Waste Management Stock

Waste Management, Inc. operates as a provider of comprehensive environmental solutions, providing services throughout the United States (U.S.) and Canada. The company is a holding company and all operations are conducted by its subsidiaries.

The company partners with its customers and the communities it serves to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. The company’s solid waste business is operated and managed locally by its subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, recycling and resource recovery services. Through its subsidiaries, including its Waste Management Renewable Energy (WM Renewable Energy) business, the company is 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 that it allocates to its natural gas fleet. During 2023, the company’s largest customer represented less than 5% of annual revenues.

The company owns or operates 263 landfill sites, which is 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, the company manages 332 transfer stations that consolidate, compact and transport waste efficiently and economically. The company also uses waste to create energy, recovering the gas produced naturally as waste decomposes in landfills and using the gas in generators to make electricity. The company is a leading recycler in the U.S. and Canada, handling materials that include cardboard, paper, glass, plastic and metal. The company provides cost-efficient, environmentally sound recycling programs for municipalities, businesses and households across the U.S. and Canada, as well as other services that supplement its solid waste business.

The company’s strategy leverages and sustains the strongest asset network in the industry to drive best-in-class customer experience and growth. The company’s strategic planning processes appropriately consider that the future of its business and the industry can be influenced by changes in economic conditions, the competitive landscape, the regulatory environment, asset and resource availability and technology.

The company’s brand promise is ALWAYS WORKING FOR A SUSTAINABLE TOMORROW. The company lives this promise through its service offerings and sustainable solutions, its investments in innovation, its people, and its commitment to the future. Through its longtime focus on finding sustainable solutions, the company continues to evolve beyond being a traditional environmental waste services company.

Operations

General

The company’s East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada. The company’s West Tier primarily includes geographic areas located in the Western U.S., including the upper Midwest region, and British Columbia, Canada. The company also provides additional services not managed through its four reportable segments, which are presented as Corporate and Other.

Collection and Disposal

Services provided through the company’s Collection and Disposal businesses are described below:

Collection: The company’s commitment to customers begins with a vast waste collection network. Collection involves picking up and transporting waste and recyclable materials from where it was generated to a transfer station, recycling facility or disposal site. The company generally provides collection services under one of two types of arrangements:

For commercial and industrial collection services, typically the company has three-year service agreements. As part of the service, the company provides steel containers to most customers to store their solid waste between pick-up dates. Containers vary in size and type according to the needs of the company’s customers and the restrictions of their communities. Many are designed to be lifted mechanically and either emptied into a truck’s compaction hopper or directly into a disposal site. By using these containers, the company can service most of its commercial and industrial customers with trucks operated by only one employee.

For most residential collection services, the company has a contract with, or a franchise granted by, a municipality, homeowners’ association or some other regional authority that gives it the exclusive right to service all or a portion of the homes in an area. These contracts or franchises are typically for periods of three to ten years and typically mirror maximum terms as allowed by statutes by state. The company also provides services under individual monthly subscriptions directly to households. The fees for residential collection are either paid by the municipality or authority from their tax revenues or service charges, or are paid directly by the residents receiving the service.

Landfill: Landfills are the main depositories for solid waste in North America. As of December 31, 2023, the company owned or operated 258 solid waste landfills and five secure hazardous waste landfills, which represents the largest network of landfills throughout the U.S. and Canada. As of December 31, 2023, the company owned or controlled the management of 237 sites with remedial activities, that are in closure or that have received a certification of closure from the applicable regulatory agency. Solid waste landfills are constructed and operated on land with engineering safeguards that limit the possibility of water and air pollution, and is operated under procedures prescribed by regulation. A landfill must meet federal, state or provincial, and local regulations during its design, construction, operation and closure. All solid waste management companies must have access to a disposal facility, such as a solid waste landfill. It is usually preferable for the company’s collection operations to use disposal facilities that it owns or operates, a practice it refers to as internalization, rather than using third-party disposal facilities.

The company’s hazardous waste landfills are sited, constructed and operated in a manner designed to provide long-term containment of waste. The company also operates a hazardous waste facility at which it isolates treated hazardous waste in liquid form by injection into deep wells that have been drilled in certain acceptable geologic formations far below the base of fresh water to a point that is safely separated by other substantial geological confining layers.

