What changed in this filing

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Item 1. Financial Statements

2020-10-29 compared with 2020-08-07 · 259 added, 238 removed, 887 unchanged (36% of the section changed)

4 unchanged sentences

dollars, except share and per share amounts)

September 30,

Current assets:

Cash and equivalents

Accounts receivable, net of allowance for credit losses of $ 19,965 and $ 16,432 at June 30, 2020 and December 31, 2019, respectively

Accounts receivable, net of allowance for credit losses of $ 20,657 and $ 16,432 at September 30, 2020 and December 31, 2019, respectively

Prepaid expenses and other current assets

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Common shares:

262,885,349 shares issued and 262,811,165 shares outstanding at June 30, 2020;

262,897,009 shares issued and 262,822,825 shares outstanding at September 30, 2020;

263,699,675 shares issued and 263,618,161 shares outstanding at December 31, 2019

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Treasury shares:

74,184 and 81,514 shares at June 30, 2020 and December 31, 2019, respectively

74,184 and 81,514 shares at September 30, 2020 and December 31, 2019, respectively

Retained earnings

3 unchanged sentences

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(In thousands of U.S.

dollars, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

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Impairments and other operating items

Operating income (loss)

Operating income

Interest expense

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Other income (expense), net

Income (loss) before income tax provision

Income tax (provision) benefit

Net income (loss)

Income before income tax provision

Income tax provision

Net loss attributable to noncontrolling interests

Net income (loss) attributable to Waste Connections

Earnings (loss) per common share attributable to Waste Connections’ common shareholders:

Net income attributable to Waste Connections

Earnings per common share attributable to Waste Connections’ common shareholders:

Shares used in the per share calculations:

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(In thousands of U.S.

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive income (loss), before tax:

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Other comprehensive income (loss), before tax

Income tax benefit related to items of other comprehensive income (loss)

Income tax (expense) benefit related to items of other comprehensive income (loss)

Other comprehensive income (loss), net of tax

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Balances at June 30, 2020

Vesting of restricted share units

Fair value adjustment for common shares in deferred compensation plan exchanged for other investment options

Tax withholdings related to net share settlements of equity-based compensation

Equity-based compensation

Exercise of warrants

Cash dividends on common shares

Amounts reclassified into earnings, net of taxes

Changes in fair value of cash flow hedges, net of taxes

Foreign currency translation adjustment

Net income (loss)

Balances at September 30, 2020

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Balances at June 30, 2019

Sale of common shares held in trust

Vesting of restricted share units

Restricted share units released from deferred compensation plan

Tax withholdings related to net share settlements of equity-based compensation

Equity-based compensation

Exercise of warrants

Cash dividends on common shares

Amounts reclassified into earnings, net of taxes

Changes in fair value of cash flow hedges, net of taxes

Foreign currency translation adjustment

Net income (loss)

Balances at September 30, 2019

The accompanying notes are an integral part of these condensed consolidated financial statements.

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(In thousands of U.S.

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Loss on disposal of assets and impairments

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Proceeds from disposal of assets

Change in restricted investments, net of interest income

Net cash used in investing activities

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Proceeds from sale of common shares held in trust

Net cash provided by (used in) financing activities

Distributions to noncontrolling interests

Net cash used in financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

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The accompanying condensed consolidated financial statements relate to Waste Connections, Inc.

and its subsidiaries (the “Company”) for the three and six month periods ended June 30, 2020 and 2019.

In the opinion of management, the accompanying balance sheets and related interim statements of net income (loss), comprehensive income (loss), cash flows and equity include all adjustments, consisting only of normal recurring items, necessary for their fair statement in conformity with U.S.

and its subsidiaries (the “Company”) for the three and nine month periods ended September 30, 2020 and 2019.

In the opinion of management, the accompanying balance sheets and related interim statements of net income, comprehensive income (loss), cash flows and equity include all adjustments, consisting only of normal recurring items, necessary for their fair statement in conformity with U.S.

generally accepted accounting principles (“GAAP”).

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Actual results for all estimates could differ materially from the estimates and assumptions that the Company uses in the preparation of its condensed consolidated financial statements.

The challenges posed by the outbreak of coronavirus disease 2019 (“COVID-19”) on the global economy persisted through the second quarter of 2020 and continue to impact the demand for Waste Connections’ services in varying ways across the U.S.

and Canada and across a variety of lines of business, including commercial collection and solid waste and E&P waste disposal.

The challenges posed by the outbreak of coronavirus disease 2019 (“COVID-19”) on the global economy persisted through the third quarter of 2020 and continue to impact the demand for the Company’s services to varying degrees and in varying ways across the U.S.

and Canada and across a variety of lines of business, including commercial collection and solid waste and exploration and production (“E&P”) waste disposal.

In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing.

The ultimate impact of the COVID-19 outbreak on the Company’s business, results of operations, financial condition and cash flows will depend largely on future developments, including the duration and spread of the outbreak in the U.S.

In some markets where a portion of these measures have been curtailed, the impact to demand for the Company’s services has decreased as activity levels have increased.

The impact of the COVID-19 pandemic on the Company’s business, results of operations, financial condition and cash flows in future periods will depend largely on future developments, including the duration and spread of the outbreak in the U.S.

and Canada, its severity, the actions to contain the novel coronavirus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and cannot be predicted at this time.

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Gains and losses from foreign currency transactions are included in earnings for the period.

NEW ACCOUNTING STANDARDS

Accounting Standards Adopted

Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments .

In June 2016, the Financial Accounting Standards Board, (“FASB”) issued guidance which introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables ,

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

which will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts.

NEW ACCOUNTING STANDARDS

Accounting Standards Adopted

Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments .

In June 2016, the Financial Accounting Standards Board, (“FASB”) issued guidance introducing a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables , that requires entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts.

The standard became effective for public business entities that are U.S.

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Early adoption is permitted.

The Company has not yet assessed the potential impact of implementing this new guidance on its condensed consolidated financial statements .

The Company is currently assessing the impact that adopting this guidance will have on its condensed consolidated financial statements .

Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

In March 2020, the FASB issued guidance to provide temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”).

In March 2020, the FASB issued guidance to provide temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”), anticipated to be phased out by the end of 2021, and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”).

Under the new guidance, entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met.

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To the extent that the transition away from the use of LIBOR might affect the Company’s ability to maintain cash ‎flow hedge accounting as described in Note 13, the relief is expected to permit the Company to maintain that cash flow ‎hedge accounting.

IMPAIRMENTS OF PROPERTY, EQUIPMENT, GOODWILL AND INTANGIBLE ASSETS

Property, equipment and finite-lived intangible assets are carried on the Company’s consolidated financial statements based on their cost less accumulated depreciation or amortization.

Finite-lived intangible assets consist of long-term franchise agreements, contracts, customer lists, permits and other agreements.

The recoverability of these assets is tested whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

RECLASSIFICATION

As disclosed within other notes to the financial statements, segment information reported in the Company’s prior year has been reclassified to conform to the 2020 presentation.

IMPAIRMENTS OF PROPERTY, EQUIPMENT, GOODWILL AND INTANGIBLE ASSETS

Property, equipment and finite-lived intangible assets are carried on the Company’s consolidated financial statements based on their cost less accumulated depreciation or amortization.

