity prices for recyclable material, which were caused by overall lower demand and growing supply led by global economic conditions, 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. We also continue to make investments in automation and optimization to enhance our operational efficiency and improve labor productivity for all lines of business. During the third quarter of ~~2022,~~2023, we allocated ~~$757~~$673 million of available cash to capital expenditures ~~both as a continuing investment in our traditional solid waste business~~ and ~~to support growth in our sustainability asset network. We also allocated $808~~$653 million to our shareholders through dividends and common stock repurchases.

Key elements of our financial results for the third quarter include:

●

Revenues of ~~$5,075~~$5,198 million, compared with ~~$4,665~~$5,075 million in the prior year period, an increase of ~~$410~~$123 million, or ~~8.8%~~2.4%. The increase is primarily attributable to (i) higher yield in our collection and disposal ~~lines of~~ business; (ii) ~~increases from our fuel surcharge program~~acquisitions, net of divestitures and (iii) ~~volume growth.~~increased volumes. These increases were partially offset by ~~lower average market prices for~~commodity price declines in our recycling ~~commodities;~~and WM Renewable Energy businesses and decreased revenue from our energy surcharge program as a result of a decline in the price of fuel, particularly diesel;

●

Operating expenses of ~~$3,156~~$3,188 million, or ~~62.2%~~61.3% of revenues, compared with ~~$2,906~~$3,156 million, or ~~62.3%~~62.2% of revenues, in the prior year period. The ~~$250~~$32 million increase is primarily attributable to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor ~~costs;~~costs and (ii) ~~commodity-driven business impacts from higher fuel prices and (iii)~~ labor cost ~~pressure~~increases from merit increases and frontline employee market wage adjustments. These increases were ~~partially~~ offset, in part, by ~~(i) a $26 million catch-up benefit from the extension of alternative fuel tax credits during the quarter that was retroactive to January 1, 2022 and (ii) the~~ commodity-driven business impacts offrom lower recycling ~~rebates. Operating expense as a percentage~~rebates reflected in costs of ~~revenue improved in the collection~~goods sold and disposal business as pricing and operating efficiencies worked to overcome inflationary cost pressures. This improvement was largely offset by the impacts of a sharp decline in market prices for recycled commodities;lower fuel prices;

●

Selling, general and administrative expenses were ~~$473~~$470 million, or ~~9.3%~~9.0% of revenues, compared with ~~$469~~$473 million, or ~~10.1%~~9.3% of revenues, in the prior year period. The ~~$4 million~~30 basis point improvement was due to the increase ~~is primarily attributable~~in operating revenues and managing expenses through intentional steps to ~~strategic investments~~rationalize costs in ~~our digital platform, including those that support our ongoing sustainability initiatives;~~corporate functions;

●

Income from operations was ~~$942~~$1,021 million, or ~~18.6%~~19.6% of revenues, compared with ~~$806~~$942 million, or ~~17.3%~~18.6% of revenues, in the prior year period. The ~~increase~~improved earnings in the current quarter ~~was primarily~~are driven by ~~deliberate steps~~higher earnings attributable to ~~grow revenue~~our collection and ~~effectively manage costs through operational efficiencies, which allowed us~~disposal business partially offset by (i) reduced profitability in our WM Renewable Energy business due to ~~overcome inflationary pressures;~~lower energy prices and (ii) the decline in recycling commodity prices affecting profitability in our recycling business;

●

Net income attributable to Waste Management, Inc. was ~~$639~~$663 million, or ~~$1.54~~$1.63 per diluted share, compared with ~~$538~~$639 million, or ~~$1.28~~$1.54 per diluted share, in the prior year period. ~~With the~~The increase in income from operations as discussed above ~~there~~ was ~~also an increase~~partially offset by increases in ~~our~~interest expense and income tax ~~expense impacting our net income;~~expense;

●

Net cash provided by operating activities was ~~$1,182~~$1,263 million compared with ~~$1,184~~$1,182 million in the prior year ~~period. Our net cash provided~~period, with the increase driven by ~~operating activities was relatively flat when compared to the prior year period, primarily due to~~(i) higher earnings attributable to our collection and disposal business and (ii) favorable changes in working capital, net of effects of acquisitions and divestitures. This increase was partially offset by ~~the effect of increased~~higher interest and income tax ~~payments and an increase in the number of payroll cycles in the current year period;~~payments; and

●

Free cash flow was ~~$432~~$612 million compared with ~~$773~~$432 million in the prior year period. The ~~decrease~~increase in free cash flow is primarily attributable to (i) anthe increase in net cash provided by operating activities discussed above; (ii) lower capital spending ~~primarily driven by our intentional investment in sustainability growth projects as well as timing differences in our fixed asset purchases to support our ongoing operations~~ and ~~(ii) lower~~(iii) higher proceeds from divestitures of ~~businesses.~~businesses and other 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.

Results of Operations

Operating Revenues

~~We evaluate, oversee and manage the financial performance of our~~Our Solid Waste ~~business subsidiaries through~~operating revenues are primarily generated from fees charged for our ~~East~~collection, transfer, disposal, and ~~West Tiers.~~recycling and resource recovery services, and from sales of commodities by our recycling and landfill gas-to-energy operations. We also provide additional services that are not managed through our Solid Waste business, including both our Strategic Business Solutions (“WMSBS”) and sustainability businesses, which include landfill gas-to-energy services, environmental solutions services and recycling brokerage services. We also offer certain other expanded service offerings and solutions. The mix of operating revenues from our major lines of business ~~is reflected in the table below~~are as follows (in millions):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Commercial	$	1,392	$	1,214	$	4,034	$	3,523	$	1,464	$	1,392	$	4,300	$	4,034
Industrial		966		829		2,744		2,383		982		966		2,889		2,744
Residential		846		795		2,483		2,371		875		846		2,595		2,483
Other collection		187		140		521		391		193		187		556		521
Total collection		3,391		2,978		9,782		8,668		3,514		3,391		10,340		9,782
Landfill		1,197		1,100		3,442		3,090		1,261		1,197		3,678		3,442
Transfer		562		550		1,602		1,547		594		562		1,719		1,602
Recycling		420		464		1,341		1,203		366		420		1,094		1,341
Other (a)		614		551		1,785		1,541		678		614		1,944		1,785
Intercompany (b)		(1,109)		(978)		(3,189)		(2,796)		(1,215)		(1,109)		(3,566)		(3,189)
Total	$	5,075	$	4,665	$	14,763	$	13,253	$	5,198	$	5,075	$	15,209	$	14,763

(a)

The “Other” line of business includes (i) certain services provided by our WMSBS business; (ii) certain services within our sustainability business including our landfill gas-to-energy operations managed by our WM Renewable Energy ~~business, our construction and remediation services and our services associated with the disposal of fly ash and~~business; (iii) certain other expanded service offerings and ~~solutions. In addition, our “Other” line of business reflects~~solutions and (iv) the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity. Revenue attributable to collection, landfill, transfer and recycling services provided by our “Other” businesses has been reflected as a component of the relevant line of business for purposes of presentation in this table.

(b)	Intercompany revenues between lines of business are eliminated in the Condensed Consolidated Financial Statements included within this report.

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The following table provides details associated with the period-to-period changes in revenues and average yield (dollars in millions):


	Period-to-Period Change for the Three Months Ended September 30, 2022 vs. 2021									Period-to-Period Change for the Nine Months Ended September 30, 2022 vs. 2021							Period-to-Period Change for the Three Months Ended September 30, 2023 vs. 2022									Period-to-Period Change for the Nine Months Ended September 30, 2023 vs. 2022
			As a % of				As a % of				As a % of				As a % of				As a % of				As a % of				As a % of				As a % of
			Related				Total				Related				Total				Related				Total				Related				Total
	Amount		Business(a)		Amount		Company(b)		Amount		Business(a)		Amount		Company(b)		Amount		Business(a)		Amount		Company(b)		Amount		Business(a)		Amount		Company(b)
Collection and disposal	$	280	7.1	%					$	722	6.3	%					$	215	5.0	%					$	699	5.6	%
Recycling (c)		(54)	(11.6)							158	13.7
Fuel surcharges and other (d)		132	54.0							375	57.1
Recycling and WM Renewable Energy (c)(d)																		(108)	(23.3)							(399)	(26.8)
Energy surcharge and mandated fees (d)(e)																		(54)	(18.4)							(70)	(8.8)
Total average yield ~~(e)~~(f)					$	358	7.7	%					$	1,255	9.5	%					$	53	1.1	%					$	230	1.6	%
Volume ~~(d)~~						47	1.0							264	2.0							27	0.5							94	0.6
Internal revenue growth						405	8.7							1,519	11.5							80	1.6							324	2.2
Acquisitions						15	0.3							20	0.1							50	0.9							156	1.0
Divestitures						(2)	—							(13)	(0.1)							(1)	—							(5)	—
Foreign currency translation						(8)	(0.2)							(16)	(0.1)							(6)	(0.1)							(29)	(0.2)
Total					$	410	8.8	%					$	1,510	11.4	%					$	123	2.4	%					$	446	3.0	%

(a)	Calculated by dividing the increase or decrease for the current year period by the prior year period’s related business revenue adjusted to exclude the impacts of divestitures for the current year period.

