What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-10-29 compared with 2021-07-30 · 176 added, 178 removed, 408 unchanged (46% of the section changed)

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Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of a new strain of coronavirus (COVID-19) pandemic.

In March 2020, the World Health Organization declared the outbreak of a new strain of coronavirus (COVID-19) a pandemic.

The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets.

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As service levels decreased, we also experienced a decrease in certain costs of our operations which are variable in nature.

This decline in service activity peaked in the first half of April 2020 and improved sequentially through June 30, 2021.

This decline in service activity peaked in the first half of April 2020 and improved sequentially through September 30, 2021.

In April 2020, we launched our Committed to Serve initiative and committed $20 million to support frontline employees and their families, as well as small business customers in the local communities where we serve.

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Restructuring charges 0.04

Loss (gain) on business divestitures and impairments, net —

Accelerated vesting of compensation expense for CEO transition 0.05

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Republic is one of the largest providers of environmental services in the United States, as measured by revenue.

As of June 30, 2021, we operated facilities in 41 states through 355 collection operations, 235 transfer stations, 199 active landfills, 73 recycling processing centers, 3 treatment, recovery and disposal facilities, 6 salt water disposal wells and 7 deep injection wells.

We are engaged in 75 landfill gas to energy and renewable energy projects and had post-closure responsibility for 128 closed landfills as of June 30, 2021.

Revenue for the six months ended June 30, 2021 increased by 8.0% to $5,409.2 million compared to $5,008.3 million for the same period in 2020.

This change in revenue is due to increases in volume of 3.6%, average yield of 2.5%, acquisitions, net of divestitures of 1.5%, recycling processing and commodity sales of 0.9%, and fuel recovery fees of 0.2%, partially offset by decreased environmental solutions revenue of 0.4%.

Additionally, revenue decreased 0.3% due to the impact of one less workday during the six months ended June 30, 2021 as compared to the same period in 2020.

The following table summarizes our revenue, expenses and operating income for the three and six months ended June 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended June 30, Six Months Ended June 30,

As of September 30, 2021, we operated facilities in 41 states through 355 collection operations, 238 transfer stations, 198 active landfills, 73 recycling processing centers, 3 treatment, recovery and disposal facilities, 2 treatment, storage and disposal facilities (TSDF), 6 salt water disposal wells and 7 deep injection wells.

We are engaged in 75 landfill gas to energy and renewable energy projects and had post-closure responsibility for 129 closed landfills as of September 30, 2021.

Revenue for the nine months ended September 30, 2021 increased by 10.0% to $8,342.2 million compared to $7,580.4 million for the same period in 2020.

This change in revenue is due to increased volume of 3.8%, average yield of 2.7%, acquisitions, net of divestitures of 2.1%, recycling processing and commodity sales of 1.2%, and fuel recovery fees of 0.6%, partially offset by decreased environmental solutions revenue of 0.2%.

Additionally, revenue decreased 0.2% due to the impact of one less workday during the nine months ended September 30, 2021 as compared to the same period in 2020.

The following table summarizes our revenue, expenses and operating income for the three and nine months ended September 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Operating income $ 564.2 19.2 % $ 447.9 17.4 % $ 1,574.5 18.8 % $ 1,276.4 16.8 %

Our pre-tax income was $427.4 million and $827.5 million for the three and six months ended June 30, 2021, respectively, compared to $300.1 million and $622.7 million for the same respective periods in 2020.

Our pre-tax income was $470.7 million and $1,298.2 million for the three and nine months ended September 30, 2021, respectively, compared to $318.7 million and $941.4 million for the same respective periods in 2020.

Our net income attributable to Republic Services, Inc.

was $331.1 million and $627.0 million for the three and six months ended June 30, 2021, or $1.03 and $1.96 per diluted share, respectively, compared to $225.5 million and $471.8 million, or $0.71 and $1.47 per diluted share, for the same periods in 2020, respectively.

During each of the three and six months ended June 30, 2021 and 2020, we recorded a number of charges, other expenses and benefits that impacted our pre-tax income, net income attributable to Republic Services, Inc.

was $350.3 million and $977.3 million for the three and nine months ended September 30, 2021, or $1.10 and $3.06 per diluted share, respectively, compared to $260.0 million and $731.8 million, or $0.81 and $2.29 per diluted share, for the same periods in 2020, respectively.

During each of the three and nine months ended September 30, 2021 and 2020, we recorded a number of charges, other expenses and benefits that impacted our pre-tax income, net income attributable to Republic Services, Inc.

(net income – Republic) and diluted earnings per share as noted in the following table (in millions, except per share data).

Additionally, see our Results of Operations discussion in this Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of other items that impacted our earnings during the three and six months ended June 30, 2021 and 2020.

Three Months Ended June 30, 2021

Three Months Ended June 30, 2020

Three Months Ended September 30, 2021

Three Months Ended September 30, 2020

Net Diluted Net Diluted

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As reported $ 470.7 $ 350.3 $ 1.10 $ 318.7 $ 260.0 $ 0.81

Loss on extinguishment of debt — — — 34.5 25.5 0.08

Restructuring charges 4.6 3.4 0.01 9.8 7.2 0.02

3.8 2.8 0.01 2.2 1.6 —

Loss on business divestitures and impairments, net — — — 31.5 26.6 0.09

0.9 0.6 — 5.3 6.4 0.02

Withdrawal costs - multiemployer pension funds — — — 31.6 23.4 0.07

Accelerated vesting of compensation expense for CEO transition 15.4 15.4 0.05 — — —

Total adjustments 4.6 3.4 0.01 75.8 59.3 0.19

As adjusted $ 475.3 $ 353.7 $ 1.11 $ 394.5 $ 319.3 $ 1.00

(1) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended June 30, 2021.

(2) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended June 30, 2020.

Six Months Ended June 30, 2021

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2021

Nine Months Ended September 30, 2020

Net Diluted Net Diluted

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As reported $ 1,298.2 $ 977.3 $ 3.06 $ 941.4 $ 731.8 $ 2.29

Loss on extinguishment of debt — — — 34.5 25.5 0.08

Restructuring charges 11.2 8.2 0.02 15.8 11.7 0.04

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As adjusted $ 1,324.6 $ 1,000.8 $ 3.13 $ 1,049.7 $ 817.4 $ 2.56

(1) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the six months ended June 30, 2021.

(1) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the nine months ended September 30, 2021.

We believe that presenting adjusted pre-tax income, adjusted net income – Republic, and adjusted diluted earnings per share, which are not measures determined in accordance with U.S.

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Further information on each of these adjustments is included below.

Loss on extinguishment of debt.

During the three and nine months ended September 30, 2020, we incurred a $34.5 million loss on the early extinguishment of debt related to the redemption of our $600.0 million 5.250% senior notes due November 2021.

We paid a cash premium of $34.0 million and incurred a non-cash charge related to the unamortized deferred issuance costs of $0.5 million.

Restructuring charges.

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In addition, in July 2020, we eliminated certain back-office support positions in response to a decline in the underlying demand for services resulting from the COVID-19 pandemic.

During the three and six months ended June 30, 2021, we incurred restructuring charges of $3.8 million and $6.6 million, respectively, and during the three and six months ended June 30, 2020, we incurred restructuring charges of $2.2 million and $6.0 million, respectively.