Finite-lived intangible assets consist of long-term franchise agreements, contracts, customer lists, permits and other agreements.

The recoverability of these assets is tested whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

Typical indicators that an asset may be impaired include, but are not limited to, the following:

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In addition, the Company evaluates its reporting units for impairment if events or circumstances similar to the indicators listed above change between annual tests indicating a possible impairment.

The Company estimates the fair value of each of its reporting units, which consist of its five geographic solid waste operating segments and its exploration and production (“E&P”) segment, using discounted cash flow analyses, which require significant assumptions and estimates about the future operations of each reporting unit and the future discrete cash flows related to each indefinite-lived intangible asset.

The Company estimates the fair value of each of its reporting units using discounted cash flow analyses.

Through June 30, 2020, the Company’s reporting units consisted of its five geographic solid waste operating segments and its E&P segment.

As of July 2020, the Company combined all operations of the E&P segment into the Southern segment, based

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

on the Company’s determination that the two operating segments met the aggregation criteria, and eliminated the E&P segment.

Discounted cash flow analyses require significant assumptions and estimates about the future operations of each reporting unit and the future discrete cash flows related to each indefinite-lived intangible asset.

Significant judgments inherent in these analyses include the determination of appropriate discount rates, the amount and timing of expected future cash flows, growth rates and income tax rates.

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In testing indefinite-lived intangible assets for impairment, the Company compares the estimated fair value of each indefinite-lived intangible asset to its carrying value.

If the fair value of the indefinite-lived intangible asset is less than its carrying value, an impairment charge would be recorded to earnings in the Company’s Condensed Consolidated Statements of Net Income (Loss).

The demand for the Company’s E&P waste services depends on the continued demand for, and production of, oil and natural gas.

Crude oil and natural gas prices historically have been volatile.

Macroeconomic and geopolitical conditions,

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

including a significant decline in oil prices driven by both surplus production and supply, as well as the decrease in demand caused by factors including the COVID-19 pandemic, have resulted in decreased levels of oil and natural gas exploration and production activity and a corresponding decrease in demand for the Company’s E&P waste services.

During the three months ended June 30, 2020, total revenue for the Company’s E&P segment declined 43.3 %, compared to the prior year period, on oil rig count declines of over 60 % in certain basins.

Macroeconomic and geopolitical conditions, including a significant decline in oil prices driven by both surplus production and supply, as well as the decrease in demand caused by factors including the COVID-19 pandemic, have resulted in decreased levels of oil and natural gas exploration and production activity and a corresponding decrease in demand for the Company’s E&P waste services.

During the nine months ended September 30, 2020, total E&P revenue declined $ 75,158 , compared to the prior year period, on rig count declines of 72 % in certain basins.

The most impacted basins include the Williston Basin in North Dakota, the Eagle Ford Basin in Texas and the Powder River Basin in Wyoming, all of which have relatively high costs associated with drilling, making them less attractive than other basins, including the Permian Basin in Texas and New Mexico.

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Such uncertainty regarding global demand has had a significant impact on the investment and operating plans of the Company’s E&P waste customers in the basins where the Company operates.

The current decrease in exploration and production activity, together with market expectations of a likely slow recovery in oil prices, has reduced the expected future period cash flows of the Company’s E&P segment.

Based on these events, the Company concluded that a triggering event occurred which required the Company to perform an impairment test of the property and equipment and intangible assets of its E&P segment as of June 30, 2020 using July 2020 industry projections for drilling activity by basin as the basis for expectations about future activity.

Based upon the results of the impairment test, the Company concluded that the carrying value exceeded the projected undiscounted cash flows of four landfills in the E&P segment.

The decrease in exploration and production activity, together with market expectations of a likely slow recovery in oil prices, reduced the expected future period cash flows of the Company’s E&P operations.

Based on these events, the Company concluded that a triggering event occurred which required the Company to perform an impairment test of the property and equipment and intangible assets of its E&P operations as of June 30, 2020 using July 2020 industry projections for drilling activity by basin as the basis for expectations about future activity.

Based upon the results of the impairment test, the Company concluded that the carrying value exceeded the projected undiscounted cash flows of four E&P landfills.

The next step was to calculate the fair value of these four landfills using an income approach employing a discounted cash flow (“DCF”) model over the lesser of 40 years or the remaining life of each landfill.

Additional key assumptions used in the DCF model included a discount rate of 12 % applied to the cash flows, annual revenue projections based on E&P waste resulting from projected levels of oil and natural gas exploration and production activity during the forecast period at each location, gross margins based on estimated operating expense requirements during the forecast period, estimated capital expenditures over the forecast period and income taxes based on the estimated federal and state income tax rates applicable during the cash flow periods.

For each of the four landfills, the carrying value exceeded the calculated discounted fair value, resulting in the recording of an impairment charge of $ 417,384 to Impairments and other operating items in the Condensed Consolidated Statements of Net Income (Loss) during the three months ended June 30, 2020.

The four landfills had $ 0 of intangible assets at June 30, 2020;

therefore, no impairment charge was attributable to intangible assets.

Following the impairment charge, which reduced the carrying value of property and equipment by $ 417,384 , the E&P segment has a remaining balance in property, plant and equipment of $ 412,974 at June 30, 2020.

Additionally, the E&P segment has a balance of $ 58,712 in intangible assets at June 30, 2020.

The impairment charge reduced the carrying value of property and equipment by $ 417,384 .

If the estimated annual cash flows in the DCF model for each asset or asset group tested was changed by 10%, the resulting impairment charge would change by approximately $ 3,000 .

The aforementioned impairment charges were partially offset by a $ 4,145 adjustment to reduce the fair value of an amount payable in 2021 under a liability-classified contingent consideration arrangement calculated on future earnings and cash flows associated with the acquisition of an E&P business in 2014.

Based upon the outlook for E&P waste services in the market where the acquired business operates, the payment of the contingent consideration was deemed unlikely and the carrying value was reduced to $ 0 as of June 30, 2020, resulting in a credit to Impairments and other operating items in the Condensed Consolidated Statements of Net Income (Loss).

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company’s operations primarily consist of providing non-hazardous waste collection, transfer, disposal and recycling services, non-hazardous E&P waste treatment, recovery and disposal services, and intermodal services.

The following table disaggregates the Company’s revenues by service line for the periods indicated:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Industrial and construction roll off

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In the event that the Company bills for services in advance of performance, it recognizes deferred revenue for the amount billed and subsequently recognizes revenue at the time the service is provided.

Substantially all of the deferred revenue recorded as of March 31, 2020 was recognized as revenue during the three months ended June 30, 2020 when the service was performed.

Substantially all of the deferred revenue recorded as of June 30, 2020 was recognized as revenue during the three months ended September 30, 2020 when the service was performed.

See Note 12 for additional information regarding revenue by reportable segment.

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The Company recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity would have recognized is one year or less.

The Company had $ 19,669 and $ 16,846 of deferred sales incentives at June 30, 2020 and December 31, 2019, respectively.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash.

The carrying value of the Company’s receivables, net of the allowance for credit losses, represents their estimated net realizable value.

The allowance for credit losses is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics.

The Company monitors the collectability of its trade receivables as one overall pool due

The Company had $ 19,669 and $ 16,846 of deferred sales incentives at September 30, 2020 and December 31, 2019, respectively.