(b)	Calculated by dividing the increase or decrease for the current year period by the prior year period’s total Company revenue adjusted to exclude the impacts of divestitures for the current year period.

(c)	Includes combined impact of commodity price variability in both our recycling and WM Renewable Energy businesses, as well as changes in ~~fees.~~fees in our recycling business.

(d)

Beginning in ~~the fourth quarter of 2021,~~2023, Recycling and WM Renewable Energy includes changes in our revenue attributable to our WM Renewable Energy ~~business from yield~~business. Previously these changes in revenue were included in energy surcharges and ~~volume.~~mandated fees. We have revised our prior year results to conform with the current year presentation.

(e)	Our energy surcharge was revised in the second quarter of 2023 to incorporate market prices for both diesel and compressed natural gas (“CNG”).

(f)	The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company.

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 revenue 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 are as follows (dollars in millions):


	Period-to-Period Change for the				Period-to-Period Change for the				Period-to-Period Change for the				Period-to-Period Change for the
	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30, 2022 vs. 2021				September 30, 2022 vs. 2021				September 30, 2023 vs. 2022				September 30, 2023 vs. 2022
			As a % of				As a % of				As a % of				As a % of
			Related				Related				Related				Related
	Amount		Business		Amount		Business		Amount		Business		Amount		Business
Commercial	$	109	9.8	%	$	284	8.7	%	$	73	5.9	%	$	241	6.6	%
Industrial		86	11.0			221	9.9			53	6.1			192	7.7
Residential		48	6.3			126	5.5			50	6.3			146	6.3
Total collection		243	8.7			631	7.8			176	5.8			579	6.5
Landfill		21	3.2			57	3.0			18	2.4			56	2.6
Transfer		16	5.5			34	4.2			21	7.1			64	7.8
Total collection and disposal	$	280	7.1	%	$	722	6.3	%	$	215	5.0	%	$	699	5.6	%

This is a capital and labor intensive business. Our capital investments and operating costs needed to serve our customers are increasing. Our overall ~~strategic~~ pricing efforts are focused on ~~recovering inflationary cost increases we experience in our business by increasing our average unit rate.~~keeping pace with these higher costs. We ~~continue to experience strong~~experienced average yield growth in our collection line of business of ~~8.7%~~5.8% and ~~7.8%~~6.5% for the three and nine months ended September 30, ~~2022, respectively, illustrating our focus on our pricing efforts in this inflationary environment.~~2023, respectively. We are also continuing to see growth in our disposal business with our municipal solid waste business experiencing ~~6.5% and 6.1%~~ average yield ~~growth~~of 4.1% and 5.0% for the three and nine months ended September 30, ~~2022,~~2023, respectively.

Recycling and WM Renewable Energy — ~~Recycling~~The downturn in market prices for recycling commodities that started in the second half of 2022 has persisted in 2023. Decreases in the market prices for recycling commodities resulted in a revenue ~~decreased $54~~decline of $91 million and ~~increased $158~~$339 million for the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared with the prior year periods. ~~Demand~~Average market prices for single-stream recycled ~~material strengthened through 2021 and into early 2022, moderating during the second quarter and began to decline~~commodities were down more than 50% in the ~~third quarter~~first nine months of ~~2022. Continued significant headwinds are expected for~~2023 when compared to the ~~remainder of the~~comparable prior year ~~and into 2023 amid significant price declines resulting from~~period. The decrease is due to the slowdown in the global economy which ~~is reducing~~reduced retail demand and the corresponding need for ~~package shipping. During the third quarter of 2022, average market prices for recycling commodities at the Company’s facilities were approximately 30% lower as compared~~cardboard packaging to ~~the prior year period.~~

~~Fuel Surcharges and Other —~~ ~~These fees, which include (i) our fuel surcharge program; (ii) yield from~~ship retail goods. Additionally, revenue in our WM Renewable Energy business ~~and (iii) other mandated fees, increased $132~~declined $17 million and ~~$375~~$60 million for the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared ~~with~~to the prior year ~~periods. Fuel surcharge revenues are based on and fluctuate in response to changes~~periods, primarily driven by decreases in the ~~national average~~value of energy prices ~~for diesel~~and renewable fuel standard credits.

Energy Surcharge and ~~also vary with changes in our volume-based revenue activity. Revenue from our fuel surcharge program increased $123~~Mandated Fees — These fees decreased $54 million and ~~$324~~$70 million for the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared with the prior year periods. ~~Market~~Beginning in the second quarter of 2023, our energy surcharge was revised to incorporate market prices for both diesel and CNG. The decrease in energy surcharge revenues is primarily due to a decline of approximately 15% in market prices for diesel fuel ~~increased approximately 55% and 60%~~ for the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared with the prior year periods. Revenue from yield growth in our WM Renewable Energy business increased $8 million and $46 million for the three and nine months ended September 30, 2022, respectively, as compared with the prior year periods. This increase was primarily driven by increases in the value for electricity and renewable natural gas. 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. These amounts have not significantly impacted the change in revenue for the three and nine months ended September 30, ~~2022,~~2023, as compared with the prior year periods.

Volume

Our revenues from ~~volumes~~volume (excluding volumes from acquisitions and divestitures) increased ~~$47~~$27 million, or ~~1.0%~~0.5%, and ~~$264~~$94 million, or ~~2.0%~~0.6%, for the three and nine months ended September 30, 2022, respectively, as compared with the prior year periods. Our collection and disposal business volumes grew 1.4% and 2.5% for the three and nine months ended September 30, 2022, respectively, as compared with the prior year periods.

~~Our third quarter of 2022 volume growth has moderated when compared to the accelerated volume recovery from COVID-related impacts experienced~~2023, respectively. These results reflect increases in ~~the prior year period. Special~~special waste volumes at our landfills, ~~have been~~primarily due to event-driven projects, and an increase in WMSBS volumes, which were partially offset by a decrease in temporary industrial collection volumes and the ~~most~~intentional shedding of low-margin residential collection business.

3130

significant driver of volume growth, primarily due to an increase in event-driven projects. In addition, our WMSBS business volumes grew as a result of our continued focus on a differentiated service model for national accounts customers.

Operating Expenses

The following table summarizes the major components of our operating expenses (in millions of dollars and as a percentage of revenues):


	Three Months Ended								Nine Months Ended								Three Months Ended								Nine Months Ended
	September 30,								September 30,								September 30,								September 30,
	2022				2021				2022				2021				2023				2022				2023				2022
Labor and related benefits	$	880	17.3	%	$	835	17.9	%	$	2,563	17.4	%	$	2,372	17.9	%	$	913	17.6	%	$	880	17.3	%	$	2,750	18.1	%	$	2,563	17.4	%
Transfer and disposal costs		313	6.2			300	6.4			909	6.2			872	6.6			325	6.2			313	6.2			955	6.3			909	6.2
Maintenance and repairs		475	9.4			414	8.9			1,351	9.1			1,183	8.9			508	9.8			475	9.4			1,503	9.9			1,351	9.1
Subcontractor costs		536	10.5			466	10.0			1,496	10.1			1,303	9.8			566	10.9			536	10.5			1,627	10.7			1,496	10.1
Cost of goods sold		247	4.9			263	5.6			778	5.3			655	5.0			187	3.6			247	4.9			561	3.7			778	5.3
Fuel		132	2.6			101	2.2			438	3.0			282	2.1			122	2.3			132	2.6			381	2.5			438	3.0
Disposal and franchise fees and taxes		188	3.7			183	3.9			545	3.7			516	3.9			190	3.7			188	3.7			553	3.6			545	3.7
Landfill operating costs		100	2.0			105	2.2			303	2.0			308	2.3			105	2.0			100	2.0			339	2.2			303	2.0
Risk management		89	1.7			88	1.9			269	1.8			242	1.8			84	1.6			89	1.7			233	1.5			269	1.8
Other		196	3.9			151	3.3			549	3.7			423	3.2			188	3.6			196	3.9			558	3.7			549	3.7
	$	3,156	62.2	%	$	2,906	62.3	%	$	9,201	62.3	%	$	8,156	61.5	%	$	3,188	61.3	%	$	3,156	62.2	%	$	9,460	62.2	%	$	9,201	62.3	%

