What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-05 compared with 2022-05-06 · 248 added, 155 removed, 367 unchanged (52% of the section changed)

13 unchanged sentences

into our operations and to realize the intended benefits of such acquisition, as well as acts of war, riots or terrorism, and the impact of these acts on economic, financial and social conditions in the United States as well as our dependence on large, long-term collection, transfer and disposal contracts.

More information on factors that could cause actual results or events to differ materially from those anticipated is included below under Part II, Item 1A.

- Risk Factors and from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2021.

More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2021.

Additionally, new risk factors emerge from time to time and it is not possible for us to predict all such risk factors, or to assess the impact such risk factors might have on our business.

We undertake no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

Recent Developments

In July 2022, we made an investment of approximately $90 million in a joint venture with a landfill gas to energy developer to construct 39 renewable natural gas projects across the United States.

The agreement provides for additional contributions as certain project milestones are achieved over the next four to five years.

On May 2, 2022, we acquired all outstanding equity of US Ecology, Inc.

(US Ecology) in a transaction valued at $2.2 billion.

US Ecology is a leading provider of environmental solutions offering treatment, recycling and disposal of hazardous, non-hazardous and specialty waste.

This acquisition expands our existing environmental solutions footprint and adds a national platform to provide customers with environmental solutions from collection to disposal, including recycling, solid waste, special waste, hazardous waste, container rental and field services.

We financed the transaction using the proceeds of a new $1.0 billion unsecured Term Loan Credit Agreement (Term Loan Facility) and borrowings under our existing $3.0 billion unsecured revolving credit facility.

As of and for the three months ended June 30, 2022, the financial results of US Ecology are included within our Environmental Solutions operating segment.

Updated Full-Year 2022 Adjusted Earnings Per Share Guidance

The following is a summary of anticipated adjusted diluted earnings per share for the year ending December 31, 2022.

Adjusted diluted earnings per share is not a measure determined in accordance with U.S.

(Anticipated)

December 31, 2022

Diluted earnings per share $ 4.52 to 4.55

Restructuring charges 0.06

Withdrawal costs - multiemployer pension funds 0.01

US Ecology, Inc.

acquisition integration and deal costs 0.18

Adjusted diluted earnings per share $ 4.77 to 4.80

We believe that presenting adjusted diluted earnings per share provides an understanding of operational activities before the financial impact of certain items.

We use this measure, and believe investors will find it helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period.

We have incurred comparable charges, costs and recoveries in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods.

Our definition of adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies.

The guidance set forth above constitutes forward-looking information and is not a guarantee of future performance.

The guidance is based upon the current beliefs and expectations of our management and is subject to significant risk and uncertainties that could cause actual results to differ materially from those shown above.

See “Disclosure Regarding Forward-Looking Statements.”

Impact of the COVID-19 Pandemic

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The effects of the COVID-19 pandemic on our business are described in more detail in the Results of Operations discussion in this Management's Discussion and Analysis of Financial Condition and Results of Operations .

Recent Developments

US Ecology, Inc.

On May 2, 2022, we acquired all outstanding shares of US Ecology, Inc.

(US Ecology) in a transaction valued at $2.2 billion.

US Ecology is a leading provider of environmental solutions offering treatment, recycling and disposal of hazardous, non-hazardous and specialty waste.

We financed the transaction through the entry into a $1.0 billion unsecured Term Loan Credit Agreement (Term Loan Facility), and the remaining purchase price was funded using borrowings on our $3.0 billion unsecured revolving credit facility.

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

As of March 31, 2022, we operated facilities in 41 states through 355 collection operations, 238 transfer stations, 198 active landfills, 71 recycling processing centers, 3 treatment, recovery and disposal facilities, 3 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 124 closed landfills as of March 31, 2022.

Revenue for the three months ended March 31, 2022 increased by 14.4% to $2,968.8 million compared to $2,595.9 million for the same period in 2021.

As of June 30, 2022, we operated facilities in 43 states through 346 collection operations, 231 transfer stations, 207 active landfills, 72 recycling processing centers, 3 treatment, recovery and disposal facilities, 20 treatment, storage and disposal facilities (TSDF), 6 salt water disposal wells and 7 deep injection wells.

We are engaged in 74 landfill gas-to-energy and renewable energy projects and had post-closure responsibility for 127 closed landfills as of June 30, 2022.

Revenue for the six months ended June 30, 2022 increased by 18.0% to $6,383.7 million compared to $5,408.2 million for the same period in 2021.

This change in revenue is due to increased volume of 3.0%, average yield of 4.6%, acquisitions, net of divestitures of 7.2%, recycling processing and commodity sales of 0.3%, fuel recovery fees of 2.4%, and increased environmental solutions revenue of 0.5%.

The following table summarizes our revenue, expenses and operating income for the three months ended March 31, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

The following table summarizes our revenue, expenses and operating income for the three and six months ended June 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

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

2022 2021 2022 2021

Revenue $ 3,413.6 100.0 % $ 2,812.3 100.0 % $ 6,383.7 100.0 % $ 5,408.2 100.0 %

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Selling, general and administrative 391.5 11.5 315.8 11.2 699.3 11.0 581.2 10.7

Gain on business divestitures and impairments, net — — (1.1) —

Withdrawal costs - multiemployer pension funds

2.2 0.1 — — 2.2 — — —

Loss (gain) on business divestitures and impairments, net — — 0.9 — — — (0.2) —

Restructuring charges 5.9 0.2 3.8 0.1 11.9 0.2 6.6 —

Operating income $ 589.6 17.3 % $ 517.9 18.4 % $ 1,150.2 18.0 % $ 1,010.3 18.7 %

Our pre-tax income was $472.2 million for the three months ended March 31, 2022 compared to $400.1 million for the same period in 2021.

Our pre-tax income was $478.1 million and $950.3 million for the three and six months ended June 30, 2022, respectively, compared to $427.4 million and $827.5 million for the same respective periods in 2021.

Our net income attributable to Republic Services, Inc.

was $352.0 million for the three months ended March 31, 2022, or $1.11 per diluted share, compared to $295.9 million, or $0.93 per diluted share, for the same period in 2021.

