What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-04-29 · 266 added, 182 removed, 269 unchanged (62% of the section changed)

24 unchanged sentences

We also target niche markets, like E&P waste treatment and disposal services.

As of March 31, 2021, we served residential, commercial, industrial and E&P customers in 43 states in the U.S.

As of June 30, 2021, we served residential, commercial, industrial and E&P customers in 43 states in the U.S.

and six provinces in Canada:

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Such uncertainty regarding global demand has had a significant impact on the investment and operating plans of our E&P waste customers in the basins where we operate.

If the prices of crude oil and natural gas substantially decline, it could lead to declines in the level of production activity and demand for our E&P waste services, which could result in the recognition of impairment charges on our intangible assets and property and equipment associated with our E&P operations.

THE COVID-19 PANDEMIC’S IMPACT ON OUR RESULTS OF OPERATION

If the prices of crude oil and natural gas substantially decline, it could lead to declines in the level of production activity and demand for our E&P waste services, which could result in the recognition of additional impairment charges on our intangible assets and property and equipment associated with our E&P operations.

See Note 5 to our Condensed Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for a discussion of the impairment charge recorded during the six months ended June 30, 2020.

THE COVID-19 PANDEMIC’S IMPACT ON OUR RESULTS OF OPERATIONS

March 11, 2021 marked the one year anniversary of COVID-19 being declared a global pandemic by the World Health Organization.

The related economic disruptions largely associated with closures or restrictions put into effect following the onset of the COVID-19 pandemic resulted in declines in solid waste commercial collection, transfer station and landfill volumes, and roll off activity.

Throughout the remaining fiscal year 2020, solid waste revenue and reported volumes largely reflected the pace and shape of the closures and subsequent reopening activity, with the timing and magnitude of recovery varying by market.

Reported solid waste volumes in 2020 turned slightly negative in the first quarter, were most negative in the second quarter, and showed sequential improvement during the second half of the year, finishing the year

at negative 3.1% in the fourth quarter.

In the first quarter of 2021, the final period to include comparisons to pre-COVID-19 activity levels on a year over year basis, solid waste volumes were down 3.2%, reflecting the strong start to 2020 prior to the onset of the pandemic, compounded by the impact of an extra day in the quarter in 2020 due to leap year, as well as extreme winter weather in many markets during February 2021.

Solid waste volumes increased 2.6% in March 2021 compared to March 2020.

The COVID-19 pandemic also contributed to the decline in demand for and the value of crude oil, which impacted E&P drilling activity and resulted in lower E&P waste revenue, with the quarterly run rate decreasing from approximately $60 million in the first quarter of 2020 to approximately $25 million by the second half of 2020.

recovery varying by market.

In the first quarter of 2021, the final period to include comparisons to pre-COVID-19 activity levels on a year over year basis, solid waste volumes were down 3.2%.

In the second quarter of 2021, solid waste volumes increased sequentially by 9.6% to up 6.5% on a year over year basis, with positive volumes in all regions.

E&P waste revenue increased sequentially by $6.5 million to $31.2 million in the second quarter of 2021 on increased drilling activity in several active shale basins.

Since the onset of the COVID-19 pandemic, protecting the health, welfare and safety of our employees has been our top priority.

1 unchanged sentence

To that end, in 2020, we incurred over $35 million in incremental COVID-19-related costs, primarily supplemental pay for frontline employees.

As we continue to support our employees and their families, such costs are expected to continue in 2021, albeit to a lesser extent than in the prior year, as employee COVID-19 cases and related impacts are similarly abating.

We continue to support our employees and their families, with certain costs continuing in 2021, albeit to a lesser extent than in the prior year, as employee COVID-19 cases and related impacts are similarly abating.

The impact of the COVID-19 pandemic on our 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.

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For a description of the new accounting standards that affect us, see Note 3 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

The following table sets forth items in our Condensed Consolidated Statements of Net Income in thousands of U.S.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

The following table sets forth items in our Condensed Consolidated Statements of Net Income (Loss) in thousands of U.S.

dollars and as a percentage of revenues for the periods indicated.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of operations

2 unchanged sentences

Impairments and other operating items

Operating income

Operating income (loss)

Interest expense

1 unchanged sentence

Other income (expense), net

Income tax provision

Net loss attributable to noncontrolling interests

Net income attributable to Waste Connections

Total revenues increased $43.5 million, or 3.2%, to $1.396 billion for the three months ended March 31, 2021, from $1.352 billion for the three months ended March 31, 2020.

Acquisitions closed subsequent to the three months ended March 31, 2020 increased revenues by $43.7 million for the three months ended March 31, 2021.

Operations that were divested subsequent to March 31, 2020 decreased revenues by $3.2 million for the three months ended March 31, 2021.

During the three months ended March 31, 2021, the net increase in prices charged to our customers at our existing operations was $52.2 million, consisting of $55.9 million of core price increases, partially offset by a decrease in surcharges of $3.7 million.

During the three months ended March 31, 2021, volume decreases in our existing business decreased solid waste revenues by $40.5 million, due primarily to one less business day in 2021 resulting from leap year occurring in the prior year period and the economic disruptions resulting from the COVID-19 pandemic that began in March 2020 and has continued through the first quarter of 2021.

With the exception of our Western segment, the majority of our markets experienced declines in commercial collection, roll off collection, transfer station and landfill volumes, with our Northeastern U.S.

and Canada markets the most severely impacted.

These declines were partially offset by shelter at home requirements generating additional residential collection volumes and our Western segment’s transfer station and landfill operations recognizing increased volumes from third party collection providers disposing of increased residential collection volumes at our disposal locations.

E&P revenues at facilities owned during the three months ended March 31, 2021 and 2020 decreased $34.7 million.

Decreases in the demand for crude oil as a result of economic disruptions from the COVID-19 pandemic resulted in a drop in the value of crude oil, decreases in drilling and production activity levels and decreases in overall demand for our E&P waste services.

Income tax (provision) benefit

Net income (loss)

Net loss (income) attributable to noncontrolling interests

Net income (loss) attributable to Waste Connections

Total revenues increased $228.1 million, or 17.5%, to $1.534 billion for the three months ended June 30, 2021, from $1.306 billion for the three months ended June 30, 2020.

Total revenues increased $271.7 million, or 10.2%, to $2.930 billion for the six months ended June 30, 2021, from $2.658 billion for the six months ended June 30, 2020.

Acquisitions closed during or subsequent to the three months ended June 30, 2020 increased revenues by $47.6 million for the three months ended June 30, 2021.

Acquisitions closed during or subsequent to the six months ended June 30, 2020 increased revenues by $91.4 million for the six months ended June 30, 2021.

Operations that were divested subsequent to June 30, 2020 decreased revenues by $3.5 million and $6.7 million, respectively, for the three and six months ended June 30, 2021.

During the three months ended June 30, 2021, the net increase in prices charged to our customers at our existing operations was $60.9 million, consisting of $58.3 million of core price increases and surcharges of $2.6 million.

During the six months ended June 30, 2021, the net increase in prices charged to our customers at our existing operations was $113.1 million, consisting of $114.2 million of core price increases, partially offset by a decrease in surcharges of $1.1 million.

During the three and six months ended June 30, 2021, volume increases in our existing business increased solid waste revenues by $80.2 million and $39.7 million, respectively, as many of our markets benefitted from increased business activity resulting from reductions in COVID-19-related restrictions.

E&P revenues at facilities owned during the three and six months ended June 30, 2021 and 2020 decreased $4.4 million and $39.1 million, respectively.

Decreases in the demand for crude oil commenced in March 2020 as a result of

economic disruptions from the COVID-19 pandemic, resulting in decreases in drilling and production activity levels and decreases in overall demand for our E&P waste services.

An increase in the average Canadian dollar to U.S.

dollar currency exchange rate resulted in an increase in revenues of $10.3 million for the three months ended March 31, 2021.

dollar currency exchange rate resulted in an increase in revenues of $20.5 million and $30.9 million, respectively, for the three and six months ended June 30, 2021.