Our operating expenses increased primarily due to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor ~~costs;~~costs and (ii) ~~commodity-driven business impacts from higher fuel prices and (iii)~~ labor cost pressure from merit increases and frontline employee market wage adjustments. These increases were ~~partially~~ offset, in ~~the third quarter of 2022~~part, by ~~(i) a $26 million catch-up benefit from the extension of alternative fuel tax credits that was retroactive to January 1, 2022 and (ii)~~ commodity-driven business impacts, particularly from lower recycling ~~rebates. For the nine months ended September 30, 2022, as compared with the prior year period, commodity-driven business impacts from higher recycling~~ rebates reflected in ~~the first half~~costs of ~~2022 more than offset the decrease in the third quarter of 2022. We also continue to focus on operating efficiency~~goods sold and ~~efforts to control costs.~~lower fuel prices.

Significant items affecting the comparison of operating expenses for the reported periods include:

Labor and Related Benefits — The increase in labor and related benefits costs was ~~largely~~primarily driven by (i) merit increases and proactive market wage adjustments to hire and retain talent; (ii) ~~merit increases and annual incentive compensation costs~~increased headcount primarily from acquisitions and (iii) increases in health and welfare costs ~~attributable to our intentional investment in delivering a leading benefits program for our employees~~ and ~~increases~~ in medical care activity. These increases were offset, in part, by lower annual incentive compensation.

Transfer and Disposal Costs — The increase in transfer and disposal costs was ~~largely driven by~~primarily due to inflationary cost increases, which includes increased disposal fees at third-party sites and higher ~~fuel~~rates from our third-party ~~haulers.~~haulers, offset, in part, by a slight decrease in collection volumes.

Maintenance and Repairs — The increase in maintenance and repairs costs was ~~largely~~primarily driven by (i) continued inflationary cost increases for parts, supplies and third-party ~~services;~~services, although the impact of such inflationary cost increases has progressively moderated from earlier in the year to the third quarter of 2023 and (ii) ~~additional fleet maintenance driven by supply chain constraints, which have delayed deliveries of new trucks; (iii)~~ labor cost increases for our technicians, including ~~higher overtime~~additional headcount, market wage adjustments and ~~(iv) an increase in container~~merit increases. Through the first half of 2023, our maintenance and repairs ~~driven by delays in delivery of steel containers~~costs were also elevated due to supply chain ~~constraints.~~constraints that were causing delays in truck deliveries. These constraints have moderated and, accordingly, the pressure on maintenance and repairs costs has lessened in the third quarter of 2023.

Subcontractor Costs — The increase in subcontractor costs was ~~largely driven by~~primarily due to (i) continued inflationary cost increases, particularly ~~for~~labor and fuel ~~and labor~~ costs from third-party haulers, although the impact of such inflationary cost increases has progressively moderated from earlier in the year to the third quarter of 2023 due to lower diesel prices that reduced fuel surcharges from our third-party transportation providers and (ii) an increase in volumes in our WMSBS business and SES offerings, which ~~relies~~rely more extensively on subcontracted hauling and services than our collection and disposal business.

Cost of Goods Sold — The ~~increase~~decrease in cost of goods sold ~~for the nine months ended September 30, 2022,~~ was primarily driven by an approximate 40% ~~increase~~and 50% decrease in ~~recycling commodity prices for the six months ended June 30, 2022, as~~

~~compared to the prior year period, partially offset by an approximate 30% decrease in~~single-stream recycling commodity prices for the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared to the prior year ~~period.~~periods.

Fuel — The ~~increase~~decrease in fuel costs was primarily due to ~~increases~~a decrease of approximately 15% in market prices for diesel ~~and natural gas~~ fuel ~~prices~~ during the three and nine months ended September 30, ~~2022, respectively,~~2023, as compared to the prior year periods. ~~This increase was partially offset in~~In the third quarter of 2022, bywe recognized a $26 million catch-up benefit from the extension of alternative fuel tax credits that was retroactive to January 1, 2022. In 2023, these alternative fuel tax credits have been recognized ratably throughout the year. Accordingly, the timing of the regulatory decision in 2022 impacts the comparison of our fuel costs for the three months ended September 30, 2023 and the comparable prior year period, but has no impact on the comparability of the year-to-date periods.

Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes was primarily driven by ~~higher franchise fees paid to certain municipalities where we operate~~an increase in landfill volumes and an overall rate ~~increases~~increase in ~~our~~ fees and taxes paid to municipalities on our disposal volumes.

Landfill Operating Costs — ~~Our~~Landfill operating costs increased for the three months ended September 30, 2023, as compared with the prior year period, primarily due to higher costs for landfill accretion and site monitoring and testing. The increase for the nine months ended September 30, 2023, as compared with the prior year period, was primarily due to higher expenses for (i) landfill site costs, including costs for leachate collection and treatment, maintenance, and monitoring and testing; (ii) landfill accretion and (iii) remediation expense. Within landfill operating costs, ~~were essentially flat~~accretion expense was $32 million and $97 million for the ~~reported~~three and nine months ended September 30, 2023, respectively, compared with $30 million and $84 million, for the comparable prior year periods. The ~~variability~~increase in remediation expense for the ~~reported periods is largely~~nine months ended September 30, 2023, as compared with the prior year period, was primarily due to changes in the measurement of our environmental remediation obligations and recovery assets in ~~2022~~both 2023 and ~~2021.~~2022. Our measurement of these balances includes the application of a risk-free discount rate, which is based on the rate for U.S. Treasury bonds. InDuring the nine months ended September 30, 2022, ~~there was an increase~~the increases in the discount rate were greater than the increase experienced in the third quarter of 2023, which ~~resulted~~contributed to an increase in remediation expense between the comparable periods. Any increase in discount rate results in a reduction in the net liability ~~balance~~ and a credit to expense.

Risk Management — ~~Risk~~The decrease in risk management ~~costs increased primarily due to inflation in premiums. The~~for the three and nine months ended September ~~30, 2022~~2023, as compared with the prior year periods, was ~~also impacted by an~~primarily due to lower claims expense. An overall increase in insurance premiums partially offset this cost decrease. Our claims costs for our risk management program were particularly elevated during the first half of 2022 due to unfavorable cost development on a limited population of severe cases. The absence of these costs is the largest driver of the favorable variance for the nine months ended September 2023 compared to the prior year.

Other — Other operating ~~cost increases were~~costs decreased for the three months ended September 30, 2023, as compared with the prior year period, primarily due to ~~(i) inflationary cost pressures; (ii)~~ a ~~write-down~~write down of assets and inventory related to Hurricane ~~Ian; (iii) higher equipment rental costs attributable,~~Ian during the third quarter of 2022 and net gains on the sale of certain assets during the third quarter of 2023. These decreases were offset, in part, by (i) inflationary cost pressures, although the impact of such continued inflationary cost increases has progressively moderated from earlier in the year to ~~supply chain constraints slowing normal course fleet~~the third quarter of 2023 and ~~equipment orders and (iv)~~(ii) higher utility costs at our facilities. In addition to the foregoing, other operating cost increases for the nine-month period ended September 30, 2023 were primarily due to an increase in business travel ~~in 2022. Additionally, a favorable litigation settlement in the second quarter of 2021 impacted the comparison for the nine months ended September 30, 2022.~~and higher equipment rental costs.

