What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-04-28 compared with 2022-10-28 · 199 added, 281 removed, 353 unchanged (58% of the section changed)

12 unchanged sentences

Among the factors that could cause actual results to differ materially from the expectations expressed in the forward-looking statements are our ability to integrate the operations of US Ecology, Inc.

(US Ecology) 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, the effects of the COVID-19 pandemic and actions taken in response thereto, as well as our dependence on large, long-term collection, transfer and disposal contracts.

(US Ecology) 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 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, 2022.

1 unchanged sentence

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 acquired a non-controlling equity interest in a joint venture with a landfill gas-to-energy developer to construct 39 renewable natural gas projects across the United States for approximately $88 million.

We also purchased an approximately $38 million interest in a landfill gas-to-energy project and subsequently divested of our interest to the joint venture.

The joint venture 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 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 and nine months ended September 30, 2022, the financial results of US Ecology are included within our Group 3 reportable segment.

Impact of the COVID-19 Pandemic

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

In 2020, certain customers in our small- and large-container businesses began adjusting their service levels, which included a decrease in the frequency of pickups or a temporary pause in service.

In addition, we experienced a decline in volumes disposed at certain of our landfills and transfer stations.

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 2020 and has improved sequentially thereafter, returning to pre-pandemic levels in 2022.

In 2020 and 2021, we recognized our frontline employees for their commitment and contributions to their communities during the pandemic through our Committed to Serve program with two awards that were paid in January 2021 and November 2021.

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 .

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

As of September 30, 2022, we operated facilities in 41 states and the District of Columbia through 349 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 126 closed landfills as of September 30, 2022.

Revenue for the nine months ended September 30, 2022 increased by 19.7% to $9,981.5 million compared to $8,342.2 million for the same period in 2021.

This change in revenue is due to increased volume of 2.7%, average yield of 5.0%, acquisitions, net of divestitures of 9.0%, fuel recovery fees of 2.7%, and increased environmental solutions revenue of 0.5% offset by a decrease in recycling processing and commodity sales of 0.2%.

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

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

2022 2021 2022 2021

As of March 31, 2023, we operated across the United States and Canada through 356 collection operations, 240 transfer stations, 72 recycling centers, 206 active landfills, 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 73 landfill gas-to-energy and renewable energy projects and had post-closure responsibility for 128 closed landfills as of March 31, 2023.

Revenue for the three months ended March 31, 2023 increased by 20.6% to $3,581.1 million compared to $2,970.1 million for the same period in 2022.

This change in revenue is due to increased revenue from acquisitions, net of divestitures of 11.0%, increases in average yield of 6.5%, volume of 1.6%, fuel recovery fees of 1.5%, and environmental solutions revenue of 0.5%.

Additionally, revenue increased 0.4% due to one additional workday in 2023 as compared to the same period in 2022.

These increases were partially offset by a decrease in recycling processing and commodity sales of 0.9%.

The following table summarizes our revenue, expenses and operating income for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

Revenue $ 3,581.1 100.0 % $ 2,970.1 100.0 %

5 unchanged sentences

Selling, general and administrative 379.2 10.6 307.8 10.4

Withdrawal costs - multiemployer pension funds

— — — — 2.2 — — —

Loss (gain) on business divestitures and impairments, net (5.2) (0.1) — — (5.3) (0.1) (0.2) —

Restructuring charges 5.5 0.1 6.0 0.2

Operating income $ 644.1 18.0 % $ 560.6 18.9 %

Our pre-tax income was $507.8 million and $1,458.1 million for the three and nine months ended September 30, 2022, respectively, compared to $470.7 million and $1,298.2 million for the same respective periods in 2021.

Our pre-tax income was $522.1 million for the three months ended March 31, 2023, compared to $472.2 million for the same period in 2022.

Our net income attributable to Republic Services, Inc.

was $416.9 million and $1,140.8 million for the three and nine months ended September 30, 2022, or $1.32 and $3.60 per diluted share, respectively, compared to $350.3 million and $977.3 million, or $1.10 and $3.06 per diluted share, respectively, for the same periods in 2021.

During each of the three and nine months ended September 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.

was $383.9 million for the three months ended March 31, 2023, or $1.21 per diluted share, compared to $352.0 million, or $1.11 per diluted share, for the same period in 2022.

During each of the three months ended March 31, 2023 and 2022, 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 and nine months ended September 30, 2022 and 2021.

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021

Net Diluted Net Diluted

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

Income Impact (1)

Republic per Share Income Impact (1)

Republic per Share

As reported $ 507.8 $ 90.9 $ 416.9 $ 1.32 $ 470.7 $ 119.9 $ 350.3 $ 1.10

Restructuring charges 6.8 1.8 5.0 0.01 4.6 1.3 3.3 0.01

Loss on business divestitures and impairments, net (5.2) (2.2) (3.0) (0.01) — — — —

Accelerated vesting of compensation expense for CEO transition — — — — 4.1 — 4.1 0.01

US Ecology, Inc.

acquisition integration and deal costs 8.7 2.2 6.5 0.02 — — — —

Total adjustments 10.3 1.8 8.5 0.02 8.7 1.3 7.4 0.02

As adjusted $ 518.1 $ 92.7 $ 425.4 $ 1.34 $ 479.4 $ 121.2 $ 357.7 $ 1.12

(1) 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.

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Net Diluted Net Diluted

4 unchanged sentences

As reported $ 522.1 $ 138.2 $ 383.9 $ 1.21 $ 472.2 $ 120.3 $ 352.0 $ 1.11

Restructuring charges 18.8 4.9 13.9 0.04 11.2 3.0 8.2 0.03

Gain on business divestitures and impairments, net (1)

Loss on extinguishment of debt (1)

0.2 — 0.2 — — — — —

Withdrawal costs - multiemployer pension funds 2.2 0.6 1.6 0.01 — — — —

Accelerated vesting of compensation expense for CEO transition — — — — 19.5 — 19.5 0.05

Restructuring charges 5.5 1.5 4.0 0.01 6.0 1.6 4.4 0.02

US Ecology, Inc.

2 unchanged sentences

As adjusted $ 535.4 $ 141.7 $ 393.7 $ 1.24 $ 483.0 $ 122.4 $ 360.7 $ 1.14

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

(1) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended March 31, 2023.

(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.

5 unchanged sentences

Further information on each of these adjustments is included below.

Loss on extinguishment of debt.