The average Canadian dollar to U.S.

dollar exchange rates on our Canadian revenues were 0.7898 and 0.7447 in the three months ended March 31, 2021 and 2020, respectively.

Revenues from sales of recyclable commodities at facilities owned during the three months ended March 31, 2021 and 2020 increased $11.3 million due primarily to higher prices for old corrugated cardboard and other paper products and higher volumes collected from residential recycling customers, partially offset by decreased collected commercial recycling volumes caused by economic disruptions resulting from the COVID-19 pandemic.

Other revenues increased by $4.4 million during the three months ended March 31, 2021, due primarily to a $6.0 million increase resulting from higher prices for renewable energy credits associated with the generation of landfill gas at our Canada segment and a $0.5 million increase in other non-core revenue sources, partially offset by a $2.1 million decrease in intermodal revenues due primarily to customer losses resulting in a reduction in intermodal cargo volumes.

dollar exchange rates on our Canadian revenues were 0.8147 and 0.7226 in the three months ended June 30, 2021 and 2020, respectively.

The average Canadian dollar to U.S.

dollar exchange rates on our Canadian revenues were 0.8030 and 0.7338 in the six months ended June 30, 2021 and 2020, respectively.

Revenues from sales of recyclable commodities at facilities owned during the three and six months ended June 30, 2021 and 2020 increased $18.0 million and $29.3 million, respectively, due primarily to higher prices for old corrugated cardboard, aluminum and other paper products, higher volumes collected from residential recycling customers and the partial recovery during the three months ended June 30, 2021 of collected commercial recycling volumes which declined in the prior year period due to economic disruptions resulting from the COVID-19 pandemic.

Other revenues increased $8.8 million during the three months ended June 30, 2021, due primarily to an $8.0 million increase resulting from higher prices for renewable energy credits associated with the generation of landfill gas in our Canada segment and a $2.1 million increase in other non-core revenue sources, partially offset by a $1.3 million decrease in intermodal revenues due primarily to customer losses that reduced intermodal cargo volumes.

Other revenues increased $13.1 million during the six months ended June 30, 2021 due primarily to a $14.1 million increase resulting from higher prices for renewable energy credits associated with the generation of landfill gas at our Canada segment and a $2.4 million increase in other non-core revenue sources, partially offset by a $3.4 million decrease in intermodal revenues due primarily to customer losses resulting in a reduction in intermodal cargo volumes.

Cost of Operations .

Total cost of operations increased $10.5 million, or 1.3%, to $825.9 million for the three months ended March 31, 2021, from $815.4 million for the three months ended March 31, 2020.

The increase was primarily the result of $24.1 million of additional operating costs from acquisitions closed subsequent to the three months ended March 31, 2020 and $5.6 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease in operating costs at our existing operations of $17.2 million, assuming foreign currency parity, and a decrease in operating costs of $2.0 million at operations divested subsequent to the three months ended March 31, 2020.

The decrease in operating costs, assuming foreign currency parity, at our existing operations for the three months ended March 31, 2021, included the following declines totaling $19.6 million attributable to solid waste and E&P volume losses resulting from the impact of the COVID-19 pandemic:

a decrease in direct labor expenses at our Southern and Eastern segments and our E&P operations of $5.8 million due to headcount reductions, a decrease in third-party disposal expenses at our Eastern, Southern, Central and Canada segments of $4.5 million, a decrease in equipment and facility maintenance and repair expenses at our Eastern segment and E&P operations of $3.6 million, a decrease in diesel fuel expense of $2.7 million, a decrease in subcontracted E&P operating expenses of $2.1 million and a decrease in expenses for processing recyclable commodities at our Eastern segment of $0.9 million due to a decrease in commercial recycling volumes collected.

The remaining increase in operating costs, assuming foreign currency parity, at our existing operations of $2.4 million for the three months ended March 31, 2021 consisted of an increase in employee medical benefits expenses of $3.6 million due to an increase in medical visits, an increase in labor expenses of $3.1 million at our Western and Central segments due primarily to employee pay increases exceeding the benefit in the current year period of one less calendar and business day due to leap year occurring in the prior year period, an increase in subcontracted hauling services at our solid waste operations of $2.4 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in cash incentive compensation to non-management personnel of $2.2 million to recognize the services they are providing during the COVID-19 pandemic as essential workers, an increase in third party disposal expenses in our Western segment of $1.7 million due primarily to increased residential collection volumes requiring disposal at third party facilities and $1.0 million of other net expense increases, partially offset by a decrease in expenses for auto and workers’ compensation claims of $8.0 million due primarily to higher claims severity in the prior year period and adjustments recorded in the current year period to decrease projected losses on outstanding claims originally recorded prior to 2021, a decrease in intermodal rail expenses of $1.8 million due to customer losses resulting in a reduction in cargo volume, a decrease in leachate disposal expenses of $1.0 million due to increased on-site treatment of leachate and the prior year period incurring higher costs to dispose of leachate in newly constructed landfill cells and a decrease in expenses for processing recyclable commodities in our Western segment of $0.8 million due to increased recyclable commodity values resulting in price reductions charged by third-party recycling processors.

Cost of operations as a percentage of revenues decreased 1.1 percentage points to 59.2% for the three months ended March 31, 2021, from 60.3% for the three months ended March 31, 2020.

The decrease as a percentage of revenues consisted of a 0.7 percentage point decrease from a reduction in expenses for auto and workers’ compensation claims, a 0.3 percentage point decrease from lower maintenance and repair expenses, a 0.2 percentage point decrease from lower disposal expenses, a 0.2 percentage point decrease from lower diesel fuel expenses and a 0.2 percentage point decrease from leveraging existing personnel to support certain price-led revenue increases, partially offset by a 0.2 percentage point increase from the accrual of cash incentive compensation to non-management personnel, a 0.2 percentage point increase from higher employee medical benefits expenses and a 0.1 percentage point increase from all other net changes.

SG&A expenses increased $5.3 million, or 3.9%, to $141.4 million for the three months ended March 31, 2021, from $136.1 million for the three months ended March 31, 2020.

The increase was comprised of $3.0 million of additional SG&A expenses from operating locations at acquisitions closed subsequent to the three months ended March 31, 2020, an increase of $1.5 million in SG&A expenses at our existing operations, assuming foreign currency parity, and $1.0 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease in SG&A expenses of $0.2 million at operations divested subsequent to the three months ended March 31, 2020.

The increase in SG&A expenses at our existing operations, assuming foreign currency parity, of $1.5 million for the three months ended March 31, 2021, was comprised of an increase in deferred compensation expenses of $5.7 million as a result of increases in the market value of investments to which employee deferred compensation liability balances are tracked, an increase in accrued recurring cash incentive compensation expense to our management of $5.0 million, an increase in professional fees of $1.6 million due primarily to adjustments recorded during the prior year period to reduce estimated accrued liabilities associated with unbilled legal services, an increase in share-based compensation expenses of $1.2 million due primarily to increased average share price values in the current period for equity awards accounted for as liabilities that were granted to employees of Progressive Waste prior to June 1, 2016 which are subject to valuation adjustments each period based on changes in fair value and an increase in employee medical benefits expenses of $1.2 million due to an increase in medical visits, partially offset by a collective decrease in travel, meeting, training and community activity expenses of $6.0 million from shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, a decrease in equity-based compensation expenses of $3.4 million associated with an adjustment during the prior year period of our common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, a decrease in expenses for uncollectible accounts receivable of $0.8 million primarily due to collections in the current period of customer accounts deemed uncollectible in prior periods, a decrease in office supplies and office utilities of $0.7 million due to office closures resulting from shelter at home restrictions, a decrease in direct acquisition expenses of $0.6 million due to a decrease in acquisition activity in the comparable periods, a decrease in equity-compensation expenses of $0.6 million due primarily to a decrease in the amount of performance-based restricted share units granted in 2019 and 2020 estimated to ultimately vest based on the achievement of required financial performance results and $1.1 million of other net expense decreases.