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

to all trade receivables having similar risk characteristics.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash.

The carrying value of the Company’s receivables, net of the allowance for credit losses, represents their estimated net realizable value.

The allowance for credit losses is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics.

The Company monitors the collectability of its trade receivables as one overall pool due to all trade receivables having similar risk characteristics.

The Company estimates its allowance for credit losses based on historical collection trends, the age of outstanding receivables, geographical location of the customer, existing economic conditions and reasonable forecasts.

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Past-due receivable balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amount due.

The following is a rollforward of the Company’s allowance for credit losses from January 1, 2020 to June 30, 2020:

The following is a rollforward of the Company’s allowance for credit losses from January 1, 2020 to September 30, 2020:

Beginning balance

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LANDFILL ACCOUNTING

At June 30, 2020, the Company’s landfills consisted of 82 owned landfills, six landfills operated under life-of-site operating agreements, four landfills operated under limited-term operating agreements and one development stage landfill.

The Company’s landfills had site costs with a net book value of $ 2,524,765 at June 30, 2020.

At September 30, 2020, the Company’s landfills consisted of 83 owned landfills, six landfills operated under life-of-site operating agreements, four landfills operated under limited-term operating agreements and one development stage landfill.

The Company’s landfills had site costs with a net book value of $ 2,645,221 at September 30, 2020.

For the Company’s landfills operated under limited-term operating agreements and life-of-site operating agreements, the owner of the property (generally a municipality) usually owns the permit and the Company operates the landfill for a contracted term.

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Expansion airspace that meets certain criteria is included in the estimate of total landfill airspace.

Based on remaining permitted capacity as of June 30, 2020, and projected annual disposal volumes, the average remaining landfill life for the Company’s owned landfills and landfills operated under life-of-site operating agreements is estimated to be approximately 28 years .

As of June 30, 2020, the Company is seeking to expand permitted capacity at ten of its owned landfills and three landfills that it operates under life-of-site operating agreements, and considers the achievement of these expansions to be probable.

Although the Company cannot be certain that all future expansions will be permitted as designed, the average remaining life, when considering remaining permitted capacity, probable expansion capacity and projected annual disposal volume, of the Company’s owned landfills and landfills operated under life-of-site operating agreements is approximately 31 years , with lives ranging from approximately 1 to 204 years .

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

During the six months ended June 30, 2020 and 2019, the Company expensed $ 96,925 and $ 107,364 , respectively, or an average of $ 4.50 and $ 4.77 per ton consumed, respectively, related to landfill depletion at owned landfills and landfills operated under life-of-site agreements.

Based on remaining permitted capacity as of September 30, 2020, and projected annual disposal volumes, the average remaining landfill life for the Company’s owned landfills and landfills operated under life-of-site operating agreements is estimated to be approximately 28 years .

As of September 30, 2020, the Company is seeking to expand permitted capacity at ten of its owned landfills and three landfills that it operates under life-of-site operating agreements, and considers the achievement of these expansions to be probable.

Although the Company cannot be certain that all future expansions will be permitted as designed, the average remaining life, when considering remaining permitted capacity, probable expansion capacity and projected annual disposal volume, of the Company’s owned landfills and landfills operated under life-of-site operating agreements is approximately 32 years , with lives ranging from approximately 1 to 204 years .

During the nine months ended September 30, 2020 and 2019, the Company expensed $ 149,988 and $ 169,064 , respectively, or an average of $ 4.51 and $ 4.77 per ton consumed, respectively, related to landfill depletion at owned landfills and landfills operated under life-of-site agreements.

The Company reserves for estimated final capping, closure and post-closure maintenance obligations at the landfills it owns and landfills it operates under life-of-site operating agreements.

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Interest is accreted on the recorded liability using the corresponding discount rate.

During the six months ended June 30, 2020 and 2019, the Company expensed $ 7,505 and $ 7,063 respectively, or an average of $ 0.35 and $ 0.31 per ton consumed, respectively, related to final capping, closure and post-closure accretion expense.

The following is a reconciliation of the Company’s final capping, closure and post-closure liability balance from December 31, 2019 to June 30, 2020:

During the nine months ended September 30, 2020 and 2019, the Company expensed $ 11,174 and $ 10,656 , respectively, or an average of $ 0.34 and $ 0.30 per ton consumed, respectively, related to final capping, closure and post-closure accretion expense.

The following is a reconciliation of the Company’s final capping, closure and post-closure liability balance from December 31, 2019 to September 30, 2020:

Final capping, closure and post-closure liability at December 31, 2019

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Closure payments

Assumption of closure liabilities from acquisitions

Foreign currency translation adjustment

Final capping, closure and post-closure liability at June 30, 2020

Liability adjustments of $ 5,597 for the six months ended June 30, 2020, represent non-cash changes to final capping, closure and post-closure liabilities and are recorded on the Condensed Consolidated Balance Sheets along with an offsetting addition to site costs, which is amortized to depletion expense as the remaining landfill airspace is consumed.

Final capping, closure and post-closure liability at September 30, 2020

Liability adjustments of $ 1,861 for the nine months ended September 30, 2020, represent non-cash changes to final capping, closure and post-closure liabilities and are recorded on the Condensed Consolidated Balance Sheets along with an offsetting addition to site costs, which is amortized to depletion expense as the remaining landfill airspace is consumed.

The final capping, closure and post-closure liability is included in Other long-term liabilities in the Condensed Consolidated Balance Sheets.

The Company performs its annual review of its cost and capacity estimates in the first quarter of each year.

At June 30, 2020 and December 31, 2019, $ 17,905 and $ 12,324 , respectively, of the Company’s restricted cash balance and $ 43,802 and $ 48,590 , respectively, of the Company’s restricted investments balance was for purposes of securing its performance of future final capping, closure and post-closure obligations.

The Company acquired seven individually immaterial non-hazardous solid waste collection, transfer and recycling businesses during the six months ended June 30, 2020.

The total acquisition-related costs incurred during the six months

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

ended June 30, 2020 for these acquisitions were $ 2,162 .

These expenses are included in Selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Net Income (Loss).

The Company acquired ten individually immaterial non-hazardous solid waste collection, transfer and disposal businesses during the six months ended June 30, 2019.

The total acquisition-related costs incurred during the six months ended June 30, 2019 for these acquisitions were $ 7,021 .

These expenses are included in Selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Net Income (Loss).

At September 30, 2020 and December 31, 2019, $ 17,589 and $ 12,324 , respectively, of the Company’s restricted cash balance and $ 44,558 and $ 48,590 , respectively, of the Company’s restricted investments balance was for purposes of securing its performance of future final capping, closure and post-closure obligations.

The Company acquired 11 individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the nine months ended September 30, 2020.

The total acquisition-related costs incurred during the nine months ended September 30, 2020 for these acquisitions were $ 4,497 .

These expenses are included in Selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Net Income.

The Company acquired 13 individually immaterial non-hazardous solid waste collection, transfer and disposal businesses during the nine months ended September 30, 2019.

The total acquisition-related costs incurred during the nine months ended September 30, 2019 for these acquisitions were $ 8,057 .

These expenses are included in Selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Net Income.

