Segment and Related Information (Tables)

6 Months Ended

Jun. 30, 2021


	Gross		Intercompany		Net		Income
	Operating		Operating		Operating		from
	Revenues		Revenues(d)		Revenues		Operations
Three Months Ended June 30:
2021
Solid Waste:
Tier 1	$	1,214	$	(228)	$	986	$	350
Tier 2		1,495		(323)		1,172		331
Tier 3		1,997		(376)		1,621		375
Solid Waste (a)		4,706		(927)		3,779		1,056
Other (b)		729		(32)		697		4
		5,435		(959)		4,476		1,060
Corporate and Other (c)		—		—		—		(269)
Total	$	5,435	$	(959)	$	4,476	$	791

2020
Solid Waste:
Tier 1	$	975	$	(178)	$	797	$	270
Tier 2		1,194		(252)		942		208
Tier 3		1,599		(306)		1,293		244
Solid Waste (a)		3,768		(736)		3,032		722
Other (b)		554		(25)		529		(10)
		4,322		(761)		3,561		712
Corporate and Other (c)		—		—		—		(185)
Total	$	4,322	$	(761)	$	3,561	$	527


	Gross		Intercompany		Net		Income
	Operating		Operating		Operating		from
	Revenues		Revenues(d)		Revenues		Operations
Six Months Ended June 30:
2021
Solid Waste:
Tier 1	$	2,302	$	(429)	$	1,873	$	657
Tier 2		2,890		(625)		2,265		622
Tier 3		3,820		(709)		3,111		695
Solid Waste (a)		9,012		(1,763)		7,249		1,974
Other (b)		1,394		(55)		1,339		22
		10,406		(1,818)		8,588		1,996
Corporate and Other (c)		—		—		—		(555)
Total	$	10,406	$	(1,818)	$	8,588	$	1,441

2020
Solid Waste:
Tier 1	$	1,999	$	(360)	$	1,639	$	558
Tier 2		2,450		(517)		1,933		477
Tier 3		3,295		(631)		2,664		532
Solid Waste (a)		7,744		(1,508)		6,236		1,567
Other (b)		1,108		(54)		1,054		(35)
		8,852		(1,562)		7,290		1,532
Corporate and Other (c)		—		—		—		(432)
Total	$	8,852	$	(1,562)	$	7,290	$	1,100

(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. 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.

The increase in income from operations across the Tiers was primarily due to (i) revenue growth in our collection and disposal businesses driven by both volume and yield; (ii) improved profitability in our recycling business from higher market prices for recycling commodities, volume recovery from facilities where we temporarily suspended operations during the pandemic and improved costs at facilities where we have made investments in enhanced technology and equipment; (iii) a decrease in the provision for bad debts and (iv) the continuation of our proactive cost management efforts as volumes increased. These increases were partially offset by (i) higher incentive compensation costs; (ii) inflationary cost pressures and (iii) increased overtime driven by increased volumes and driver shortages. Additionally, the prior year periods were impacted by non-cash impairment charges, as further discussed below. The positive earnings contributions of Advanced Disposal were offset by elevated depreciation and amortization of the related acquired assets.

During the second quarter of 2020, income from operations was impacted by $61 million of non-cash impairments consisting of (i) $41 million of non-cash asset impairment charges in our Tier 2 segment primarily related to two landfills and an oil field waste injection facility and (ii) a $20 million non-cash impairment charge in our Tier 3 segment related to management’s decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted airspace.

(b)

“Other” includes (i) our Strategic Business Solutions (“WMSBS”) business; (ii) elements of our landfill gas-to-energy operations managed by our WM Renewable Energy business and not included in the operations of our reportable segments; (iii) elements of our third-party subcontract and administration revenues managed by our Energy and Environmental Services (“EES”) business and not included in the operations of our reportable segments; (iv) our

recycling brokerage services and (v) certain other expanded service offerings and solutions. In addition, our “Other” segment reflects the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.

The increase in income from operations was primarily driven by (i) increased market values for renewable energy credits generated by our WM Renewable Energy business; (ii) increased revenues for our WMSBS business as a result of new contracts, improved pricing and increased customer activity and (iii) higher market prices for commodities benefiting our recycling brokerage services. The increase in income from operations for the six months ended June 30, 2021, as compared with the prior year period, was also due to a gain from the divestiture of certain ancillary operations during the first quarter of 2021.

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

The increase in these costs was driven by (i) higher incentive compensation costs; (ii) strategic investments in our digital platform; (iii) increases in health and welfare costs attributable to medical care activity generally returning to pre-pandemic levels from the lower levels experienced during 2020 and (iv) increased labor and support costs from our acquisition of Advanced Disposal. The six months ended June 30, 2021, as compared with the prior year period, was further impacted by a charge pertaining to reserves for certain loss contingencies recognized during the first quarter of 2021, as well as changes in the measurement of our environmental remediation obligations and recovery assets in both the first quarter of 2020 and 2021.

(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.

Summary of operating revenues mix

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Commercial	$	1,178	$	928	$	2,309	$	1,991
Residential		794		657		1,576		1,307
Industrial		811		625		1,554		1,318
Other collection		135		115		251		227
Total collection		2,918		2,325		5,690		4,843
Landfill		1,075		874		1,990		1,761
Transfer		532		439		997		880
Recycling		397		275		739		529
Other (a)		513		409		990		839
Intercompany (b)		(959)		(761)		(1,818)		(1,562)
Total	$	4,476	$	3,561	$	8,588	$	7,290

(a)

The “Other” line of business includes (i) certain services provided by our WMSBS business; (ii) our landfill gas-to-energy operations; (iii) certain services within our EES business, including our construction and remediation services and our services associated with the disposal of fly ash and (iv) certain other expanded service offerings and solutions. In addition, our “Other” line of business reflects 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.