During the six months ended June 30, 2021 and 2020, we paid $8.6 million and $6.2 million, respectively, related to these restructuring efforts.

During the three and nine months ended September 30, 2021, we incurred restructuring charges of $4.6 million and $11.2 million, respectively, and during the three and nine months ended September 30, 2020, we incurred restructuring charges of $9.8 million and $15.8 million, respectively.

During the nine months ended September 30, 2021 and 2020, we paid $12.1 million and $11.9 million, respectively, related to these restructuring efforts.

During the remainder of 2021, we expect to incur additional restructuring charges of approximately $5 million primarily related to the redesign of certain of our back-office software systems.

Substantially all of these restructuring charges will be recorded in our corporate entities and other segment.

Substantially all of these restructuring charges will be recorded in Corporate entities and other.

Loss (gain) on business divestitures and impairments, net.

During the three and six months ended June 30, 2021, we recorded a net loss (gain) on business divestitures and impairments of $0.9 million and $(0.2) million, respectively.

During the three and six months ended June 30, 2020, we recorded a net loss on business divestitures and impairments of $5.3 million and $1.4 million, respectively.

During the nine months ended September 30, 2021, we recorded a net gain on business divestitures and impairments of $(0.2) million.

During the three and nine months ended September 30, 2020, we recorded a net loss on business divestitures and impairments of $31.5 million and $32.9 million, respectively.

Withdrawal costs - multiemployer pension funds.

During the three and six months ended June 30, 2020, we recorded charges to earnings of $31.6 million and $35.9 million, respectively, for withdrawal events at multiemployer pension funds to which we contribute.

During the nine months ended September 30, 2020, we recorded charges to earnings of $35.9 million for withdrawal events at multiemployer pension funds to which we contribute.

As we obtain updated information regarding multiemployer pension funds, the factors used in deriving our estimated withdrawal liabilities will be subject to change, which may adversely impact our reserves for withdrawal costs.

Bridgeton insurance recovery.

During the six months ended June 30, 2020, we recognized an insurance recovery of $10.8 million related to our closed Bridgeton Landfill in Missouri as a reduction of remediation expenses in our cost of operations.

During the nine months ended September 30, 2020, we recognized an insurance recovery of $10.8 million related to our closed Bridgeton Landfill in Missouri as a reduction of remediation expenses in our cost of operations.

Accelerated vesting of compensation expense for CEO transition.

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Slager retired as Chief Executive Officer (CEO) of Republic Services, Inc.

During the three and six months ended June 30, 2021, we recognized a charge of $15.4 million related to the accelerated vesting of his compensation awards that were previously scheduled to vest in 2022 and beyond.

During the nine months ended September 30, 2021, we recognized a charge of $15.4 million related to the accelerated vesting of his compensation awards that were previously scheduled to vest in 2022 and beyond.

Results of Operations

We generate revenue by providing environmental services to our customers, including the collection and processing of recyclable materials, the collection, transfer and disposal of non-hazardous solid waste, and other environmental solutions.

residential, small-container and large-container collection operations in some markets are based on long-term contracts with municipalities.

Our residential, small-container and large-container collection operations in some markets are based on long-term contracts with municipalities.

Certain of our municipal contracts have annual price escalation clauses that are tied to changes in an underlying base index such as a consumer price index.

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Our recycling processing centers generate revenue from tipping fees charged to third parties and the sale of recycled commodities.

Our revenue from environmental solutions consists mainly of fees we charge for disposal of non-hazardous solid and liquid material and in-plant services, such as transportation and logistics.

Environmental solutions waste is generated from the by-product of oil and natural gas exploration and production activity.

Additionally, it is generated by the daily operations of industrial, petrochemical and refining facilities, including maintenance, plant turnarounds and capital projects.

Our revenue from environmental solutions consists mainly of fees we charge for disposal of hazardous and non-hazardous solid and liquid material and in-plant services, such as transportation and logistics, including at our TSDFs.

Other non-core revenue consists primarily of revenue from National Accounts, which represents the portion of revenue generated from nationwide or regional contracts in markets outside our operating areas where the associated material handling is subcontracted to local operators.

Consequently, substantially all of this revenue is offset with related subcontract costs, which are recorded in cost of operations.

The following table reflects our revenue by service line for the three and six months ended June 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended June 30, Six Months Ended June 30,

The following table reflects our revenue by service line for the three and nine months ended September 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Total revenue $ 2,933.9 100.0 % $ 2,572.1 100.0 % $ 8,342.2 100.0 % $ 7,580.4 100.0 %

The following table reflects changes in components of our revenue, as a percentage of total revenue, for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

The following table reflects changes in components of our revenue, as a percentage of total revenue, for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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We also measure changes in average yield and core price as a percentage of related-business revenue, defined as total revenue excluding recycled commodities and fuel recovery fees, to determine the effectiveness of our pricing strategies.

Average yield as a percentage of related-business revenue was 2.7% and 2.6% for the three and six months ended June 30, 2021, respectively, 2.7% and 2.9% for the same respective periods in 2020.

Core price as a percentage of related-business revenue was 5.4% and 5.0% for the three and six months ended June 30, 2021, respectively, and 5.0% and 5.3% for the same respective periods in 2020.

During the three and six months ended June 30, 2021, we experienced the following changes in our revenue as compared to the same respective periods in 2020:

• Average yield increased revenue by 2.6% and 2.5% during the three months and six months ended June 30, 2021, respectively, due to price increases in all lines of business.

• The fuel recovery fee program, which mitigates our exposure to increases in fuel prices, increased revenue by 0.9% and 0.2% during the three and six months ended June 30, 2021, respectively, primarily due to an increase in fuel prices compared to the same periods in 2020.

• Volume increased revenue by 8.1% and 3.6% during the three and six months ended June 30, 2021, respectively, primarily due to volume growth in our landfill, transfer station, and small- and large-container collection lines of business.

Average yield as a percentage of related-business revenue was 3.4% and 2.9% for the three and nine months ended September 30, 2021, respectively, and 2.8% for each of the same respective periods in 2020.

Core price as a percentage of related-business revenue was 5.4% and 5.1% for the three and nine months ended September 30, 2021, respectively, and 4.8% and 5.1% for the same respective periods in 2020.

During the three and nine months ended September 30, 2021, we experienced the following changes in our revenue as compared to the same respective periods in 2020:

• Average yield increased revenue by 3.2% and 2.7% during the three months and nine months ended September 30, 2021, respectively, due to price increases in all lines of business.

• The fuel recovery fee program, which mitigates our exposure to increases in fuel prices, increased revenue by 1.3% and 0.6% during the three and nine months ended September 30, 2021, respectively, primarily due to an increase in fuel prices compared to the same periods in 2020.

• Volume increased revenue by 4.3% and 3.8% during the three and nine months ended September 30, 2021, respectively, primarily due to volume growth in our landfill, transfer, and small- and large-container collection lines of business.

The volume increase in our landfill line of business is primarily attributable to increased solid and special waste volumes.

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This decline in service activity peaked in the first half of April 2020 and sequentially improved thereafter.

• Revenue decreased by 0.3% due to one less workday during the six months ended June 30, 2021 as compared to the same period in 2020, which drove a decline in volumes in our large-container collection, landfill and transfer lines of business.