Included within the company’s Collection and Disposal businesses are landfills having 21 third-party power generating facilities converting its landfill gas to fuel electricity generators; 14 third-party renewable natural gas (RNG) facilities processing landfill gas to be sold to natural gas suppliers and two third-party projects delivering its landfill gas by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes.

Transfer: As of December 31, 2023, the company owned or operated 332 transfer stations in the U.S. and Canada. The company deposits waste at these stations, as do other waste haulers. The solid waste is then consolidated and compacted to reduce the volume and increase the density of the waste and transported by transfer trucks or by rail to disposal sites.

The utilization of the company’s transfer stations by its own collection operations improves internalization by allowing it to retain fees that it would otherwise pay to third parties for the disposal of the waste it collects. In most cases, the company owns the permits and will be responsible for any regulatory requirements relating to the operation and closure of the transfer station.

Other: Other businesses providing collection and disposal services include the following:

Strategic Business Solutions (WMSBS) — Although many waste management services such as collection and disposal are local services, the company’s WMSBS business works with customers whose locations span the U.S. and Canada. The company’s strategic accounts program provides these customers with streamlined service, enhanced reporting, measurement tools aimed at meeting sustainability objectives and centralized billing and management of accounts.

Sustainability and Environmental Solutions (SES) — The company’s SES business collaborates with its geographic areas and WMSBS team to offer its customers end-to-end solutions that help businesses achieve their sustainability, recycling and waste diversion goals while meeting industry-specific compliance requirements and rising environmental demands. These solutions include Sustainability Services, where its employees provide full-service waste management solutions and consulting services, working full-time onsite at its customers’ facilities or through remote-managed programs (this service is managed through its SES business but reflected principally in its collection line of business); remediation and construction services; management and marketing of fly ash, which is residue generated from the combustion of coal to generate electricity; and industrial waste services, which uses thermal and mechanical separation technologies to minimize waste volumes and recover commodities at the point of generation. The breadth of these service offerings, combined with the company’s large and expanding network of technology-enabled infrastructure in recycling, organics, and renewable energy give it the ability to help customers reduce the amount of waste they generate, identify recycling opportunities, and determine efficient and environmentally friendly means for waste collection and disposal.

Recycling Processing and Sales

Recycling involves the separation of reusable materials from the waste stream for processing and resale or other disposition. The company is North America’s leading recycler of post-consumer materials. The company is helping expand the availability of recycled materials by investing in infrastructure, increasing access to recycling services and educating customers through its Recycle Right program.

The company’s recycling operations provide communities and businesses with an alternative to traditional landfill disposal and support its strategic goals to extract more value from the materials it manages. The company is the first major solid waste company to focus on residential single-stream recycling, which allows customers to mix clean bottles, cans, paper and cardboard in one bin. Residential single-stream programs have greatly increased recycling volumes. Single-stream recycling is possible through the use of various mechanized screens and optical sorting technologies. In addition to advancing its single stream recycling programs for commercial applications, the company continues to invest in recycling technologies and businesses designed to offer services and solutions to support and grow its current operations. The company is investing in enhanced recycling facility technology at new and existing facilities to benefit labor productivity, support increased recycling capacity and allow for dynamic adjustments to respond to evolving end-market demands. The company’s Recycling Processing and Sales segment includes the following:

Materials Processing — Through its collection operations and third-party customer base, the company collects recyclable materials from residential, commercial and industrial customers and direct these materials to one of its recycling facilities for processing. As of December 31, 2023, the company operated 102 recycling facilities, of which 44 are single stream, where cardboard, paper, glass, metals, plastics, construction and demolition materials and other recycling commodities are recovered for resale or redirected for other purposes.

Recycling Commodities — The company markets and resells recycling commodities globally. The company manages the marketing of recycling commodities that are processed in its facilities by continuously analyzing market prices, logistics, market demands and product quality through its dedicated recycling service centers and account managers.