Selling, General and Administrative Expenses

The following table summarizes the major components of our selling, general and administrative expenses (in millions of dollars and as a percentage of revenues):


	Three Months Ended								Nine Months Ended								Three Months Ended								Nine Months Ended
	September 30,								September 30,								September 30,								September 30,
	2022				2021				2022				2021				2023				2022				2023				2022
Labor and related benefits	$	293	5.8	%	$	311	6.7	%	$	910	6.2	%	$	905	6.8	%	$	280	5.4	%	$	293	5.8	%	$	885	5.8	%	$	910	6.2	%
Professional fees		65	1.3			53	1.1			193	1.3			158	1.2			61	1.1			65	1.3			166	1.1			193	1.3
Provision for bad debts		12	0.2			11	0.2			36	0.2			28	0.2			16	0.3			12	0.2			36	0.2			36	0.2
Other		103	2.0			94	2.1			312	2.1			281	2.2			113	2.2			103	2.0			326	2.2			312	2.1
	$	473	9.3	%	$	469	10.1	%	$	1,451	9.8	%	$	1,372	10.4	%	$	470	9.0	%	$	473	9.3	%	$	1,413	9.3	%	$	1,451	9.8	%

Selling, general and administrative expenses have ~~increased~~decreased primarily due to ~~strategic~~lower annual incentive compensation costs and reduced professional fees in connection with investments in our digital platform, ~~including those that support our ongoing sustainability initiatives. Although~~as certain strategic digital projects have now been implemented. Partially offsetting these reductions are annual merit increases and increased litigation costs. The effective management of our costs, ~~increased,~~along with the increase in revenue resulted in a significant ~~revenue increases positioned us to reduce~~reduction in our ~~overall~~ selling, general and administrative expenses as a percentage of revenues when compared with the prior year ~~periods.~~period.

Significant items affecting the comparison of our selling, general and administrative expenses for the reported periods include:

Labor and Related Benefits —The decrease in labor and related benefits ~~for the three months ended September 30, 2022, as compared with the prior year period, is~~costs was primarily related to lower ~~long-term incentive compensation costs. Higher~~ annual incentive compensation costs and lower contract labor expenses. These decreases were partially offset by annual merit increases ~~and increases in health and welfare costs attributable to our intentional investment in delivering a leading benefits program~~ for our employees and

~~increases in medical care activity partially offset such decrease~~ market adjustments for ~~the three months ended September 30, 2022, and more than offset such decrease for the nine months ended September 30, 2022, as compared with the prior year periods.~~deferred compensation plans related to investment performance.

Professional Fees — The ~~increase~~decrease in professional fees was primarily ~~driven by strategic~~attributable to reduced expenses in connection with investments in our digital platform, ~~and sustainability initiatives. Partially offsetting these increases were lower integration costs related to our acquisition of Advanced Disposal Services, Inc. (“Advanced Disposal”).~~as certain strategic projects have now been implemented.

Provision for Bad Debts — The increase in provision for bad debts during the three months ended September 30, 2023, as compared with the prior year period, is primarily related to an increase in the aging of certain receivables as well as customer-specific provisions required for bankruptcies of two of our ~~increased revenue.~~WMSBS customers.

Other ~~— The~~—The increase in other expenses was primarily ~~driven~~related to litigation costs and higher advertising costs, which were partially offset by ~~costs associated with an increase in technology infrastructure to support our strategic investments in our digital platform and an increase in business travel expense in 2022.~~lower telecommunications costs.

Depreciation, Depletion and Amortization Expenses

The following table summarizes the components of our depreciation, depletion and amortization expenses (in millions of dollars and as a percentage of revenues):


	Three Months Ended								Nine Months Ended								Three Months Ended								Nine Months Ended
	September 30,								September 30,								September 30,								September 30,
	2022				2021				2022				2021				2023				2022				2023				2022
Depreciation of tangible property and equipment	$	287	5.7	%	$	282	6.0	%	$	859	5.8	%	$	840	6.3	%	$	298	5.7	%	$	287	5.7	%	$	894	5.9	%	$	859	5.8	%
Amortization of landfill airspace		184	3.6			200	4.3			539	3.7			541	4.1
Depletion of landfill airspace																		188	3.6			184	3.6			554	3.6			539	3.7
Amortization of intangible assets		32	0.6			35	0.8			95	0.6			108	0.8			33	0.7			32	0.6			97	0.7			95	0.6
	$	503	9.9	%	$	517	11.1	%	$	1,493	10.1	%	$	1,489	11.2	%	$	519	10.0	%	$	503	9.9	%	$	1,545	10.2	%	$	1,493	10.1	%

The increase in depreciation of tangible property and equipment for the three months ended September 30, 2023 was primarily driven by additional depreciation due to investments in capital assets to service our customers, ~~such as heavy~~including machinery and trucks. The increase in depreciation of tangible property and equipment for the nine months ended

September 30, 2023 was primarily driven by additional depreciation due to investments in capital assets, including strategic investments in our digital platform and ~~containers.~~machinery and containers to service our customers. The ~~decrease~~increase in ~~amortization~~depletion of landfill airspace for the three and nine months ended September 30, ~~2022~~2023 was primarily driven by increased volumes from the reopening of a ~~prior year charge of $15 million due to management’s decision to close a~~previously closed landfill in our West Tier segment earlier than expected, resulting in acceleration of the timing of capping, closure and post-closure activities during the third quarter of 2021. The decrease for the nine months ended September 30, 2022, when compared with the prior year period, was partially offset by landfill volume increases and changes in amortization rates from revisions in landfill estimates. The decrease in amortization of intangible assets was primarily driven by the reduction in amortization of acquired intangible assets from the acquisition of Advanced Disposal.East Tier.

(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net

Income from Operations

The following table summarizes income from operations for our reportable segments (dollars in millions):


	Three Months Ended										Nine Months Ended										Three Months Ended										Nine Months Ended
	September 30,						Period-to-Period				September 30,						Period-to-Period				September 30,						Period-to-Period				September 30,						Period-to-Period
	2022			2021(c)			Change				2022			2021(c)			Change				2023			2022			Change				2023			2022			Change
Solid Waste:
East Tier	$	616		$	550		$	66	12.0	%	$	1,728		$	1,514		$	214	14.1	%	$	671		$	616		$	55	8.9	%	$	1,846		$	1,728		$	118	6.8	%
West Tier		622			548			74	13.5			1,779			1,577			202	12.8			653			622			31	5.0			1,843			1,779			64	3.6
Solid Waste		1,238			1,098			140	12.8			3,507			3,091			416	13.5			1,324			1,238			86	6.9			3,689			3,507			182	5.2
Other (a)		—			10			(10)	*			19			36			(17)	*			(13)			—			(13)	*			(30)			19			(49)	*
Corporate and Other (b)		(296)			(302)			6	(2.0)			(926)			(880)			(46)	5.2			(290)			(296)			6	(2.0)			(869)			(926)			57	(6.2)
Total	$	942		$	806		$	136	16.9	%	$	2,600		$	2,247		$	353	15.7	%	$	1,021		$	942		$	79	8.4	%	$	2,790		$	2,600		$	190	7.3	%
Percentage of revenues		18.6	%		17.3	%						17.6	%		17.0	%						19.6	%		18.6	%						18.3	%		17.6	%

*Percentage change does not provide a meaningful comparison.

(a)

“Other” includes (i) elements of our WMSBS business that are not included in the operations of our reportable segments; (ii) elements of our sustainability business that includes landfill gas-to-energy operations managed by our WM Renewable Energy business, our ~~environmental solutions services~~SES business and recycling brokerage services and not included in the operations of our reportable segments; (iii) certain other expanded service offerings and solutions and (iv) the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.

(b)

~~(c)~~

The significant items affecting income from operations for our segments during the three and nine months ended September 30, ~~2022,~~2023, as compared with the prior year periods, are summarized below:

●

Solid Waste — Income from operations in our Solid Waste business increased primarily due to ~~(i)~~ revenue growth in our collection and disposal ~~businesses~~business driven by both yield and volume and (ii) a $26 million catch-up benefit from the extension of alternative fuel tax credits that was retroactive to January 1, 2022. Our income from operations for the nine months ended September 30, 2022 was favorably impacted by an increase in our recycling line of business as a result of an overall increase in average market prices for recycling commodities during the first half of 2022.yield. These increases were partially offset by (i) inflationary cost pressures; (ii) labor cost increases from frontline employee wage adjustments and annual merit increases and (iii) ~~commodity-driven~~reduced profitability in our recycling business ~~impacts from higher fuel prices. Additionally, the prior year included a pre-tax net gain~~ from the ~~recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations~~decline in ~~our East Tier segment and a charge~~recycling commodity prices. In addition, fuel tax credits in 2022 were not recognized until August 2022 due to ~~management’s decision to close a landfill in our West Tier segment earlier than expected, resulting in acceleration of~~ the timing of ~~capping, closure and post-closure activities~~the Inflation Reduction Act of 2022 (“IRA”). This created a $26 million negative impact to income from operations for the three months ended September 30, 2023, but is broadly flat for the nine months ended September 30, 2023.