• Recycling processing and commodity sales increased revenue by 1.0% and 0.9% during the three and six months ended June 30, 2021, respectively, primarily due to an increase in overall commodity prices as compared to the same periods in 2020.

The average price for recycled commodities, excluding glass and organics, for the three and six months ended June 30, 2021 was $170 and $152 per ton, respectively, compared to $101 and $88 per ton for the same respective periods in 2020.

• Revenue decreased by 0.2% due to one less workday during the nine months ended September 30, 2021 as compared to the same period in 2020.

• Recycling processing and commodity sales increased revenue by 1.6% and 1.2% during the three and nine months ended September 30, 2021, respectively, primarily due to an increase in overall commodity prices as compared to the same periods in 2020.

The average price for recycled commodities, excluding glass and organics, for the three and nine months ended September 30, 2021 was $230 and $178 per ton, respectively, compared to $99 and $92 per ton for the same respective periods in 2020.

Changing market demand for recycled commodities causes volatility in commodity prices.

At current volumes and mix of materials, we believe a $10 per ton change in the price of recycled commodities would change both annual revenue and operating income by approximately $12 million.

• Environmental solutions revenue decreased by 0.4% during the six months ended June 30, 2021 primarily due to a decrease in rig counts, drilling activity, and the delay of in-plant project work that began during the three months

ended June 30, 2020 as a result of lower demand for crude oil due to the COVID-19 pandemic.

Rig counts and drilling activity have sequentially improved during the six months ended June 30, 2021 but remain below pre-COVID levels.

• Acquisitions, net of divestitures, increased revenue by 2.0% and 1.5% during the three and six months ended June 30, 2021, respectively, reflecting our continued growth strategy of acquiring privately held solid waste, recycling, and environmental services companies that complement our existing business platform.

• Environmental solutions revenue decreased by 0.2% during the nine months ended September 30, 2021 primarily due to a decrease in rig counts, drilling activity, and the delay of in-plant project work that began during the second quarter of 2020 as a result of lower demand for crude oil.

Rig counts and drilling activity have sequentially improved during

the nine months ended September 30, 2021 but remain below pre-COVID levels.

Consequently, environmental solutions revenue increased by 0.2% during the three months ended September 30, 2021.

• Acquisitions, net of divestitures, increased revenue by 3.5% and 2.1% during the three and nine months ended September 30, 2021, respectively, reflecting our continued growth strategy of acquiring privately held solid waste, recycling, and environmental services companies that complement and expand our existing business platform.

Cost of Operations

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maintenance and repairs relating to our vehicles, equipment and containers, including related labor and benefit costs;

transportation and subcontractor costs, which include costs for independent haulers that transport our waste to disposal facilities and costs for local operators who provide waste handling services associated with our National Accounts in markets outside our standard operating areas;

transportation and subcontractor costs, which include costs for independent haulers that transport our waste to disposal facilities and costs for local operators that provide waste handling services associated with our National Accounts in markets outside our standard operating areas;

fuel, which includes the direct cost of fuel used by our vehicles, net of fuel tax credits;

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and other, which includes expenses such as facility operating costs, equipment rent and gains or losses on sale of assets used in our operations.

The following table summarizes the major components of our cost of operations for the three and six months ended June 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended June 30, Six Months Ended June 30,

The following table summarizes the major components of our cost of operations for the three and nine months ended September 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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As such, you should take care when comparing our cost of operations by component to that of other companies and of ours for prior periods.

Our cost of operations decreased as a percentage of revenue for the three and six months ended June 30, 2021 compared to the same periods in 2020 as a result of the following:

The most significant items impacting our cost of operations during the three and nine months ended September 30, 2021 and 2020 are summarized below:

• Labor and related benefits increased in aggregate dollars due to higher hourly and salaried wages as a result of annual merit increases and an increase in service levels attributable to the economic recovery from the COVID-19 pandemic.

These increases were partially offset by one less workday during the six months ended June 30, 2021 as compared to the same period in 2020.

These increases were partially offset by one less workday during the nine months ended September 30, 2021 as compared to the same period in 2020.

• Transfer and disposal costs increased in aggregate dollars as a result of higher collection volumes and an increase in third party disposal rates.

During both the three and six months ended June 30, 2021, approximately 68% of the total solid waste volume we collected was disposed at landfill sites that we own or operate (internalization).

During the three and six months ended June 30, 2020, approximately 67% and 68%, respectively, of the total solid waste volume collected was disposed at landfill sites that we own or operate.

During both the three and nine months ended September 30, 2021 and 2020, approximately 68% of the total solid waste volume we collected was disposed at landfill sites that we own or operate (internalization).

• Maintenance and repairs expense increased in aggregate dollars due to an increase in service levels attributable to the economic recovery from the COVID-19 pandemic.

• Transportation and subcontract costs increased during the three and six months ended June 30, 2021 primarily due to higher collection and transfer station volumes, acquisition-related activity, and increased subcontract work attributable to an increase in non-core revenues, partially offset by a decline in demand for our environmental solutions business and one less workday during the six months ended June 30, 2021 as compared to the same period in 2020.

• Transportation and subcontract costs increased during the three and nine months ended September 30, 2021 primarily due to higher collection and transfer station volumes, acquisition-related activity, and increased subcontract work

attributable to an increase in non-core revenues, partially offset by one less workday during the nine months ended September 30, 2021 as compared to the same period in 2020.

• Our fuel costs increased due to an increase in the average diesel fuel cost per gallon.

The national average diesel fuel cost per gallon for the three and six months ended June 30, 2021 was $3.21 and $3.06, respectively, as compared to $2.43 and $2.66 for the same respective periods in 2020.

The national average diesel fuel cost per gallon for the three and nine months ended September 30, 2021 was $3.36 and $3.16, respectively, as compared to $2.43 and $2.58 for the same respective periods in 2020.

At current consumption levels, we believe a twenty-cent per gallon change in the price of diesel fuel would change our fuel costs by approximately $25 million per year.

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At current participation rates, a twenty-cent per gallon change in the price of diesel fuel would change our fuel recovery fee by approximately $25 million per year.

• Landfill operating costs increased in aggregate dollars during the three months ended June 30, 2021 primarily due to certain unfavorable remediation adjustments.

Landfill operating costs decreased during the six months ended June 30, 2021 due to a decline in leachate treatment, transportation and disposal costs due in part to decreased rainfall in select geographic regions, partially offset by certain unfavorable remediation adjustments.

• Other costs of operations decreased due to certain costs associated with our Committed to Serve initiative recognized during the three and six months ended June 30, 2020, which did not recur in the same respective periods in 2021.

• During the six months ended June 30, 2020, we recognized a favorable insurance recovery of $10.8 million related to our closed Bridgeton Landfill as a reduction of remediation expenses in our consolidated statement of income for the applicable period.

• Risk management expenses increased during the three and nine months ended September 30, 2021 primarily due to unfavorable actuarial development in our auto liability claims as well as higher premium costs, partially offset by favorable workers compensation development in prior year programs.

• Other costs of operations increased during the three and nine months ended September 30, 2021 due to increased occupancy and facility related expenses partially offset by certain costs associated with our Committed to Serve initiative recognized during the nine months ended September 30, 2020, which did not recur in the same respective period in 2021.