During each of the three months ended March 31, 2022 and 2021, we recorded a number of charges, other expenses and benefits that impacted our pre-tax income, tax expense, net income attributable to Republic Services, Inc.

was $371.9 million and $723.9 million for the three and six months ended June 30, 2022, or $1.17 and $2.28 per diluted share, respectively, compared to $331.1 million and $627.0 million, or 1.03 and $1.96 per diluted share, for the same periods in 2021, respectively.

During each of the three and six months ended June 30, 2022 and 2021, we recorded a number of charges, other expenses and benefits that impacted our pre-tax income, tax expense, 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 months ended March 31, 2022 and 2021.

Three Months Ended March 31, 2022

Three Months Ended March 31, 2021

Three Months Ended June 30, 2022

Three Months Ended June 30, 2021

Net Diluted Net Diluted

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Restructuring charges 5.9 1.5 4.4 0.01 3.8 1.0 2.8 0.01

Loss on business divestitures and impairments, net (1)

— — — — 0.9 0.3 0.6 —

Withdrawal costs - multiemployer pension funds 2.2 0.7 1.5 0.01 — — — —

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

US Ecology, Inc.

acquisition integration and deal costs 51.9 11.3 40.6 0.13 — — — —

Total adjustments 60.0 13.5 46.5 0.15 20.1 1.3 18.8 0.06

As adjusted $ 538.1 $ 119.8 $ 418.4 $ 1.32 $ 447.5 $ 96.7 $ 349.9 $ 1.09

(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 income tax effect related to our adjustments includes both current and deferred income tax impact and is individually calculated based on the statutory rates applicable to each adjustment.

Six Months Ended June 30, 2022

Six Months Ended June 30, 2021

Net Diluted Net Diluted

Pre-tax Tax Income - Earnings Pre-tax Tax Income - Earnings

Income Impact (2)

Republic per Share Income Impact (2)

Republic per Share

As reported $ 950.3 $ 226.6 $ 723.9 $ 2.28 $ 827.5 $ 199.1 $ 627.0 $ 1.96

Restructuring charges 11.9 3.1 8.8 0.03 6.6 1.7 4.9 0.01

Gain on business divestitures and impairments, net (1)

— — — — (0.2) — (0.2) —

Withdrawal costs - multiemployer pension funds 2.2 0.7 1.5 0.01 — — — —

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

US Ecology, Inc.

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As adjusted $ 1,021.0 $ 242.1 $ 779.1 $ 2.46 $ 849.3 $ 200.8 $ 647.1 $ 2.02

(1) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended March 31, 2021.

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

(2) The income tax effect related to our adjustments includes both current and deferred income tax impact and is individually calculated based on the statutory rates applicable to each adjustment.

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Restructuring charges.

During the three months ended March 31, 2022 and 2021, we incurred restructuring charges of $6.0 million and $2.8 million, respectively, related to the redesign of certain back-office software systems.

During the same periods, we paid $5.9 million and $4.0 million, respectively, related to these restructuring efforts.

During the remainder of 2022, we expect to incur additional restructuring charges of approximately $10 million to $15 million primarily related to the redesign of certain of our back-office software systems.

During the three and six months ended June 30, 2022, we incurred restructuring charges of $5.9 million and $11.9 million, respectively, and during the three and six months ended June 30, 2021, we incurred restructuring charges of $3.8 million and $6.6 million respectively, related to the redesign of certain back-office software systems.

During the six months ended June 30, 2022 and 2021, we paid $8.3 million and $8.6 million, respectively, related to these restructuring efforts.

During the remainder of 2022, we expect to incur additional restructuring charges of approximately $10 million, primarily related to the continued 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.

Gain on business divestitures and impairments, net.

During the three months ended March 31, 2021, we recorded a net gain on business divestitures and impairments of $1.1 million.

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

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

Withdrawal costs - multiemployer pension funds.

During both the three and six months ended June 30, 2022, we recorded $2.2 million of withdrawal costs from a multiemployer pension plan.

A ccelerated vesting of compensation expense for CEO transition.

In June 2021, Donald W.

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.

US Ecology, Inc.

acquisition integration and deal costs .

During the three months ended March 31, 2022, we incurred $4.8 million of acquisition integration and deal costs in connection with the acquisition of US Ecology, which closed on May 2, 2022.

During the three and six months ended June 30, 2022, we incurred $51.9 million and $56.6 million, respectively, of acquisition integration and deal costs in connection with the acquisition of US Ecology, which included certain costs to close the acquisition and integrate the business, including stock compensation expense for unvested awards at closing as well as severance and change-in-control payments.

The acquisition closed on May 2, 2022.

Results of Operations

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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 hazardous and non-hazardous solid and liquid material and in-plant services, such as transportation and logistics, including at our TSDFs, and onsite services such as high-pressure cleaning, tank cleaning, decontamination, remediation, transportation, spill cleanup, and emergency response at refineries, chemical, steel, and automotive plants, and other governmental, commercial, and industrial facilities.

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 months ended March 31, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

The following table reflects our revenue by service line for the three and six months ended June 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

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

2022 2021 2022 2021

$ 654.1 19.2 % $ 611.6 21.7 % $ 1,282.0 20.1 % $ 1,204.7 22.2 %

Small-container

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Total revenue $ 3,413.6 100.0 % $ 2,812.3 100.0 % $ 6,383.7 100.0 % $ 5,408.2 100.0 %

The following table reflects changes in components of our revenue, as a percentage of total revenue, for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

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, 2022 and 2021:

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

2022 2021 2022 2021

Average yield 5.0 % 2.6 % 4.6 % 2.5 %

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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, fuel recovery fees and environmental solutions revenue, to determine the effectiveness of our pricing strategies.

Average yield as a percentage of related-business revenue was 4.5% and 2.5% for the three months ended March 31, 2022 and 2021, respectively.

Core price as a percentage of related-business revenue was 6.5% and 4.5% for the three months ended March 31, 2022 and 2021, respectively.