SG&A as a percentage of revenues was 10.1% for both the three months ended March 31, 2021 and 2020.

SG&A remained unchanged as a percentage of revenues as a result of a 0.4 percentage point decrease from a reduction in travel, meeting, training and community activity expenses, a 0.3 percentage point decrease from a reduction in equity-based compensation expenses associated with the designation of our common shares held in our deferred compensation plan and a 0.1 percentage point decrease from the net impact of SG&A expenses from acquisitions closed subsequent to the three months ended March 31, 2020, partially offset by a 0.4 percentage point increase from cash incentive compensation expenses and a 0.4 percentage point increase from deferred compensation expenses.

Total cost of operations increased $115.5 million, or 14.7%, to $901.2 million for the three months ended June 30, 2021, from $785.7 million for the three months ended June 30, 2020.

The increase was primarily the result of an increase in operating costs at our existing operations of $81.3 million, assuming foreign currency parity, $24.6 million of additional operating costs from acquisitions closed subsequent to the three months ended June 30, 2020 and $11.6 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease in operating costs of $2.0 million at operations divested subsequent to the three months ended June 30, 2020.

The increase in operating costs of $81.3 million, assuming foreign currency parity, at our existing operations for the three months ended June 30, 2021, consisted of an increase in labor expenses at our solid waste operations of $27.8 million due primarily to employee pay increases and headcount additions to support solid waste volume increases, an increase in third-party disposal expenses of $15.1 million due primarily to increased solid waste collection volumes, an increase in truck, container, equipment and facility maintenance and repair expenses of $14.7 million due to parts and service rate increases and additional maintenance and repair requirements resulting from increased truck and equipment operating hours to support increases in our solid waste volumes, an increase in third-party trucking and transportation expenses of $11.9 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in diesel fuel expense of $10.1 million due to higher fuel prices and increased consumption resulting from additional truck and equipment operating hours to support solid waste volume increases, an increase in employee medical benefits expenses of $7.9 million due to an increase in medical visits, an increase in taxes on revenues of $6.5 million due primarily to increased revenues in our solid waste markets, an increase in subcontracted hauling services at our solid waste operations of $3.8 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in landfill maintenance, environmental compliance and daily cover expenses of $2.8 million due to increased compliance requirements under our landfill operating permits, an increase in 401(k) matching expenses of $1.7 million due to the prior year period reflecting less expenses due to a one month impact of the June 1, 2020 to December 31, 2020 suspension of our 401(k) match, an increase in insurance premium expenses of $1.3 million due primarily to increased insurance premium costs for auto and environmental compliance and $0.5 million of other net expense increases, partially offset by a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $17.3 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic, a decrease in labor at our E&P operations of $1.7 million due to headcount reductions resulting from disposal

volume decreases, a decrease in taxes on revenues of $1.6 million at Chiquita Canyon landfill due to a reduction in certain fees and exactions resulting from our successful challenge of these expenses subsequent to June 30, 2020, a decrease in subcontracted operating and remediation services at our E&P operations of $1.2 million due to disposal volume decreases and a decrease in intermodal rail expenses of $1.0 million due to customer losses resulting in a reduction in cargo volume.

Total cost of operations increased $126.0 million, or 7.9%, to $1.727 billion for the six months ended June 30, 2021, from $1.601 billion for the six months ended June 30, 2020.

The increase was primarily the result of an increase in operating costs at our existing operations of $63.9 million, assuming foreign currency parity, $48.7 million of additional operating costs from acquisitions closed subsequent to the six months ended June 30, 2020 and $17.4 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease in operating costs of $4.0 million at operations divested subsequent to the six months ended June 30, 2020.

The increase in operating costs of $63.9 million, assuming foreign currency parity, at our existing operations for the six months ended June 30, 2021, consisted of an increase in labor expenses at our solid waste operations of $26.7 million due primarily to employee pay increases and headcount additions to support solid waste volume increases, an increase in third-party disposal expenses of $12.2 million due primarily to increased solid waste collection volumes, an increase in third-party trucking and transportation expenses of $12.2 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in employee medical benefits expenses of $11.5 million due to an increase in medical visits, an increase in truck, container, equipment and facility maintenance and repair expenses of $10.7 million due primarily to parts and service rate increases, an increase in taxes on revenues of $8.9 million due primarily to increased revenues in our solid waste markets, an increase in diesel fuel expense of $7.4 million due to higher fuel prices, an increase in subcontracted hauling services at our solid waste operations of $6.3 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in landfill maintenance, environmental compliance and daily cover expenses of $3.3 million due to increased compliance requirements under our landfill operating permits, an increase in insurance premium expenses of $2.0 million due primarily to increased insurance premium costs for auto and environmental compliance, an increase in 401(k) matching expenses of $1.8 million due to the prior year period reflecting less expenses due to a one month impact of the June 1, 2020 to December 31, 2020 suspension of our 401(k) match and $0.4 million of other net expense increases, partially offset by a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $15.1 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic, a decrease in expenses for auto and workers’ compensation claims of $8.1 million due primarily to higher claims severity in the prior year period and adjustments recorded in the current year period to decrease projected losses on outstanding claims originally recorded prior to 2021, a decrease in labor at our E&P operations of $4.7 million due to headcount reductions resulting from disposal volume decreases, a decrease in taxes on revenues of $3.7 million at Chiquita Canyon landfill due to a reduction in certain fees and exactions resulting from our successful challenge of these expenses subsequent to June 30, 2020, a decrease in subcontracted operating and remediation services at our E&P operations of $3.4 million due to disposal volume decreases, a decrease in intermodal rail expenses of $2.8 million due to customer losses resulting in a reduction in cargo volume and a decrease in expenses for processing recyclable commodities in our Western segment of $1.7 million due to increased recyclable commodity values resulting in price reductions charged by third-party recycling processors.

Cost of operations as a percentage of revenues decreased 1.4 percentage points to 58.8% for the three months ended June 30, 2021, from 60.2% for the three months ended June 30, 2020.

The decrease as a percentage of revenues consisted of a 1.4 percentage point decrease from a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel, a 0.5 percentage point decrease from leveraging existing personnel to support our solid waste revenue volume growth and a 0.2 percentage point decrease from all other net changes, partially offset by a 0.4 percentage point increase from higher employee medical expenses and a 0.3 percentage point increase from higher diesel fuel expenses.

Cost of operations as a percentage of revenues decreased 1.2 percentage points to 59.0% for the six months ended June 30, 2021, from 60.2% for the six months ended June 30, 2020.

The decrease as a percentage of revenues consisted of a 0.6 percentage point decrease from a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel, a 0.4 percentage point decrease from a reduction in expenses for auto and workers’ compensation

claims, a 0.3 percentage point decrease from leveraging existing personnel to support our solid waste revenue volume growth and a 0.2 percentage point decrease from all other net changes, partially offset by a 0.3 percentage point increase from higher employee medical expenses.

SG&A expenses increased $25.7 million, or 19.5%, to $157.9 million for the three months ended June 30, 2021, from $132.2 million for the three months ended June 30, 2020.

The increase was comprised of an increase of $20.7 million in SG&A expenses at our existing operations, assuming foreign currency parity, $3.0 million of additional SG&A expenses from operating locations at acquisitions closed subsequent to the three months ended June 30, 2020 and $2.2 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease in SG&A expenses of $0.2 million at operations divested subsequent to the three months ended June 30, 2020.