During the three months ended March 31, 2023, we incurred a loss on the early extinguishment of debt related to the early repayment of a portion of our Term Loan Facility.

We incurred non-cash charges related to the proportional share of unamortized deferred issuance costs of $0.2 million.

During the three months ended March 31, 2022, we did not incur any losses on extinguishment of debt.

Restructuring charges.

During the three and nine months ended September 30, 2022, we incurred restructuring charges of $6.8 million and $18.8 million, respectively, and during the three and nine months ended September 30, 2021, we incurred restructuring charges of $4.6 million and $11.2 million, respectively, related to the redesign of certain back-office software

During the nine months ended September 30, 2022 and 2021, we paid $17.0 million and $12.1 million , respectively, related to these restructuring efforts.

During the remainder of 2022, we expect to incur additional restructuring charges of approximately $8.0 million, primarily related to the continued redesign of certain of our back-office software systems.

During the three months ended March 31, 2023 and 2022, we incurred restructuring charges of $5.5 million and $6.0 million, respectively.

The 2023 charges primarily related to the redesign of our customer billing and asset management software systems, while the 2022 charges primarily related to the redesign of our general ledger, budgeting and procurement enterprise resource planning systems, which was completed with the systems being placed into production in the fourth quarter of 2022.

We paid $5.0 million and $5.9 million during the three months ended March 31, 2023 and 2022, respectively, related to these restructuring efforts.

In 2023, we expect to incur additional restructuring charges of approximately $20 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 Corporate entities and other.

Gain on business divestitures and impairments, net.

During the three and nine months ended September 30, 2022, we recorded a net gain on business divestitures and impairments of $5.2 million and $5.3 million, respectively.

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

Withdrawal costs - multiemployer pension funds.

During the nine months ended September 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 nine months ended September 30, 2021, we recognized charges of $4.1 million and $19.5 million, respectively, 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 and nine months ended September 30, 2022, we incurred $8.7 million and $65.4 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.

During the three months ended March 31, 2023 and 2022, we incurred $7.6 million and $4.8 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 .

In 2023, we expect to incur additional costs of approximately $25 million to $30 million to integrate the US Ecology business, primarily related to the integration of certain software systems as well as rebranding the business.

We expect to be substantially complete with our integration activities by the end of 2023.

Results of Operations

4 unchanged sentences

Our transfer stations and landfills generate revenue from disposal or tipping fees charged to third parties.

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

Our recycling 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.

1 unchanged sentence

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 nine months ended September 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

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

2022 2021 2022 2021

The following table reflects our revenue by service line for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

$ 685.1 19.1 % $ 627.9 21.1 %

24 unchanged sentences

Total revenue $ 3,581.1 100.0 % $ 2,970.1 100.0 %

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, 2022 and 2021:

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

2022 2021 2022 2021

The following table reflects changes in components of our revenue, as a percentage of total revenue, for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Average yield 6.5 % 4.2 %

11 unchanged sentences

Core price is defined as price increases to our customers and fees, excluding fuel recovery fees, net of price decreases to retain customers.

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 6.3% and 5.4% for the three and nine months ended September 30, 2022, respectively, and 3.4% and 2.9% for the same respective periods in 2021.

Core price as a percentage of related-business revenue was 7.7% and 7.0% for the three and nine months ended September 30, 2022, respectively, and 5.5% and 5.2% for the same respective periods in 2021.

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

• Average yield increased revenue by 5.6% and 5.0% during the three and nine months ended September 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 3.1% and 2.7% during the three and nine months ended September 30, 2022, respectively, primarily due to an increase in fuel prices compared to the same periods in 2021.

• Volume increased revenue by 2.2% and 2.7% during the three and nine months ended September 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.

We also measure changes in core price, average yield and volume 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 and organic growth strategies.

The following table reflects core price, average yield and volume as a percentage of related-business revenue for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

As a % of Related Business

Core price 9.3 % 6.5 %

Average yield 7.4 % 4.5 %

Volume 1.8 % 3.9 %

During the three months ended March 31, 2023, we experienced the following changes in our revenue as compared to the same period in 2022:

• Average yield increased revenue by 6.5% during the three months ended March 31, 2023, 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 1.5% during the three months ended March 31, 2023, primarily due to an increase in fuel prices compared to the same period in 2022.

• Volume increased revenue by 1.6% during the three months ended March 31, 2023, primarily due to volume growth in our collection and landfill lines of business.

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

• Recycling processing and commodity sales decreased revenue by 1.3% and 0.2% during the three and nine months ended September 30, 2022, respectively, primarily due to a decrease 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 nine months ended September 30, 2022 was $162 and $195 per ton, respectively, compared to $230 and $178 per ton for the same respective periods in 2021.

These increases were partially offset by volume declines in our transfer line of business.

• Revenue increased by 0.4% due to one additional workday during the three months ended March 31, 2023, as compared to the same period in 2022, which drove an increase in volumes in our large-container collection, landfill and transfer lines of business.

• Recycling processing and commodity sales decreased revenue by 0.9% during the three months ended March 31, 2023, primarily due to a decrease in overall commodity prices as compared to the same period in 2022.

The average price for recycled commodities, excluding glass and organics, for the three months ended March 31, 2023 was $105 per ton, compared to $201 per ton for the same period in 2022.

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 0.6% and 0.5% during the three and nine months ended September 30, 2022, respectively, primarily due to an increase in volumes, including those driven by an increase in rig counts and drilling activity.

• Environmental solutions revenue increased by 0.5% during the three months ended March 31, 2023, primarily due to an increase in volumes, including those driven by an increase in rig counts, as well as price increases.

This revenue increase excludes the impact from our acquisition of US Ecology.

• Acquisitions, net of divestitures, increased revenue by 12.4% and 9.0% during the three and nine months ended September 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.

• Acquisitions, net of divestitures, increased revenue by 11.0% during the three months ended March 31, 2023, 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

9 unchanged sentences

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 nine months ended September 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

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

2022 2021 2022 2021

The following table summarizes the major components of our cost of operations for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

Labor and related benefits $ 738.1 20.6 % $ 608.9 20.5 %

9 unchanged sentences

Other 167.2 4.7 121.0 4.1

Subtotal 2,193.0 60.9 1,744.0 59.4 6,020.1 60.3 4,928.0 59.1

US Ecology, Inc.

acquisition integration and deal costs (0.6) — — — 0.3 — — —

Total cost of operations $ 2,169.5 60.6 % $ 1,763.6 59.4 %

1 unchanged sentence

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 and nine months ended September 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 and an increase in service levels attributable to economic recovery from the COVID-19 pandemic.