The results of operations of the acquired businesses have been included in the Company’s Condensed Consolidated Financial Statements from their respective acquisition dates.

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Goodwill acquired is attributable to the synergies and ancillary growth opportunities expected to arise after the Company’s acquisition of these businesses.

Goodwill acquired during the six months ended June 30, 2020 and 2019, totaling $ 48,825 and $ 82,769 , respectively, is expected to be deductible for tax purposes.

The fair value of acquired working capital related to seven individually immaterial acquisitions completed during the twelve months ended June 30, 2020, is provisional pending receipt of information from the acquirees to support the fair value of the assets acquired and liabilities assumed.

Any adjustments recorded relating to finalizing the working capital for these seven acquisitions are not expected to be material to the Company’s financial position.

Goodwill acquired during the nine months ended September 30, 2020 and 2019, totaling $ 48,926 and $ 81,903 , respectively, is expected to be deductible for tax purposes.

The fair value of acquired working capital related to six individually immaterial acquisitions completed during the twelve months ended September 30, 2020, is provisional pending receipt of information from the acquirees to support the fair value of the assets acquired and liabilities assumed.

Any adjustments recorded relating to finalizing the working capital for these six acquisitions are not expected to be material to the Company’s financial position.

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

INTANGIBLE ASSETS, NET

Intangible assets, exclusive of goodwill, consisted of the following at June 30, 2020:

Intangible assets, exclusive of goodwill, consisted of the following at September 30, 2020:

Finite-lived intangible assets:

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Intangible assets, exclusive of goodwill

The weighted-average amortization period of long-term franchise agreements and contracts acquired during the six months ended June 30, 2020 was 14.0 years.

The weighted-average amortization period of customer lists acquired during the six months ended June 30, 2020 was 11.0 years.

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The weighted-average amortization period of long-term franchise agreements and contracts acquired during the nine months ended September 30, 2020 was 14.1 years.

The weighted-average amortization period of customer lists acquired during the nine months ended September 30, 2020 was 11.0 years.

Intangible assets, exclusive of goodwill, consisted of the following at December 31, 2019:

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LONG-TERM DEBT

The following table presents the Company’s long-term debt as of June 30, 2020 and December 31, 2019:

The following table presents the Company’s long-term debt as of September 30, 2020 and December 31, 2019:

September 30,

Revolver under Credit Agreement, bearing interest ranging from 1.35 % to 1.68 % (a)

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____________________

(a) Interest rates represent the interest rates incurred at June 30, 2020 .

(a) Interest rates represent the interest rates incurred at September 30, 2020 .

(b) The Company has recorded the 4.64 % Senior Notes due 2021 (the “2021 Senior Notes”) in long-term in the table above as the Company has the intent and ability to redeem the 2021 Senior Notes on April 1, 2021 using borrowings under the Credit Agreement.

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The Company will pay interest on the 2030 Senior Notes semi-annually in arrears and the 2030 Senior Notes will mature on February 1, 2030 .

The 2030 Senior Notes are senior unsecured obligations, ranking equally in right of payment with the Company’s other existing and future unsubordinated debt and senior to any of the Company’s future subordinated debt.

The 2030 Senior Notes are not guaranteed by any of the Company’s subsidiaries.

The 2030 Senior Notes are senior unsecured obligations, ranking equally in right of payment

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

with the Company’s other existing and future unsubordinated debt and senior to any of the Company’s future subordinated debt.

The 2030 Senior Notes are not guaranteed by any of the Company’s subsidiaries.

The Company may redeem some or all of the 2030 Senior Notes at its option prior to November 1, 2029 (three months before the maturity date) at any time and from time to time at a redemption price equal to the greater of 100 % of the principal amount of the 2030 Senior Notes redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest on the 2030 Senior Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

11 unchanged sentences

If the Company experiences certain kinds of changes of control, each holder of the Notes may require the Company to repurchase all or a portion of the Notes for cash at a price equal to 101 % of the aggregate principal amount of such Notes, plus any accrued but unpaid interest to, but excluding, the date of repurchase.

The covenants in the Indenture include limitations on liens, sale-leaseback transactions and mergers and sales of all or substantially all of the Company’s assets.

The Indenture also includes customary events of default with respect to the Notes.

As of June 30, 2020, the Company was in compliance with all applicable covenants in the Indenture.

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The covenants in the Indenture include limitations on liens, sale-leaseback transactions and mergers and sales of all or substantially all of the Company’s assets.

The Indenture also includes customary events of default with respect to the Notes.

As of September 30, 2020, the Company was in compliance with all applicable covenants in the Indenture.

Upon an event of default, the principal of and accrued and unpaid interest on all the 2030 and/or 2050 Senior Notes may be declared to be due and payable by the Trustee or the holders of not less than 25% in principal amount of the outstanding Notes of the applicable series.

4 unchanged sentences

Details of the Credit Agreement are as follows:

September 30,

Revolver under Credit Agreement

16 unchanged sentences

No single contract or customer accounted for more than 10% of the Company’s total revenues at the consolidated or reportable segment level during the periods presented.

The Company manages its operations through five geographic solid waste operating segments and its E&P segment, which includes the majority of the Company’s E&P waste treatment and disposal operations.

The Company’s five geographic solid waste operating segments and its E&P segment comprise the Company’s reportable segments.

Prior to July 2020, the Company managed its operations through five geographic solid waste operating segments and its E&P segment, which were also its reportable segments.

As of July 2020, the Company’s chief operating decision maker determined that the Company’s E&P and Southern operating segments met all the aggregation criteria and eliminated the E&P segment by combining all operations of the E&P segment into the Southern segment.

After giving effect to this combination, the Company’s reportable segments consist of its five geographic solid waste operating segments.

Each operating segment is responsible for managing several vertically integrated operations, which are comprised of districts.

The Company’s Eastern segment services customers located in northern Illinois, Kentucky, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, eastern Tennessee, Vermont, Virginia and Wisconsin;

the Company’s Southern segment services customers located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, southern Oklahoma, western Tennessee and Texas;

the Company’s Western segment services customers located in Alaska, California, Idaho, Montana, Nevada, Oregon, Washington and western Wyoming;

the Company’s Central segment services customers located in Arizona, Colorado, southern Illinois, Iowa, Kansas,

The segment information presented herein reflects the realignment of these districts.

Segment results for the 2019 periods

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Minnesota, Missouri, Nebraska, New Mexico, Oklahoma, South Dakota, western Texas, Utah and eastern Wyoming;

reflected in this report have been reclassified to reflect the realignment of the Company’s reportable segments for comparison with the same period in 2020.

Under the current orientation, the Company’s Eastern segment services customers located in northern Illinois, Kentucky, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, eastern Tennessee, Vermont, Virginia and Wisconsin;

the Company’s Southern segment services customers located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Dakota, southern Oklahoma, western Tennessee, Texas, Wyoming and along the Gulf of Mexico;

the Company’s Western segment services customers located in Alaska, California, Idaho, Montana, Nevada, Oregon, Washington and western Wyoming;

the Company’s Central segment services customers located in Arizona, Colorado, southern Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Oklahoma, South Dakota, western Texas, Utah and eastern Wyoming;

and the Company’s Canada segment services customers located in the state of Michigan and in the provinces of Alberta, British Columbia, Manitoba, Ontario, Québec and Saskatchewan.