The increase in SG&A expenses at our existing operations of $20.7 million, assuming foreign currency parity, for the three months ended June 30, 2021, was comprised of an increase in accrued recurring cash incentive compensation expense to our management of $9.5 million, a collective increase in travel, meeting, training and community activity expenses of $6.7 million due to event cancelation credits recognized in the prior year period and increased travel and social gatherings in the current year period due to a reduction in restrictions associated with the COVID-19 pandemic, an increase in equity-based compensation expenses of $5.3 million associated with an adjustment during the current year period of our common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, an increase in equity-based compensation expenses of $2.3 million resulting primarily from adjustments to the amount of performance-based restricted share units granted in 2019 and 2020 that are estimated to ultimately vest based on the achievement of required financial performance results, an increase in employee medical benefits expenses of $2.2 million due to an increase in medical visits, an increase in administrative payroll expenses of $1.7 million due primarily to annual pay increases, an increase in employee relocation expenses of $1.1 million and $0.8 million of other net expense increases, partially offset by a decrease in expenses for uncollectible accounts receivable of $5.4 million primarily due to the prior year period incurring increased expenses due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic, a decrease in deferred compensation expenses of $1.4 million as a result of higher increases during the prior year period in the market value of investments to which employee deferred compensation liability balances are tracked, a decrease of $1.1 million resulting from the prior year period including payments of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic and a decrease in direct acquisition expenses of $1.0 million due to a decrease in acquisition activity in the comparable periods.

SG&A expenses increased $31.2 million, or 11.6%, to $299.4 million for the six months ended June 30, 2021, from $268.2 million for the six months ended June 30, 2020.

The increase was comprised of an increase of $22.4 million in SG&A expenses at our existing operations, assuming foreign currency parity, $6.0 million of additional SG&A expenses from operating locations at acquisitions closed subsequent to the six months ended June 30, 2020 and $3.2 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease in SG&A expenses of $0.4 million at operations divested subsequent to the six months ended June 30, 2020.

The increase in SG&A expenses at our existing operations of $22.4 million, assuming foreign currency parity, for the six months ended June 30, 2021, was comprised of an increase in accrued recurring cash incentive compensation expense to our management of $14.4 million, an increase in deferred compensation expenses of $4.2 million as a result of increases in the market value of investments to which employee deferred compensation liability balances are tracked, an increase in employee medical benefits expenses of $3.5 million due to an increase in medical visits, an increase in professional fees of $2.2 million due primarily to adjustments recorded during the prior year period to reduce estimated accrued liabilities associated with unbilled legal services and increased expenses associated with professional tax services, an increase in equity-based compensation expenses of $2.0 million associated with the net impact of current and prior period adjustments of our common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, an increase in equity-based compensation expenses of $1.8 million resulting primarily from adjustments to the amount of performance-based restricted share units granted in 2019 and 2020 that are estimated to ultimately vest based on the achievement of required financial performance results, an increase in administrative payroll expenses of $1.1 million due primarily to annual pay increases and $2.5 million of other net expense

increases, partially offset by a decrease in expenses for uncollectible accounts receivable of $6.4 million primarily due to the prior year period incurring increased expenses due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic, a decrease in direct acquisition expenses of $1.6 million due to a decrease in acquisition activity in the comparable periods and a decrease of $1.3 million resulting from the prior year period including payments of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic.

SG&A as a percentage of revenues increased 0.2 percentage points to 10.3% for the three months ended June 30, 2021, from 10.1% for the three months ended June 30, 2020.

The increase as a percentage of revenues consisted of a 0.5 percentage point increase from travel, meeting, training and community activity expenses, a 0.4 percentage point increase from higher accrued recurring cash incentive compensation expense to our management and a 0.3 percentage point increase from increased equity-based compensation expenses associated with the designation of our common shares held in our deferred compensation plan, partially offset by a 0.4 percentage point decrease from lower expenses for uncollectible accounts receivable, a 0.4 percentage point decrease from leveraging existing administrative headcount to support solid waste revenue increases and a 0.2 percentage point decrease from all other net changes.

SG&A as a percentage of revenues increased 0.1 percentage points to 10.2% for the six months ended June 30, 2021, from 10.1% for the six months ended June 30, 2020.

The increase as a percentage of revenues consisted of a 0.4 percentage point increase from higher accrued recurring cash incentive compensation expense to our management, a 0.1 percentage point increase from higher benefits expenses and a 0.1 percentage point increase from increased equity-based compensation expenses associated with the designation of our common shares held in our deferred compensation plan, partially offset by a 0.3 percentage point decrease from leveraging existing administrative headcount to support solid waste revenue increases and a 0.2 percentage point decrease from lower expenses for uncollectible accounts receivable.

Depreciation .

Depreciation expense increased $6.6 million, or 4.4%, to $157.4 million for the three months ended March 31, 2021, from $150.8 million for the three months ended March 31, 2020.

The increase was comprised of $5.0 million of depreciation from the impact of additions to our fleet and equipment purchased to support our existing operations, depreciation and depletion expense of $4.0 million from acquisitions closed subsequent to the three months ended March 31, 2020 and $1.1 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease in depletion expense of $2.7 million primarily at our E&P landfills as a decrease in demand for oil has resulted in decreased levels of oil and natural gas exploration and production activity and a corresponding decrease in disposal volumes and a decrease in depreciation and depletion expense of $0.8 million from operations divested subsequent to the three months ended March 31, 2020.

Depreciation expense as a percentage of revenues increased 0.1 percentage points to 11.3% for the three months ended March 31, 2021, from 11.2% for the three months ended March 31, 2020.

The increase as a percentage of revenues consisted of a 0.3 percentage point increase from depreciation expense attributable to the impact of additions to our fleet and equipment, partially offset by a 0.2 percentage point decrease from depletion expense due to declines in E&P landfill volumes.

Depreciation expense increased $18.0 million, or 11.9%, to $169.2 million for the three months ended June 30, 2021, from $151.2 million for the three months ended June 30, 2020.

The increase was comprised of an increase in depletion expense of $7.9 million resulting from increased landfill municipal solid waste and special waste volumes, an increase in depreciation expense of $4.8 million from the impact of additions to our fleet and equipment purchased to support our existing operations, depreciation and depletion expense of $3.8 million from acquisitions closed subsequent to the three months ended June 30, 2020 and $2.4 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease in depreciation and depletion expense of $0.9 million from operations divested subsequent to the three months ended June 30, 2020.

Depreciation expense increased $24.5 million, or 8.1%, to $326.6 million for the six months ended June 30, 2021, from $302.1 million for the six months ended June 30, 2020.

The increase was comprised of an increase in depreciation expense of $9.8 million from the impact of additions to our fleet and equipment purchased to support our existing operations, depreciation and depletion expense of $7.7 million from acquisitions closed subsequent to the six months ended June 30, 2020, an increase in depletion expense of $5.1 million resulting from increased landfill municipal solid waste and special waste volumes and $3.6 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease in depreciation and depletion expense of $1.7 million from operations divested subsequent to the six months ended June 30, 2020.

Depreciation expense as a percentage of revenues decreased 0.6 percentage points to 11.0% for the three months ended June 30, 2021, from 11.6% for the three months ended June 30, 2020.

Depreciation expense as a percentage of revenues decreased 0.2 percentage points to 11.2% for the six months ended June 30, 2021, from 11.4% for the six months ended June 30, 2020.

The decreases as a percentage of revenues were primarily attributable to leveraging volume increases in our solid waste revenues.

Amortization of Intangibles .

Amortization of intangibles expense increased $0.6 million, or 1.8%, to $32.2 million for the three months ended March 31, 2021, from $31.6 million for the three months ended March 31, 2020.

The increase was the result of $2.8 million from intangible assets acquired in acquisitions closed subsequent to the three months ended March 31, 2020 and $0.3 million from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease of $2.4 million from certain intangible assets becoming fully amortized subsequent to March 31, 2020 and a decrease of $0.1 million from operations divested subsequent to the three months ended March 31, 2020.

Amortization expense as a percentage of revenues was 2.3% for both the three months ended March 31, 2021 and 2020.

Amortization of intangibles expense increased $0.9 million, or 2.9%, to $32.7 million for the three months ended June 30, 2021, from $31.8 million for the three months ended June 30, 2020.