• During the nine months ended September 30, 2020, we recognized a favorable insurance recovery of $10.8 million related to our closed Bridgeton Landfill as a reduction of remediation expenses in our consolidated statement of income for the applicable period.

Depreciation, Amortization and Depletion of Property and Equipment

The following table summarizes depreciation, amortization and depletion of property and equipment for the three and six months ended June 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended June 30, Six Months Ended June 30,

The following table summarizes depreciation, amortization and depletion of property and equipment for the three and nine months ended September 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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$ 282.7 9.6 % $ 255.5 9.9 % $ 832.8 10.0 % $ 763.7 10.1 %

Depreciation and amortization of property and equipment increased for the three and six months ended June 30, 2021 primarily due to assets added through acquisitions.

Depreciation and amortization of property and equipment increased for the three and nine months ended September 30, 2021 primarily due to assets added through acquisitions.

Landfill depletion and amortization expense increased due to higher landfill disposal volumes primarily driven by special and solid waste volumes coupled with an increase in our overall average depletion rate.

Additionally, we recognized unfavorable amortization adjustments related to the asset retirement obligation at one of our closed landfills during the three and six months ended June 30, 2021.

Additionally, we recognized unfavorable amortization adjustments related to the asset retirement obligation at certain of our closed landfills during the three and nine months ended September 30, 2021.

Amortization of Other Intangible Assets

Our other intangible assets primarily relate to customer relationships and, to a lesser extent, non-compete agreements.

Expenses for amortization of other intangible assets were $7.7 million and $15.0 million, or 0.3% of revenue, for the three and six months ended June 30, 2021, respectively, compared to $5.2 million and $10.5 million, or 0.2% of revenue, for the same respective periods in 2020.

Amortization of other intangible assets primarily relates to customer relationships and, to a lesser extent, non-compete agreements.

Expenses for amortization of other intangible assets were $8.5 million and $23.5 million, or 0.3% of revenue, for the three and nine months ended September 30, 2021, respectively, compared to $5.3 million and $15.8 million, or 0.2% of revenue, for the same respective periods in 2020.

Amortization expense increased due to assets added through acquisitions.

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Our other assets primarily relate to the prepayment of fees and capitalized implementation costs associated with cloud-based hosting arrangements.

Expenses for amortization of other assets were $10.1 million and $20.1 million, or 0.4% of revenue, for the three and six months ended June 30, 2021, respectively, compared to $9.5 million and $19.0 million, or 0.4% of revenue, for the same respective periods in 2020.

Expenses for amortization of other assets were $10.1 million and $30.2 million, or 0.4% of revenue, for the three and nine months ended September 30, 2021, respectively, compared to $9.9 million and $28.9 million, or 0.4% of revenue, for the same respective periods in 2020.

Accretion Expense

Accretion expense was $20.7 million and $41.1 million, or 0.8% of revenue, for the three and six months ended June 30, 2021, respectively, compared to $20.8 million and $41.7 million, or 0.8% of revenue, for the same respective periods in 2020.

Accretion expense was $20.8 million and $61.9 million, or 0.7% of revenue, for the three and nine months ended September 30, 2021, respectively, compared to $20.7 million and $62.4 million, or 0.8% of revenue, for the same respective periods in 2020.

Accretion expense has remained relatively unchanged as our asset retirement obligations have remained relatively consistent period over period.

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Restructuring charges are excluded from selling, general and administrative expenses and are discussed separately.

The following table summarizes our selling, general and administrative expenses for the three and six months ended June 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended June 30, Six Months Ended June 30,

The following table summarizes our selling, general and administrative expenses for the three and nine months ended September 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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As such, you should take care when comparing our selling, general and administrative expenses by cost component to those of other companies and of ours for prior periods.

The most significant items affecting our selling, general and administrative expenses during the three and six months ended June 30, 2021 and 2020 are summarized below:

• Salaries and related benefits increased primarily due to higher incentive pay and wages, benefits, and other payroll related items resulting from annual merit increases.

• Other selling, general and administrative expenses decreased for the six months ended June 30, 2021, primarily due to a decrease in consulting fees coupled with an unfavorable change in certain legal reserves in the same period in 2020 that did not recur in 2021.

The most significant items affecting our selling, general and administrative expenses during the three and nine months ended September 30, 2021 and 2020 are summarized below:

• Salaries and related benefits increased primarily due to higher management incentive expenses.

• Other selling, general and administrative expenses increased for the three months ended September 30, 2021 largely due an increase in recruiting and advertising costs.

Consulting fees increased during the third quarter but decreased for the nine months ended September 30, 2021.

Additionally, we recognized an unfavorable change in certain legal reserves during the nine months ended September 30, 2020 that did not recur in 2021.

• In June 2021, Donald W.

Slager retired as CEO of Republic Services, Inc.

Withdrawal Costs - Multiemployer Pension Funds

During the three and six months ended June 30, 2020, we recorded charges to earnings of $31.6 million and $35.9 million for withdrawal events at multiemployer pension funds to which we contribute.

During the nine months ended September 30, 2020, we recorded charges to earnings of $35.9 million for withdrawal events at multiemployer pension funds to which we contribute.

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Business divestitures could result in gains, losses or impairment charges that may be material to our results of operations in a given period.

During the three and six months ended June 30, 2021, we recorded a net loss (gain) on business divestitures and impairments of $0.9 million and $(0.2) million, respectively.

During the three and six months ended June 30, 2020, we recorded a net loss on business divestitures and impairments of $5.3 million and $1.4 million, respectively, which included a $10.8 million liability for a withdrawal event from a certain multi-employer pension plan.

During the nine months ended September 30, 2021, we recorded a net gain on business divestitures and impairments of $0.2 million.

During the three and nine months ended September 30, 2020, we recorded a net loss on business divestitures and impairments of $31.5 million and $32.9 million, respectively.

Restructuring Charges

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In addition, in July 2020, we eliminated certain back-office support positions in response to a decline in the underlying demand for services resulting from the COVID-19 pandemic.

During the six months ended June 30, 2021 and 2020, we paid $8.6 million and $6.2 million, respectively, related to these restructuring efforts.

During the nine months ended September 30, 2021 and 2020, we paid $12.1 million and $11.9 million, respectively, related to these restructuring efforts.

Interest Expense

The following table provides the components of interest expense, including accretion of debt discounts and accretion of discounts primarily associated with environmental and risk insurance liabilities assumed in acquisitions, for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Total interest expense $ 78.1 $ 88.9 $ 234.9 $ 277.4

Total interest expense for the three and six months ended June 30, 2021 decreased primarily due to lower interest rates on our floating and fixed rate debt.

Total interest expense for the three and nine months ended September 30, 2021 decreased primarily due to lower interest rates on our floating and fixed rate debt.

The decrease attributable to our fixed rate debt is primarily due to the issuance of $350.0 million of 0.875% senior notes and $750.0 million of 1.750% senior notes in November 2020 as well as the issuance of $650.0 million of 1.450% senior notes in August 2020, the proceeds of which were used to repay outstanding senior notes with coupons ranging from 3.550% to 5.250%.

Cash paid for interest, excluding net swap settlements for our fixed-to-floating interest rate swaps, was $116.6 million and $166.9 million for the six months ended June 30, 2021 and 2020, respectively.