The E&P segment services E&P customers located in Louisiana, New Mexico, North Dakota, Oklahoma, Texas, Wyoming and along the Gulf of Mexico.

The Company’s Chief Operating Decision Maker evaluates operating segment profitability and determines resource allocations based on several factors, of which the primary financial measure is segment EBITDA.

2 unchanged sentences

The Company’s management uses segment EBITDA in the evaluation of segment operating performance as it is a profit measure that is generally within the control of the operating segments.

A reconciliation of segment EBITDA to Income (loss) before income tax provision is included at the end of this Note 11.

Summarized financial information concerning the Company’s reportable segments for the three and six months ended June 30, 2020 and 2019, is shown in the following tables:

A reconciliation of segment EBITDA to Income before income tax provision is included at the end of this Note 12.

Summarized financial information concerning the Company’s reportable segments for the three and nine months ended September 30, 2020 and 2019, is shown in the following tables:

Three Months Ended

June 30, 2020

September 30, 2020

Corporate (a)

Three Months Ended

June 30, 2019

September 30, 2019

Corporate (a)

3 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Six Months Ended

June 30, 2020

Nine Months Ended

September 30, 2020

Corporate (a)

Six Months Ended

June 30, 2019

Nine Months Ended

September 30, 2019

Corporate (a)

____________________

(a) Corporate functions include accounting, legal, tax, treasury, information technology, risk management, human resources, training, direct acquisition expenses, other administrative functions and share-based compensation expenses associated with Progressive Waste share-based grants outstanding at June 1, 2016 that were continued by the Company.

Amounts reflected are net of allocations to the six operating segments.

(a) Corporate consists of expenses associated with its administrative departments and certain centralized expenses including cash and equity-based incentive compensation, direct acquisition expenses and share-based compensation expenses associated with Progressive Waste share-based grants outstanding at June 1, 2016 that were continued by the Company.

Amounts reflected are net of allocations to the five operating segments.

(b) Intercompany revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments.

1 unchanged sentence

(c) For those items included in the determination of segment EBITDA, the accounting policies of the segments are the same as those described in the Company’s most recent Annual Report on Form 10-K.

Total assets for each of the Company’s reportable segments at June 30, 2020 and December 31, 2019, were as follows:

Total assets for each of the Company’s reportable segments at September 30, 2020 and December 31, 2019, were as follows:

September 30,

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The following tables show changes in goodwill during the six months ended June 30, 2020 and 2019, by reportable segment:

The following tables show changes in goodwill during the nine months ended September 30, 2020 and 2019, by reportable segment:

Balance as of December 31, 2019

Goodwill acquired

Goodwill acquisition adjustments

Impact of changes in foreign currency

Balance as of June 30, 2020

Balance as of September 30, 2020

Balance as of December 31, 2018

Goodwill acquired

Goodwill acquisition adjustments

Goodwill divested

Impact of changes in foreign currency

Balance as of June 30, 2019

A reconciliation of the Company’s primary measure of segment profitability (segment EBITDA) to Income (loss) before income tax provision in the Condensed Consolidated Statements of Net Income (Loss) is as follows:

Balance as of September 30, 2019

A reconciliation of the Company’s primary measure of segment profitability (segment EBITDA) to Income before income tax provision in the Condensed Consolidated Statements of Net Income is as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Eastern segment EBITDA

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Canada segment EBITDA

E&P segment EBITDA

Subtotal reportable segments

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Other income (expense), net

Income (loss) before income tax provision

Income before income tax provision

DERIVATIVE FINANCIAL INSTRUMENTS

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The Company classifies cash inflows and outflows from derivatives within operating activities on the Condensed Consolidated Statements of Cash Flows.

One of the Company’s objectives for utilizing derivative instruments is to reduce its exposure to fluctuations in cash flows due to changes in the variable interest rates of certain borrowings under the Credit Agreement.

The Company’s strategy to achieve that objective involves entering into interest rate swaps.

The interest rate swaps outstanding at September 30, 2020 were specifically designated to the Credit Agreement and accounted for as cash flow hedges.

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company’s strategy to achieve that objective involves entering into interest rate swaps.

The interest rate swaps outstanding at June 30, 2020 were specifically designated to the Credit Agreement and accounted for as cash flow hedges.

At June 30, 2020, the Company’s derivative instruments included 14 interest rate swap agreements as follows:

At September 30, 2020, the Company’s derivative instruments included 10 interest rate swap agreements as follows:

Interest Rate

8 unchanged sentences

1-month LIBOR

February 2020

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* Plus applicable margin.

The fair values of derivative instruments designated as cash flow hedges as of June 30, 2020, were as follows:

On September 28, 2020, the Company terminated four of its interest rate swaps with notional amounts of $ 150,000 , $ 150,000 , $ 50,000 and $ 50,000 , each of which would have expired in January 2021.

As a result of terminating these interest rate swaps, the Company made total cash payments of $ 853 to the counterparties of the swap agreements.

The fair values of derivative instruments designated as cash flow hedges as of September 30, 2020, were as follows:

Derivatives Designated as Cash

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____________________

(a) Represents the estimated amount of the existing unrealized losses, respectively, on interest rate swaps as of June 30, 2020 (based on the interest rate yield curve at that date), included in AOCIL expected to be reclassified into pre-tax earnings within the next 12 months.

(a) Represents the estimated amount of the existing unrealized losses, respectively, on interest rate swaps as of September 30, 2020 (based on the interest rate yield curve at that date), included in AOCIL expected to be reclassified into pre-tax earnings within the next 12 months.

The actual amounts reclassified into earnings are dependent on future movements in interest rates.

14 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The following table summarizes the impact of the Company’s cash flow hedges on the results of operations, comprehensive income (loss) and AOCIL for the three and six months ended June 30, 2020 and 2019:

The following table summarizes the impact of the Company’s cash flow hedges on the results of operations, comprehensive income (loss) and AOCIL for the three and nine months ended September 30, 2020 and 2019:

Amount of (Gain) or Loss Reclassified

1 unchanged sentence

Amount of Gain or (Loss) Recognized

Net Income (Loss)

from AOCIL into Earnings,

4 unchanged sentences

Three Months Ended

September 30,

Interest rate swaps

3 unchanged sentences

Amount of Gain or (Loss) Recognized

Net Income (Loss)

from AOCIL into Earnings,

2 unchanged sentences

Net of Tax (b), (c)

Six Months Ended

Nine Months Ended

September 30,

Interest rate swaps

7 unchanged sentences

The Company’s financial instruments consist primarily of cash and equivalents, trade receivables, restricted cash and investments, trade payables, debt instruments, contingent consideration obligations and interest rate swaps.

As of June 30, 2020 and December 31, 2019, the carrying values of cash and equivalents, trade receivables, restricted cash and investments, trade payables and contingent consideration are considered to be representative of their respective fair values.

The carrying values of the Company’s debt instruments, excluding certain notes as listed in the table below, approximate their fair values as of June 30, 2020 and December 31, 2019, based on current borrowing rates, current remaining average life to maturity and borrower credit quality for similar types of borrowing arrangements, and are classified as Level 2

As of September 30, 2020 and December 31, 2019, the carrying values of cash and equivalents, trade receivables, restricted cash and investments, trade payables and contingent consideration are considered to be representative of their respective fair values.