Acquisition-related growth, including US Ecology, also contributed to the increase in labor and related benefits in aggregate dollars.

The most significant items impacting our cost of operations during the three months ended March 31, 2023 and 2022 are summarized below:

• Labor and related benefits increased due to higher hourly and salaried wages as a result of annual merit increases, volume-related growth, and one additional workday in 2023.

Acquisition-related growth, including US Ecology, also contributed to the increase in labor and related benefits.

• Transfer and disposal costs increased in aggregate dollars primarily due to acquisition-related growth, including US Ecology.

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

During both the three and nine months ended September 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 an increase 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 nine months ended September 30, 2022 due to increases in volume and an increase in subcontract work attributable to a corresponding increase in non-core revenues as compared to the same period in 2021.

Transfer and disposal costs also increased in aggregate dollars as a result of higher collection volumes.

During both the three months ended March 31, 2023 and 2022, approximately 69% 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 higher volumes as well as an increase in third party maintenance costs due to inflationary pressures.

Acquisition-related growth, including US Ecology, also contributed to the increase in maintenance and repairs expense in aggregate dollars.

• Transportation and subcontract costs increased during the three months ended March 31, 2023 due to increases in transportation rates.

Acquisition-related growth, including US Ecology, also contributed to the increase in transportation and subcontract costs in aggregate dollars.

• 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 nine months ended September 30, 2022 was $5.15 and $4.96, respectively, as compared to $3.36 and $3.16, respectively, for the same respective periods in 2021.

The national average diesel fuel cost per gallon for the three months ended March 31, 2023 was $4.41, as compared to $4.24, for the same period in 2022.

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 $27 million per year.

1 unchanged sentence

At current participation rates, a twenty-cent per gallon change in the price of diesel fuel would change our fuel recovery fee by approximately $31 million per year.

• Landfill operating costs increased in aggregate dollars during the three and nine months ended September 30, 2022 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 and nine months ended September 30, 2022 primarily due to unfavorable actuarial developments in our auto liability program as well as higher premium costs.

• During the three and nine months ended September 30, 2022, respectively, we reclassified a net $0.6 million of costs to Selling, General and Administrative expenses, and incurred $0.3 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 nine months ended September 30, 2022 due to increased occupancy and facility related expenses, acquisition-related activity, and higher third-party truck and equipment rentals to support higher volumes.

• Landfill operating costs increased in aggregate dollars during the three months ended March 31, 2023 primarily due to increased leachate treatment, transportation, and disposal costs due in part to increased rainfall in select geographic regions, as well as certain favorable remediation adjustments recorded during the three months ended March 31, 2022 which did not recur in 2023.

• Risk management expenses increased during the three months ended March 31, 2023 primarily due to unfavorable actuarial developments in our auto liability program as well as higher premium costs.

• Other costs of operations increased during the three months ended March 31, 2023 due to increased occupancy and facility related expenses, acquisition-related activity, and higher third-party truck and equipment rentals to support 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 and nine months ended September 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

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

2022 2021 2022 2021

The following table summarizes depreciation, amortization and depletion of property and equipment for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

Depreciation and amortization of property and equipment

4 unchanged sentences

$ 328.3 9.2 % $ 289.6 9.7 %

Depreciation and amortization of property and equipment increased for the three and nine months ended September 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, solid waste, and construction and demolition 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 nine months ended September 30, 2021, which did not recur in 2022.

Depreciation and amortization of property and equipment increased in aggregate dollars for the three months ended March 31, 2023 primarily due to assets added through acquisitions.

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

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 $14.7 million and $38.6 million, or 0.4% of revenue, for the three and nine months ended September 30, 2022, respectively, compared to $8.5 million and $23.5 million or 0.3% of revenue, for the same respective periods in 2021.

Expenses for amortization of other intangible assets were $15.1 million, or 0.4% of revenue, for the three months ended March 31, 2023, compared to $10.0 million or 0.3% of revenue, for the same period in 2022.

Amortization expense increased due to assets added through acquisitions.

1 unchanged sentence

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 $13.1 million and $36.0 million, or 0.4% of revenue, for the three and nine months ended September 30, 2022, respectively, compared to $10.1 million and $30.2 million, or 0.4% of revenue, for the same respective periods in 2021.

Expenses for amortization of other assets were $15.3 million, or 0.4% of revenue, for the three months ended March 31, 2023, compared to $10.8 million, or 0.4% of revenue, for the same period in 2022.

Accretion Expense

Accretion expense was $22.8 million and $66.9 million, or 0.6% and 0.7% of revenue, for the three and nine months ended September 30, 2022, respectively, compared to $20.8 million and $61.9 million, or 0.7% of revenue, for the same respective periods in 2021.

Accretion expense has increased due to acquired asset retirement obligations.

Accretion expense was $24.1 million, or 0.7% of revenue, for the three months ended March 31, 2023, compared to $21.7 million, or 0.7% of revenue, for the same period in 2022.

Accretion expense increased in aggregate dollars primarily due to acquired asset retirement obligations.

Selling, General and Administrative Expenses

2 unchanged sentences

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 nine months ended September 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue):

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

2022 2021 2022 2021

The following table summarizes our selling, general and administrative expenses for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

Three Months Ended March 31,

Salaries and related benefits $ 252.5 7.1 % $ 212.9 7.2 %

3 unchanged sentences

Subtotal 371.6 10.4 303.0 10.2

Accelerated vesting of compensation expense for CEO transition — — 4.1 0.1 — — 19.5 0.2

US Ecology, Inc.

4 unchanged sentences

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 nine months ended September 30, 2022 and 2021 are summarized below:

The most significant items affecting our selling, general and administrative expenses during the three months ended March 31, 2023 and 2022 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.

Acquisition-related growth, including US Ecology, also contributed to the growth in salaries and related benefits in aggregate dollars.

• Provision for doubtful accounts increased in aggregate dollars primarily due to an increase in days sales outstanding and acquisition-related activity.

As of September 30, 2022 , our days sales outstanding were 42.9, or 31.2 days net of deferred revenue, compared to 39.2, or 27.4 days net of deferred revenue, as of September 30, 2021.

Excluding our acquisition of US Ecology, our days sales outstanding were 40.1, or 28.0 days net of deferred revenue, as of September 30, 2022.