Recycling Brokerage Services — The company also provides recycling brokerage services, which involve managing the marketing of recyclable materials for third parties. The company’s experience in managing recycling commodities for its own operations gives it the expertise needed to effectively manage volumes for third parties. Utilizing the resources and capabilities of its recycling service centers and account managers, it can assist customers in marketing and selling their recycling commodities with minimal capital requirements. The recyclable materials processed in the company’s recycling facilities are received from various sources, including third parties and its own operations.

WM Renewable Energy

The company develops, operates, and promotes projects for the beneficial use of landfill gas through its WM Renewable Energy businesses. Landfill gas is produced naturally as waste decomposes in a landfill. The methane component of the landfill gas is a readily available, renewable energy source that can be gathered and used beneficially as an alternative to fossil fuel. The U.S. Environmental Protection Agency (EPA) endorses landfill gas as a renewable energy resource, in the same category as wind, solar and geothermal resources. As of December 31, 2023, the company had 92 landfill gas beneficial use projects producing commercial quantities of methane gas at owned or operated landfills. For 66 of these projects, the processed gas is used to fuel electricity generators. The electricity is then sold to public utilities, municipal utilities or power cooperatives. For 20 of these projects, the gas is used at the landfill or delivered by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. For six of these projects, the landfill gas is processed to pipeline-quality RNG and then sold to natural gas suppliers. The revenues from these facilities are primarily generated through the sale of RNG, RINs, electricity and capacity, RECs and related environmental attributes. WM Renewable Energy is charged a 15% royalty on net operating revenue from these facilities residing on the company’s active and closed landfills from its Collection and Disposal, and Corporate and Other businesses, which is eliminated in consolidation. Additionally, WM Renewable Energy operates and maintains 12 third-party landfill beneficial gas use projects in return for service revenue. The company’s Collection and Disposal and Corporate and Other businesses benefit from these projects, as well as 32 additional third-party landfill beneficial gas use projects in the form of royalties.

WM Renewable Energy converts landfill gas into several sources of renewable energy, which include RNG, electricity and capacity, heat and/or steam. WM Renewable Energy also generates RINs under the Renewable Fuel Standard (RFS) program, other credits under a variety of state programs associated with the use of RNG in the company’s compressed natural gas fleet, and RECs associated with the production of electricity. The RINs, RECs and other credits are sold to counterparties who are obligated under the regulatory programs and have a responsibility to procure RINs, RECs and other credits proportionate to their fossil fuel production and imports. RINs and RECs prices generally respond to regulations enacted by the EPA or other regulatory bodies, as well as fluctuations in supply and demand.

Corporate and Other

The company continues to invest in businesses and technologies that are designed to offer services and solutions ancillary or supplementary to its current operations. While most of these investments are in the form of minority equity stakes, they can also include joint ventures, joint development agreements or majority equity stakes. The solutions and services include waste collection, processing, and recycling; the development, operation and marketing of waste processing facilities and technologies; operation of RNG plants and the development and operation of organic recycling technologies. Furthermore, the company continually scouts, evaluates and runs proof-of-concepts of innovative technologies within its core operations to improve safety, operational efficiencies and customer solutions.

Seasonal Trends

The company’s operating revenues and volumes typically experience seasonal increases in the summer months that are reflected in second and third quarter (year ended December 31, 2023) revenues and results of operations.

Regulation

The company’s business is subject to extensive and evolving federal, state or provincial and local environmental protection, health, safety, land use, zoning, transportation, and other related laws and regulations. These laws and regulations are administered by the EPA, Environment and Climate Change Canada (ECCC), and various other federal, state, provincial and local environmental, zoning, transportation, land use, health and safety agencies in the U.S. and Canada.

The primary U.S. federal statutes affecting the company’s business are the Resource Conservation and Recovery Act of 1976 (RCRA), as amended; the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), as amended, which is also known as Superfund; the Federal Water Pollution Control Act of 1972, as amended, known as the Clean Water Act; the Clean Air Act of 1970, as amended; and the Occupational Safety and Health Act of 1970, as amended.

History

The company was incorporated in Oklahoma in 1987. It was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. The company was reincorporated as a Delaware company in 1995.