Waste Management WM · USD

19. Segment and Related Information Our senior management evaluates, oversees and manages the financial performance of our business through five reportable segments, referred to as (i) East Tier; (ii) West Tier; (iii) Recycling Processing and Sales; (iv) Renewable Energy and (v) Healthcare Solutions. Our East and West Tiers, along with Other Ancillary services, form our “Collection and Disposal” businesses. We also provide additional services not managed through our five reportable segments, which are presented as Corporate and Other. From time to time, our operating results are significantly affected by certain transactions or events that management believes are not indicative or representative of our results. Refer to Note 11 for an explanation of certain transactions and events affecting our operating results. Reclassifications have been made to our prior period consolidated financial information to conform to the current year presentation.Collection and DisposalOur Collection and Disposal businesses provide integrated environmental services, including collection, transfer, disposal and resource recovery services. We evaluate our Collection and Disposal businesses primarily through two geographic segments, East Tier and West Tier. Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. Our West Tier primarily includes geographic areas located in the Western, Southern and Central U.S., including the upper Midwest region, and British Columbia, Canada. Additionally, we provide Other Ancillary services that are not managed through the Tier segments but that support our collection and disposal operations. Other Ancillary includes specialized services performed for customers that have differentiated needs. These specialized services are targeted at large industrial customers managed through our Sustainability and Environmental Solutions (“SES”) business or geographically dispersed customers managed through our Strategic Business Solutions (“WMSBS”) business. Also included within Other Ancillary are the results of non-operating entities that provide financial assurance and self-insurance support for our business, net of intercompany activity.

10. Commitments and ContingenciesFinancial 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 6. 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.

6. DebtThe 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 December 31:​​​​​​​​ ​ ​ ​2025 ​ ​ ​2024Commercial paper program (weighted average interest rate of 4.1% as of December 31, 2025 and 4.7% as of December 31, 2024)​$ 1,090​$ 1,250Senior notes, maturing through 2054, interest rates ranging from 1.15% to 7.75% (weighted average interest rate of 4.3% as of December 31, 2025 and 4.2% as of December 31, 2024)​ 17,498​ 18,419Canadian senior notes, C$500 million maturing September 2026, interest rate of 2.6%​​ 364​​ 348Tax-exempt bonds, maturing through 2055, fixed and variable interest rates ranging from 0.70% to 4.60% (weighted average interest rate of 3.4% as of December 31, 2025 and 3.7% as of December 31, 2024)​ 2,827​ 2,873Financing leases and other, maturing through 2075 (weighted average interest rate of 4.8% as of December 31, 2025 and 4.9% as of December 31, 2024)​ 1,284​ 1,189Debt issuance costs, discounts and other​ (156)​ (179)​​ 22,907​ 23,900Current portion of long-term debt​ 711​ 1,359Long-term debt, less current portion​$ 22,196​$ 22,541​Debt ClassificationAs of December 31, 2025, we had approximately $3.7 billion of debt maturing within the next 12 months, including (i) $1.8 billion of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities; (ii) $1.1 billion of short-term borrowings under our commercial paper program (net of related discount on issuance); (iii) $223 million of 7.1% senior notes that mature in August 2026; (iv) $364 million of 2.6% Canadian senior notes that mature in September 2026 and (v) $200 million of other debt with scheduled maturities within the next 12 months. As of December 31, 2025, we have classified $3.0 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S. and Canadian revolving credit facility (“$3.5 billion revolving credit facility”), as discussed below. The remaining $711 million of debt maturing in the next 12 months is classified as current obligations. Access to and Utilization of Credit Facilities and Commercial Paper Program$3.5 Billion Revolving Credit Facility — Our $3.