●

Other — The decrease in income from operations was due to (i) reduced profitability in our WM Renewable Energy business primarily driven by decreases in the ~~third quarter~~value of ~~2021.~~energy prices and renewable fuel standard credits and (ii) the decline in recycling brokerage commodity prices affecting profitability in our recycling business.

●

Corporate and Other — The ~~increase~~improvement in income from operations ~~from our Corporate and Other segment for the three months ended September 30, 2022, as compared with the prior year period,~~ was primarily driven by (i) lower ~~long-term~~annual incentive compensation ~~costs and~~costs; (ii) lower ~~integration costs from our acquisition of Advanced Disposal. Increased costs to support strategic~~professional fees in connection with investments in our digital ~~platform, including those that support our ongoing sustainability initiatives,~~program, as certain strategic projects have now been implemented and ~~increased labor~~(iii) a charge during the first quarter of 2022 to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site. These lower costs ~~from higher annual incentive costs and merit~~

~~increases,~~were partially offset ~~the three months ended September 30, 2022,~~by annual merit increases and ~~more than offset the nine months ended September 30, 2022, as compared with the prior year periods.~~litigation costs.

Interest Expense, Net

Our interest expense, net was $127 million and $372 million for the three and nine months ended September 30, 2023, respectively, compared to $91 million and $269 million for the three and nine months ended September 30, 2022, ~~respectively, compared to $87 million and $282 million for the three and nine months ended September 30, 2021,~~ respectively. The increase ~~for the third quarter~~is primarily related to borrowings incurred under our $1.0 billion two-year, U.S. term credit agreement (“Term Loan”) in the second quarter of 2022. The decrease for the nine months ended September 30, 2022, as compared with the prior year period, is primarily due to the retirement of $1.3 billion of certain high coupon senior notes and concurrent issuance of $950 million of lower coupon senior notes in May 2021 and, to a lesser extent, the impacts that lower interest rates had on the cost of certain of our tax-exempt debt during the first quarter of 2022. Also impacting the three and nine months ended September 30, 2022, were benefits from higher capitalized interest and increases in interest income as a result of higher cash and cash equivalents balances. During 2022, we have started to see an increase in our weighted average borrowing rate of approximately 90 basis points due to increased rates on floating-rate debt and higher fixed rates on refinancing as well as an increase in average debt balances to fund growth. To mitigate the impact of increasing interest rates ~~on our~~and to provide certainty in cost, we elected to replace certain floating-rate debt, ~~including~~specifically our Term Loan and commercial paper borrowings, with longer-term, fixed-rate debt through our senior notes issuances as discussed within Liquidity and ~~variable-rate tax-exempt bonds. The impact of the increase is immaterial to the reported periods; however, we expect interest expense to meaningfully increase in 2023.~~Capital Resources below. See Note 3 to the Condensed Consolidated Financial Statements for more information related to our debt balances.

~~Loss on Early Extinguishment of Debt~~

In May 2021, WMI issued $950 million of senior notes. We used the net proceeds from the newly issued senior notes of $942 million and available cash on hand to retire $1.3 billion of certain high-coupon senior notes through a tender offer. The loss on early extinguishment of debt for the nine months ended September 30, 2021 includes $220 million of charges related to the tender offer, including $211 million of premiums and other third-party costs and $9 million primarily related to unamortized discounts and debt issuance costs.

Equity in Net Losses of Unconsolidated Entities

We recognized equity in net losses of unconsolidated entities of ~~$17~~$18 million and ~~$49~~$41 million during the three and nine months ended September 30, ~~2022,~~2023, respectively, compared to ~~$14~~$17 million and ~~$34~~$49 million for the three months and nine months ended September 30, ~~2021,~~2022, respectively. The losses for each period were primarily related to our noncontrolling interests in entities established to invest in and manage low-income housing properties. We generate tax benefits, including tax credits, from the losses incurred from these investments. The losses are more than offset by the tax benefits generated by these investments ~~which are~~as further discussed in Note 4 to the Condensed Consolidated Financial Statements.

Income Tax Expense

Our income tax expense was $210 million and $570 million for the three and nine months ended September 30, 2023, respectively, compared to $189 million and $535 million for the three and nine months ended September 30, 2022, ~~respectively, compared to $167 million~~respectively. Our effective income tax rate was 24.1% and ~~$396 million~~24.0% for the three and nine months ended September 30, ~~2021, respectively. Our effective income tax rate was~~2023, respectively, compared to 22.8% and 23.5% for the three and nine months ended September 30, 2022, ~~respectively, compared~~respectively. See Note 4 to ~~23.7% and 23.2%~~the Condensed Consolidated Financial Statements for ~~the three and nine months ended September 30, 2021, respectively.~~

~~The increase in our~~more information related to income tax expense when comparing the three and nine months ended September 30, 2022 and 2021 was primarily driven by an increase in pre-tax income in 2022. The decrease in our effective income tax rate when comparing the three months ended September 30, 2022 and 2021 was primarily driven by an unfavorable adjustment to accruals and related deferred taxes in 2021 due to a change from our initial expectations of the tax effects of our acquisition of Advanced Disposal and related divestitures. The decrease was offset in part by the divestiture of certain non-strategic Canadian operations in 2021, which was not taxable and did not reoccur in the current period, and an increase in pre-tax income in 2022 resulting in a reduced rate benefit from federal tax credits.taxes.

The increase in our effective income tax rate when comparing the nine months ended September 30, 2022 and 2021 was primarily driven by an increase in pre-tax income in 2022 resulting in a reduced rate benefit from federal tax credits.

Tax Legislation –— The ~~Inflation Reduction Act of 2022 (“IRA”)~~IRA was signed into law by President Biden on August 16, 2022, and contains a number of tax-related provisions. ~~We are in the process of evaluating the IRA and identifying all potential impacts that may be applicable.~~ The provisions of the IRA related to alternative fuel tax credits secure approximately $55 million of annual pre-tax benefit ~~from tax credits through 2024, which is~~(recorded as a reduction in ~~line with the benefit we have realized from~~ our ~~alternative fuel~~operating expense) for tax credits in ~~prior years. Additionally, we expect to incur an excise tax~~each of ~~1% for future common stock repurchases, which will be reflected in the cost of purchasing the underlying shares as a component of treasury stock.~~2022, 2023 and 2024. The IRA contains a number of additional provisions related to tax incentives for investments in renewable energy production, carbon capture, and other climate actions, as well as 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 ~~have not yet quantified any incremental~~continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation. With respect to only the investment tax credit aspect of the IRA, we expect the cumulative benefit to be between $250 million and $350 million, a large portion of which is anticipated to be realized in 2024, 2025 and 2026. Additionally, the production tax credit incentives for investments in renewable energy and the carbon capture provisions of the IRA will likely result in incremental benefit, although at this time the amount of those benefits has not been quantified. Additionally, we incur an excise tax of 1% for common stock repurchases, which is reflected in the cost of purchasing the underlying shares as a component of treasury stock in our Condensed Consolidated Balance Sheet. See

~~See~~ 35

Note 411 to the Condensed Consolidated Financial Statements for ~~more information related~~additional information. The current expectation is the IRA’s minimum corporate tax will not have an impact on the Company.

Additionally, numerous countries have agreed to a statement in support of the Organization for Economic Co-operation and Development model rules that propose a global minimum tax rate of 15%. As legislation to enact a minimum tax becomes effective in countries in which we do business, we do not expect a material impact to our income taxes. We will continue to monitor pending legislation and implementation by individual countries and evaluate the potential impact on our business in future periods.

Liquidity and Capital Resources

The Company consistently generates 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 additional ability to manage liquidity during periods of significant financial market disruption through temporary modification of our capital expenditure and share repurchase plans.