• Other selling, general and administrative expenses increased for the three and nine months ended September 30, 2022, due to both an increase in advertising and travel costs and acquisition-related growth, including US Ecology.

• In June 2021, Donald W.

Slager retired as CEO of Republic Services, Inc.

During the three and nine months ended September 30, 2021 , we recognized charges of $4.1 million and $19.5 million, respectively, related to the accelerated vesting of his compensation awards that were previously scheduled to vest in 2022 and beyond.

• During the three and nine months ended September 30, 2022, we incurred $9.3 million and $65.1 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.

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 m ay be material to our results of operations in a given period.

During the three and nine months ended September 30, 2022, we recorded a net gain on business divestitures and impairments of $5.2 million and $5.3 million, respectively.

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

• Provision for doubtful accounts increased in aggregate dollars primarily due to acquisition-related activity.

As of March 31, 2023 , our days sales outstanding were 42.9, or 31.0 days net of deferred revenue, compared to 40.0, or 27.5 days net of deferred revenue, as of March 31, 2022.

Excluding our acquisition of US Ecology, our days sales outstanding were 38.8, or 26.7 days net of deferred revenue, as of March 31, 2023.

• Other selling, general and administrative expenses increased for the three months ended March 31, 2023, due to both an increase in meeting and travel costs and acquisition-related growth, including US Ecology.

• In the three months ended March 31, 2023 and 2022 , we incurred $7.6 million and $4.8 million, respectively, of acquisition integration and deal costs in connection with the acquisition of US Ecology.

The 2023 costs primarily related to the integration of certain software systems as well as rebranding the business , and the 2022 costs included certain costs to close the acquisition.

Restructuring Charges

During the nine months ended September 30, 2022 and 2021, we paid $17.0 million and $12.1 million, respectively, related to the restructuring efforts.

During the remainder of 2022, we expect to incur additional

restructuring charges of approximately $8 million primarily related to the continuing redesign of certain of our back-office software systems.

During the three months ended March 31, 2023 and 2022, we incurred restructuring charges of $5.5 million and $6.0 million, respectively.

We paid $5.0 million and $5.9 million during 2023 and 2022, respectively, related to these restructuring efforts.

In 2023, we expect to incur additional restructuring charges of approximately $20 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 Corporate entities and other.

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 nine months ended September 30, 2022 and 2021:

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

2022 2021 2022 2021

Three Months Ended March 31,

Interest expense on debt

3 unchanged sentences

Total interest expense $ 126.7 $ 83.5

Total interest expense for the three and nine months ended September 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 and floating-to-fixed interest rate swaps, was $232.4 million and $193.8 million for the nine months ended September 30, 2022 and 2021, respectively.

As of September 30, 2022, we had $3,258.8 million of floating rate debt and $300.0 million of floating interest rate swap contracts.

Total interest expense for the three months ended March 31, 2023 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 and floating-to-fixed interest rate swaps, was $124.0 million and $75.6 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, we had $2,312.1 million of principal floating rate debt including interest rate swap contracts.

If interest rates increased or decreased by 100 basis points on our variable rate debt, annualized interest expense and net cash payments for interest would increase or decrease by approximately $23 million.

Our effective tax rate, exclusive of non-controlling interests, for the three and nine months ended September 30, 2022 was 17.9% and 21.8%, 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 for the three months ended September 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 $90.5 million and $182.1 million for the nine months ended September 30, 2022 and 2021, respectively.

On August 16, 2022, the Inflation Reduction Act ("IRA") was signed into law.

The IRA, among other things, implements a 15% minimum tax on financial statement income of certain large corporations, a 1% excise tax on stock repurchases and extends, enhances, and creates several tax incentives to promote clean energy.

While we continue to evaluate the IRA, at present, we do not believe it will have a material effect on our consolidated financial statements.

Loss on Extinguishment of Debt

During the three months ended March 31, 2023, we incurred a loss on the early extinguishment of debt related to the early repayment of a portion of our Term Loan Facility.

We incurred non-cash charges related to the proportional share of unamortized deferred issuance costs of $0.2 million.

During the three months ended March 31, 2022, we did not incur any losses on extinguishment of debt.

Our effective tax rate, exclusive of non-controlling interests, for the three months ended March 31, 2023 and 2022 was 26.5% and 25.5%, respectively.

Our effective tax rate for the three months ended March 31, 2022 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 $7.7 million and $3.7 million for the three months ended March 31, 2023 and 2022, 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.

1 unchanged sentence

Our senior management evaluates, oversees and manages the financial performance of our operations through three field groups, referred to as Group 1, Group 2 and Group 3.

Group 1 is our recycling and solid waste business operating in geographic areas located in the western United States.

Group 2 is our recycling and solid waste business operating in geographic areas located in the southeastern and mid-western United States, and the eastern seaboard of the United States.

Group 3 is our environmental solutions business in geographic areas located across the United States and Canada.

Group 1 is our recycling and solid waste business operating primarily in geographic areas located in the western United States.

Group 2 is our recycling and solid waste business operating primarily in geographic areas located in the southeastern and mid-western United States and the eastern seaboard of the United States, and Canada.

Group 3 is our environmental solutions business operating primarily in geographic areas located across the United States and Canada.

These groups are presented below as our reportable segments, which each provide integrated environmental services, including but not limited to collection, transfer, recycling and disposal.

3 unchanged sentences

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

Summarized financial information regarding our reportable segments for the three months ended September 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue in the case of adjusted EBITDA margin) follows.

For further detail regarding our reportable segments and the adjustments used to calculate Adjusted EBITDA for each segment, see Note 12, Segment Reporting , to our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Group 1 Group 2 Recycling & Solid Waste Subtotal Group 3

(Environmental Solutions) Corporate entities and other Total

Three Months Ended September 30, 2022

Gross Revenue $ 1,876.2 $ 1,803.6 $ 3,679.8 $ 411.0 $ 62.4 $ 4,153.2

Intercompany Revenue (285.2) (242.8) (528.0) (11.3) (16.1) (555.4)