During the three months ended March 31, 2022, we experienced the following changes in our revenue as compared to the same respective period in 2021:

• Average yield increased revenue by 4.2% during the three months ended March 31, 2022 due to price increases in all our collection and disposal lines of business.

• The fuel recovery fee program, which mitigates our exposure to increases in fuel prices, increased revenue by 1.9% during the three months ended March 31, 2022 primarily due to an increase in fuel prices compared to the same period in 2021.

• Volume increased revenue by 3.6% during the three months ended March 31, 2022, primarily due to volume growth in our small- and large-container collection, landfill, and transfer lines of business, partially offset by a decrease in volume in our residential line of business.

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

• Recycling processing and commodity sales increased revenue by 0.4% during the three months ended March 31, 2022 primarily due to an increase in overall commodity prices as compared to the same period in 2021.

The average price for recycled commodities, excluding glass and organics, for the three months ended March 31, 2022 was $201 per ton compared to $133 per ton for the same period in 2021.

Average yield as a percentage of related-business revenue was 5.4% and 5.0% for the three and six months ended June 30, 2022, respectively, and 2.8% and 2.6% for the same respective periods in 2021.

Core price as a percentage of related-business revenue was 6.7% and 6.6% for the three and six months ended June 30, 2022, respectively, and 5.5% and 5.1% for the same respective periods in 2021.

During the three and six months ended June 30, 2022, we experienced the following changes in our revenue as compared to the same respective periods in 2021:

• Average yield increased revenue by 5.0% and 4.6% during the three and six months ended June 30, 2022, respectively, due to price increases in all our collection and disposal lines of business.

• The fuel recovery fee program, which mitigates our exposure to increases in fuel prices, increased revenue by 3.0% and 2.4% during the three and six months ended June 30, 2022, respectively, primarily due to an increase in fuel prices compared to the same periods in 2021.

• Volume increased revenue by 2.4% and 3.0% during the three and six months ended June 30, 2022, respectively, primarily due to volume growth in our landfill, small- and large-container collection, and transfer lines of business, partially offset by a decrease in volume in our residential line of business.

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

• Recycling processing and commodity sales increased revenue by 0.2% and 0.3% during the three and six months ended June 30, 2022, respectively, primarily due to an increase in overall commodity prices as compared to the same periods in 2021.

The average price for recycled commodities, excluding glass and organics, for the three and six months ended June 30, 2022 was $218 and $210 per ton, respectively, compared to $170 and $152 per ton for the same respective periods in 2021.

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 $10 million.

• Environmental solutions revenue increased by 0.4% during the three months ended March 31, 2022 primarily due to an increase in volumes, including those driven by an increase in rig counts and drilling activity.

• Acquisitions, net of divestitures, increased revenue by 3.9% during the three months ended March 31, 2022, reflecting our continued growth strategy of acquiring privately held solid waste, recycling, and environmental services companies that complement and expand our existing business platform.

• Environmental solutions revenue increased by 0.5% during both the three and six months ended June 30, 2022, primarily due to an increase in volumes, including those driven by an increase in rig counts and drilling activity.

• Acquisitions, net of divestitures, increased revenue by 10.3% and 7.2% during the three and six months ended June 30, 2022, respectively, reflecting the results of our continued growth strategy of acquiring solid waste, recycling, and environmental services companies, including US Ecology, that complement and expand our existing business platform.

Cost of Operations

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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 months ended March 31, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

The following table summarizes the major components of our cost of operations for the three and six months ended June 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

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

2022 2021 2022 2021

Labor and related benefits $ 677.3 19.8 % $ 571.5 20.3 % $ 1,286.1 20.2 % $ 1,127.2 20.8 %

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Other 147.6 4.3 106.9 3.8 268.8 4.2 213.1 4.0

Subtotal 2,063.4 60.4 1,650.2 58.7 3,827.1 60.0 3,184.0 58.9

US Ecology, Inc.

acquisition integration and deal costs 1.0 0.1 — — 1.0 — — —

Total cost of operations $ 2,064.4 60.5 % $ 1,650.2 58.7 % $ 3,828.1 60.0 % $ 3,184.0 58.9 %

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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.

The most significant items impacting our cost of operations during the three months ended March 31, 2022 and 2021 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 along with additional headcount attributable to acquisition-related growth, and an increase in service levels attributable to economic recovery from the COVID-19 pandemic.

The most significant items impacting our cost of operations during the three and six months ended June 30, 2022 and 2021 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 along with additional headcount attributable to acquisition-related growth, an increase in service levels attributable to economic recovery from the COVID-19 pandemic, and acquisitions.

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

• During the three months ended March 31, 2022 and 2021, approximately 69% 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 months ended March 31, 2022 primarily due to higher collection and transfer station volumes, acquisition-related activity, and increased subcontract work attributable to an increase in non-core revenues as compared to the same period in 2021.

During both the three and six months ended June 30, 2022 and 2021, approximately 68% of the total solid waste volume we collected was disposed at landfill sites that we owned or operated (internalization).

• Maintenance and repairs expense increa sed in aggregate dollars due to increases in the price of replacement parts as well as 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, 2022 primarily due to increases in volume, acquisition-related activity, and an increase in subcontract work attributable to a corresponding increase in non-core revenues as compared to the same period in 2021.

• 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 months ended March 31, 2022 was $4.24 as compared to $2.91 for the same period in 2021.

The national average diesel fuel cost per gallon for the three and six months ended June 30, 2022 was $5.49 and $4.87, respectively, as compared to $3.21 and $3.06, respectively, for the same respective periods in 2021.

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 $26 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 $26 million per year.

• Landfill operating costs increased in aggregate dollars primarily due to increased leachate treatment, transportation and disposal costs due in part to increased rainfall in select geographic regions, as well as landfill gas and other maintenance costs.

• Risk management expenses increased during the three months ended March 31, 2022 primarily due to favorable actuarial developments in the prior year that did not recur in the current year.

• Other costs of operations increased during the three months ended March 31, 2022 due to increased occupancy and facility related expenses as well as higher third-party truck and equipment rentals supporting higher volumes.