Our effective tax rate, exclusive of non-controlling interests, for the three and six months ended June 30, 2021 was 22.4% and 24.1%, respectively.

Our effective tax rate for the three months ended June 30, 2021 reflects benefits from investments in solar energy assets qualifying for tax credits under Section 48 of the Internal Revenue Code.

Our effective tax rate, exclusive of non-controlling interests, for the three and six months ended June 30, 2020 was 24.7% and 24.1%, respectively.

Cash paid for income taxes was $54.3 million for the six months ended June 30, 2021 and $6.6 million for the same period in 2020.

Cash paid for interest, excluding net swap settlements for our fixed-to-floating interest rate swaps, was $193.8 million and $246.1 million for the nine months ended September 30, 2021 and 2020, respectively.

Our effective tax rate, exclusive of non-controlling interests, for the three and nine months ended September 30, 2021 was 25.5% and 24.6%, respectively.

Our effective tax rate, exclusive of non-controlling interests, for the three and nine months ended September 30, 2020 was 18.4% and 22.1%, respectively.

Cash paid for income taxes was $182.1 million for the nine months ended September 30, 2021 and $34.2 million for the same period in 2020.

The year over year increase results from tax refunds received in the prior year that did not recur in 2021 and higher projected taxable income in the current year.

For additional discussion and detail regarding our income taxes, see Note 8, Income Taxes , to our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Each of our operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal.

Summarized financial information concerning our reportable segments for the three and six months ended June 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue in the case of operating margin) follows:

Summarized financial information concerning our reportable segments for the three and nine months ended September 30, 2021 and 2020 (in millions of dollars and as a percentage of revenue in the case of operating margin) follows:

Net Revenue Depreciation, Amortization, Depletion and Accretion Before Adjustments for Asset Retirement Obligations Adjustments to Amortization Expense for Asset Retirement Obligations Depreciation, Amortization, Depletion and Accretion Loss (Gain) on Business Divestitures and Impairments, Net Operating Income (Loss) Operating Margin

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Group 1 $ 1,441.6 $ 140.7 $ — $ 140.7 $ — $ 391.1 27.1 %

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Total $ 2,933.9 $ 321.1 $ 1.0 $ 322.1 $ — $ 564.2 19.2 %

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Group 1 $ 1,290.1 $ 131.7 $ (0.5) $ 131.2 $ — $ 349.7 27.1 %

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Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Group 1 $ 4,133.5 $ 413.0 $ (1.5) $ 411.5 $ — $ 1,122.4 27.2 %

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Total $ 8,342.2 $ 936.1 $ 12.3 $ 948.4 $ (0.2) $ 1,574.5 18.9 %

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Group 1 $ 3,774.8 $ 391.2 $ (0.7) $ 390.5 $ — $ 983.7 26.1 %

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$ 7,580.4 $ 877.2 $ (6.4) $ 870.8 $ 32.9 $ 1,276.4 16.8 %

Financial information for the three and six months ended June 30, 2020 reflects the transfer of our environmental solutions operating segment from Group 2 to Corporate entities and other.

Financial information for the three and nine months ended September 30, 2020 reflects the transfer of our Environmental Solutions operating segment from Group 2 to Corporate entities and other.

Corporate entities and other include legal, tax, treasury, information technology, risk management, human resources, closed landfills, other administrative functions, and environmental solutions.

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Consequently, substantially all of this revenue is offset with related subcontract costs, which are recorded in cost of operations.

Significant changes in the revenue and operating margins of our reportable segments comparing the three and six months ended June 30, 2021 and 2020 are discussed below.

Revenue for the three and six months ended June 30, 2021 increased 13.3% and 8.4%, respectively, due to an increase in both average yield and volume in all lines of business.

Operating income in Group 1 increased from $320.4 million for the three months ended June 30, 2020, or a 26.0% operating income margin, to $379.8 million for the three months ended June 30, 2021, or a 27.2% operating income margin.

Operating income in Group 1 increased from $633.9 million for the six months ended June 30, 2020, or a 25.5% operating income margin, to $731.3 million for the six months ended June 30, 2021, or a 27.2% operating income margin.

Operating income margin for the three and six months ended June 30, 2021 was favorably impacted by the increase in revenue attributable to economic recovery coupled with the effective management of certain returning costs.

Revenue for the three and six months ended June 30, 2021 increased 16.7% and 8.7%, respectively, due to an increase in average yield in all lines of business.

Significant changes in the revenue and operating margins of our reportable segments comparing the three and nine months ended September 30, 2021 and 2020 are discussed below.

Revenue for the three and nine months ended September 30, 2021 increased 11.7% and 9.5%, respectively, due to an increase in both average yield and volume in all lines of business.

Operating income in Group 1 increased from $349.7 million for the three months ended September 30, 2020, or a 27.1% operating income margin, to $391.1 million for the three months ended September 30, 2021, or a 27.1% operating income margin.

Operating income in Group 1 increased from $983.7 million for the nine months ended September 30, 2020, or a 26.1% operating income margin, to $1,122.4 million for the nine months ended September 30, 2021, or a 27.2% operating income margin.

Operating income margin for the three and nine months ended September 30, 2021 was favorably impacted by the increase in revenue attributable to economic recovery coupled with the effective management of certain operating costs.

This benefit was partially offset by an increase in fuel costs.

Revenue for the three and nine months ended September 30, 2021 increased 14.2% and 10.6%, respectively, due to an increase in average yield in all lines of business.

Additionally, volume increased in our landfill, transfer station, and small- and large-container collection lines of business, partially offset by volume declines in our residential line of business.

Operating income in Group 2 increased from $226.9 million for the three months ended June 30, 2020, or a 19.7% operating income margin, to $283.6 million for the three months ended June 30, 2021, or a 21.1% operating income margin.

Operating income in Group 2 increased from $456.2 million for the six months ended June 30, 2020, or a 19.3% operating income margin, to $545.4 million for the six months ended June 30, 2021, or an 21.3% operating income margin.

The following also impacted operating income margin:

• Cost of operations favorably impacted operating income margin for the three and six months ended June 30, 2021 as a result of revenue growth from economic recovery.

This benefit was partially offset by an increase in fuel, transfer and disposal, and transportation and subcontract costs.

Operating income in Group 2 increased from $241.9 million for the three months ended September 30, 2020, or a 19.9% operating income margin, to $294.0 million for the three months ended September 30, 2021, or a 21.2% operating income margin.

Operating income in Group 2 increased from $698.5 million for the nine months ended September 30, 2020, or a 19.5% operating income margin, to $839.4 million for the nine months ended September 30, 2021, or a 21.2% operating income margin.

This benefit was partially offset by an increase in fuel costs.

Corporate Entities and Other

Operating loss in our Corporate entities and other segment decreased from $151.9 million for the three months ended June 30, 2020 to $145.5 million for the three months ended June 30, 2021.

Operating loss in our Corporate entities and other segment increased from $261.6 million for the six months ended June 30, 2020 to $266.4 million for the six months ended June 30, 2021.

The operating loss for the three and six months ended June 30, 2021 was unfavorably impacted by the accelerated vesting of CEO compensation awards, unfavorable amortization adjustments related to the asset retirement obligation at one of our closed landfills, and favorable remediation adjustments recognized during the six months ended June 30, 2020, which did not recur in 2021.