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 (in millions):


	September 30,		December 31,		September 30,		December 31,
	2022		2021		2023		2022
Cash and cash equivalents	$	137	$	118	$	150	$	351
Restricted funds:
Insurance reserves	$	339	$	305	$	386	$	313
Final capping, closure, post-closure and environmental remediation funds		112		118		116		113
Other		6		5		2		5
Total restricted funds (a)	$	457	$	428	$	504	$	431
Debt:
Current portion	$	258	$	708	$	297	$	414
Long-term portion		13,805		12,697		15,133		14,570
Total debt	$	14,063	$	13,405	$	15,430	$	14,984

(a)	As of September 30, ~~2022~~2023 and December 31, ~~2021, $83~~2022, $80 million and ~~$80~~$83 million, respectively, of these account balances were included in other current assets in our Condensed Consolidated Balance Sheets.

Debt — As of September 30, ~~2022,~~2023, we had approximately ~~$2.2~~$2.4 billion of debt maturing within the next 12 months, including (i) ~~$839~~$489 million of short-term borrowings under our commercial paper program (net of related discount on issuance); (ii) ~~$625 million~~$1.6 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (iii) ~~$500~~$156 million of ~~2.4%~~3.5% senior notes that mature in May ~~2023~~2024 and (iv) ~~$258~~$174 million of other debt with scheduled maturities within the next 12 months, including ~~$136~~$60 million of tax-exempt bonds. As of September 30, ~~2022,~~2023, we have classified ~~$2.0~~$2.1 billion of debt maturing in the next 12 months as ~~long term~~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 ~~$258~~$297 million of debt maturing in the next 12 months is classified as current obligations.

In February 2023, WMI issued $750 million and $500 million of 4.625% senior notes due February 2030 and February 2033, respectively, the net proceeds of which were $1.24 billion. We used the net proceeds to reduce outstanding

3736

~~Additionally, as of September 30, 2022, we also had $54~~borrowings under our commercial paper program, repay $500 million of ~~variable-rate tax-exempt bonds with long-term scheduled maturities that are supported by letters of credit under~~WMI’s 2.4% senior notes upon maturity in May 2023, and for general corporate purposes, including our $3.5 billion revolving credit facility. The interest rates on our variable-rate tax-exempt bonds reset on a weekly basis through a remarketing process. All recent variable-rate tax-exempt bond remarketings have been successful at market-driven rates. However, if the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us. In the event of a failed remarketing, we have the availability under our $3.5 billion revolving credit facility to fund these bonds until they are remarketed successfully. Accordingly, we have classified the $54 million of variable-rate tax-exempt bonds with maturities of more than one year as long-term in our Condensed Consolidated Balance Sheet.sustainability capital investment program.

In ~~May 2022,~~July 2023, WMI issued ~~$1.0~~$750 million and $1.25 billion of ~~4.15%~~4.875% senior notes due ~~April 15, 2032,~~February 2029 and February 2034, respectively, the net proceeds of which were ~~$992 million.~~$1.97 billion. We used the net proceeds to ~~redeem our $500 million of 2.9% senior notes due September 2022 in advance of their scheduled maturity, to repay a portion of~~reduce outstanding borrowings under our commercial paper program, repay $1.0 billion of outstanding borrowings under our Term Loan and for general corporate purposes.

In May 2022, we entered into a Term Loan to be used for general corporate purposes and as of September 30, 2022, we had $1.0 billion of outstanding borrowings. WM Holdings guarantees all of the obligations under the Term Loan.

~~Amendment and Extension of Revolving Credit Facility~~

In May 2022, we amended and restated our $3.5 billion U.S. and Canadian revolving credit facility extending the term through May 2027. The agreement includes a $1.0 billion accordion feature that may be used to increase total capacity in future periods, and we have the option to request up to two one-year extensions. Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly-owned subsidiary of WMI, are borrowers under the $3.5 billion revolving credit facility, and the agreement permits borrowing in Canadian dollars up to the U.S. dollar equivalent of $375 million, with such borrowings to be repaid in Canadian dollars. WM Holdings, a wholly-owned subsidiary of WMI, guarantees all the obligations under the $3.5 billion revolving credit facility. Refer to Note 3 to the Condensed Consolidated Financial Statements for additional information.

Guarantor Financial Information

WM Holdings has fully and unconditionally guaranteed all of WMI’s senior indebtedness. WMI has fully and unconditionally guaranteed all of WM Holdings’ senior indebtedness. None of WMI’s 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):

September 30,

December 31,

2022

2021
Balance Sheet Information:

Current assets

$
54

$
6
Noncurrent assets

14

13
Current liabilities

108

590
Noncurrent liabilities:

Advances due to affiliates (a)

19,819

18,599
Other noncurrent liabilities

11,856

10,778

~~(a)~~

The amount reported as Advances due to affiliates as of December 31, 2021 was understated in our Annual Report on Form 10-K for the year ended December 31, 2021 and subsequently corrected in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.


	September 30,		December 31,
	2023		2022
Balance Sheet Information:
Current assets	$	6	$	193
Noncurrent assets		13		14
Current liabilities		269		325
Noncurrent liabilities:
Advances due to affiliates		20,939		19,740
Other noncurrent liabilities		13,214		12,618


	Nine Months Ended
	September 30, ~~2022~~2023
Income Statement Information:
Revenue	$	—
Operating income		—
Net loss		~~106~~250

Summary of Cash Flow Activity

The following is a summary of our cash flows for the nine months ended September 30 (in millions):


	Nine Months Ended
	September 30,
	2022		2021		2023		2022
Net cash provided by operating activities	$	3,487	$	3,347	$	3,337	$	3,487
Net cash used in investing activities	$	(2,036)	$	(1,106)	$	(2,007)	$	(2,036)
Net cash used in financing activities	$	(1,391)	$	(2,686)	$	(1,525)	$	(1,391)

Net Cash Provided by Operating Activities — Our operating cash flows ~~increased~~decreased by ~~$140~~$150 million as compared with the prior year ~~period. The increase~~period, driven by (i) higher interest payments; (ii) unfavorable changes in working capital, net of effects of acquisitions and divestitures; (iii) higher incentive compensation payments and (iv) higher income tax payments. This decrease was ~~largely driven~~partially offset by increased earnings inattributable to our collection and disposal recycling and WM Renewable Energy lines of business for the nine months ended September 30, 2022. We also experienced lower interest payments due to timing and refinancing activities in 2021 that reduced our overall interest rate. Partially offsetting our increase in cash from operating activities were (i) timing differences on payments of certain trade accounts payables; (ii) higher income tax payments as a result of higher earnings in the current year period; (iii) higher annual incentive compensation payments in the current year period and (iv) lower alternative fuel tax credit benefits in the current year period.business.

Net Cash Used in Investing Activities — The most significant items included in our investing cash flows for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 are summarized below:

●

Capital Expenditures — We used ~~$1,725~~$1,853 million and ~~$1,130~~$1,725 million for capital expenditures during the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The increase in capital spending is primarily

driven by our intentional investment in sustainability growth capital spending on recycling and renewable energy projects, as well as ~~timing differences~~inflationary increases in ~~our~~many fixed asset purchases made to support ~~our~~ ongoing ~~operations.~~operations and intentional investments in the Company’s landfills to reduce greenhouse gas emissions. The Company continues to maintain a disciplined focus on capital management to prioritize investments ~~in the long-term growth of our business and~~ for expansion, the replacement of aging ~~assets.~~assets and assets that support our strategy of differentiation and continuous improvement through efficiency and innovation.

●

Other, Net ~~—During the nine months ended September 30, 2022, we used $57 million to fund secured convertible promissory notes~~— The year-over-year changes in other investing activities were primarily driven by changes in our investment portfolio associated with a ~~pending acquisition and $28 million to make an initial cash payment associated with a new low-income housing investment.~~wholly-owned insurance captive. During the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, we used ~~$36~~$71 million and ~~$42~~$36 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities within our investment portfolio associated with a wholly-owned insurance captive. Additionally, in 2022, we used $57 million to fund secured convertible promissory notes associated with an acquisition and $28 million to make an initial cash payment associated with a low-income housing investment.