The increase was the result of $2.5 million from intangible assets acquired in acquisitions closed subsequent to the three months ended June 30, 2020 and $0.7 million from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease of $2.2 million from certain intangible assets becoming fully amortized

subsequent to June 30, 2020 and a decrease of $0.1 million from operations divested subsequent to the three months ended June 30, 2020.

Amortization of intangibles expense increased $1.5 million, or 2.4%, to $64.9 million for the six months ended June 30, 2021, from $63.4 million for the six months ended June 30, 2020.

The increase was the result of $5.3 million from intangible assets acquired in acquisitions closed subsequent to the six months ended June 30, 2020 and $1.0 million from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease of $4.6 million from certain intangible assets becoming fully amortized subsequent to June 30, 2020 and a decrease of $0.2 million from operations divested subsequent to the six months ended June 30, 2020.

Amortization expense as a percentage of revenues decreased 0.3 percentage points to 2.1% for the three months ended June 30, 2021, from 2.4% for the three months ended June 30, 2020.

Amortization expense as a percentage of revenues decreased 0.2 percentage points to 2.2% for the six months ended June 30, 2021, from 2.4% for the six months ended June 30, 2020.

The decreases as a percentage of revenues were primarily attributable to leveraging volume increases in our solid waste revenues.

Impairments and Other Operating Items .

Impairments and other operating items decreased $0.9 million, to net losses totaling $0.6 million for the three months ended March 31, 2021, from net losses totaling $1.5 million for the three months ended March 31, 2020.

The net losses of $0.6 million recorded during the three months ended March 31, 2021 consisted of $0.5 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to their original estimated termination date and $0.1 million of other net charges.

The net losses of $1.5 million recorded during the three months ended March 31, 2020 consisted of $0.9 million of charges to terminate or write off the carrying cost of certain contracts that were not, or were not expected to be, renewed prior to their original estimated termination date and $0.6 million of other net charges.

Operating Income .

Operating income increased $21.4 million, or 9.9%, to $238.4 million for the three months ended March 31, 2021, from $217.0 million for the three months ended March 31, 2020.

The increase was due primarily to price increases for our solid waste services, operating income contributions from increased sales of recyclable commodities and renewable energy credits associated with the generation of landfill gas, operating income generated from acquisitions closed subsequent to the three months ended March 31, 2020 and an increase in the average Canadian dollar to U.S.

dollar currency exchange rate, partially offset by declines in our existing solid waste and E&P volumes resulting from the impact of the COVID-19 pandemic.

Operating income as a percentage of revenues increased 1.1 percentage points to 17.1% for the three months ended March 31, 2021, from 16.0% for the three months ended March 31, 2020.

The increase as a percentage of revenues was comprised of a 1.1 percentage point increase in cost of operations and a 0.1 percentage point increase in impairments and other operating items, partially offset by a 0.1 percentage point decrease in depreciation expense.

Impairments and other operating items decreased $431.2 million, to net losses totaling $6.1 million for the three months ended June 30, 2021, from net losses totaling $437.3 million for the three months ended June 30, 2020, including an impairment charge at our E&P operations of $417.4 million.

The net losses of $6.1 million recorded during the three months ended June 30, 2021 consisted of a $4.6 million loss resulting from property and equipment damaged in a facility fire, $0.6 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to their original estimated termination date and $0.9 million of other net charges.

During the three months ended June 30, 2020, we concluded that a triggering event occurred which required us to perform an impairment test of the property and equipment and intangible assets of our E&P operations as of June 30, 2020.

As a result of the impairment test, we concluded that the carrying value of four E&P landfills exceeded their estimated fair value, resulting in an impairment charge of $417.4 million to property and equipment.

The remaining net losses of $19.9 million recorded during the three months ended June 30, 2020 consisted of $16.8 million of expenses associated with adjusting the carrying value of liabilities for contingent consideration associated with acquisitions closed in prior periods, $1.7 million of losses on property and equipment that were disposed of through sales or as a result of being damaged in operations and $1.6 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to their original estimated termination date, partially offset by $0.2 million of other net credits to expense.

Impairments and other operating items decreased $432.1 million, to net losses totaling $6.7 million for the six months ended June 30, 2021, from net losses totaling $438.8 million for the six months ended June 30, 2020.

The net losses of $6.7 million recorded during the six months ended June 30, 2021 consisted of a $4.6 million loss resulting from property and equipment damaged in a facility fire, $1.1 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to their original estimated termination date and $1.0 million of other net charges.

The net losses of $438.8 million recorded during the six months ended June 30, 2020 consisted of the aforementioned charges of $417.4 million at our E&P operations and $16.8 million to adjust the carrying value of liabilities for contingent consideration, as well as $2.5 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to their original estimated termination date, $1.5 million of losses on property and equipment that were disposed of through sales or as a result of being damaged in operations and $0.6 million of other net charges.

Operating Income (Loss) .

Operating income (loss) increased $499.2 million, to operating income of $266.8 million for the three months ended June 30, 2021, from an operating loss of $232.4 million for the three months ended June 30,

Operating income (loss) increased $520.6 million, to operating income of $505.2 million for the six months ended June 30, 2021, from an operating loss of $15.4 million for the six months ended June 30, 2020.

Our operating results for the three and six months ended June 30, 2020 were adversely impacted by the aforementioned impairment charge at our E&P operations of $417.4 million.

The remaining increase in our operating income for the three and six months ended June 30, 2021 was due primarily to price increases for our solid waste services, increases in solid waste collection and disposal volumes, operating income contributions from increased sales of recyclable commodities and renewable energy credits associated with the generation of landfill gas, operating income generated from acquisitions closed subsequent to the three and six months ended June 30, 2020 and an increase in the average Canadian dollar to U.S.

dollar currency exchange rate.

Operating income as a percentage of revenues increased 35.2 percentage points to 17.4% for the three months ended June 30, 2021, from a loss of 17.8% for the three months ended June 30, 2020.

The increase as a percentage of revenues was comprised of a 33.1 percentage point decrease in impairments and other operating items, a 1.4 percentage point decrease in cost of operations, a 0.6 percentage point decrease in depreciation expense and a 0.3 percentage point decrease in amortization expense, partially offset by at 0.2 percentage point increase in SG&A expense.

Operating income as a percentage of revenues increased 17.8 percentage points to 17.2% for the six months ended June 30, 2021, from a loss of 0.6% for the six months ended June 30, 2020.

The increase as a percentage of revenues was comprised of a 16.3 percentage point decrease in impairments and other operating items, a 1.2 percentage point decrease in cost of operations, a 0.2 percentage point decrease in depreciation expense and a 0.2 percentage point decrease in amortization expense, partially offset by at 0.1 percentage point increase in SG&A expense.

Interest Expense .

Interest expense increased $4.4 million, or 11.7%, to $42.4 million for the three months ended March 31, 2021, from $38.0 million for the three months ended March 31, 2020.

The increase was primarily attributable to an increase of $3.0 million from the March 2020 issuance of our 2050 Senior Notes (as defined below), an increase of $2.0 million from higher net interest rates on borrowings outstanding under our Credit Agreement due primarily to $600 million in interest rate swap agreements commencing in October 2020 at higher interest rates than $575 million in interest rate swap agreements which expired between September 2020 and October 2020, an increase of $0.9 million from the January 2020 issuance of our 2030 Senior Notes (as defined below) and $0.6 million of other net increases, partially offset by a decrease of $2.1 million due to a reduction in the average borrowings outstanding under our Credit Agreement.

Interest expense increased $0.4 million, or 1.0%, to $41.3 million for the three months ended June 30, 2021, from $40.9 million for the three months ended June 30, 2020.

The increase was primarily attributable to an increase of $1.4 million from higher net interest rates on borrowings outstanding under our Credit Agreement due primarily to $600 million in interest rate swap agreements commencing in October 2020 at higher interest rates than $575 million in interest rate swap agreements which expired between September 2020 and October 2020 and $0.5 million of other net increases, partially offset by a decrease of $1.5 million from the repayment of $250 million of senior unsecured notes in 2021.