• Landfill operating costs decreased in aggregate dollars and as a percentage of revenue during the three months ended June 30, 2022, and remained flat in aggregate dollars and decreased as a percentage of revenue during the six months ended June 30, 2022, primarily due to certain favorable remediation reimbursements in the quarter.

This favorability was partially offset by increased leachate treatment, transportation and disposal costs due in part to increased rainfall in select geographic regions, as well as landfill gas and other maintenance costs.

• Risk management expenses increased during the three and six months ended June 30, 2022 primarily due to unfavorable actuarial developments in our auto liability program.

• During both the three and six months ended June 30, 2022, we incurred $1.0 million of acquisition integration and deal costs in connection with the acquisition of US Ecology.

The acquisition closed on May 2, 2022.

• Other costs of operations increased during the three and six months ended June 30, 2022 due to increased occupancy and facility related expenses as well as higher third-party truck and equipment rentals supporting higher volumes.

Depreciation, Amortization and Depletion of Property and Equipment

The following table summarizes depreciation, amortization and depletion of property and equipment for the three months ended March 31, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

The following table summarizes depreciation, amortization and depletion of property and equipment for the three and six months ended June 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

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

2022 2021 2022 2021

Depreciation and amortization of property and equipment

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$ 311.5 9.1 % $ 285.2 10.1 % $ 601.1 9.4 % $ 550.1 10.2 %

Depreciation and amortization of property and equipment increased for the three months ended March 31, 2022 primarily due to assets added through acquisitions.

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

These increases were partially offset by an unfavorable amortization adjustment related to the asset retirement obligation at one of our closed landfills during the three months ended March 31, 2021, which did not recur in 2022.

Depreciation and amortization of property and equipment increased for the three and six months ended June 30, 2022 primarily due to assets added through acquisitions.

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

These increases were partially offset by an unfavorable amortization adjustment related to the asset retirement obligation at one of our closed landfills during the three and six months ended June 30, 2021, which did not recur in 2022.

Amortization of Other Intangible Assets

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 $10.0 million, or 0.3% of revenue, for the three months

ended March 31, 2022 compared to $7.3 million, or 0.3% of revenue, for the same respective period in 2021.

Expenses for amortization of other intangible assets were $13.9 million and $23.9 million, or 0.4% of revenue, for the three and six months ended June 30, 2022 , respectively, compared to $7.7 million and $15.0 million, or 0.3% of revenue, for the same respective periods in 2021.

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 $10.8 million, or 0.4% of revenue, for the three months ended March 31, 2022 compared to $10.0 million, or 0.4% of revenue, for the same respective period in 2021.

Expenses for amortization of other assets were $12.2 million and $22.9 million, or 0.4% of revenue, for the three and six months ended June 30, 2022, respectively, compared to $10.1 million and $20.1 million, or 0.4% of revenue, for the same respective periods in 2021.

Accretion Expense

Accretion expense was $21.7 million, or 0.7% of revenue, for the three months ended March 31, 2022 compared to $20.5 million, or 0.8% of revenue, for the same respective period in 2021.

Accretion expense was $22.4 million and $44.1 million, or 0.7% of revenue, for the three and six months ended June 30, 2022, respectively, compared to $20.7 million and $41.1 million, or 0.7% of revenue, for the same respective periods in 2021.

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 months ended March 31, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

The following table summarizes our selling, general and administrative expenses for the three and six months ended June 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

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

2022 2021 2022 2021

Salaries and related benefits $ 232.1 6.8 % $ 222.5 7.9 % $ 444.9 7.0 % $ 416.8 7.7 %

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Subtotal 340.6 10.0 300.4 10.7 643.7 10.1 565.8 10.4

Accelerated vesting of compensation expense for CEO transition — — 15.4 0.5 — — 15.4 0.3

US Ecology, Inc.

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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 months ended March 31, 2022 and 2021 are summarized below:

• Salaries and related benefits increased in aggregate dollars 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 increased for the three months ended March 31, 2022, primarily due to an increase in advertising and travel costs.

• During the three months ended March 31, 2022, we incurred $4.8 million of acquisition integration and deal costs in connection with the acquisition of US Ecology, which closed on May 2, 2022.

Gain on Business Divestitures and Impairments, Net

The most significant items affecting our selling, general and administrative expenses during the three and six months ended June 30, 2022 and 2021 are summarized below:

• Salaries and related benefits increased in aggregate dollars primarily due to higher wages, benefits, and other payroll related items resulting from annual merit increases, as well as additional salaries and related benefits from acquisitions.

• Other selling, general and administrative expenses increased for the three and six months ended June 30, 2022, primarily due to an increase in advertising and travel costs.

• In June 2021, Donald W.

Slager retired as CEO of Republic Services, Inc.

• During the three and six months ended June 30, 2022, we incurred $50.9 million and $55.6 million, respectively, of acquisition integration and deal costs in connection with the acquisition of US Ecology, which included certain costs to close the acquisition and integrate the business, including stock compensation expense for unvested awards at closing as well as severance and change-in-control payments.

The acquisition closed on May 2, 2022.

Loss (Gain) on Business Divestitures and Impairments, Net

We strive to have a number one or number two market position in each of the markets we serve, or have a clear path on how we will achieve a leading market position over time.

Where we cannot establish a leading market position, or where operations are not generating acceptable returns, we may decide to divest certain assets and reallocate resources to other markets.

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 months ended March 31, 2021, we recorded a net gain on business divestitures and impairments of $1.1 million.

No such gains were recorded during the three months ended March 31, 2022.

Business divestitures could result in gains, losses or impairment charges that m ay 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 on business divestitures and impairments of $0.9 million and net gain on business divestitures and impairments of $0.2 million, respectively.

Restructuring Charges

During the same periods, we paid $5.9 million and $4.0 million, respectively, related to these restructuring efforts.

During the three and six months ended June 30, 2022, we incurred restructuring charges of $5.9 million and $11.9 million, respectively, and during the three and six months ended June 30, 2021, we incurred restructuring charges of $3.8 million and $6.6 million , respectively, related to the redesign of certain back-office software systems and certain facility lease exit and impairment charges.