Net Cash Used in Financing Activities — The most significant items affecting the comparison of our financing cash flows for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 are summarized below:

●

Debt Borrowings ~~(Repayments)~~and Repayments — The following summarizes our cash borrowings (net of related discount) and repayments of debt for the nine months ended September 30 (in millions):


	2022		2021		2023		2022
Borrowings:
Commercial paper	$	3,924	$	5,361	$	14,062	$	3,924
Senior notes						3,207		992
Term loan		1,000		—		—		1,000
Senior notes		992		942
Tax-exempt bonds		—		125		50		—
	$	5,916	$	6,428	$	17,319	$	5,916
Repayments:
Commercial paper	$	(4,864)	$	(5,798)	$	(15,335)	$	(4,864)
Senior notes		(500)		(1,289)		(500)		(500)
Term loan						(1,000)		—
Tax-exempt bonds		—		(63)		(65)		—
Other debt		(65)		(87)		(91)		(65)
	$	(5,429)	$	(7,237)	$	(16,991)	$	(5,429)
Net cash borrowings (repayments)	$	487	$	(809)
Net cash borrowings					$	328	$	487

Refer to Note 3 to the Condensed Consolidated Financial Statements for additional information related to our debt borrowings and repayments.

●

~~Premiums and Other Paid on Early Extinguishment of Debt —~~ ~~During the nine months ended September 30, 2021, we paid premiums and other third-party costs of $211 million to retire certain high-coupon senior notes.~~

●

Common Stock Repurchase Program — During the nine months ended September 30, ~~2022,~~2023, we repurchased ~~$1.0 billion~~$950 million of our common stock pursuant to three accelerated share repurchase (“ASR”) agreements and repurchased ~~$63~~$41.5 million of our common stock in open market transactions, of which $2$1.5 million was paid in October ~~2022.~~2023. See Note 11 to the Condensed Consolidated Financial Statements for additional information. ~~During the nine months ended September 30, 2021, we repurchased $1.0 billion of our common stock pursuant to three ASR agreements.~~

During the nine months ended September 30, 2022, we repurchased $1.0 billion of our common stock pursuant to three ASR agreements and repurchased $63 million of our common stock in open market transactions, of which $2 million was paid in October 2022.

●

Cash Dividends — For the periods presented, all dividends have been declared by our Board of Directors. We paid cash dividends of ~~$811~~$855 million and ~~$730~~$811 million during the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The increase in dividend payments is ~~primarily~~ due to our quarterly per share dividend increasing from ~~$0.575 in 2021 to~~ $0.65 in ~~2022.~~2022 to $0.70 in 2023.

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 (in millions), and may not be calculated the same as similarly-titled measures presented by other companies:


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Net cash provided by operating activities	$	1,182	$	1,184	$	3,487	$	3,347	$	1,263	$	1,182	$	3,337	$	3,487
Capital expenditures to support the business		(547)		(448)		(1,403)		(1,094)		(493)		(547)		(1,456)		(1,403)
Capital expenditures - sustainability growth investments (a)		(210)		(16)		(322)		(36)		(180)		(210)		(397)		(322)
Total capital expenditures		(757)		(464)		(1,725)		(1,130)		(673)		(757)		(1,853)		(1,725)
Proceeds from divestitures of businesses and other assets, net of cash divested		7		53		18		70		22		7		68		18
Free cash flow	$	432	$	773	$	1,780	$	2,287	$	612	$	432	$	1,552	$	1,780

(a)

These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas ~~generation. We~~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, as described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.

Seasonal Trends

Our operating revenues tend to be somewhat higher in summer months, primarily due to higher construction and demolition waste volumes. The volumes of industrial and residential waste in certain regions where we operate also tend

to increase during the summer months. Our second and third quarter revenues and results of operations typically reflect these seasonal trends.

Inflation

~~Accelerated~~Macroeconomic pressures, including inflation and ~~pronounced economic pressures, particularly related to inflationary cost pressures on~~rising interest rates, and market disruption resulting in labor, supply chain and transportation constraints have impacted our results. Significant global supply chain disruption has reduced availability of certain assets used in our business and inflation has increased costs for the goods and services we purchase, particularly for labor, repair and maintenance, and subcontractor costs. Supply chain constraints have caused delayed delivery of fleet, steel containers and other purchases. Aspects of our business rely ~~upon~~on third-party transportation providers, and such services have become more limited and expensive. We continue to ~~deliver service to our customers, have continued to have a significant impact on our cost structure and capital expenditures in 2022. We are taking~~take proactive steps to recover ~~and/or~~and mitigate inflationary cost pressures through our overall ~~strategic~~ pricing efforts and by managing our costs through efficiency, labor productivity, and investments in technology to automate certain aspects of our business. ~~A significant portion~~These efforts may not be successful for various reasons including the pace of ~~our revenue is tied to~~

~~a price escalation index with a lookback provision, which has resulted in a~~inflation, operating cost inefficiencies, market responses, and contractual limitations, such as the timing lag in our ability to recover increased costs under ~~these contracts during periods of rapid inflation. Separately, for many of our customers we provide services under multi-year~~certain contracts that ~~can restrict our ability~~are tied to increase prices and the timing of such increases. Throughout 2022, many of these contract lookback provisions began to capture the inflationary cost increases experienced since the second half of 2021 in thea price escalation ~~calculation; however, such timing lag persists and will continue to restrict our ability to address proactively future rapid cost increases for those contracts.~~index with a lookback provision.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~Information~~Except for the general financial institution instability that was publicly reported during the first quarter of 2023, as described further in Part II, Item 1A. Risk Factors, included in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, the information about market risks as of September 30, ~~2022~~2023 does not materially differ from that discussed under Item 37A in our ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~March~~December 31, 2022.

Item 4. Controls and Procedures.

Effectiveness of Disclosure Controls and Procedures

Our management, with the participation of our principal executive and financial officers, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) in ensuring that the information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such information is accumulated and communicated to management (including the principal executive and financial officers) as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive and financial officers have concluded that such disclosure controls and procedures were effective as of September 30, ~~2022~~2023 (the end of the period covered by this Quarterly Report on Form 10-Q) at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

In 2022, we implemented a new general ledger accounting system, complementary finance enterprise resource planning system and a human capital management system. These new system implementations were achieved after a multi-year review of existing accounting, reporting and human capital processes and the design and configuration of system-enabled enhancements to such processes. The change in our general ledger, finance enterprise resource planning and human capital management systems was subject to thorough testing and review by internal and external parties both before and after the implementation.

~~While these systems implementations are intended to enhance our framework for internal control over financial reporting, management,~~Management, together with our CEO and CFO, ~~has determined that~~evaluated the changes in our internal ~~controls~~control over financial reporting during the quarter ended September 30, ~~2022~~2023. We determined that there were no changes in our internal control over

financial reporting during the quarter ended September 30, 2023 that have ~~not been material and~~materially affected, or are ~~not~~ reasonably likely to materially affect, our internal ~~controls~~control over financial reporting.

PART II.

Item 1. Legal Proceedings.

Information regarding our legal proceedings can be found under the Environmental Matters and Litigation sections of Note 6 to the Condensed Consolidated Financial Statements.

Item 1A. Risk Factors.

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022, as updated by Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table summarizes common stock repurchases made during the third quarter of ~~2022~~2023 (shares in millions):

Issuer Purchases of Equity Securities


				Total Number of							Total Number of
	Total			Shares Purchased as	Approximate Maximum			Total			Shares Purchased as	Approximate Maximum
	Number of	Average		Part of Publicly	Dollar Value of Shares that			Number of	Average		Part of Publicly	Dollar Value of Shares that
	Shares	Price Paid		Announced Plans or	May Yet be Purchased Under			Shares	Price Paid		Announced Plans or	May Yet be Purchased Under
Period	Purchased	per Share		Programs	the Plans or Programs			Purchased	per Share(a)		Programs	the Plans or Programs(a)
July 1 — 30 (a)	0.2	$	153.60	0.2	$	940 million
July 1 — 31 (b)								0.1	$	169.33	0.1	$	860 million
August 1 — 31 ~~(b)~~(c)	2.4	$	164.56	2.4	$	540 million		1.7	$	163.97	1.7	$	510 million
September 1 — 30 ~~(b)~~(c)	0.6	$	167.64	0.6	$	437 million	(c)	0.5	$	156.85	0.5	$	508.5 million	(d)
Total	3.2	$	166.74	3.2				2.3	$	157.42	2.3

(a)

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. We reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased. In the table above and footnotes below, the average price paid per share, total repurchase costs and approximate maximum dollar value of shares that may yet be purchased under the plans or programs exclude the 1% excise tax.