Net Revenue $ 1,591.0 $ 1,560.8 $ 3,151.8 $ 399.7 $ 46.3 $ 3,597.8

Gross Adjusted EBITDA $ 506.6 $ 441.1 $ 947.7 $ 89.2 $ 14.4 $ 1,051.3

Adjusted EBITDA allocations $ 15.0 $ 14.0 29.0 (14.6) (14.4) —

Net Adjusted EBITDA $ 521.6 $ 455.1 $ 976.7 $ 74.6 $ — $ 1,051.3

Adjusted EBITDA margin 32.3 % 28.7 % 30.5 % 18.7 % — % 29.2 %

Capital Expenditures $ 199.1 $ 140.2 $ 339.3 $ 35.2 $ (0.5) $ 374.0

Total Assets $ 12,199.9 $ 10,233.8 $ 22,433.7 $ 3,991.7 $ 1,975.6 $ 28,401.0

Three Months Ended September 30, 2021

Gross Revenue $ 1,719.5 $ 1,626.5 $ 3,346.0 $ 60.2 $ 55.1 $ 3,461.3

Intercompany Revenue (277.9) (238.5) (516.4) (3.2) (7.8) (527.4)

Net Revenue $ 1,441.6 $ 1,388.0 $ 2,829.6 $ 57.0 $ 47.3 $ 2,933.9

Gross Adjusted EBITDA $ 481.8 $ 389.7 $ 871.5 $ 12.8 $ 10.7 $ 895.0

Adjusted EBITDA allocations 5.6 5.1 10.7 — (10.7) —

Net Adjusted EBITDA $ 487.4 $ 394.8 $ 882.2 $ 12.8 $ — $ 895.0

Adjusted EBITDA margin 33.2 % 28.0 % 30.7 % 22.5 % — % 30.5 %

Capital Expenditures $ 144.3 $ 141.1 $ 285.4 $ 9.3 $ 0.9 $ 295.6

Total Assets $ 12,018.7 $ 9,723.4 $ 21,742.1 $ 852.2 $ 1,834.6 $ 24,428.9

Summarized financial information regarding our reportable segments for the nine months ended September 30, 2022 and 2021 (in millions of dollars and as a percentage of revenue in the case of adjusted EBITDA margin) follows:

Group 1 Group 2 Recycling & Solid Waste Subtotal Group 3

(Environmental Solutions) Corporate entities and other Total

Nine Months Ended September 30, 2022

Summarized financial information regarding our reportable segments for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue in the case of adjusted EBITDA margin) follows.

For totals as well as further detail regarding our reportable segments and the adjustments used to calculate gross Adjusted EBITDA, net Adjusted EBITDA, and adjusted EBITDA margin for each segment, see Note 12, Segment Reporting , of the notes to our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Group 1 Group 2 Group 3 Corporate entities and other

Three Months Ended March 31, 2023

Gross Revenue $ 1,840.3 $ 1,818.8 $ 430.2 $ 57.9

7 unchanged sentences

Total Assets $ 12,357.4 $ 10,614.3 $ 4,027.0 $ 2,082.7

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

Gross Revenue $ 1,671.5 $ 1,625.7 $ 108.9 $ 60.0

7 unchanged sentences

Total Assets $ 12,065.7 $ 10,023.7 $ 1,201.7 $ 1,589.0

Significant changes in the revenue and adjusted EBITDA margins of our reportable segments comparing the three and nine months ended September 30, 2022 and 2021 are discussed below.

Revenue for the three months ended September 30, 2022 increased 10.4% due to an increase in average yield in all lines of business and volume in our landfill, residential, and small- and large- container collection lines of business, partially offset by volume declines in our transfer station line of business.

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

Revenue for the nine months ended September 30, 2022 increased 10.8% due to an increase in both average yield and volume in all lines of business.

Significant changes in the revenue, Adjusted EBITDA and Adjusted EBITDA margins of our reportable segments comparing the three months ended March 31, 2023 and 2022 are discussed below.

Revenue for the three months ended March 31, 2023 increased 9.9% due to an increase in average yield in all lines of business and volume in our collection and landfill lines of business, partially offset by volume declines in our transfer line of business.

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

Revenue also increased due to acquisition-related growth.

Adjusted EBITDA in Group 1 increased from $487.4 million for the three months ended September 30, 2021, or a 33.2% adjusted EBITDA margin, to $521.6 million for the three months ended September 30, 2022, or a 32.3% adjusted EBITDA margin.

Adjusted EBITDA in Group 1 increased from $1,399.8 million for the nine months ended September 30, 2021, or a 33.3% adjusted EBITDA margin, to $1,521.1 million for the nine months ended September 30, 2022, or a 32.7% adjusted EBITDA margin.

Adjusted EBITDA margin for the three and nine months ended September 30, 2022 was primarily 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 both acquisition activity and the economic recovery from the COVID-19 pandemic.

Revenue for the three and nine months ended September 30, 2022 increased 12.5% and 13.1%, respectively, due to an increase in average yield in all lines of business.

Additionally, volume increased in our landfill, small- and large-container collection lines of business.

These increases were partially offset by volume declines in our residential and transfer station lines of

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

Adjusted EBITDA in Group 1 increased in aggregate dollars from $470.9 million for the three months ended March 31, 2022, or a 32.7% adjusted EBITDA margin, to $489.4 million for the three months ended March 31, 2023, or a 31.1% adjusted EBITDA margin.

Adjusted EBITDA margin for the three months ended March 31, 2023 was unfavorably impacted by an increase in labor costs, higher third party maintenance costs due to inflationary pressures, and higher transportation and subcontract costs due to increased transportation rates.

Revenue for the three months ended March 31, 2023 increased 12.2% due to an increase in average yield in all lines of business.

Additionally, volume increased in our landfill and small- and large-container collection lines of business.

The increase in landfill volume was primarily attributable to an increase in special waste volumes.

Revenue also increased due to acquisition-related growth.

Adjusted EBITDA in Group 2 increased from $394.8 million for the three months ended September 30, 2021, or a 28.0% adjusted EBITDA margin, to $455.1 million for the three months ended September 30, 2022, or a 28.7% adjusted EBITDA margin.

Adjusted EBITDA in Group 2 increased from $1,125.8 million for the nine months ended September 30, 2021, or a 28.0% adjusted EBITDA margin, to $1,304.1 million for the nine months ended September 30, 2022, or a 28.8% adjusted EBITDA margin.

Adjusted EBITDA margin for the three and nine months ended September 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.

Revenue for the three and nine months ended September 30, 2022 increased due to the acquisition of US Ecology.

Adjusted EBITDA in Group 3 increased from $12.8 million for the three months ended September 30, 2021, or a 22.5% adjusted EBITDA margin, to $74.6 million for the three months ended September 30, 2022, or an 18.7% adjusted EBITDA margin.