During the six months ended June 30, 2022 and 2021, we paid $8.3 million and $8.6 million, respectively, related to the restructuring efforts.

During the remainder of 2022, we expect to incur additional restructuring charges of approximately $10 million primarily related to the continuing redesign of certain of our back-office software systems.

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 months ended March 31, 2022 and 2021:

Three Months Ended March 31,

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

2022 2021 2022 2021

Interest expense on debt

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Total interest expense $ 94.0 $ 78.4 $ 177.5 $ 156.7

Total interest expense for the three months ended March 31, 2022 increased primarily due to higher interest rates on our floating rate debt.

Cash paid for interest, excluding net swap settlements for our fixed-to-floating interest rate swaps, was $75.6 million and $66.2 million for the three months ended March 31, 2022 and 2021, respectively.

Our effective tax rate, exclusive of non-controlling interests, for the three months ended March 31, 2022 and 2021 was 25.5% and 25.9%, respectively.

Cash paid for income taxes was a net payment of $3.7 million and a net refund of $0.4 million for the three months ended March 31, 2022 and 2021, respectively.

Total interest expense for the three and six months ended June 30, 2022 increased primarily due to additional outstanding debt to fund the purchase of US Ecology and higher interest rates on our floating rate debt.

Cash paid for interest, excluding net swap settlements for our fixed-to-floating interest rate swaps, was $130.6 million and $116.6 million for the six months ended June 30, 2022 and 2021, respectively.

Our effective tax rate, exclusive of non-controlling interests, for the three and six months ended June 30, 2022 was 22.2% and 23.8%, 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.

Net cash paid for income taxes was $78.9 million and $54.3 million for the six months ended June 30, 2022 and 2021, respectively.

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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Group 1 primarily consists of geographic areas located in the western United States, and Group 2 primarily consists of geographic areas located in the southeastern and mid-western United States, and the eastern seaboard of the United States.

Our Environmental Solutions operating segment, which provides environmental solutions for daily operations of industrial, petrochemical and refining facilities, is aggregated with Corporate entities and other as it only represents approximately 3% of our consolidated revenue.

Our Environmental Solutions operating segment, which provides environmental solutions for daily operations of industrial, petrochemical and refining facilities, as well as waste treatment and disposal, specialty onsite services and emergency response services and waste transportation and logistics services, is aggregated for reporting purposes with Corporate entities and other as it only represents approximately 6.2% of our consolidated revenue for the six months ended June 30, 2022.

Our Environmental Solutions operating segment includes the financial results of US Ecology following its acquisition on May 2, 2022.

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 months ended March 31, 2022 and 2021 (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 six months ended June 30, 2022 and 2021 (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 Gain on Business Divestitures and Impairments, Net Operating Income (Loss) Operating Margin

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Group 1 $ 1,548.4 $ 147.4 $ (1.5) $ 145.9 $ — $ 415.1 26.8 %

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Total $ 3,413.6 $ 361.5 $ (1.5) $ 360.0 $ — $ 589.6 17.3 %

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Group 1 $ 1,393.3 $ 139.1 $ (0.4) $ 138.7 $ — $ 379.8 27.3 %

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Total $ 2,812.3 $ 316.2 $ 7.5 $ 323.7 $ 0.9 $ 517.9 18.4 %

Six Months Ended June 30, 2022

Group 1 $ 2,988.8 $ 291.1 $ (1.5) $ 289.6 $ — $ 787.9 26.4 %

Group 2 2,908.1 290.5 0.3 290.9 — 647.8 22.3 %

Corporate entities and other 486.8 111.3 0.2 111.5 — (285.5) —

Total $ 6,383.7 $ 692.9 $ (1.0) $ 692.0 $ — $ 1,150.2 18.0 %

Six Months Ended June 30, 2021

Group 1 $ 2,691.9 $ 272.3 $ (1.5) $ 270.8 $ — $ 731.3 27.2 %

Group 2 2,563.9 266.4 0.4 266.8 — 545.4 21.3 %

Corporate entities and other 152.4 76.4 12.3 88.7 (0.2) (266.4) —

Total $ 5,408.2 $ 615.1 $ 11.2 $ 626.3 $ (0.2) $ 1,010.3 18.7 %

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 months ended March 31, 2022 and 2021 are discussed below.

Revenue for the three months ended March 31, 2022 increased 10.9% due to an increase in both average yield in all lines of business.

Additionally, volume increased in our residential, small- and large-container collection lines of business, as well as our transfer station and landfill lines of business.

The increase in landfill volume was attributable to an increase in solid waste, construction and demolition waste and special waste volumes.

Significant changes in the revenue and operating margins of our reportable segments comparing the three and six months ended June 30, 2022 and 2021 are discussed below.

Revenue for the three and six months ended June 30, 2022 increased 11.1% and 11.0%, respectively, due to an increase in both average yield and volume in all lines of business.

Revenue also increased due to acquisition-related growth.

Operating income in Group 1 increased from $351.5 million for the three months ended March 31, 2021, or a 27.1% operating income margin, to $372.8 million for the three months ended March 31, 2022, or a 25.9% operating income margin.

Operating income margin for the three months ended March 31, 2022 was unfavorably impacted by higher disposal costs due to an increase in third party disposal rates and higher transportation and subcontract costs driven by an increase in volume.

Revenue for the three months ended March 31, 2022 increased 12.9% due to an increase in average yield in all lines of business.

Operating income in Group 1 increased from $379.8 million for the three months ended June 30, 2021, or a 27.3% operating income margin, to $415.1 million for the three months ended June 30, 2022, or a 26.8% operating income margin.

Operating income in Group 1 increased from $731.3 million for the six months ended June 30, 2021, or a 27.2% operating income margin, to $787.9 million for the six months ended June 30, 2022, or a 26.4% operating income margin.

Operating income margin for the three and six months ended June 30, 2022 was primarily unfavorably impacted by an increase in vehicle and equipment rental fees, transportation and subcontract costs driven by increases in volume, as well as higher disposal costs due to an increase in third party disposal rates and higher transportation and subcontract costs driven by the increase in volume.

