Waste Management (WM): 2Q takeaways: Estimates broadly unchanged as stronger margins offset softer volumes and renewable energy headwinds

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Waste Management (WM): 2Q takeaways: Estimates broadly unchanged as stronger margins offset softer volumes and renewable energy headwinds

Goldman Sachs Waste Management (WM)

revenue outlook by 0.6% at the midpoint to $26.275-$26.475 bn ($26.375 bn at the

midpoint). Despite higher recycling commodity prices, incremental M&A contribution,

and higher fuel surcharges, WM lowered its revenue outlook as it now expects full year

Collection and Disposal volume growth of -1%, compared to its initial outlook of +0.2%

to +0.6%. The revised revenue outlook also reflects modest pressure from lower

recycling brokerage activity and delays in RNG plant connections to pipelines.

Nevertheless, WM raised its adjusted EBITDA margin outlook by 20 bps, leaving EBITDA

guidance unchanged. The improved margin outlook reflects WM’s strong cost

performance year to date, including Collection operating costs increasing less than 1.7%

yoy in 2Q despite ongoing inflationary pressures. As a result, stronger margins are

expected to offset the impact of lower revenue and volume assumptions, supporting the

company’s unchanged EBITDA outlook.

(iii) Slower RNG ramp. Renewable Energy EBITDA was $71 mn in 2Q, compared to $72

mn in 1Q. At 4Q25 earnings, WM outlined $235-$255 mn of incremental EBITDA from

Recycling, Renewable Energy, and landfill gas royalties in 2026. However, management

noted this quarter that two RNG facilities have been completed but are not yet able to

inject gas into pipelines. As a result, landfill gas volumes are now expected to be

modestly below the company’s original expectations for the year. The impact of

lower-than-expected RNG volumes, combined with softer recycling brokerage activity,

represents a ~$75 mn revenue headwind relative to WM’s original guidance.