Adjusted EBITDA in Group 3 increased from $30.3 million for the nine months ended September 30, 2021, or a 24.1% adjusted EBITDA margin, to $139.1 million for the nine months ended September 30, 2022, or a 17.5% adjusted EBITDA margin.

Adjusted EBITDA margin for the three and nine months ended September 30, 2022 decreased due to the acquisition of US Ecology.

Adjusted EBITDA margin in Group 2 increased in aggregate dollars from $418.4 million for the three months ended March 31, 2022, or a 29.2% adjusted EBITDA margin, to $465.1 million for the three months ended March 31, 2023, or a 29.2% adjusted EBITDA margin.

Adjusted EBITDA margin for the three months ended March 31, 2023 was unfavorably impacted by an increase in labor costs, transfer and disposal costs due to an increase in volumes, transportation and subcontract costs due to increased transportation rates, and higher third party maintenance costs due to inflationary pressures.

Revenue for the three months ended March 31, 2023 increased due to the acquisition of US Ecology.

Adjusted EBITDA in Group 3 increased from $14.2 million for the three months ended March 31, 2022, or a 14.3% adjusted EBITDA margin, to $85.5 million for the three months ended March 31, 2023, or a 20.6% adjusted EBITDA margin.

Adjusted EBITDA margin for the three months ended March 31, 2023 increased primarily due to favorable pricing, acquisition-related growth and realized cost synergies associated with the US Ecology acquisition.

Landfill and Environmental Matters

Available Airspace

As of September 30, 2022 , we owned or operated 207 active landfills with total available disposal capacity estimated to be 5.0 billion in-place cubic yards.

As of March 31, 2023 , we owned or operated 206 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:

2 unchanged sentences

Net of Closures Airspace

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

Consumed Changes in Engineering Estimates Balance as of March 31, 2023

Cubic yards (in millions):

8 unchanged sentences

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 September 30, 2022 , 11 of our landfills met all of our criteria for including their probable expansion airspace in their total available disposal capacity.

As of March 31, 2023 , 15 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 15 landfills have an estimated remaining average site life of 46 years, including probable expansion airspace.

6 unchanged sentences

Property and Equipment

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

The following tables reflect the activity in our property and equipment accounts for the three months ended March 31, 2023:

Gross Property and Equipment

5 unchanged sentences

Transfers, Foreign Currency Translation

Adjustments Balance as of September 30, 2022

Adjustments Balance as of March 31, 2023

Land $ 779.7 $ (0.7) $ (0.3) $ 5.6 $ — $ — $ 0.4 $ 784.7

9 unchanged sentences

Divestitures Adjustments

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

Obligations Impairments, Transfers, Foreign Currency Translation and Other Adjustments Balance as of March 31, 2023

Landfill development costs $ (5,058.9) $ (115.2) $ — $ — $ 2.4 $ 0.1 $ (5,171.6)

5 unchanged sentences

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Cash and cash equivalents $ 132.2 $ 143.4

2 unchanged sentences

Cash, cash equivalents, restricted cash and restricted cash equivalents $ 206.7 $ 214.3

Our restricted cash and marketable securities include, among other things, restricted cash related to proceeds from the issuance of tax-exempt bonds that will be used to fund qualifying landfill-related expenditures in the Commonwealth of Pennsylvania, restricted cash and marketable securities pledged to regulatory agencies and governmental entities as financial guarantees of our performance under certain collection, landfill and transfer station contracts and permits, and relating to our final capping, closure and post-closure obligations at our landfills as well as restricted cash and marketable securities related to our insurance obligations.

Our restricted cash and marketable securities includes amounts pledged to regulatory agencies and governmental entities as financial guarantees of our performance under certain collection, landfill and transfer station contracts and permits, and relating to our final capping, closure and post-closure obligations at our landfills as well as restricted cash and marketable securities related to our insurance obligations.

The following table summarizes our restricted cash and marketable securities:

September 30, 2022 December 31, 2021

Financing proceeds $ — $ 12.4

March 31, 2023 December 31, 2022

Capping, closure and post-closure obligations 40.2 39.1

3 unchanged sentences

We expect existing cash, cash equivalents, restricted cash and marketable securities, cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future.

Our known current- and long-term uses of cash include, among other possible demands:

Our known current- and long-term uses of

cash include, among other possible demands:

(1) capital expenditures and leases;

1 unchanged sentence

(3) dividend payments;

(4) share repurchases;

(4) repayments to service debt and other long-term obligations;

and (6) payments for asset retirement obligations and environmental liabilities.

(5) payments for asset retirement obligations and environmental liabilities;

and (6) share repurchases.

We may choose to voluntarily retire certain portions of our outstanding debt before their maturity dates using cash from operations or additional borrowings.

4 unchanged sentences

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

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 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 2023.

In March 2023, we issued $400.0 million of 4.875% senior notes due 2029 (the 4.875% Notes) and $800.0 million of 5.000% senior notes due 2034 (the 5.000% Notes, and together with the 4.875% Notes, the Notes).

The Notes are unsecured and unsubordinated and rank equally with our other unsecured obligations.

We used the net proceeds from the Notes for general corporate purposes, including the repayment of a portion of amounts outstanding under the Uncommitted Credit Facility, the Commercial Paper Program, the Credit Facility, and the Term Loan Facility.

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 (the "Commercial Paper Cap").

In August 2022, the Commercial Paper Cap was increased to $1.0 billion.

As of September 30, 2022, we had $1.0 billion principal value of commercial paper issued and outstanding under the program, with a weighted average interest rate of 3.134% and weighted average maturity of 28 days.

In 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 $1.0 billion outstanding at any one time (the Commercial Paper Cap).

As of March 31, 2023, we had $370.0 million principal value of commercial paper issued and outstanding under the program, with a weighted average interest rate of 5.778% and weighted average maturity of 27 days.

In the event of a failed re-borrowing, we currently have availability under our Credit Facility to fund the commercial paper program until it is re-borrowed successfully.

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

Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of March 31, 2023.

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 nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,

The following table summarizes our cash flow from operating activities, investing activities and financing activities for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Cash Provided by Operating Activities $ 687.7 $ 705.6

Cash Used in Investing Activities $ (653.3) $ (399.4)

Cash Provided by (Used in) Financing Activities $ 1,362.8 $ (343.5)

Cash Used in Financing Activities $ (42.0) $ (314.7)

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 nine months ended September 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 $113.9 million during the nine months ended September 30, 2022, compared to an increase of $81.6 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 $206.1 million during the nine months ended September 30, 2022 due to the timing of billings net of collections, compared to a $137.7 million increase in the same period in 2021.