The Corporate entities and other operating loss decreased from $143.7 million for the three months ended September 30, 2020 to $120.9 million for the three months ended September 30, 2021.

The Corporate entities and other operating loss decreased from $405.8 million for the nine months ended September 30, 2020 to $387.3 million for the nine months ended September 30, 2021.

The operating loss for the three and nine months ended September 30, 2021 was impacted by favorable CNG tax credits recognized during the respective periods as well as a net loss on business divestitures and impairments and favorable remediation adjustments recognized during the nine months ended September 30, 2020, which did not recur at the same magnitude in 2021.

Landfill and Environmental Matters

Available Airspace

As of June 30, 2021, we owned or operated 199 active solid waste landfills with total available disposal capacity estimated to be 5.0 billion in-place cubic yards.

As of September 30, 2021, we owned or operated 198 active solid waste landfills with total available disposal capacity estimated to be 5.0 billion in-place cubic yards.

For these landfills, the following table reflects changes in capacity and remaining capacity, as measured in cubic yards of airspace:

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Net of Closures Airspace

Consumed Changes in Engineering Estimates Balance as of June 30, 2021

Consumed Changes in Engineering Estimates Balance as of September 30, 2021

Cubic yards (in millions):

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Before airspace included in an expansion area is determined to be probable expansion airspace and, therefore, included in our calculation of total available disposal capacity, it must meet all of our expansion criteria.

As of June 30, 2021, 12 of our landfills met all of our criteria for including their probable expansion airspace in their total available disposal capacity.

As of September 30, 2021, 12 of our landfills met all of our criteria for including their probable expansion airspace in their total available disposal capacity.

At projected annual volumes, these landfills have an estimated remaining average site life of 34 years, including probable expansion airspace.

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Property and Equipment

The following tables reflect the activity in our property and equipment accounts for the six months ended June 30, 2021:

The following tables reflect the activity in our property and equipment accounts for the nine months ended September 30, 2021:

Gross Property and Equipment

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Obligations Impairments,

Adjustments Balance as of June 30, 2021

Adjustments Balance as of September 30, 2021

Land $ 467.1 $ 12.5 $ (0.9) $ 15.2 $ — $ — $ (0.2) $ 493.7

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Obligations Impairments,

Adjustments Balance as of June 30, 2021

Adjustments Balance as of September 30, 2021

Landfill development costs $ (4,249.5) $ (276.9) $ — $ — $ (12.3) $ — $ (4,538.7)

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The following is a summary of our cash and cash equivalents and restricted cash and marketable securities balances as of:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Cash and cash equivalents $ 40.1 $ 38.2

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The following table summarizes our restricted cash and marketable securities:

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Capping, closure and post-closure obligations $ 42.2 $ 31.5

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The major components of changes in cash flows are discussed in the following paragraphs.

The following table summarizes our cash flow from operating activities, investing activities and financing activities for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

The following table summarizes our cash flow from operating activities, investing activities and financing activities for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

Cash provided by operating activities $ 2,137.8 $ 1,909.0

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Cash Flows Provided by Operating Activities

The most significant items affecting the comparison of our operating cash flows for the six months ended June 30, 2021 and 2020 are summarized below.

Changes in assets and liabilities, net of effects from business acquisitions and divestitures, increased our cash flow from operations by $69.2 million during the six months ended June 30, 2021, compared to an increase of $148.9 million during the same period in 2020, primarily as a result of the following:

• Our accounts receivable, exclusive of the change in allowance for doubtful accounts and customer credits, increased $68.1 million during the six months ended June 30, 2021 due to the timing of billings net of collections, compared to a $45.5 million decrease in the same period in 2020.

As of June 30, 2021, our days sales outstanding were 37.0, or 25.2 days net of deferred revenue, compared to 38.6, or 26.4 days net of deferred revenue, as of December 31, 2020.

• Our prepaid expenses and other assets decreased $88.8 million during the six months ended June 30, 2021, compared to a $192.1 million decrease in the same period in 2020, primarily due to timing of our estimated tax payments.

Cash paid for incomes taxes was $54.3 million and $6.6 million for the six months ended June 30, 2021 and 2020, respectively.

• Our accounts payable increased $54.4 million during the six months ended June 30, 2021, compared to a $60.8 million decrease in the same period in 2020, due to the timing of payments.

• Cash paid for capping, closure and post-closure obligations was $26.8 million during the six months ended June 30, 2021, compared to $23.2 million in the same period in 2020.

The most significant items affecting the comparison of our operating cash flows for the nine months ended September 30, 2021 and 2020 are summarized below.

Changes in assets and liabilities, net of effects from business acquisitions and divestitures, increased our cash flow from operations by $81.6 million during the nine months ended September 30, 2021, compared to an increase of $75.7 million during the same period in 2020, primarily as a result of the following:

• Our accounts receivable, exclusive of the change in allowance for doubtful accounts and customer credits, increased $137.7 million during the nine months ended September 30, 2021 due to the timing of billings net of collections, compared to a $3.4 million decrease in the same period in 2020.

As of September 30, 2021, our days sales outstanding

were 39.2, or 27.4 days net of deferred revenue, compared to 38.9, or 26.8 days net of deferred revenue, as of September 30, 2020.

• Our prepaid expenses and other assets decreased $105.7 million during the nine months ended September 30, 2021, compared to a $135.0 million decrease in the same period in 2020, primarily due to the change in our estimated tax liability and timing of estimated tax payments.

Cash paid for incomes taxes was $182.1 million and $34.2 million for the nine months ended September 30, 2021 and 2020, respectively.

• Our accounts payable increased $99.4 million during the nine months ended September 30, 2021, compared to a $60.4 million decrease in the same period in 2020, due to the timing of payments.

• Cash paid for capping, closure and post-closure obligations was $41.2 million during the nine months ended September 30, 2021, compared to $39.5 million in the same period in 2020.

The increase in cash paid for capping, closure, and post-closure obligations is primarily due to the timing of capping and post-closure payments at certain of our landfill sites.

• Cash paid for remediation obligations was $6.6 million lower during the six months ended June 30, 2021, compared to the same period in 2020, primarily due to $9.9 million of payments related to management and monitoring of the remediation area of our closed Bridgeton Landfill in Missouri during the six months ended June 30, 2021 as compared to $15.7 million of payments for the same period in 2020.

In addition, cash paid for interest, excluding net swap settlements for our fixed-to-floating interest rate swaps, was $116.6 million and $166.9 million for the six months ended June 30, 2021 and 2020, respectively.

• Cash paid for remediation obligations was $7.6 million lower during the nine months ended September 30, 2021, compared to the same period in 2020, primarily due to $14.0 million of payments related to management and monitoring of the remediation area of our closed Bridgeton Landfill in Missouri during the nine months ended September 30, 2021 as compared to $19.8 million of payments for the same period in 2020.

In addition, cash paid for interest, excluding net swap settlements for our fixed-to-floating interest rate swaps, was $193.8 million and $246.1 million for the nine months ended September 30, 2021 and 2020, respectively.

We use cash flows from operations to fund capital expenditures, acquisitions, dividend payments, share repurchases and debt repayments.