8. Income TaxesIncome Tax ExpenseOur income tax expense consisted of the following for the year ended December 31 (in millions):​​​​​​​​​​ ​ ​ ​ ​2025 ​ ​ ​2024 ​ ​ ​2023Current: ​ ​ ​ ​ ​ ​Federal​$ 193​$ 419​$ 477State​ 121​ 133​ 151Foreign​ 40​​ 37​​ 34​​ 354​​ 589​​ 662Deferred:​ ​​​ ​​​ ​Federal​ 308​​ 98​​ 73State​ 64​​ 19​​ 2Foreign​ (9)​​ 7​​ 8​​ 363​​ 124​​ 83Income tax expense:​$ 717​$ 713​$ 745​The U.S. federal statutory income tax rate is reconciled to the effective income tax rate for the year ended December 31 as follows (in millions, except percentages):​​​​​​​​​​​​​​​​​ ​ ​ ​ ​2025​2024​2023​​​Tax Expense​Rate​Tax Expense​Rate​Tax Expense​Rate​Income tax expense at U.S. federal statutory rate $ 720​ 21.0%$ 726​ 21.0% $ 634​ 21.0%State and local income tax, net of federal income tax effect (a) ​ 146​ 4.3 ​ 135​ 3.9 ​ 123​ 4.1​Foreign tax effects​​ 6​ 0.2​​ 16​ 0.5​​ 12​ 0.4​Tax credits ​​​​​​​​​​​​​​​Investment tax credits ​ (184)​ (5.4) ​ (137)​ (4.0) ​ (8)​ (0.2)​Low income housing tax credits ​ (117)​ (3.4) ​ (90)​ (2.6) ​ (88)​ (2.9)​Other tax credits ​ (2)​ (0.1) ​ (3)​ (0.1) ​ (2)​ (0.1)​Changes in valuation allowances​​ (5)​ (0.2)​​ (7)​ (0.2)​​ 41​ 1.4​Nontaxable or nondeductible items​​ 34​ 1.0​​ 17​ 0.5​​ 35​ 1.1​Changes in unrecognized tax benefits​​ —​ —​​ (20)​ (0.6)​​ 1​0.0​Other adjustments​​​​​​​​​​​​​​​​Proportional amortization method​​ 96​ 2.8​​ 78​ 2.3​​ —​ —​Other​​ 23​ 0.7​​ (2)​ (0.1)​​ (3)​ (0.1)​​ $ 717​ 20.9% $ 713​ 20.6%$ 745​ 24.7%(a)For the years ended December 31, 2025, 2024 and 2023, the states that make up a majority of the effect of the state and local income tax category include California, Florida, Illinois, New Jersey, New York and Oregon. Additionally, Georgia is included in the year ended December 31, 2024. The comparability of our income tax expense for the reported periods has been primarily affected by (i) federal tax credits; (ii) variations in our income before income taxes; (iii) impacts of adopting Accounting Standards Updates (“ASU”) 2023-02 and (iv) the tax implications of impairments.Income before income taxes by source for the year ended December 31 was as follows (in millions):​​​​​​​​​​ ​ ​ ​ ​2025 ​ ​ ​2024 ​ ​ ​2023Domestic​$ 3,307​$ 3,325​$ 2,878Foreign​ 119​​ 133​​ 143Income before income taxes​$ 3,426​$ 3,458​$ 3,021​Renewable Natural Gas — Through our Renewable Energy segment, we have invested in building landfill gas-to-energy facilities in the U.S.

7. LeasesOur operating lease activities primarily consist of leases for real estate, landfills (as discussed further in Note 2), fleet vehicles and operating equipment. Our financing lease activities primarily consist of leases for operating equipment, railcars and landfill assets. Leases with an initial term of 12 months or less, which are not expected to be renewed beyond one year, are not recorded on the balance sheet and are recognized as lease expense on a straight-line basis over the lease term. Most leases include one or more options to renew, with renewal terms generally ranging from one to 10 years. The exercise of lease renewal options is generally at our sole discretion. We include the renewal term in the calculation of the right-of-use asset and related lease liability when such renewals are reasonably certain of being exercised. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Certain of our lease agreements include rental payments based on usage, and other lease agreements include rental payments adjusted periodically for inflation; these payments are treated as variable lease payments. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.When the implicit interest rate is not readily available for our leases, we discount future cash flows of the remaining lease payments using the current interest rate that would be paid to borrow on collateralized debt over a similar term, or incremental borrowing rate, at the commencement date.