As of September 30, 2022 , our days sales outstanding were 42.9, or 31.2 days net of deferred revenue, compared to 39.2, or 27.4 days net of deferred revenue, as of September 30, 2021.

Excluding our acquisition of US Ecology, our days sales outstanding were 40.1, or 28 days net of deferred revenue, as of September 30, 2022.

• Our prepaid expenses and other assets decreased $28.0 million during the nine months ended September 30, 2022, compared to a $105.7 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 $90.5 million and $182.1 million for the nine months ended September 30, 2022 and 2021, respectively.

• Our accounts payable increased $97.7 million during the nine months ended September 30, 2022, compared to a $99.4 million increase in the same period in 2021, due to the timing of payments.

• Cash paid for capping, closure and post-closure obligations was $35.6 million during the nine months ended September 30, 2022, compared to $41.2 million in the same period in 2021.

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

The most significant items affecting the comparison of our cash flows provided by operating activities for the three months ended March 31, 2023 and 2022 are summarized below.

Changes in assets and liabilities, net of effects from business acquisitions and divestitures, decreased our cash flow from operations by $133.8 million during the three months ended March 31, 2023, compared to a decrease of $46.6 million during the same period in 2022, primarily as a result of the following:

• Our accounts receivable, exclusive of the change in allowance for doubtful accounts and customer credits, increased $3.3 million during the three months ended March 31, 2023 due to the timing of billings net of collections, compared to a $38.4 million increase in the same period in 2022.

As of March 31, 2023, our days sales outstanding were 42.9, or 31.0 days net of deferred revenue, compared to 40.0, or 27.5 days net of deferred revenue, as of March 31, 2022.

Excluding our acquisition of US Ecology, our days sales outstanding were 38.8, or 26.7 days net of deferred revenue, as of March 31, 2023.

• Our prepaid expenses and other assets decreased $87.2 million during the three months ended March 31, 2023, compared to a $54.8 million decrease in the same period in 2022, primarily driven by a decrease of tax receivables due to the timing of our estimated tax payments.

Cash paid for incomes taxes was $7.7 million and $3.7 million for the three months ended March 31, 2023 and 2022, respectively.

• Our accounts payable decreased $71.1 million during the three months ended March 31, 2023, compared to a $73.0 million increase in the same period in 2022, due to the timing of payments.

• Cash paid for capping, closure and post-closure obligations was $8.8 million during the three months ended March 31, 2023, compared to $7.1 million in the same period in 2022.

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 $5.1 million higher during the nine months ended September 30, 2022, compared to the same period in 2021.

• Our other liabilities increased $39.4 million during the nine months ended September 30, 2022, compared to an $87.6 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 and floating-to-fixed interest rate swaps, was $232.4 million and $193.8 million for the nine months ended September 30, 2022 and 2021, respectively.

• Cash paid for remediation obligations was $1.6 million higher during the three months ended March 31, 2023, compared to the same period in 2022.

• Our other liabilities decreased $126.2 million during the three months ended March 31, 2023, compared to a $118.9 million decrease in the same period in 2022, primarily due to the payment of incentive compensation accruals.

In addition, cash paid for interest, excluding net swap settlements for our fixed-to-floating and floating-to-fixed interest rate swaps, was $124.0 million and $75.6 million for the three months ended March 31, 2023 and 2022, respectively.

Cash Flows Used in Investing Activities

The most significant items affecting the comparison of our cash flows used in investing activities for the nine months ended September 30, 2022 and 2021 are summarized below:

• Capital expenditures during the nine months ended September 30, 2022 were $924.8 million, compared with $904.2 million for the same period in 2021.

• During the nine months ended September 30, 2022 and 2021, we paid $2,847.6 million and $936.3 million, respectively, for acquisitions and investments.

During the nine months ended September 30, 2022 and 2021, we received $50.1 million and $46.3 million, respectively, for business divestitures.

The most significant items affecting the comparison of our cash flows used in investing activities for the three months ended March 31, 2023 and 2022 are summarized below:

• Capital expenditures during the three months ended March 31, 2023 were $378.6 million, compared with $334.1 million for the same period in 2022.

• During the three months ended March 31, 2023 and 2022, we paid $290.9 million and $81.6 million, respectively, for acquisitions and investments.

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 Provided By (Used in) Financing Activities

The most significant items affecting the comparison of our cash flows used in financing activities for the nine months ended September 30, 2022 and 2021 are summarized below:

• Net proceeds from notes payable and long-term debt and senior notes were $2,021.0 million during the nine months ended September 30, 2022 , compared to net proceeds of $264.7 million in the same period in 2021.

• During the nine months ended September 30, 2022 , we repurchased 1.6 million shares of our stock for $203.5 million compared to repurchases of 1.6 million shares for $179.0 million during the same period in 2021.

• Dividends paid were $436.5 million and $406.5 million during the nine months ended September 30, 2022 and 2021, respectively.

• During the nine months ended September 30, 2022 and 2021, cash paid for purchase price holdback releases and contingent purchase price related to acquisitions was $4.5 million and $14.4 million, respectively.

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, 2023 and 2022 are summarized below:

• Net proceeds from notes payable and long-term debt and senior notes were $129.6 million during the three months ended March 31, 2023, compared to net proceeds of $48.0 million in the same period in 2022.

• During the three months ended March 31, 2023, we did not repurchase any shares of our common stock, compared to repurchases of 1.6 million shares for $203.5 million during the same period in 2022.

• Dividends paid were $156.4 million and $145.9 million during the three months ended March 31, 2023 and 2022, respectively.

Financial Condition

Debt Obligations

As of September 30, 2022 , we had $455.8 million of principal debt maturing within the next 12 months, which includes certain finance lease obligations.

As of March 31, 2023 , we had $457.1 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.

1 unchanged sentence

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 September 30, 2022 , we had availability under our $3.0 billion unsecured revolving credit facility to fund these bonds until they are remarketed successfully.

In the event of a failed remarketing, as of March 31, 2023 , we had availability under our $3.0 billion unsecured revolving credit facility to fund these bonds until they are remarketed successfully.

In the event of a failed re-borrowing, we currently have availability under our Credit Facility to fund the commercial paper program until it is re-borrowed successfully.

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

Accordingly, we have classified these tax-exempt financings and commercial paper program borrowings as long-term in our consolidated balance sheet as of March 31, 2023 .