Cash Flows Used in Investing Activities

The most significant items affecting the comparison of our cash flows used in investing activities for the six months ended June 30, 2021 and 2020 are summarized below:

• Capital expenditures during the six months ended June 30, 2021 were $608.6 million, compared with $654.7 million for the same period in 2020.

• During the six months ended June 30, 2021 and 2020, we paid $576.6 million and $95.1 million, respectively, for acquisitions and investments.

During the six months ended June 30, 2021 and 2020, we received $45.9 million and $26.8 million for business divestitures, respectively.

We intend to finance capital expenditures and acquisitions through cash on hand, restricted cash held for capital expenditures, cash flows from operations, our revolving credit facilities, and tax-exempt bonds and other financings.

The most significant items affecting the comparison of our cash flows used in investing activities for the nine months ended September 30, 2021 and 2020 are summarized below:

• Capital expenditures during the nine months ended September 30, 2021 were $904.2 million, compared with $889.0 million for the same period in 2020.

• During the nine months ended September 30, 2021 and 2020, we paid $936.3 million and $189.9 million, respectively, for acquisitions and investments.

During the nine months ended September 30, 2021 and 2020, we received $46.3 million and $32.5 million for business divestitures, respectively.

We intend to finance capital expenditures and acquisitions through cash on hand, cash flows from operations, our revolving credit facilities, and tax-exempt bonds and other financings.

We expect to primarily use cash and borrowings under our revolving credit facilities to pay for future business acquisitions.

Cash Flows Used in Financing Activities

The most significant items affecting the comparison of our cash flows used in financing activities for the six months ended June 30, 2021 and 2020 are summarized below:

• Net payments from notes payable and long-term debt and senior notes were $18.2 million and $67.4 million during the six months ended June 30, 2021 and 2020, respectively.

• During the six months ended June 30, 2021, we repurchased 0.4 million shares of our stock for $40.1 million compared to repurchases of 1.2 million shares for $98.8 million during the same period in 2020.

• Dividends paid were $271.1 million and $257.9 million during the six months ended June 30, 2021 and 2020, respectively.

• During the six months ended June 30, 2021 and 2020, cash paid for purchase price holdback releases and contingent purchase price related to acquisitions was $11.8 million and $7.4 million, respectively.

The most significant items affecting the comparison of our cash flows used in financing activities for the nine months ended September 30, 2021 and 2020 are summarized below:

• Net proceeds from notes payable and long-term debt and senior notes were $264.7 million during the nine months ended September 30, 2021, compared to net payments of $35.8 million in the same period in 2020.

• During the nine months ended September 30, 2021, we repurchased 1.6 million shares of our stock for $179.0 million compared to repurchases of 1.2 million shares for $98.8 million during the same period in 2020.

• Dividends paid were $406.5 million and $387.1 million during the nine months ended September 30, 2021 and 2020, respectively.

• During the nine months ended September 30, 2021 and 2020, cash paid for purchase price holdback releases and contingent purchase price related to acquisitions was $14.4 million and $9.7 million, respectively.

Financial Condition

Debt Obligations

As of June 30, 2021, we had $135.2 million of principal debt maturing within the next 12 months, which includes certain variable rate tax-exempt financings and finance lease obligations.

As of September 30, 2021, we had $8.0 million of principal debt maturing within the next 12 months, which includes certain variable rate tax-exempt financings and finance lease obligations.

All of our tax-exempt financings are remarketed either quarterly or semiannually by remarketing agents to effectively maintain a variable yield.

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If the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us.

In the event of a failed remarketing, we currently have availability under our $2.25 billion unsecured revolving credit facility to fund these bonds until they are remarketed successfully.

Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of June 30, 2021.

In the event of a failed remarketing, we currently have availability under our $3.0

billion unsecured revolving credit facility to fund these bonds until they are remarketed successfully.

Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of September 30, 2021.

For further discussion of the components of our overall debt, see Note 7, Debt, of the notes to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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The 364-Day Credit Facility

In August 2020, we entered into a $1.0 billion 364-day unsecured revolving credit facility (the 364-Day Credit Facility), which matures in August 2021.

At our option, borrowings under the 364-Day Credit Facility bear interest at a Base Rate, or a Eurodollar Rate, plus an applicable margin based on our Debt Ratings (all as defined in the 364-Day Credit Facility agreement).

The 364-Day Credit Facility is subject to facility fees based on applicable rates defined in the 364-Day Credit Facility agreement and the aggregate commitment, regardless of usage.

Availability under our 364-Day Credit Facility totaled $1.0 billion as of June 30, 2021 and December 31, 2020.

The 364-Day Credit Facility can be used for working capital, capital expenditures, acquisitions, and other general corporate purposes.

The 364-Day Credit Facility agreement requires us to comply with financial and other covenants, which are consistent with the financial and other covenants included in our Credit Facility.

We may pay dividends and repurchase common stock if we are in compliance with these covenants.

As of June 30, 2021 and December 31, 2020, we had no borrowings outstanding under our 364-Day Credit Facility.

In August 2020, we entered into a $1.0 billion 364-day unsecured revolving credit facility (the 364-Day Credit Facility), which matured in August 2021.

As of December 31, 2020, we had no borrowings outstanding under our 364-Day Credit Facility.

The Credit Facility

In 2018, we entered into a $2.25 billion unsecured revolving credit facility (as amended, the Credit Facility), which matures in June 2023.

In August 2021, we entered into a $3.0 billion unsecured revolving credit facility (as amended, the Credit Facility), which amends and restates the prior $2.25 billion unsecured revolving credit facility which would have matured in June 2023 (the Replaced Credit Facility).

The Credit Facility matures in August 2026.

As permitted by the Credit Facility, we have the right to request two one-year extensions of the maturity date, but none of the lenders are committed to participate in such extension.

The Credit Facility also includes a feature that allows us to increase availability, at our option, by an aggregate amount of up to $1.0 billion through increased commitments from existing lenders or the addition of new lenders.

At our option, borrowings under the Credit Facility bear interest at a Base Rate, or a Eurodollar Rate, plus an applicable margin based on our Debt Ratings (all as defined in the Credit Facility agreement).

At our option, borrowings under the Credit Facility bear interest at a Base Rate, a daily floating London Interbank Offered Rate (LIBOR), or a Eurodollar Rate, plus an applicable margin based on our Debt Ratings (all as defined in the Credit Facility agreement).

On the earliest of (i) the date that all available tenors of U.S.

dollar LIBOR have permanently or indefinitely ceased to be provided or have been announced to be no longer representative, (ii) June 30, 2023 or (iii) the effective date of an election to opt into a secured overnight financing rate (“SOFR”), the LIBOR rate will be replaced by a forward-looking term rate based on SOFR or a daily rate based on SOFR published on such date.

The Credit Facility is subject to facility fees based on applicable rates defined in the Credit Facility agreement and the aggregate commitment, regardless of usage.

Availability under our Credit Facility totaled $1,808.5 million and $1,671.8 million as of June 30, 2021 and December 31, 2020, respectively.

Availability under our Credit Facility totaled $2,296.7 million as of September 30, 2021.

The Credit Facility can be used for working capital, capital expenditures, acquisitions, letters of credit and other general corporate purposes.

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We may pay dividends and repurchase common stock if we are in compliance with these covenants.