The carrying values of the Company’s debt instruments, excluding certain notes as listed in the table below, approximate their fair values as of September 30, 2020 and December 31, 2019, based on current borrowing rates, current remaining average life to maturity and borrower credit quality for similar types of borrowing arrangements, and are classified as Level 2 within the fair value hierarchy.

The carrying values and fair values of the Company’s debt instruments

WASTE CONNECTIONS, INC.

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

within the fair value hierarchy.

The carrying values and fair values of the Company’s debt instruments where the carrying values do not approximate their fair values as of June 30, 2020 and December 31, 2019, are as follows:

where the carrying values do not approximate their fair values as of September 30, 2020 and December 31, 2019, are as follows:

Carrying Value at

Fair Value* at

September 30,

4.64 % Senior Notes due 2021

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For details on the fair value of the Company’s interest rate swaps, restricted cash and investments and contingent consideration, refer to Note 16.

NET INCOME (LOSS) PER SHARE INFORMATION

The following table sets forth the calculation of the numerator and denominator used in the computation of basic and diluted net income (loss) per common share attributable to the Company’s shareholders for the three and six months ended June 30, 2020 and 2019:

NET INCOME PER SHARE INFORMATION

The following table sets forth the calculation of the numerator and denominator used in the computation of basic and diluted net income per common share attributable to the Company’s shareholders for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended

Six Months Ended

Net income (loss) attributable to Waste Connections for basic and diluted earnings per share

Nine Months Ended

September 30,

Net income attributable to Waste Connections for basic and diluted earnings per share

Basic shares outstanding

1 unchanged sentence

Diluted shares outstanding

For the three and six months ended June 30, 2020, equity-based awards to purchase 322,779 and 442,786 of common shares, respectively, were excluded from the computation of diluted loss per share as they were anti-dilutive.

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

FAIR VALUE MEASUREMENTS

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Level 1, defined as quoted market prices in active markets for identical assets or liabilities;

Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities;

Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

that are not active, model-based valuation techniques for which all significant assumptions are observable in the market, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities;

and Level 3, defined as unobservable inputs that are not corroborated by market data.

The Company’s financial assets and liabilities recorded at fair value on a recurring basis include derivative instruments and restricted cash and investments.

At June 30, 2020 and December 31, 2019, the Company’s derivative instruments included pay-fixed, receive-variable interest rate swaps.

At September 30, 2020 and December 31, 2019, the Company’s derivative instruments included pay-fixed, receive-variable interest rate swaps.

The Company’s interest rate swaps are recorded at their estimated fair values based on quotes received from financial institutions that trade these contracts.

4 unchanged sentences

government and agency securities and Canadian bankers’ acceptance notes.

The Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2020 and December 31, 2019, were as follows:

Fair Value Measurement at June 30, 2020 Using

The Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2020 and December 31, 2019, were as follows:

Fair Value Measurement at September 30, 2020 Using

Quoted Prices in

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The following table summarizes the changes in the fair value for Level 3 liabilities related to contingent consideration for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

The following table summarizes the changes in the fair value for Level 3 liabilities related to contingent consideration for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

Beginning balance

8 unchanged sentences

Other comprehensive income (loss) includes changes in the fair value of interest rate swaps that qualify for hedge accounting.

The components of other comprehensive income (loss) and related tax effects for the three and six months ended June 30, 2020 and 2019 are as follows:

Three Months Ended June 30, 2020

The components of other comprehensive income (loss) and related tax effects for the three and nine months ended September 30, 2020 and 2019 are as follows:

Three Months Ended September 30, 2020

Interest rate swap amounts reclassified into interest expense

1 unchanged sentence

Foreign currency translation adjustment

Three Months Ended June 30, 2019

Three Months Ended September 30, 2019

Interest rate swap amounts reclassified into interest expense

1 unchanged sentence

Foreign currency translation adjustment

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Interest rate swap amounts reclassified into interest expense

1 unchanged sentence

Foreign currency translation adjustment

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

Interest rate swap amounts reclassified into interest expense

5 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

A rollforward of the amounts included in AOCIL, net of taxes, for the six months ended June 30, 2020 and 2019, is as follows:

A rollforward of the amounts included in AOCIL, net of taxes, for the nine months ended September 30, 2020 and 2019, is as follows:

Comprehensive

4 unchanged sentences

Foreign currency translation adjustment

Balance at June 30, 2020

Balance at September 30, 2020

Comprehensive

4 unchanged sentences

Foreign currency translation adjustment

Balance at June 30, 2019

Balance at September 30, 2019

See Note 13 for further discussion on the Company’s derivative instruments.

7 unchanged sentences

The maximum number of shares that may be issued under the ESPP is 1,000,000 .

As of the quarter ended June 30, 2020, none of the Company’s common shares have been purchased under the ESPP.

As of September 30, 2020, none of the Company’s common shares have been purchased under the ESPP.

WASTE CONNECTIONS, INC.

3 unchanged sentences

Restricted Share Units

A summary of activity related to restricted share units (“RSUs”) during the six-month period ended June 30, 2020, is presented below:

A summary of activity related to restricted share units (“RSUs”) during the nine-month period ended September 30, 2020, is presented below:

Unvested Shares

1 unchanged sentence

Vested and issued

Outstanding at June 30, 2020

The weighted average grant-date fair value per share for the common shares underlying the RSUs granted during the six-month period ended June 30, 2020 was $ 101.80 .

Outstanding at September 30, 2020

The weighted average grant-date fair value per share for the common shares underlying the RSUs granted during the nine-month period ended September 30, 2020 was $ 101.80 .

Recipients of the Company’s RSUs who participate in the Company’s Nonqualified Deferred Compensation Plan may have elected in years prior to 2015 to defer some or all of their RSUs as they vest until a specified date or dates they choose.

At the end of the deferral periods, unless a qualified participant makes certain other elections, the Company issues to recipients who deferred their RSUs common shares of the Company underlying the deferred RSUs.

At June 30, 2020 and 2019, the Company had 186,932 and 249,003 vested deferred RSUs outstanding, respectively.

At September 30, 2020 and 2019, the Company had 178,119 and 247,999 vested deferred RSUs outstanding, respectively.

Performance-Based Restricted Share Units

A summary of activity related to performance-based restricted share units (“PSUs”) during the six-month period ended June 30, 2020, is presented below:

A summary of activity related to performance-based restricted share units (“PSUs”) during the nine-month period ended September 30, 2020, is presented below:

Unvested Shares

1 unchanged sentence

Vested and issued

Outstanding at June 30, 2020

During the six months ended June 30, 2020, the Company’s Compensation Committee granted PSUs with three-year performance-based metrics that the Company must meet before those awards may be earned, and the performance period for those grants ends on December 31, 2022 .

Outstanding at September 30, 2020

During the nine months ended September 30, 2020, the Company’s Compensation Committee granted PSUs with three-year performance-based metrics that the Company must meet before those awards may be earned, and the performance period for those grants ends on December 31, 2022 .

During the same period, the Company’s Compensation Committee also granted PSUs with a one-year performance-based metric that the Company must meet before those awards may be earned, with the awards then subject to time-based vesting for the remaining three years of their four-year vesting period.

The Compensation Committee will determine the achievement of performance results and corresponding vesting of PSUs for each performance period.