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.

5 unchanged sentences

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, a daily floating London Interbank Offered Rate (LIBOR), or a Eurodollar Rate, plus a current applicable margin of 0.910% 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.

In February 2023, we entered into Amendment No.

1 to the Credit Facility (the Credit Facility Amendment) to add our subsidiary, USE Canada Holdings, Inc.

(the Canadian Borrower), as an additional borrower under the Credit Facility.

The Credit Facility Amendment provides that the aggregate of (i) all loans to the Canadian Borrower and (ii) all loans denominated in Canadian dollars cannot exceed $500 million (the Canadian Sublimit).

The Canadian Sublimit is part of, and not in addition to, the aggregate commitments under the Credit Facility.

The Canadian dollar-denominated loans bear interest based on the Canadian Prime Rate or the Canadian Dollar Offered Rate plus a current applicable margin of 0.910% based on our Debt Ratings.

Borrowings under the Credit Facility in United States dollars bear interest at a Base Rate, a daily floating SOFR or a term SOFR plus a current applicable margin of 0.910% based on our Debt Ratings (all as defined in the Credit Facility agreement).

As of March 31, 2023, C$180 million is outstanding against the Canadian Sublimit, with an interest rate of 5.933%.

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 $1,633.1 million and $2,633.8 million as of September 30, 2022 and December 31, 2021, respectively.

Availability under our Credit Facility totaled $2,151.8 million and $1,402.4 million as of March 31, 2023 and December 31, 2022, respectively.

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

1 unchanged sentence

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

We had $17.1 million and $24.3 million in borrowings outstanding under our Credit Facility as of September 30, 2022 and December 31, 2021, respectively.

We had $349.8 million and $341.9 million of letters of credit outstanding under our Credit Facility as of September 30, 2022 and December 31, 2021, respectively.

We had $133.0 million and $250.0 million in borrowings outstanding under our Credit Facility as of March 31, 2023 and December 31, 2022, respectively.

We had $345.2 million and $347.6 million of letters of credit outstanding under our Credit Facility as of March 31, 2023 and December 31, 2022, respectively.

Uncommitted Credit Facility

In January 2022, we entered into a $200.0 million unsecured uncommitted revolving credit facility (the Uncommitted Credit Facility), which replaced the prior $135.0 million uncommitted credit facility (the Replaced Uncommitted Credit Facility).

The Uncommitted Credit Facility bears interest at an annual percentage rate to be agreed upon by both parties.

2 unchanged sentences

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

As of September 30, 2022, we had $60.8 million outstanding under our Uncommitted Credit Facility.

We had no borrowings outstanding as of December 31, 2021.

As of March 31, 2023 and December 31, 2022, we had no borrowings outstanding under our Uncommitted Credit Facility.

Financial and Other Covenants

3 unchanged sentences

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 September 30, 2022, our total debt to EBITDA ratio was 3.17 compared to the 3.75 maximum allowed by the covenants.

As of September 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.

During the second quarter of 2022, we exercised the elevated ratio clause in conjunction with our acquisition of US Ecology;

as a result, we are subject to a 4.25 to 1.00 total debt to EBITDA ratio through March 31, 2023.

As of March 31, 2023, our total debt to EBITDA ratio was 3.05 compared to the 4.25 maximum allowed by the covenants.

As of March 31, 2023, we were in compliance with the covenants unde r our Credit Facility, and we exp ect to be in compliance throughout the remainder of 2023.

EBITDA, which is a non-U.S.

3 unchanged sentences

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

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

maturity acceleration on the Credit Facility constitutes an event of default under our other debt and derivative 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.

2 unchanged sentences

Term Loan Facility

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 SOFR, plus an applicable margin based on our debt ratings.

On April 29, 2022, we entered into the $1.0 billion Term Loan Facility.

The Term Loan Facility will mature on April 29, 2025 and bears interest at a base rate or a forward-looking SOFR, plus an applicable margin based on our debt ratings.

The current weighted average interest rate is 5.707%.

We may prepay, without penalty, all or any part of the borrowings under the Term Loan Facility at any time.

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 September 30, 2022.

During the three months ended March 31, 2023, we used a portion of the proceeds from our senior note issuance described below under Senior Notes and Debentures to pay down a portion of the Term Loan Facility.

As a result, we incurred a non-cash loss on the early extinguishment of debt related to the ratable portion of unamortized deferred issuance costs of $0.2 million.

We had $700.0 million and $1.0 billion in borrowings outstanding under the Term Loan Facility as of March 31, 2023 and December 31, 2022, respectively.

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 the Commercial Paper Cap.

In the event of a failed re-borrowing, we currently have availability under our Credit Facility to fund the commercial paper program until it is re-borrowed successfully.

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

Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of March 31, 2023.

Senior Notes and Debentures

In November 2021, we issued $700.0 million of 2.375% senior notes due 2033 (the 2.375% Notes).

We used the net proceeds for general corporate purposes, including repayment of amounts outstanding under our unsecured and uncommitted credit facilities.

Prior to such use, Republic may have temporarily invested the net proceeds in marketable securities and short-term investments.

During the second quarter of 2021, we paid the entire $35.3 million principal balance of our 9.250% debentures which matured in May 2021.

The Notes are unsecured and unsubordinated and rank equally with our other unsecured obligations.

Our senior notes and debentures are general unsecured obligations.

8 unchanged sentences

Tax-Exempt Financings

As of September 30, 2022 and December 31, 2021 we had $1,181.9 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 $30.0 million and $17.2 million was incurred and reimbursed to us as of September 30, 2022 and December 31, 2021, respectively .

As of September 30, 2022 and December 31, 2021 , we had $121.7 million and $139.0 million , respectively, of restricted cash and marketable securities.

As of December 31, 2021, $12.4 million of the restricted cash and marketable securities balance represented proceeds from the issuance of the tax-exempt bonds.

As of March 31, 2023 and December 31, 2022 we had $1,182.2 million and $1,182.0 million of certain variable rate tax-exempt financings outstanding, respectively, with maturities ranging from 2023 to 2051.

Finance Leases

We had finance lease liabilities of $273.9 million and $249.4 million as of September 30, 2022 and December 31, 2021, respectively, with maturities ranging from 2023 to 2063.

We had finance lease liabilities of $244.6 million and $247.5 million as of March 31, 2023 and December 31, 2022, respectively, with maturities ranging from 2023 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 September 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.

As of March 31, 2023, 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.

15 unchanged sentences

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