(b)	In July ~~2022,~~2023, we repurchased ~~233,319~~0.1 million shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act for ~~$36~~$18 million, inclusive of per-share commissions, at a weighted average price of ~~$153.60.~~$169.33.

~~(b)~~(c)

In August ~~2022,~~2023, we ~~entered into~~repurchased $350 million of our common stock pursuant to an accelerated share repurchase (“ASR”) ~~agreement to repurchase $500 million of our common stock.~~agreement. At the beginning of the repurchase period, we delivered ~~$500~~$350 million cash and received ~~2.4~~1.7 million shares based on a stock price of ~~$164.56.~~$163.97. The ASR agreement completed in September ~~2022,~~2023, at which time we received ~~0.6~~0.5 million additional shares based on a final weighted average price of ~~$167.79.~~$156.87. In September ~~2022,~~2023, after the completion of the ASR agreement, we repurchased ~~18,437~~9,744 shares of our common stock in open market transactions in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act for $3$1.5 million, inclusive of ~~per-share~~per share commissions, at a weighted average price of ~~$162.70, of~~$153.93, which ~~$2 million~~ was paid in October ~~2022.~~2023.

The “Average Price Paid per Share” in the table for September represents the final weighted average price per share paid for the August 2023 ASR agreement ~~executed in August 2022~~ and the September ~~2022~~2023 open market transactions.

~~(c)~~(d)

Item 4. Mine Safety Disclosures.

Information concerning mine safety and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this quarterly report.

Item 5. Other Information.

Securities Trading Plans of Directors and Executive Officers

During the quarter ended September 30, 2023, the following executive officers adopted the stock trading plans described below, each of which is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act:


	Plan	Plan	Plan
	Adoption	Effective	Expiration
Executive Officer	Date	Date	Date(a)	Type of Transaction
Rafael Carrasco Senior Vice President, Enterprise Strategy	8/14/2023	12/1/2023	None	Sell-to-Cover Taxes (b)
Michael Watson Senior Vice President & Chief Customer Officer	8/22/2023	11/20/2023	1/31/2024	Cashless Exercise and Sale (c) Cashless Exercise and Hold (d)
Tara Hemmer Senior Vice President & Chief Sustainability Officer	8/28/2023	11/27/2023	3/28/2024	Donation (e) Open Market Sale Upon Payout of Performance Share Units (f) Cashless Exercise and Hold (g)
John Morris Executive Vice President & Chief Operating Officer	9/5/2023	12/4/2023	6/28/2024	Open Market Sale Upon Payout of Performance Share Units (h) Cashless Exercise and Sale (i)

(a)

Mr. Carrasco’s stock trading plan provides that it shall remain in effect for as long as he is employed, unless affirmatively terminated sooner. The remaining stock trading plans will automatically terminate at the earlier of the applicable Plan Expiration Date set forth above or the completion of all of the contemplated transactions set forth therein.

(b)

Mr. Carrasco’s stock trading plan provides that, upon future vesting and payout of equity compensation awards granted to Mr. Carrasco by the Company or any affiliate, the Corporate Secretary shall cause to be sold the number of shares of common stock that, when added to tax withholding by the Company, will generate sufficient proceeds to cover the full anticipated personal federal tax obligations on account of such equity compensation award. The proceeds shall be remitted directly to the U.S. Internal Revenue Service. The number of shares of common stock to potentially be sold pursuant to this stock trading plan will depend on the terms of current unvested and future equity compensation awards granted to Mr. Carrasco and the Company’s achievement relative to applicable performance measures for such current unvested and future equity compensation awards.

(c)

Mr. Watson’s stock trading plan provides for the potential cashless exercise of 8,184 stock options, upon our common stock reaching a specified market price, pursuant to which shares of common stock will be sold to cover option costs, tax obligations, commissions and fees, and all net shares received after settlement will also be sold.

(d)

Mr. Watson’s stock trading plan also provides for the potential cashless exercise of 8,183 stock options, upon our common stock reaching a specified market price, pursuant to which shares of common stock will be sold to cover option costs, tax obligations, commissions and fees; Mr. Watson will then continue to hold all remaining shares of common stock resulting from the option exercise after the settlement.

(e)	Ms. Hemmer’s stock trading plan provides for a donation of 900 shares of our common stock upon our common stock reaching a specified market price.

(f)

Ms. Hemmer’s stock trading plan also provides for the sale of 25% of net after-tax shares of our common stock received upon the payout of performance share unit (“PSU”) equity compensation awards in 2024, for the performance period ending December 31, 2023, upon our common stock reaching each of three specified market prices, for an aggregate total sale of up to 75% of such net after-tax shares. Ms. Hemmer received a target grant of 11,930 PSU awards with a performance period ending December 31, 2023; the number of shares to be delivered to Ms. Hemmer on account of these PSU awards can range from zero to 200% of the initial target grant. As a result, the number of

shares of common stock to potentially be sold pursuant to this instruction will be determined based on the Company’s achievement relative to applicable performance measures for the underlying PSU awards.

(g)

Ms. Hemmer’s stock trading plan also provides for the potential cashless exercise of an aggregate of 27,005 stock options upon our common stock reaching specified market prices, pursuant to which shares of common stock will be sold to cover option costs, tax obligations, commissions and fees; Ms. Hemmer will then continue to hold all remaining shares of common stock resulting from the option exercise after settlement.

(h)

Mr. Morris’s stock trading plan provides for the sale of all net after-tax shares of our common stock received upon payout of PSU equity compensation awards in 2024, for the performance period ending December 31, 2023, upon our common stock reaching a specified market price. Mr. Morris received a target grant of 16,140 PSU awards with a performance period ending December 31, 2023; the number of shares to be delivered to Mr. Morris on account of these PSU awards can range from zero to 200% of the initial target grant. As a result, the number of shares of common stock to potentially be sold pursuant to this instruction will be determined based on the Company’s achievement relative to applicable performance measures for the underlying PSU awards.

(i)

Mr. Morris’s stock trading plan also provides for the potential cashless exercise of 17,778 stock options upon our common stock reaching a specified market price, pursuant to which shares of common stock will be sold to cover option costs, tax obligations, commissions and fees, and all net shares received after settlement will also be sold.

Item 6. Exhibits.


Exhibit No.		Description
4.1*		Officers’ Certificate delivered pursuant to Section 301 of the Indenture dated September 10, 1997 establishing the terms and form of the 4.875% Senior Notes due 2029.

4.2*		Officers’ Certificate delivered pursuant to Section 301 of the Indenture dated September 10, 1997 establishing the terms and form of the 4.875% Senior Notes due 2034.

4.3*		Guarantee Agreement by WM Holdings in favor of The Bank of New York Mellon Trust Company, N.A., as Trustee for the holders of the 4.875% Senior Notes due 2029.

4.4*		Guarantee Agreement by WM Holdings in favor of The Bank of New York Mellon Trust Company, N.A., as Trustee for the holders of the 4.875% Senior Notes due 2034.

22.1*		Guarantor Subsidiary.

31.1*		Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 James C. Fish, Jr., President and Chief Executive Officer.

31.2*		Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934 Devina A. Rankin, Executive Vice President and Chief Financial Officer.

32.1**		Certification Pursuant to 18 U.S.C. §1350 of James C. Fish, Jr., President and Chief Executive Officer.

32.2**		Certification Pursuant to 18 U.S.C. §1350 of Devina A. Rankin, Executive Vice President and Chief Financial Officer.

95*		Mine Safety Disclosures.

101.INS*		Inline XBRL Instance.

101.SCH*		Inline XBRL Taxonomy Extension Schema.

101.CAL*		Inline XBRL Taxonomy Extension Calculation.

101.LAB*		Inline XBRL Taxonomy Extension Labels.

101.PRE*		Inline XBRL Taxonomy Extension Presentation.

101.DEF*		Inline XBRL Taxonomy Extension Definition.

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	WASTE MANAGEMENT, INC.

	By:	/s/ DEVINA A. RANKIN
		Devina A. Rankin
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

	WASTE MANAGEMENT, INC.

	By:	/s/ ~~LESLIE K. NAGY~~JOHN CARROLL
		~~Leslie K. Nagy~~John Carroll
		Vice President and
		Chief Accounting Officer
		(Principal Accounting Officer)



Date: October ~~26, 2022~~25, 2023

4546