The weighted average grant-date fair value per share for the common shares underlying all PSUs granted during the six-month period ended June 30, 2020 was $ 87.19 .

The weighted average grant-date fair value per share for the common shares underlying all PSUs granted during the nine-month period ended September 30, 2020 was $ 87.19 .

WASTE CONNECTIONS, INC.

3 unchanged sentences

Deferred Share Units

A summary of activity related to deferred share units (“DSUs”) during the six-month period ended June 30, 2020, is presented below:

A summary of activity related to deferred share units (“DSUs”) during the nine-month period ended September 30, 2020, is presented below:

Vested Shares

Outstanding at December 31, 2019

Outstanding at June 30, 2020

Outstanding at September 30, 2020

The DSUs consist of a combination of DSU grants outstanding under the Progressive Waste share-based compensation plans that were continued by the Company following the Progressive Waste acquisition and DSUs granted by the Company since the Progressive Waste acquisition.

The weighted average grant-date fair value per share for the common shares underlying the DSUs granted during the six-month period ended June 30, 2020 was $ 103.81 .

The weighted average grant-date fair value per share for the common shares underlying the DSUs granted during the nine-month period ended September 30, 2020 was $ 103.81 .

Other Restricted Share Units

RSU grants outstanding under the Progressive Waste share-based compensation plans were continued by the Company following the Progressive Waste acquisition and allow for the issuance of shares or cash settlement to employees upon vesting.

A summary of activity related to Progressive Waste RSUs during the six-month period ended June 30, 2020, is presented below:

A summary of activity related to Progressive Waste RSUs during the nine-month period ended September 30, 2020, is presented below:

Outstanding at December 31, 2019

Outstanding at June 30, 2020

Outstanding at September 30, 2020

No RSUs under the Progressive Waste share-based compensation plans were granted subsequent to June 1, 2016.

2 unchanged sentences

Share based options outstanding under the Progressive Waste share-based compensation plans were continued by the Company following the Progressive Waste acquisition and allow for the issuance of shares or cash settlement to employees upon vesting.

A summary of activity related to Progressive Waste share based options during the six-month period ended June 30, 2020, is presented below:

A summary of activity related to Progressive Waste share based options during the nine-month period ended September 30, 2020, is presented below:

Outstanding at December 31, 2019

Outstanding at June 30, 2020

Outstanding at September 30, 2020

No share based options under the Progressive Waste share-based compensation plans were granted subsequent to June 1, 2016.

15 unchanged sentences

All common shares purchased under the NCIB shall be immediately cancelled following their repurchase.

For the six months ended June 30, 2020, the Company repurchased 1,271,977 common shares pursuant to the NCIB at an aggregate cost of $ 105,654 .

During the six months ended June 30, 2019, the Company did not repurchase any common shares pursuant to the NCIB.

As of June 30, 2020, the remaining maximum number of shares available for repurchase under the current NCIB was 11,912,497 .

For the nine months ended September 30, 2020, the Company repurchased 1,271,977 common shares pursuant to the NCIB at an aggregate cost of $ 105,654 .

During the nine months ended September 30, 2019, the Company did not repurchase any common shares pursuant to the NCIB.

As of September 30, 2020, the remaining maximum number of shares available for repurchase under the current NCIB was 11,912,497 .

Cash Dividend

In October 2019, the Company announced that its Board of Directors increased its regular quarterly cash dividend by $ 0.025 , from $ 0.16 to $ 0.185 per Company common share.

Cash dividends of $ 96,912 and $ 84,215 were paid during the six months ended June 30, 2020 and 2019, respectively.

Cash dividends of $ 145,921 and $ 126,348 were paid during the nine months ended September 30, 2020 and 2019, respectively.

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

In addition, the Company is a party to various claims and suits pending for alleged damages to persons and property, alleged violations of certain laws and alleged liabilities arising out of matters occurring during the normal operation of the Company’s business.

Except as noted in the matters described below, as of June 30, 2020, there is no current proceeding or litigation involving the Company or its property that the Company believes could have a material adverse effect on its business, financial condition, results of operations or cash flows.

Except as noted in the matters described below, as of September 30, 2020, there is no current proceeding or litigation involving the Company or its property that the Company believes could have a material adverse effect on its business, financial condition, results of operations or cash flows.

WASTE CONNECTIONS, INC.

19 unchanged sentences

At the April 24, 2019 stakeholders meeting the LDWG projected completion of the remedial design for the upper reach could be completed by August 2024.

The EPA’s presentation at the June 10, 2020 stakeholders meeting suggests the work may be completed somewhat earlier than predicted in 2019.

In late September 2020, the EPA informed attorneys for several PRPs that the work may be completed by late 2023 or early 2024.

On August 16, 2016, the EPA sent individual letters to each of the PRPs for the LDW Site, including NWCS, stating that it expected to initiate negotiations with all PRPs in early 2018 relating to a Remedial Design/Remedial Action (“RD/RA”) Consent Decree.

7 unchanged sentences

In June 2017, attorneys for the EPA informed attorneys for several PRPs that the EPA expected to begin RD/RA negotiations in the late summer or early fall of 2018.

Those negotiations have not been scheduled and there is no recent indication from the EPA regarding when they will begin.

Those negotiations did not occur.

In September 2020, the EPA informed attorneys for several PRPs that the EPA intends to initiate settlement negotiations in 2021, and the EPA was informed of the delay in the issuance of the preliminary allocation report.

NWCS is defending itself vigorously in this confidential allocation process.

40 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

On December 6, 2017, the County filed a demurrer to the Complaint arguing that the Complaint was legally insufficient to proceed.

Responding to a procedural suggestion from the Court, CCL filed its First Amended Complaint on March 23, 2018.

After full briefing, the hearing on the demurrer took place on July 17, 2018.

On December 6, 2017, the County filed a demurrer to and motion to strike regarding portions of the Complaint, arguing that the Complaint was legally insufficient to proceed.

After full briefing, the hearing on the demurrer and motion to strike regarding CCL’s First Amended Complaint took place on July 17, 2018.

The Superior Court sustained the demurrer and granted the motion to strike.

6 unchanged sentences

CCL’s Complaint sets forth that CCL relied on representations made by the County in 2017 that CCL could reserve its legal rights to challenge the CUP in a separate reservation of rights letter rather than the affidavit of acceptance of the CUP that the County compelled Chiquita to file.

At a trial setting conference on May 28, 2019, the equitable estoppel issues in this case were discussed and the Superior Court continued the June 18, 2019 trial date to April 23, 2020.

The Superior Court also set an evidentiary hearing on the equitable estoppel issues for November 12, 2019.

The Superior Court set an evidentiary hearing on the equitable estoppel issues for November 12, 2019.

Discovery occurred on these issues in July through September 2019.

14 unchanged sentences

A separate lawsuit involving CCL and the Landfill was filed on August 24, 2017 by community activists alleging that the environmental review underlying the CUP was inadequate under state law.

The Val Verde Civic Association, Citizens for Chiquita Canyon Landfill Compliance, and the Santa Clarita Organization for Planning the Environment filed a petition for writ of mandate in the Superior Court of California, County of Los Angeles against the County, naming CCL as the real party in interest.