The unfavorable impact was partially offset by the increase in revenue attributable to the economic recovery from the COVID-19 pandemic.

Revenue for the three and six months ended June 30, 2022 increased 13.8% and 13.4%, 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.

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Revenue also increased due to acquisition-related growth.

Operating income in Group 2 increased from $261.8 million for the three months ended March 31, 2021, or a 21.4% operating income margin, to $319.4 million for the three months ended March 31, 2022, or a 23.1% operating income margin.

Operating income margin for the three months ended March 31, 2022 was favorably impacted by the increase in revenue attributable to the economic recovery from the COVID-19 pandemic coupled with the effective management of certain operating costs, primarily labor and related benefits, disposal costs, and maintenance and repairs.

The favorable impact was partially offset by higher transportation and subcontract costs driven by an increase in volume.

Operating income in Group 2 increased from $283.6 million for the three months ended June 30, 2021, or a 21.1% operating income margin, to $328.4 million for the three months ended June 30, 2022, or a 21.5% operating income margin.

Operating income in Group 2 increased from $545.4 million for the six months ended June 30, 2021, or a 21.3% operating income margin, to $647.8 million for the six months ended June 30, 2022, or a 22.3% operating income margin

Operating income margin for the three and six months ended June 30, 2022 was favorably impacted by the increase in revenue attributable to the economic recovery from the COVID-19 pandemic coupled with the effective management of certain operating costs, primarily labor and related benefits, disposal costs, and maintenance and repairs.

The favorable impact was partially offset by an increase in vehicle and equipment rental fees and transportation and subcontract costs driven by increases in volume.

Corporate Entities and Other

Operating loss in our Corporate entities and other segment increased from $120.9 million for the three months ended March 31, 2021 to $131.6 million for the three months ended March 31, 2022.

The change in the operating loss for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to an increase in acquisition deal and integration costs as well as restructuring costs.

Operating loss in our Corporate entities and other segment increased from $145.5 million for the three months ended June 30, 2021 to $153.9 million for the three months ended June 30, 2022.

Operating loss in our Corporate entities and other segment increased from $266.4 million for the six months ended June 30, 2021 to $285.5 million for the six months ended June 30, 2022.

The change in the operating loss for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 was primarily due to an increase in acquisition deal and integration costs as well as restructuring costs, offset by the operating income from US Ecology.

Landfill and Environmental Matters

Available Airspace

As of March 31, 2022, we owned or operated 198 active solid waste landfills with total available disposal capacity estimated to be 5.0 billion in-place cubic yards.

As of June 30, 2022 , we owned or operated 207 active landfills with total available disposal capacity estimated to be 5.1 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 March 31, 2022

Consumed Changes in Engineering Estimates Balance as of June 30, 2022

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 March 31, 2022, 11 of our landfills met all of our criteria for including their probable expansion airspace in their total available disposal capacity.

As of June 30, 2022 , 11 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 32 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 three months ended March 31, 2022:

The following tables reflect the activity in our property and equipment accounts for the six months ended June 30, 2022 :

Gross Property and Equipment

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Obligations Impairments,

Adjustments Balance as of March 31, 2022

Transfers, Foreign Currency Translation

Adjustments Balance as of June 30, 2022

Land $ 694.9 $ 0.1 $ (1.5) $ 60.2 $ — $ — $ 1.0 $ 754.7

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Divestitures Adjustments

Obligations Impairments,

Adjustments Balance as of March 31, 2022

Obligations Impairments, Transfers, Foreign Currency Translation and Other Adjustments Balance as of June 30, 2022

Landfill development costs $ (4,625.6) $ (212.5) $ — $ (1.6) $ 1.0 $ 0.1 $ (4,838.6)

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Cash and cash equivalents $ 119.4 $ 29.0

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The following table summarizes our restricted cash and marketable securities:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Financing proceeds $ 2.0 $ 12.4

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We continue to invest in value-enhancing acquisitions in existing markets.

On May 2, 2022, we acquired all outstanding shares of US Ecology in a transaction valued at $2.2 billion.

On May 2, 2022, we acquired all outstanding equity of US Ecology in a transaction valued at $2.2 billion.

US Ecology is a leading provider of environmental solutions offering treatment, recycling and disposal of hazardous, non-hazardous and specialty waste.

We financed the transaction through the entry into a $1.0 billion unsecured Term Loan Facility, and the remaining purchase price was funded using borrowings on our $3.0 billion unsecured revolving credit facility.

We financed the transaction using the proceeds of a $1.0 billion unsecured Term Loan Facility and borrowings under our existing $3.0 billion unsecured revolving credit facility.

We expect to invest at least $500 million in additional acquisitions in 2022.

Commercial Paper Program

In May 2022, we entered into a commercial paper program for the issuance and sale of unsecured commercial paper in an aggregate principal amount not to exceed $500.0 million outstanding at any one time.

As of June 30, 2022, we had $500.0 million principal value of commercial paper issued and outstanding under the program, with a weighted average interest rate of 1.845% and weighted average maturity of 24 days.

We maintain capacity under the Credit Facility to support our commercial paper program in the event of a default.

Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of June 30, 2022.

Summary of Cash Flow Activity

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 three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

The following table summarizes our cash flow from operating activities, investing activities and financing activities for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

Cash Provided by Operating Activities $ 1,563.5 $ 1,482.8

Cash Used in Investing Activities $ (3,283.9) $ (1,133.1)

Cash used in financing activities $ (314.7) $ (342.3)

Cash Provided by (Used in) Financing Activities $ 1,798.7 $ (351.9)

Cash Flows Provided by Operating Activities

We use cash flows from operations to fund capital expenditures and leases, acquisitions, dividend payments, share repurchases, repayments to service debt and other long-term obligations, and payments for asset retirement obligations and environmental liabilities.

The most significant items affecting the comparison of our operating cash flows for the three months ended March 31, 2022 and 2021 are summarized below.