We had $100.0 million and $186.0 million outstanding under our Credit Facility as of June 30, 2021 and December 31, 2020, respectively.

We had $341.5 million and $376.5 million of letters of credit outstanding under our Credit Facility as of June 30, 2021 and December 31, 2020, respectively.

We had $364.7 million and $186.0 million outstanding under our Credit Facility and Replaced Credit Facility as of September 30, 2021 and December 31, 2020, respectively.

We had $338.6 million and $376.5 million of letters of credit outstanding under our Credit Facility and Replaced Credit Facility as of September 30, 2021 and December 31, 2020, respectively.

Uncommitted Credit Facility

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The Uncommitted Credit Facility may be terminated by either party at any time.

As of June 30, 2021, we had $113.7 million outstanding under our Uncommitted Credit Facility.

As of September 30, 2021, we had $98.1 million outstanding under our Uncommitted Credit Facility.

As of December 31, 2020 , we had no borrowings outstanding under our Uncommitted Credit Facility.

Financial and Other Covenants

The Credit Facility and 364-Day Credit Facility (collectively, the Credit Facilities) require us to comply with financial and other covenants.

The Credit Facility requires us to comply with financial and other covenants.

To the extent we are not in compliance with these covenants, we cannot pay dividends or repurchase common stock.

Compliance with covenants also is a condition for any incremental borrowings under the Credit Facilities, and failure to meet these covenants would enable the lenders to require repayment of any outstanding loans (which would adversely affect our liquidity).

The 364-Day Credit Facility and the Credit Facility, as amended, provide that our total debt to EBITDA ratio may not exceed 3.75 to 1.00 as of the last day of any fiscal quarter.

Compliance with covenants also is a condition for any incremental borrowings under the Credit Facility, and failure to meet these covenants would enable the lenders to require repayment of any outstanding loans (which would adversely affect our liquidity).

The Credit Facility provides that our total debt to EBITDA ratio may not exceed 3.75 to 1.00 as of the last day of any fiscal quarter.

In the case of an "elevated ratio period", which may be elected by us if one or more acquisitions during a fiscal quarter involve aggregate consideration in excess of $200.0 million (the Trigger Quarter), the total debt to EBITDA ratio may not exceed 4.25 to 1.00 during the Trigger Quarter and for the three fiscal quarters thereafter.

The 364-Day Credit Facility and the Credit Facility, as amended, also provide that there may not be more than two elevated ratio periods during the respective terms of the Credit Facility and 364-Day Credit Facility agreements.

As of June 30, 2021, our total debt to EBITDA ratio was 2.86 compared to the 3.75 maximum allowed by the covenants.

As of June 30, 2021, we were in compliance with the covenants unde r our Credit Facilities, and we exp ect to be in compliance throughout the remainder of 2021.

The Credit Facility also provides that there may not be more than two elevated ratio periods during the respective terms of the Credit Facility agreement.

As of September 30, 2021, our total debt to EBITDA ratio was 2.84 compared to the 3.75 maximum allowed by the covenants.

As of September 30, 2021, we were in compliance with the covenants unde r our Credit Facility, and we exp ect to be in compliance throughout the remainder of 2021.

EBITDA, which is a non-U.S.

GAAP measure, is calculated as defined in our Credit Facility and 364-Day Credit Facility agreements.

GAAP measure, is calculated as defined in our Credit Facility agreement.

In this context, EBITDA is used solely to provide information regarding the extent to which we are in compliance with debt covenants and is not comparable to EBITDA used by other companies or used by us for other purposes.

Failure to comply with the financial and other covenants under the Credit Facilities, as well as the occurrence of certain material adverse events, would constitute defaults and would allow the lenders under the Credit Facilities to accelerate the maturity of all indebtedness under the Credit Facilities.

Failure to comply with the financial and other covenants under the Credit Facility, as well as the occurrence of certain material adverse events, would constitute defaults and would allow the lenders under the Credit Facility to accelerate the maturity of all indebtedness under the Credit Facility.

This could have an adverse effect on the availability of financial assurances.

In addition, maturity acceleration on the Credit Facilities constitutes an event of default under our other debt instruments, including our senior notes, and, therefore, our senior notes would also be subject to acceleration of maturity.

In addition, maturity acceleration on the Credit Facility constitutes an event of default under our other debt instruments, including our senior notes, and, therefore, our senior notes would also be subject to acceleration of maturity.

If such acceleration were to occur, we would not have sufficient liquidity available to repay the indebtedness.

We would likely have to seek an amendment under the Credit Facilities for relief from the financial covenant or repay the debt with proceeds from the issuance of new debt or equity, or asset sales, if necessary.

We may be unable to amend the Credit Facilities or raise sufficient capital to repay such obligations in the event the maturity is accelerated.

We would likely have to seek an amendment under the Credit Facility for relief from the financial covenant or repay the debt with proceeds from the issuance of new debt or equity, or asset sales, if necessary.

We may be unable to amend the Credit Facility or raise sufficient capital to repay such obligations in the event the maturity is accelerated.

Senior Notes and Debentures

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We used the net proceeds to redeem all $600.0 million of the outstanding 5.250% senior notes due November 2021 plus a make-whole premium of $34.0 million.

Additionally, we incurred a non-cash charge related to the unamortized deferred issuance costs of $0.5 million.

The remaining proceeds were used for general corporate purposes.

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Tax-Exempt Financings

As of June 30, 2021 and December 31, 2020, we had $1,104.9 million and $1,104.7 million of certain variable rate tax-exempt financings outstanding, respectively, with maturities ranging from 2021 to 2050.

As of September 30, 2021 we had $1,151.6 million of certain variable rate tax-exempt financing outstanding with maturities ranging from 2023 to 2051.

As of December 31, 2020, we had $1,104.7 million of certain variable rate tax-exempt financings outstanding with maturities ranging from 2021 to 2050.

During the third quarter of 2021, we issued $175.0 million of tax exempt financings.

During the second quarter of 2020, we issued $60.0 million of tax-exempt financings.

Finance Leases

We had finance lease liabilities of $246.3 million and $206.5 million as of June 30, 2021 and December 31, 2020, respectively, with maturities ranging from 2021 to 2063.

We had finance lease liabilities of $244.5 million and $206.5 million as of September 30, 2021 and December 31, 2020, respectively, with maturities ranging from 2021 to 2063.

Credit Ratings

Our continued access to the debt capital markets and to new financing facilities, as well as our borrowing costs, depend on multiple factors, including market conditions, our operating performance and maintaining strong credit ratings.

As of June 30, 2021, our credit ratings were BBB+, Baa2 and BBB by Standard & Poor’s Ratings Services, Moody’s Investors Service and Fitch Ratings, Inc., respectively.

If our credit ratings were downgraded, especially any downgrade to below investment grade,

our ability to access the debt markets with the same flexibility that we have experienced historically, our cost of funds and other terms for new debt issuances, could be adversely impacted.

As of September 30, 2021, our credit ratings were BBB+, Baa2 and BBB by Standard & Poor’s Ratings Services, Moody’s Investors Service and Fitch Ratings, Inc., respectively.

If our credit ratings were downgraded, especially any downgrade to below investment grade, our ability to access the debt markets with the same flexibility that we have experienced historically, our cost of funds and other terms for new debt issuances, could be adversely impacted.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis