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 June 30, 2022
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 July 22, 2022 was 413,335,715 (excluding treasury shares of 216,946,746).

PART I.

Item 1.    Financial Statements.

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Millions, Except Share and Par Value Amounts)

	June 30,		December 31,
	2022		2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	894	$	118
Accounts receivable, net of allowance for doubtful accounts of $26 and $25, respectively		2,494		2,278
Other receivables, net of allowance for doubtful accounts of $7 and $8, respectively		171		268
Parts and supplies		159		135
Other assets		269		270
Total current assets		3,987		3,069
Property and equipment, net of accumulated depreciation and amortization of $21,127 and $20,537, respectively		14,382		14,419
Goodwill		9,022		9,028
Other intangible assets, net		834		898
Restricted funds		397		348
Investments in unconsolidated entities		607		432
Other assets		899		903
Total assets	$	30,128	$	29,097
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,382	$	1,375
Accrued liabilities		1,493		1,428
Deferred revenues		616		571
Current portion of long-term debt		231		708
Total current liabilities		3,722		4,082
Long-term debt, less current portion		14,046		12,697
Deferred income taxes		1,632		1,694
Landfill and environmental remediation liabilities		2,426		2,373
Other liabilities		1,110		1,125
Total liabilities		22,936		21,971
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
Additional paid-in capital		5,257		5,169
Retained earnings		12,563		12,004
Accumulated other comprehensive income (loss)		(17)		17
Treasury stock at cost, 217,005,817 and 214,158,636 shares, respectively		(10,619)		(10,072)
Total Waste Management, Inc. stockholders’ equity		7,190		7,124
Noncontrolling interests		2		2
Total equity		7,192		7,126
Total liabilities and equity	$	30,128	$	29,097

See Notes to Condensed Consolidated Financial Statements.

2

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Millions, Except per Share Amounts)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Operating revenues	$	5,027	$	4,476	$	9,688	$	8,588
Costs and expenses:
Operating		3,142		2,736		6,045		5,250
Selling, general and administrative		487		445		978		903
Depreciation and amortization		508		500		990		972
Restructuring		—		4		—		5
(Gain) loss from divestitures, asset impairments and unusual items, net		—		—		17		17
		4,137		3,685		8,030		7,147
Income from operations		890		791		1,658		1,441
Other income (expense):
Interest expense, net		(93)		(98)		(178)		(195)
Loss on early extinguishment of debt		—		(220)		—		(220)
Equity in net losses of unconsolidated entities		(17)		(11)		(32)		(20)
Other, net		(4)		(6)		(1)		(5)
		(114)		(335)		(211)		(440)
Income before income taxes		776		456		1,447		1,001
Income tax expense		189		105		346		229
Consolidated net income		587		351		1,101		772
Less: Net income (loss) attributable to noncontrolling interests		—		—		1		—
Net income attributable to Waste Management, Inc.	$	587	$	351	$	1,100	$	772
Basic earnings per common share	$	1.42	$	0.83	$	2.65	$	1.83
Diluted earnings per common share	$	1.41	$	0.83	$	2.64	$	1.82

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Millions)

(Unaudited)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Consolidated net income	$	587	$	351	$	1,101	$	772
Other comprehensive income (loss), net of tax:
Derivative instruments, net		2		6		3		7
Available-for-sale securities, net		(7)		3		(20)		(2)
Foreign currency translation adjustments		(27)		13		(17)		26
Post-retirement benefit obligations, net		—		—		—		—
Other comprehensive income (loss), net of tax		(32)		22		(34)		31
Comprehensive income		555		373		1,067		803
Less: Comprehensive income (loss) attributable to noncontrolling interests		—		—		1		—
Comprehensive income attributable to Waste Management, Inc.	$	555	$	373	$	1,066	$	803

See Notes to Condensed Consolidated Financial Statements.

3

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

(Unaudited)

	Six Months Ended
	June 30,
	2022		2021
Cash flows from operating activities:
Consolidated net income	$	1,101	$	772
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization		990		972
Deferred income tax (benefit) expense		(64)		(67)
Interest accretion on landfill and environmental remediation liabilities		55		53
Provision for bad debts		24		17
Equity-based compensation expense		51		45
Net gain on disposal of assets		(10)		(12)
(Gain) loss from divestitures, asset impairments and other, net		17		17
Equity in net losses of unconsolidated entities, net of dividends		32		22
Loss on early extinguishment of debt		—		220
Change in operating assets and liabilities, net of effects of acquisitions and divestitures:
Receivables		(88)		(24)
Other current assets		(26)		(22)
Other assets		36		9
Accounts payable and accrued liabilities		250		213
Deferred revenues and other liabilities		(63)		(52)
Net cash provided by operating activities		2,305		2,163
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired		(10)		(10)
Capital expenditures		(968)		(666)
Proceeds from divestitures of businesses and other assets, net of cash divested		11		17
Other, net		(133)		(49)
Net cash used in investing activities		(1,100)		(708)
Cash flows from financing activities:
New borrowings		5,360		1,707
Debt repayments		(4,683)		(2,326)
Premiums and other paid on early extinguishment of debt		—		(211)
Common stock repurchase program		(520)		(500)
Cash dividends		(544)		(489)
Exercise of common stock options		21		41
Tax payments associated with equity-based compensation transactions		(35)		(28)
Other, net		(6)		(4)
Net cash used in financing activities		(407)		(1,810)
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents		1		4
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents		799		(351)
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period		194		648
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	993	$	297
Reconciliation of cash, cash equivalents and restricted cash and cash equivalents at end of period:
Cash and cash equivalents	$	894	$	148
Restricted cash and cash equivalents included in other current assets		30		56
Restricted cash and cash equivalents included in restricted funds		69		93
Cash, cash equivalents and restricted cash and cash equivalents at end of period	$	993	$	297

See Notes to Condensed Consolidated Financial Statements.