17. Acquisitions and Divestitures Acquisitions2025 Acquisitions During the year ended December 31, 2025, we completed solid waste and recycling acquisitions primarily in Virginia, Maryland and Washington D.C. for total consideration of $440 million. Total consideration included $399 million in net cash paid and $41 million in non-cash consideration, primarily related to purchase price holdbacks. In addition, we paid $9 million of holdbacks, of which $8 million related to prior year acquisitions.Total consideration for our 2025 acquisitions was primarily allocated to $92 million of property and equipment, $45 million of other intangible assets, primarily customer relationships, and $315 million of goodwill. Other intangible assets included $39 million of customer relationships and $6 million of covenants not-to-compete. The goodwill related to our 2025 acquisitions was primarily a result of expected synergies from combining the acquired businesses with our existing operations and substantially all was tax deductible.​2024 Acquisitions In addition to the acquisition of Stericycle, during the year ended December 31, 2024, we completed solid waste and recycling acquisitions primarily in New York, Florida, North Carolina and Arizona for total consideration of $790 million. Total consideration included $783 million in net cash paid and $7 million in non-cash consideration, primarily related to purchase price holdbacks. In addition, we paid $23 million of holdbacks, of which $16 million related to prior year acquisitions.Total consideration for our 2024 acquisitions, exclusive of Stericycle, was primarily allocated to $160 million of property and equipment, $79 million of other intangible assets and $588 million of goodwill. Other intangible assets included $63 million of customer relationships and $14 million of covenants not-to-compete. The goodwill related to our other 2024 acquisitions was primarily a result of expected synergies from combining the acquired businesses with our existing operations, a significant portion of which was tax deductible.In 2024, we paid $41 million to acquire the remaining minority interests in a business engaged in accelerating film and plastic wrap recycling capabilities that is included in our Recycling Processing and Sales segment.Stericycle Acquisition — On June 3, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to acquire all outstanding shares of Stericycle for $62.

Strategy, Governance and Risk ManagementOur Technology Risk Program is designed to proactively identify, monitor, and mitigate technology-related risks across our digital operations and assess cybersecurity risks related to third-party vendors and suppliers. Our Cybersecurity Program and our Technology Risk Program are led by our Chief Information Security Officer (“CISO”), a Certified Information Systems Security Professional with two decades of cybersecurity leadership. The CISO and his team are responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture and processes. The Technology Risk Oversight Committee chaired by our CISO, with members representing leadership throughout our Company, provides oversight and guidance to technology risks, including cybersecurity, and our policies and procedures related to our development, deployment and monitoring of artificial intelligence. Our Company’s Cybersecurity Program is designed to align with the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework and leading industry practices, and our Cybersecurity Program is integrated into our Company’s Enterprise Risk Management framework. Internal and external experts regularly evaluate our Cybersecurity Program, and the results of those reviews are reported to senior management and our Company’s Board of Directors. Our Incident Response Committee, which is comprised of leaders in the areas of information security, digital, legal, finance, privacy, compliance and ethics, corporate security and communications, is responsible for leading our Company’s response to cyber incidents. Our Cybersecurity Incident Response Plan outlines the processes by which management is informed about and monitors detection and mediation of cyber incidents. We actively engage with key vendors, industry participants, and intelligence and law enforcement communities as part of our continuing efforts to evaluate and enhance the effectiveness of our information security policies and procedures. We have a Data Protection Office that works closely with, and assists, our enterprise Privacy Program, overseen by the Chief Privacy Officer, along with advisory support from appointed Data Protection Officers in Europe and Quebec.

15. Earnings Per ShareBasic and diluted earnings per share were computed using the following common share data for the year ended December 31 (shares in millions):​​​​​​​​ ​ ​ ​2025 ​ ​ ​2024 ​ ​ ​2023Number of common shares outstanding at end of period 402.9​ 401.5 401.5Effect of using weighted average common shares outstanding (0.2)​ — 3.4Weighted average basic common shares outstanding 402.7​ 401.5 404.9Dilutive effect of equity-based compensation awards and other contingently issuable shares 1.5​ 1.9 2.0Weighted average diluted common shares outstanding 404.2​ 403.4 406.9Potentially issuable shares 4.2​ 4.7 5.0Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding 0.8​ 1.2 1.0​Refer to the Consolidated Statements of Operations for net income attributable to Waste Management, Inc.