Changes in assets and liabilities, net of effects from business acquisitions and divestitures, decreased our cash flow from operations by $46.6 million during the three months ended March 31, 2022, compared to a decrease of $0.1 million during the same period in 2021, primarily as a result of the following:

• Our accounts receivable, exclusive of the change in allowance for doubtful accounts and customer credits, increased $38.4 million during the three months ended March 31, 2022 due to the timing of billings net of collections, compared to a $8.9 million increase in the same period in 2021.

As of March 31, 2022, our days sales outstanding were 40.0, or 27.5 days net of deferred revenue, compared to 38.4, or 25.8 days net of deferred revenue, as of March 31, 2021.

• Our prepaid expenses and other assets decreased $54.8 million during the three months ended March 31, 2022, compared to a $62.5 million decrease in the same period in 2021, primarily due to a decrease of prepaid taxes due to the timing of our estimated tax payments.

Cash paid for incomes taxes were net refunds of $3.7 million and $0.4 million for the three months ended March 31, 2022 and 2021, respectively.

• Our accounts payable increased $73.0 million during the three months ended March 31, 2022, compared to a $27.6 million increase in the same period in 2021, due to the timing of payments.

• Cash paid for capping, closure and post-closure obligations was $7.1 million during the three months ended March 31, 2022, compared to $11.0 million in the same period in 2021.

The most significant items affecting the comparison of our operating cash flows for the six months ended June 30, 2022 and 2021 are summarized below.

Changes in assets and liabilities, net of effects from business acquisitions and divestitures, decreased our cash flow from operations by $2.0 million during the six months ended June 30, 2022, compared to an increase of $69.2 million during the same period in 2021, primarily as a result of the following:

• Our accounts receivable, exclusive of the change in allowance for doubtful accounts and customer credits, increased $150.4 million during the six months ended June 30, 2022 due to the timing of billings net of collections, compared to a $68.1 million increase in the same period in 2021.

As of June 30, 2022 , our days sales outstanding were 37.8, or 27.1 days net of deferred revenue, compared to 37.0, or 25.2 days net of deferred revenue, as of June 30, 2021.

• Our prepaid expenses and other assets decreased $72.6 million during the six months ended June 30, 2022 , compared to a $88.8 million decrease in the same period in 2021, primarily due to a decrease of prepaid taxes due to the timing of our estimated tax payments.

Cash paid for incomes taxes was $78.9 million and $54.3 million for the six months ended June 30, 2022 and 2021, respectively.

• Our accounts payable increased $167.1 million during the six months ended June 30, 2022 , compared to a $54.4 million increase in the same period in 2021, due to the timing of payments.

• Cash paid for capping, closure and post-closure obligations was $18.0 million during the six months ended June 30, 2022 , compared to $26.8 million in the same period in 2021.

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 $1.1 million higher during the three months ended March 31, 2022, compared to the same period in 2021.

• Our other liabilities decreased $118.9 million during the three months ended March 31, 2022, compared to a $61.4 million decrease in the same period in 2021, primarily due to the payment of incentive compensation accruals.

In addition, cash paid for interest, excluding net swap settlements for our fixed-to-floating interest rate swaps, was $75.6 million and $66.2 million for the three months ended March 31, 2022 and 2021, respectively.

• Cash paid for remediation obligations was $0.6 million lower during the six months ended June 30, 2022 , compared to the same period in 2021.

• Our other liabilities decreased $52.2 million during the six months ended June 30, 2022 , compared to a $42.6 million increase in the same period in 2021, primarily due to the payment of incentive compensation accruals.

In addition, cash paid for interest, excluding net swap settlements for our fixed-to-floating interest rate swaps, was $130.6 million and $116.6 million for the six months ended June 30, 2022 and 2021, respectively.

Cash Flows Used in Investing Activities

The most significant items affecting the comparison of our cash flows used in investing activities for the three months ended March 31, 2022 and 2021 are summarized below:

• Capital expenditures during the three months ended March 31, 2022 were $334.1 million, compared with $331.0 million for the same period in 2021.

• During the three months ended March 31, 2022 and 2021, we paid $81.6 million and $18.0 million, respectively, for acquisitions and investments.

During the three months ended March 31, 2022, we did not have any business divestitures.

During the three months ended March 31, 2021, we received $0.8 million for business divestitures.

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 six months ended June 30, 2022 and 2021 are summarized below:

• Capital expenditures during the six months ended June 30, 2022 were $647.3 million, compared with $608.6 million for the same period in 2021.

• During the six months ended June 30, 2022 and 2021, we paid $2,655.0 million and $576.6 million, respectively, for acquisitions and investments.

During the six months ended June 30, 2022 , we did not have any business divestitures.

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

We intend to finance future 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.

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 three months ended March 31, 2022 and 2021 are summarized below:

• Net proceeds from notes payable and long-term debt and senior notes were $48.0 million during the three months ended March 31, 2022, compared to net payments of $180.1 million in the same period in 2021.

• During the three months ended March 31, 2022, we repurchased 1.6 million shares of our stock for $203.5 million compared to repurchases of 0.1 million shares for $12.7 million during the same period in 2021.

• Dividends paid were $145.9 million and $135.5 million during the three months ended March 31, 2022 and 2021, respectively.

• During the three months ended March 31, 2022 and 2021, cash paid for purchase price holdback releases and contingent purchase price related to acquisitions was $1.8 million and $1.7 million, respectively.

Cash Flows Provided By (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, 2022 and 2021 are summarized below:

• Net proceeds from notes payable and long-term debt and senior notes were $2,311.7 million during the six months ended June 30, 2022 , compared to net payments of $18.2 million in the same period in 2021.

• During the six months ended June 30, 2022 , we repurchased 1.6 million shares of our stock for $203.5 million compared to repurchases of 0.4 million shares for $40.1 million during the same period in 2021.

• Dividends paid were $291.2 million and $271.1 million during the six months ended June 30, 2022 and 2021, respectively.

• During the six months ended June 30, 2022 and 2021, cash paid for purchase price holdback releases and contingent purchase price related to acquisitions was $2.9 million and $11.8 million, respectively.