Interest expense increased $4.9 million, or 6.1%, to $83.8 million for the six months ended June 30, 2021, from $78.9 million for the six months ended June 30, 2020.

The increase was primarily attributable to an increase of $3.4 million from higher net interest rates on borrowings outstanding under our Credit Agreement due primarily to $600 million in interest rate swap agreements commencing in October 2020 at higher interest rates than $575 million in interest rate swap agreements which expired between September 2020 and October 2020, an increase of $3.1 million from the March 2020 issuance of our 2050 Senior Notes (as defined below), an increase of $0.9 million from the January 2020 issuance of our 2030 Senior Notes (as defined below) and $1.1 million of other net increases, partially offset by a decrease of $2.1 million due to a reduction in the average borrowings outstanding under our Credit Agreement and a decrease of $1.5 million from the repayment of $250 million of senior unsecured notes in 2021.

Interest Income .

Interest income decreased $1.1 million to $1.1 million for the three months ended March 31, 2021, from $2.2 million for the three months ended March 31, 2020.

The decrease was primarily attributable to lower reinvestment rates in the current period.

Interest income decreased $0.6 million to $0.7 million for the three months ended June 30, 2021, from $1.3 million for the three months ended June 30, 2020.

Interest income decreased $1.7 million to $1.8 million for the six months ended June 30, 2021, from $3.5 million for the six months ended June 30, 2020.

The decreases were primarily attributable to lower reinvestment rates in the current period, partially offset by higher average cash balances.

Other Income (Expense), Net .

Other income (expense), net increased $13.0 million, to an income total of $3.5 million for the three months ended March 31, 2021, from an expense total of $9.5 million for the three months ended March 31, 2020.

Other income of $3.5 million recorded during the three months ended March 31, 2021 consisted of $1.2 million of income earned on investments purchased to fund our employee deferred compensation obligations, $1.2 million of adjustments to decrease certain accrued liabilities acquired in prior period acquisitions, an increase in foreign currency transaction gains of $0.7 million due to an increase in the value of the Canadian dollar and a $0.4 million increase in other net income sources.

Other expense of $9.5 million recorded during the three months ended March 31, 2020 consisted of $4.7 million of losses on investments purchased to fund our employee deferred compensation obligations, a $3.0 million adjustment to increase certain accrued liabilities acquired in the 2016 Progressive Waste acquisition and an increase in foreign currency transaction losses of $2.5 million due to a decrease in the value of the Canadian dollar, partially offset by a $0.7 million increase in other income sources.

Income Tax Provision .

Income taxes increased $11.6 million, or 36.4%, to $40.3 million for the three months ended March 31, 2021, from $28.7 million for the three months ended March 31, 2020.

Our effective tax rate for the three months ended March 31, 2021 was 20.1%.

Our effective tax rate for the three months ended March 31, 2020 was 16.7%.

The income tax provision for the three months ended March 31, 2021 included a benefit of $2.0 million from share-based payment awards being recognized in the income statement when settled, as well as a portion of our internal financing being taxed at effective rates substantially lower than the U.S.

Other income (expense), net decreased $7.0 million, to an expense total of $1.2 million for the three months ended June 30, 2021, from an income total of $5.8 million for the three months ended June 30, 2020.

Other expense of $1.2 million recorded during the three months ended June 30, 2021 consisted of $1.8 million of adjustments to increase certain accrued liabilities acquired in prior period acquisitions and a $0.9 million increase in other net expenses, partially offset by $1.5 million of income earned on investments purchased to fund our employee deferred compensation obligations.

Other income of $5.8 million recorded during the three months ended June 30, 2020 consisted of $3.3 million of earnings on investments purchased to fund our employee deferred compensation obligations, a $1.0 million adjustment to decrease certain non-acquisition accrued liabilities recorded in prior periods and a $1.5 million increase in other income sources.

Other income (expense), net increased $6.0 million, to an income total of $2.3 million for the six months ended June 30, 2021, from an expense total of $3.7 million for the six months ended June 30, 2020.

Other income of $2.3 million recorded during the six months ended June 30, 2021 consisted of $2.7 million of income earned on investments purchased to fund our employee deferred compensation obligations and a $1.1 million increase in other net income sources, partially offset by $1.5 million of adjustments to increase certain accrued liabilities acquired in prior period acquisitions.

Other expense of $3.7 million recorded during the six months ended June 30, 2020 consisted of a $3.0 million adjustment to increase certain accrued liabilities acquired in the 2016 Progressive Waste acquisition, $1.5 million of losses on investments purchased to fund our employee deferred compensation obligations and a $0.2 million increase in other expenses, partially offset by a $1.0 million adjustment to decrease certain non-acquisition accrued liabilities recorded in prior periods.

Income Tax (Provision) Benefit .

Income taxes increased $86.6 million, to an expense total of $47.9 million for the three months ended June 30, 2021, from a benefit total of $38.7 million for the three months ended June 30, 2020.

Our effective tax expense rate for the three months ended June 30, 2021 was 21.3%.

Our effective tax benefit rate for the three months ended June 30, 2020 was 14.6%.

Income taxes increased $98.2 million, to an expense total of $88.2 million for the six months ended June 30, 2021, from a benefit total of $10.0 million for the six months ended June 30, 2020.

Our effective tax expense rate for the six months ended June 30, 2021 was 20.7%.

Our effective tax benefit rate for the six months ended June 30, 2020 was 10.6%.

The income tax provision for the six months ended June 30, 2021 included benefits of $2.0 million from share-based payment awards being recognized in the income statement when settled, as well as a portion of our internal financing being taxed at effective rates substantially lower than the U.S.

federal statutory rate.

The income tax provision for the three months ended March 31, 2020 included a benefit of $5.1 million from share-based payment awards being recognized in the income statement when settled, as well as a portion of our internal financing being taxed at effective rates substantially lower than the U.S.

The income tax benefit for the three and six months ended June 30, 2020 included a $27.4 million expense associated with certain 2019 inter-entity payments no longer being deductible for tax purposes due to the finalization of tax regulations on April 7, 2020 under Internal Revenue Code section 267A and a $4.1 million expense related to an increase in our deferred income tax liabilities resulting from the impairment of certain assets within our E&P operations, which impacted the geographical apportionment of our state income taxes.

Additionally, the income tax benefit for the three and six months ended June 30, 2020 included a benefit of $0.2 million and $5.3 million, respectively, from share-based payment awards being recognized in the income statement when settled, as well as a portion of our internal financing being taxed at effective rates substantially lower than the U.S.

federal statutory rate.

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The following table disaggregates our revenue by service line for the periods indicated (dollars in thousands of U.S.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Industrial and construction roll off

11 unchanged sentences

Segment results for the 2020 periods reflected in this report have been reclassified to reflect the realignment of our reportable segments for comparison with the same period in 2021.

At March 31, 2021, under the current orientation, our 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;

At June 30, 2021, under the current orientation, our 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;

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

4 unchanged sentences

dollars and as a percentage of total revenues for the periods indicated.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Segment EBITDA for our reportable segments is shown in the following table in thousands of U.S.

dollars and as a percentage of segment revenues for the periods indicated.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Corporate (a)

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A reconciliation of segment EBITDA to Income before income tax provision is included in Note 11 to our Condensed Consolidated Financial Statements included in Part 1, Item 1 of this report.

Significant changes in revenue and segment EBITDA for our reportable segments for the three month periods ended March 31, 2021, compared to the three month periods ended March 31, 2020, are discussed below:

Significant changes in revenue and segment EBITDA for our reportable segments for the three and six month periods ended June 30, 2021, compared to the three and six month periods ended June 30, 2020, are discussed below.

Segment Revenue

Revenue in our Southern segment decreased $31.1 million, or 8.4%, to $338.2 million for the three months ended March 31, 2021, from $369.3 million for the three months ended March 31, 2020.

Revenue in our Eastern segment increased $50.7 million, or 15.9%, to $369.6 million for the three months ended June 30, 2021, from $318.9 million for the three months ended June 30, 2020.