4

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 June 30:
2022
Balance, March 31, 2022	$	7,146	630,282	$	6	$	5,178	$	12,247	$	15	(215,102)	$	(10,302)	$	2
Consolidated net income		587	—		—		—		587		—	—		—		—
Other comprehensive income (loss), net of tax		(32)	—		—		—		—		(32)	—		—		—
Cash dividends declared of $0.65 per common share		(269)	—		—		—		(269)		—	—		—		—
Equity-based compensation transactions, net		34	—		—		29		(2)		—	141		7		—
Common stock repurchase program		(274)	—		—		50		—		—	(2,046)		(324)		—
Other, net		—	—		—		—		—		—	1		—		—
Balance, June 30, 2022	$	7,192	630,282	$	6	$	5,257	$	12,563	$	(17)	(217,006)	$	(10,619)	$	2
2021
Balance, March 31, 2021	$	7,429	630,282	$	6	$	5,071	$	11,337	$	48	(208,201)	$	(9,035)	$	2
Consolidated net income		351	—		—		—		351		—	—		—		—
Other comprehensive income (loss), net of tax		22	—		—		—		—		22	—		—		—
Cash dividends declared of $0.575 per common share		(242)	—		—		—		(242)		—	—		—		—
Equity-based compensation transactions, net		44	—		—		33		(2)		—	310		13		—
Common stock repurchase program		(250)	—		—		—		—		—	(1,576)		(250)		—
Other, net		—	—		—		—		—		—	—		—		—
Balance, June 30, 2021	$	7,354	630,282	$	6	$	5,104	$	11,444	$	70	(209,467)	$	(9,272)	$	2

See Notes to Condensed Consolidated Financial Statements.

5

WASTE MANAGEMENT, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ─ (Continued)

(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
Six Months Ended June 30:
2022
Balance, December 31, 2021	$	7,126	630,282	$	6	$	5,169	$	12,004	$	17	(214,159)	$	(10,072)	$	2
Consolidated net income		1,101	—		—		—		1,100		—	—		—		1
Other comprehensive income (loss), net of tax		(34)	—		—		—		—		(34)	—		—		—
Cash dividends declared of $1.30 per common share		(544)	—		—		—		(544)		—	—		—		—
Equity-based compensation transactions, net		68	—		—		18		3		—	1,003		47		—
Common stock repurchase program		(524)	—		—		70		—		—	(3,852)		(594)		—
Other, net		(1)	—		—		—		—		—	2		—		(1)
Balance, June 30, 2022	$	7,192	630,282	$	6	$	5,257	$	12,563	$	(17)	(217,006)	$	(10,619)	$	2
2021
Balance, December 31, 2020	$	7,454	630,282	$	6	$	5,129	$	11,159	$	39	(207,481)	$	(8,881)	$	2
Consolidated net income		772	—		—		—		772		—	—		—		—
Other comprehensive income (loss), net of tax		31	—		—		—		—		31	—		—		—
Cash dividends declared of $1.15 per common share		(489)	—		—		—		(489)		—	—		—		—
Equity-based compensation transactions, net		86	—		—		25		2		—	1,399		59		—
Common stock repurchase program		(500)	—		—		(50)		—		—	(3,385)		(450)		—
Other, net		—	—		—		—		—		—	—		—		—
Balance, June 30, 2021	$	7,354	630,282	$	6	$	5,104	$	11,444	$	70	(209,467)	$	(9,272)	$	2

See Notes to Condensed Consolidated Financial Statements.

6

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 12. 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., 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 our 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 our natural gas fleet.

In 2021, our senior management began evaluating, overseeing and managing 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 June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 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.

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.

7

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 advance 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 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 June 30, 2022 and December 31, 2021, we had $177 million and $175 million, respectively, of deferred contract costs, of which $132 million and $126 million, respectively, was related to deferred sales incentives.

Leases

Amounts for our operating lease right-of-use assets are recorded in long-term other assets in our Condensed Consolidated Balance Sheets. 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. Amounts for our financing leases are recorded in property and equipment, net of accumulated depreciation, 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.

8

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):

	June 30, 2022						December 31, 2021
			Environmental						Environmental
	Landfill		Remediation		Total		Landfill		Remediation		Total
Current (in accrued liabilities)	$	135	$	29	$	164	$	137	$	29	$	166
Long-term		2,244		182		2,426		2,189		184		2,373
	$	2,379	$	211	$	2,590	$	2,326	$	213	$	2,539

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

			Environmental
	Landfill		Remediation
December 31, 2021	$	2,326	$	213
Obligations incurred and capitalized		56		—
Obligations settled		(43)		(12)
Interest accretion		54		1
Revisions in estimates and interest rate assumptions (a) (b)		(13)		9
Acquisitions, divestitures and other adjustments		(1)		—
June 30, 2022	$	2,379	$	211

(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 $11 million due to an increase from 1.50% at December 31, 2021 to 3.00% at June 30, 2022 in the risk-free discount rate used to measure these liabilities.

At several of our landfills, we provide financial assurance by depositing cash into restricted trust funds accounts for purposes of settling final capping, closure, post-closure and environmental remediation obligations. Generally, these trust funds are established to comply with statutory requirements and operating agreements. See Note 12 for additional information related to these trusts.

9

WASTE MANAGEMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3.    Debt

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

	June 30,		December 31,
	2022		2021
Commercial paper program (weighted average interest rate of 0.4% as of June 30, 2022 and December 31, 2021)	$	1,006	$	1,778
Term Loan maturing May 2024, interest rate of 2.3% as of June 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 June 30, 2022 and 3.1% as of December 31, 2021)		8,626