The lawsuit seeks to overturn the County’s approval of the CUP for the expansion of the Landfill and the certification of the final Environmental Impact Report, arguing that the report violates the California Environmental

The Val Verde Civic Association, Citizens for Chiquita Canyon Landfill Compliance, and the Santa Clarita Organization for Planning and the Environment filed a petition for writ of mandate in the Superior Court of California, County of Los Angeles against the County, naming CCL as the real party in interest.

Pursuant to Condition No.

6 of the CUP, which requires CCL to defend, indemnify, and hold harmless the County, its agents, officers, and employees from any claim or proceeding against the County brought by any

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Pursuant to Condition No.

6 of the CUP, which requires CCL to defend, indemnify, and hold harmless the County, its agents, officers, and employees from any claim or proceeding against the County brought by any third party to attack, set aside, void, or annul the CUP approval, CCL agreed to reimburse the County for its legal costs associated with defense of the lawsuit.

third party to attack, set aside, void, or annul the CUP approval, CCL agreed to reimburse the County for its legal costs associated with defense of the lawsuit.

As the real party in interest, CCL has a right to notice and an opportunity to be heard in opposition to the petition for writ of mandate.

The petitioners filed their Opening Brief with the court on September 27, 2018.

CCL filed its Opposition Brief with the court on November 28, 2018 and the petitioners filed their Reply Brief on December 20, 2018.

A trial date had been scheduled for February 8, 2019, but on February 6, 2019, the court reassigned the case to a different judge and vacated the trial date.

A new trial date was scheduled for August 23, 2019.

At the conclusion of oral argument on August 23, 2019, the court asked the parties to return on September 13, 2019 for further oral argument on the odor mitigation issue.

Initial briefs were filed in 2018 and a trial date was set in February 2019, which was later rescheduled and held in August 2019.

The court issued a final ruling on October 10, 2019 and a final judgment on December 4, 2019, denying the writ petition in full.

On December 6, 2019, one of the petitioners, Santa Clarita Organization for Planning the Environment, filed an appeal of the court’s October 10, 2019 ruling.

On December 9, 2019, the same petitioner filed an appeal of the court’s December 4, 2019 judgment.

The appellant filed its Opening Brief on March 2, 2020.

Both the County’s and CCL’s Opposition Briefs were originally due to the court on March 30, 2020.

However, the Second District Court of Appeal issued orders on March 23 and April 15, 2020, extending the time to do any act required or permitted under the California Rules of Court by an additional 30 days each due to the COVID-19 outbreak.

CCL filed its Opposition Brief on May 29, 2020.

The County filed a letter with the court on June 12, 2020, indicating that it would not be filing an Opposition Brief.

The appellant filed its reply brief on July 1, 2020.

The court has not scheduled a hearing date for oral argument.

One petitioner, Santa Clarita Organization for Planning and the Environment, appealed the judgment.

All interested parties filed their briefs by July 1, 2020 and the County did not file an opposition brief.

No amicus or “friend of the court” briefs were filed, so the case was fully briefed on July 1, 2020.

The court has set oral argument for November 18, 2020.

December 11, 2017 Notice of Violation Regarding Certain CUP Conditions.

15 unchanged sentences

However, following the rescheduling of the trial date for the CUP case, the Superior Court agreed to continue the trial date for the B&T fee/NOV case to October 20, 2020.

The Superior Court’s July 2, 2020 decision in the CUP case upheld the B&T fee and addressed two other conditions that were also the subject of the NOV, which may impact the scope of the B&T

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

fee/NOV case.

At an August 20, 2020 status conference, the Superior Court again continued the trial date for the B&T fee/NOV case to January 14, 2021.

The Superior Court’s July 2, 2020 decision in the CUP case upheld the B&T fee and addressed two other conditions that were also the subject of the NOV, which may impact the scope of the B&T fee/NOV case.

CCL will continue to vigorously prosecute the lawsuit.

2 unchanged sentences

On April 16, 2014, the Town of Colonie (the “Town”) filed an application (the “Application”) with the New York State Department of Environmental Conservation (“DEC”) to modify the Town’s then-current Solid Waste Management Facility Permit and for other related permits to authorize the development and operation of Area 7 of the Town of Colonie Landfill (the “Landfill”), which is located in Albany County, New York.

DEC issued the requested permits on April 5, 2018 (the “Permits”).

DEC issued the requested permits on April 5,

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

2018 (the “Permits”).

The Company’s subsidiary, Capital Region Landfills, Inc.

21 unchanged sentences

On March 7, 2019, the Waterford Petitioners moved, with consent of the Halfmoon Petitioners, to consolidate the appeals.

Respondents opposed the consolidation motion to the extent that it may result in inequitable briefing under the

Respondents opposed the consolidation motion to the extent that it may result in inequitable briefing under the Appellate Division rules.

On April 4, 2019, the Appellate Division, Third Department granted the consolidation motion “to the extent that the appeals shall be heard together and may be perfected upon a joint record on appeal.”

On April 26, 2019, the Waterford Petitioners filed a motion with the Appellate Division, Third Department, seeking an order preliminarily enjoining construction activities or the acceptance of waste at the Landfill.

The Company, CRL, and the Town of Colonie opposed the motion, which was summarily denied by the Third Department, Appellate Division on June 20, 2019.

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Appellate Division rules.

The Company, CRL, and the Town of Colonie opposed the motion, which was summarily denied by the Third Department, Appellate Division on June 20, 2019.

On June 25, 2019, the Waterford Petitioners filed their appellate brief and the joint record on appeal.

3 unchanged sentences

The Waterford and Halfmoon Petitioners filed their reply briefs on March 10, 2020 and March 13, 2020, respectively.

As such, the appeals are fully briefed.

The Appellate Division, Third Department originally scheduled the appeals to be argued during the court’s May 2020 term.

The appeals were adjourned as a result of the COVID-19 outbreak and they are currently scheduled to be heard during the court’s September 2020 term.

SUBSEQUENT EVENTS

On July 23, 2020, the Company’s Board of Directors approved, subject to receipt of regulatory approvals, the annual renewal of its NCIB.

The Company received TSX approval for its annual renewal of the NCIB on August 5, 2020.

The renewal will follow on the conclusion of the Company’s current NCIB expiring August 7, 2020.

The Company is authorized to make purchases during the period of August 10, 2020 to August 9, 2021 or until such earlier time as the NCIB is completed or terminated at the Company’s option.

On July 23, 2020 , the Company announced that its Board of Directors approved a regular quarterly cash dividend of $ 0.185 per Company common share.

The dividend will be paid on August 18, 2020 , to shareholders of record on the close of business on August 4, 2020 .

The appeals were adjourned as a result of the COVID-19 pandemic.

On September 14, 2020, the Appellate Division, Third Department held virtual oral argument in the appeals.

The Company anticipates that the Appellate Division, Third Department will issue a decision in the appeals by the end of 2020 or shortly thereafter.

SUBSEQUENT EVENT

On October 28, 2020 , the Company announced that its Board of Directors increased its regular quarterly cash dividend by $ 0.02 , from $ 0.185 to $ 0.205 per Company common share, and then declared a regular quarterly cash dividend of $ 0.205 per Company common share.

The dividend will be paid on November 25, 2020 , to shareholders of record on the close of business on November 10, 2020 .

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 1. Financial Statements