The components of the increase consisted of solid waste volume increases of $16.6 million due primarily to higher collection and disposal volumes, net price increases of $14.0 million, net revenue growth from acquisitions closed subsequent to the three months ended June 30, 2020 of $10.4 million, the impact of a partial recovery of collected commercial recycling volumes, which declined in the prior year period due to economic disruptions resulting from the COVID-19 pandemic, and higher prices for old corrugated cardboard, other paper products, plastics and aluminum contributing to a $9.2 million increase in sales from recyclable commodities and other revenue increases of $0.5 million.

Revenue in our Eastern segment increased $55.0 million, or 8.4%, to $706.1 million for the six months ended June 30, 2021, from $651.1 million for the six months ended June 30, 2020.

The components of the increase consisted of net price increases of $27.2 million, net revenue growth from acquisitions closed subsequent to the six months ended June 30, 2020 of $20.0 million, the impact of a partial recovery of collected commercial recycling volumes, which declined in the prior year period due to economic disruptions resulting from the COVID-19 pandemic, and higher prices for old corrugated cardboard, other paper products, plastics and aluminum contributing to a $14.8 million increase in sales from recyclable commodities and other revenue increases of $0.6 million, partially offset by solid waste volume decreases of $7.6 million

attributable primarily to COVID-19-related economic disruptions in our Northeastern markets, which commenced in March 2020 and continued into 2021, driving declines in commercial collection and roll off collection volumes.

Revenue in our Southern segment increased $29.8 million, or 9.0%, to $363.3 million for the three months ended June 30, 2021, from $333.5 million for the three months ended June 30, 2020.

The components of the increase consisted of net price increases of $18.0 million, solid waste volume increases of $14.8 million due primarily to higher commercial collection, roll off collection, transfer station and landfill volumes, higher prices for old corrugated cardboard, plastics and aluminum products contributing to a $2.8 million increase in sales from recyclable commodities and other revenue increases of $1.6 million, partially offset by a decline in revenue at our E&P operations of $5.2 million as decreases in the demand for crude oil commenced in March 2020 as a result of economic disruptions from the COVID-19 pandemic, resulting in decreases in drilling and production activity levels and decreases in overall demand for our E&P waste services and net revenue reductions from divestitures closed subsequent to June 30, 2020 of $2.2 million.

Revenue in our Southern segment decreased $1.2 million, or 0.2%, to $701.5 million for the six months ended June 30, 2021, from $702.7 million for the six months ended June 30, 2020.

The components of the decrease consisted of a decline in revenue at our E&P operations of $39.5 million, partially offset by an increase in revenue at our solid waste operations of $38.3 million.

The $39.5 million decrease in revenue at our E&P operations was attributable to decreases in the demand for crude oil as a result of economic disruptions from the COVID-19 pandemic resulting in a drop in the value of crude oil, decreases in drilling and production activity levels and decreases in overall demand for our E&P waste services.

The components of the $3.2 million increase in revenue at our solid waste operations consisted of net price increases of $13.5 million, higher prices for old corrugated cardboard and other paper products contributing to a $1.6 million increase in sales from recyclable commodities and other revenue increases of $0.3 million, partially offset by solid waste volume decreases of $10.4 million attributable primarily to COVID-19-related economic disruptions driving declines in commercial collection, roll off collection and municipal solid waste landfill volumes and net revenue reductions from divestitures closed subsequent to March 31, 2020 of $1.8 million.

Revenue in our Eastern segment increased $4.3 million, or 1.3%, to $336.5 million for the three months ended March 31, 2021, from $332.2 million for the three months ended March 31, 2020.

The components of the increase consisted of net price increases of $13.2 million, net revenue growth from acquisitions closed subsequent to the three months ended March 31, 2020 of $9.6 million and higher prices for old corrugated cardboard and other paper products contributing to a $5.6 million increase in sales from recyclable commodities, partially offset by solid waste volume decreases of $24.1 million attributable primarily to COVID-19-related economic disruptions in our Northeastern markets driving declines in commercial collection, roll off collection, transfer station and landfill volumes.

Revenue in our Western segment increased $25.0 million, or 9.2%, to $297.0 million for the three months ended March 31, 2021, from $272.0 million for the three months ended March 31, 2020.

The components of the increase consisted of solid waste volume increases of $9.8 million attributable to increased residential collection, transfer station and landfill municipal solid waste volumes, net revenue growth from acquisitions closed subsequent to the three months ended March 31, 2020 of $8.5 million, net price increases of $7.0 million and recyclable commodity revenue increases of $1.8 million due primarily to higher prices for old corrugated cardboard and higher volumes collected from residential recycling customers, partially offset by intermodal revenue decreases of $2.1 million due primarily to customer losses resulting in a reduction in intermodal cargo volumes.

Revenue in our Central segment increased $26.9 million, or 12.9%, to $235.4 million for the three months ended March 31, 2021, from $208.5 million for the three months ended March 31, 2020.

The components of the increase consisted of revenue growth from acquisitions closed subsequent to the three months ended March 31, 2020 of $25.2 million, net price increases of $9.4 million and other revenue increases of $0.2 million, partially offset by solid waste volume decreases of $6.5 million due to the impact of COVID-19-related economic disruptions driving decreases in roll off collection and landfill municipal solid waste volumes and net revenue reductions from divestitures closed subsequent to March 31, 2020 of $1.4 million.

Revenue in our Canada segment increased $18.5 million, or 10.9%, to $188.9 million for the three months ended March 31, 2021, from $170.4 million for the three months ended March 31, 2020.

The components of the increase consisted of $10.3 million resulting from a higher average foreign currency exchange rate in effect during the comparable reporting periods, net price increases of $9.2 million, $6.0 million resulting from higher prices for renewable energy credits associated with the generation of landfill gas, recyclable commodity revenue increases of $2.0 million due primarily to higher prices for old corrugated cardboard and higher volumes collected from residential recycling customers and other revenue increases of $0.3 million, partially offset by solid waste volume decreases of $9.3 million due to the net impact of COVID-19-related economic disruptions driving decreases in commercial collection, roll off and transfer station volumes.

The components of the $38.3 million increase in revenue at our solid waste operations consisted of net price increases of $31.5 million, solid waste volume increases of $4.4 million due primarily to higher landfill special waste volumes, higher prices for old corrugated cardboard, plastics and aluminum contributing to a $4.4 million increase in sales from recyclable commodities and other revenue increases of $1.9 million, partially offset by net revenue reductions from divestitures closed subsequent to June 30, 2020 of $3.9 million.

Revenue in our Western segment increased $38.3 million, or 13.9%, to $313.8 million for the three months ended June 30, 2021, from $275.5 million for the three months ended June 30, 2020.

The components of the increase consisted of solid waste volume increases of $22.6 million attributable to increased collection and disposal volumes, net revenue growth from acquisitions closed subsequent to the three months ended June 30, 2020 of $6.9 million, net price increases of $6.9 million and recyclable commodity revenue increases of $3.0 million due primarily to higher prices for old corrugated cardboard, metals and aluminum and higher volumes collected from residential recycling customers and other revenue increases of $0.2 million, partially offset by intermodal revenue decreases of $1.3 million due primarily to customer losses resulting in a reduction in intermodal cargo volumes.

Revenue in our Western segment increased $63.3 million, or 11.6%, to $610.8 million for the six months ended June 30, 2021, from $547.5 million for the six months ended June 30, 2020.

The components of the increase consisted of solid waste volume increases of $32.5 million attributable to increased collection and disposal volumes, net revenue growth from acquisitions closed subsequent to the six months ended June 30, 2020 of $15.4 million, net price increases of $13.9 million and recyclable commodity revenue increases of $4.7 million due primarily to higher prices for old corrugated cardboard, metals and aluminum and higher volumes collected from residential recycling customers and other revenue increases of $0.2 million, partially offset by intermodal revenue decreases of $3.4 million due primarily to customer losses resulting in a reduction in intermodal cargo volumes.

