John Morris
Executive Vice President and Chief Operating Officer at Waste Management
Thanks, Jim, and good morning. Before we dive in our operational performance and financial metrics, I want to take a minute to acknowledge and thank our team for providing safe and reliable service to our customers, especially considering the severe weather events. Hurricanes Helene and Milton affected both our employees and the communities we serve. We're hard working -- we are working hard to support those impacted helping restore a sense of normalcy in these areas.
Turning to our results, we continue to prioritize technology and automation to optimize our cost structure and enhance operational efficiency. This is evident in operating expenses of 60.6% of revenue in the third quarter, which improved 70 basis points and overcame a 30 basis point headwind from additional work days in the quarter. This is the fourth consecutive quarter this measure has been below 61%. This quarter's result is driven by continued benefits from cost optimization, pricing discipline and easing inflation. We also benefited from lower fuel prices and stronger contributions from our renewable energy business, though these gains were offset by the impact of increased recycled commodity prices on the brokerage business.
Our operating expense performance was largely driven by our collection business, in particular in labor and repair and maintenance costs. Labor costs improved through a combination of retention, technology and automation. We've automated more than 800 routes in our residential fleet since 2022, reducing our labor dependence, boosting efficiency and improving safety performance. The continued adoption of scheduling and planning tools, advanced mapping systems and dynamic routing is also driving efficiency and reducing operating costs.
In the third quarter, our weighted average collection efficiency rose by 2% with the residential line of business increasing more than 4%. Our intentional focus on making WM a great place to build a career is leading to reduced driver and technician turnover, improving about 19% annualized, a significant improvement over last year.
Repair and maintenance costs also improved as a percentage of revenue, driven by our ongoing implementation of technology-driven processes and improvements in our truck delivery schedule. Our focus and execution in these areas are leading to strong financial performance as adjusted operating EBITDA in the Collection and Disposal business grew $181 million in the quarter with margin expanding to 37.4%.
Finally, turning to our revenue growth, our pricing results continue to track well. Our team continues to leverage customer-specific data and insights to deliver pricing in line with inflation alongside our margin expansion objectives. We are being purposeful in allocating our people and our assets to their best use. This approach is very evident in our residential line of business where we've intentionally moved away from lower margin business, while at the same time significantly improving our safety performance, growing organic revenue and expanding operating EBITDA margin. By maintaining and growing the right volumes, we are driving long-term value and enhancing overall returns.
Our volume results have trended consistently to what we saw in the first half of the year with growth from commercial collection, MSW and special wastes. It is encouraging to see our key volumes continue to grow, particularly MSW, which was up 5.7% in the quarter. While the roll-off business remained soft, the declines in volumes showed sequential improvement. Similar to the residential business, we're making the right volume trade-offs as organic revenue grew in the quarter and operating EBITDA margin expanded.
Churn was 9.2% in the quarter, which is similar to last year and validates the effectiveness of our customer lifetime value model. Service increases continue to outpace decreases, further reinforcing our execution. We remain confident that our data-driven business decisions and technology investments are leading to greater operational efficiency and improved return on capital, which is reflected in the growth and margin performance of our Collection and Disposal operations.
In closing, I want to thank the entire WM team again for their contributions. Their performance positions us for a strong year-end finish and sustained growth heading into 2025. And now, I'll turn the call over to Devina to discuss our third quarter financial results in further detail.