Financial Condition

Debt Obligations

As of March 31, 2022, we had $8.8 million of principal debt maturing within the next 12 months, which includes certain finance lease obligations.

As of June 30, 2022 , we had $313.8 million of principal debt maturing within the next 12 months, which includes certain 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, as of March 31, 2022, we had 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 March 31, 2022.

In the event of a failed remarketing, as of June 30, 2022 , we had availability under our $3.0 billion unsecured revolving credit facility to fund these bonds until they are remarketed successfully.

We also maintain availability under the Credit Facility to support our commercial paper program in the event of default.

Accordingly, we have classified these tax-exempt financings and commercial paper program borrowings as long-term in our consolidated balance sheet as of June 30, 2022 .

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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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.

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 $2,661.1 million and $2,633.8 million as of March 31, 2022 and December 31, 2021, respectively.

Availability under our Credit Facility totaled $1,435.0 million and $2,633.8 million as of June 30, 2022 and December 31, 2021, respectively.

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 no balance and $24.3 million outstanding under our Credit Facility as of March 31, 2022 and December 31, 2021, respectively.

We had $338.9 million and $341.9 million of letters of credit outstanding under our Credit Facility as of March 31, 2022 and December 31, 2021, respectively.

On May 2, 2022, we acquired all outstanding shares of US Ecology in a transaction valued at $2.2 billion, using proceeds from a $1.0 billion Term Loan Facility and borrowings on our $3.0 billion unsecured revolving credit facility.

We had $714.4 million and $24.3 million in borrowings outstanding under our Credit Facility as of June 30, 2022 and December 31, 2021, respectively.

We had $350.6 million and $341.9 million of letters of credit outstanding under our Credit Facility as of June 30, 2022 and December 31, 2021, respectively.

On May 2, 2022, we acquired all outstanding equity of US Ecology in a transaction valued at $2.2 billion, using $1.0 billion of proceeds from the Term Loan Facility and borrowings under the Credit Facility.

As of May 2, 2022, we had $1,200.0 million outstanding and $338.9 million of letters of credit outstanding under our Credit Facility following our acquisition of US Ecology.

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

As of March 31, 2022 and December 31, 2021, we had $80.4 million and no balance outstanding under our Uncommitted Credit Facility and Replaced Uncommitted Credit Facility, respectively.

As of June 30, 2022 and December 31, 2021, we had $137.5 million and no amounts outstanding under our Uncommitted Credit Facility and Replaced Uncommitted Credit Facility, respectively.

Financial and Other Covenants

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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.

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

As of March 31, 2022, our total debt to EBITDA ratio was 2.84 compared to the 3.75 maximum allowed by the covenants.

As of March 31, 2022, we were in compliance with the covenants unde r our Credit Facility, and we exp ect to be in compliance throughout the remainder of 2022.

As of June 30, 2022, our total debt to EBITDA ratio was 3.34 compared to the 3.75 maximum allowed by the covenants.

As of June 30, 2022, we were in compliance with the covenants unde r our Credit Facility, and we exp ect to be in compliance throughout the remainder of 2022.

EBITDA, which is a non-U.S.

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On April 29, 2022, we entered into a $1.0 billion unsecured Term Loan Facility, which will mature on April 29, 2025, and bears interest at a base rate or a forward-looking secured overnight financing rate, plus an applicable margin based on our debt ratings.

On May 2, 2022, we completed the acquisition of US Ecology using proceeds from the Term Loan Facility and borrowings on the Credit Facility.

On May 2, 2022, we completed the acquisition of US Ecology using proceeds from the Term Loan Facility and borrowings under the Credit Facility.

We had $1.0 billion in borrowings outstanding under the Term Loan Facility as of June 30, 2022.

Commercial Paper Program

We maintain capacity under the Credit Facility to support our commercial paper program in the event of a default.

Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of June 30, 2022.

Senior Notes and Debentures

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Tax-Exempt Financings

As of March 31, 2022 and December 31, 2021 we had $1,181.7 million and $1,181.5 million of certain variable rate tax-exempt financings outstanding respectively, with maturities ranging from 2023 to 2051.

As of June 30, 2022 and December 31, 2021 we had $1,181.8 million and $1,181.5 million of certain variable rate tax-exempt financings outstanding respectively, with maturities ranging from 2023 to 2051.

During 2021, we issued $205.0 million of tax exempt financings.

In the fourth quarter of 2021, the Pennsylvania Economic Development Financing Authority issued, for our benefit, $30.0 million of Solid Waste Disposal Revenue Bonds.

The proceeds from the issuance, after deferred issuance costs, will be used to fund qualifying landfill-related expenditures in the Commonwealth of Pennsylvania, of which $23.4 million and $17.2 million was incurred and reimbursed to us as of March 31, 2022 and December 31, 2021, respectively .

As of March 31, 2022 and December 31, 2021 , we had $117.2 million and $139.0 million, respectively, of restricted cash and marketable securities, of which $6.2 million and $12.4 million, respectively, represented proceeds from the issuance of the tax-exempt bonds.

The proceeds from the issuance, after deferred issuance costs, will be used to fund qualifying landfill-related expenditures in the Commonwealth of Pennsylvania, of which $27.7 million and $17.2 million was incurred and reimbursed to us as of June 30, 2022 and December 31, 2021, respectively .

As of June 30, 2022 and December 31, 2021 , we had $121.5 million and $139.0 million, respectively, of restricted cash and marketable securities, of which $2.0 million and $12.4 million, respectively, represented proceeds from the issuance of the tax-exempt bonds.

Finance Leases

We had finance lease liabilities of $256.6 million and $249.4 million as of March 31, 2022 and December 31, 2021, respectively, with maturities ranging from 2022 to 2063.

We had finance lease liabilities of $269.3 million and $249.4 million as of June 30, 2022 and December 31, 2021, respectively, with maturities ranging from 2022 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 March 31, 2022, our credit ratings were BBB+, Baa2 and BBB by Standard & Poor’s Ratings Services, Moody’s Investors Service and Fitch Ratings, Inc., respectively.

As of June 30, 2022, 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.

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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