Revenue in our Central segment increased $50.2 million, or 23.2%, to $266.8 million for the three months ended June 30, 2021, from $216.6 million for the three months ended June 30, 2020.

The components of the increase consisted of revenue growth from acquisitions closed subsequent to the three months ended June 30, 2020 of $30.1 million, net price increases of $10.0 million, solid waste volume increases of $8.7 million due primarily to higher commercial collection, roll off collection, transfer station and landfill volumes, higher prices for old corrugated cardboard and aluminum products contributing to a $1.2 million increase in sales from recyclable commodities and other revenue increases of $1.6 million, partially offset by net revenue reductions from divestitures closed subsequent to June 30, 2020 of $1.4 million.

Revenue in our Central segment increased $77.0 million, or 18.1%, to $502.2 million for the six months ended June 30, 2021, from $425.2 million for the six months ended June 30, 2020.

The components of the increase consisted of revenue growth from acquisitions closed subsequent to the six months ended June 30, 2020 of $55.3 million, net price

increases of $19.4 million, solid waste volume increases of $2.2 million due primarily to higher landfill special waste volumes, higher prices for old corrugated cardboard and aluminum products contributing to a $1.5 million increase in sales from recyclable commodities and other revenue increases of $1.4 million, partially offset by net revenue reductions from divestitures closed subsequent to June 30, 2020 of $2.8 million.

Revenue in our Canada segment increased $59.0 million, or 36.6%, to $220.3 million for the three months ended June 30, 2021, from $161.3 million for the three months ended June 30, 2020.

The components of the increase consisted of $20.5 million resulting from a higher average foreign currency exchange rate in effect during the comparable reporting periods, solid waste volume increases of $17.5 million due primarily to higher collection and disposal volumes, net price increases of $11.9 million, $8.0 million resulting from higher prices for renewable energy credits associated with the generation of landfill gas and recyclable commodity revenue increases of $1.9 million due primarily to higher prices for old corrugated cardboard and higher volumes collected from residential recycling customers, partially offset by other revenue decreases of $0.8 million.

Revenue in our Canada segment increased $77.6 million, or 23.4%, to $409.3 million for the six months ended June 30, 2021, from $331.7 million for the six months ended June 30, 2020.

The components of the increase consisted of $30.9 million resulting from a higher average foreign currency exchange rate in effect during the comparable reporting periods, net price increases of $21.1 million, $14.1 million resulting from higher prices for renewable energy credits associated with the generation of landfill gas, solid waste volume increases of $8.2 million due primarily to higher roll off collection and landfill special waste volumes and recyclable commodity revenue increases of $3.9 million due primarily to higher prices for old corrugated cardboard and higher volumes collected from residential recycling customers, partially offset by other revenue decreases of $0.6 million.

Segment EBITDA

Segment EBITDA in our Western segment increased $12.8 million, or 15.8%, to $93.8 million for the three months ended March 31, 2021, from $81.0 million for the three months ended March 31, 2020.

The increase was due primarily to an increase in revenues of $25.0 million, a decrease in intermodal rail expenses of $1.8 million due to customer losses resulting in a reduction in cargo volume, a collective decrease in travel, meeting, training, and community activity expenses of $0.9 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, a decrease in expenses for auto and workers’ compensation claims of $0.9 million due primarily to adjustments recorded in the current year period to decrease projected losses on outstanding claims originally recorded prior to 2021 and a decrease in expenses for processing recyclable commodities of $0.8 million due to increased recyclable commodity values resulting in price reductions charged by third-party recycling processors, partially offset by a net $6.3 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in corporate overhead expense allocations of $3.7 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in labor expenses of $1.9 million due primarily to employee pay increases exceeding the benefit in the current year period of one less calendar and business day due to leap year occurring in the prior year period, an increase in third party disposal expenses of $1.7 million due primarily to increased residential collection volumes requiring disposal at third party facilities, an increase in third-party trucking and transportation expenses of $1.2 million due primarily to higher residential collection tonnage increasing transfer station volumes and landfill volumes in certain markets that require transportation services to our disposal sites, an increase in employee medical benefits expenses of $1.0 million due to an increase in medical visits and other expense increases of $0.8 million.

Segment EBITDA in our Southern segment decreased $12.9 million, or 12.1%, to $93.4 million for the three months ended March 31, 2021, from $106.3 million for the three months ended March 31, 2020.

The decrease was due to a decline in E&P revenues of $34.3 million, an increase in corporate overhead expense allocations to our solid waste operations of $3.5 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in subcontracted hauling services at our solid waste operations of $2.7 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in employee medical benefits expenses of $1.4 million due to an increase in medical visits and a decrease to EBITDA of $0.9 million from operations disposed of subsequent to the three months ended March 31, 2020, partially offset by a decrease in expenses for auto and workers’ compensation claims of $6.4 million at our solid waste operations due primarily to higher claims severity in the prior year period and adjustments recorded in the current year period to decrease projected losses on outstanding claims originally recorded prior to 2021, an increase in revenues at our solid waste operations of $5.0 million from organic growth and acquisitions, a decrease in labor expenses of $2.3 million due primarily to one less calendar and business day in the current year period due to leap year in the prior year period and a decrease in employee hours worked due to commercial and roll off collection volume declines, a decrease in third party disposal expenses at our solid waste operations of $1.7 million due primarily to declines in commercial and roll off collection volumes, a collective decrease in travel, meeting, training, and community activity expenses at our solid waste operations of $1.0 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, a decrease in fuel expense at our solid waste operations of $0.9 million due to declines in the volume of fuel used in our operations, a net $1.2 million decrease in all other expenses at our solid waste operations and the following expense decreases at our E&P operations which were directly attributable to the decline in E&P volumes and corresponding decline in E&P revenues:

a decrease in labor expenses of $3.0 million, a decrease in operating activities outsourced to third-parties of $2.1 million, a decrease in equipment and property repair and maintenance expenses of $2.1 million, a decrease in corporate overhead expense allocations of $0.7 million as the calculation of the overhead allocation rate from corporate is based upon revenues, a decrease in equipment rental expenses of $0.6 million, a decrease in fuel expense of $0.5 million, a decrease in royalty expenses paid on revenues of $0.5 million, a decrease in travel, meetings and training expenses of $0.5 million, a decrease in third-party trucking and transportation services of $0.4 million, a decrease in landfill operating supplies of $0.4 million and $0.6 million of other net expense decreases.

Segment EBITDA in our Eastern segment increased $4.4 million, or 5.3%, to $89.1 million for the three months ended March 31, 2021, from $84.7 million for the three months ended March 31, 2020.

The increase was due primarily to an increase in revenues of $4.3 million, a decrease in third-party trucking and transportation expenses of $1.7 million attributable to declines in commercial and roll off collection volumes requiring third-party transportation services, a

decrease in labor expenses of $1.5 million due to lower headcount resulting from reductions in the number of routes needed to service our collection customers, a decrease in truck, container, equipment and facility maintenance and repair expenses of $1.5 million due to a decrease in the number of routed vehicles and reductions in equipment operating hours, a decrease in expenses for uncollectible accounts receivable of $1.4 million due primarily to collections in the current period of customer accounts deemed uncollectible in prior periods, a decrease in leachate disposal expenses of $1.1 million due to increased on-site treatment of leachate and the prior year period incurring higher costs to dispose of leachate in newly constructed landfill cells, a decrease in expenses for auto and workers’ compensation claims of $1.0 million due primarily to adjustments recorded in the current year period to decrease projected losses on outstanding claims originally recorded prior to 2021, a decrease in expenses for processing recyclable commodities of $0.9 million due to declines in commercial recycling volumes, a decrease in fuel expense of $0.7 million due to reductions in collection routes and equipment hours operated resulting in declines in the volume of fuel used in our operations and a collective decrease in travel, meeting, training, and community activity expenses of $0.5 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, partially offset by a net $5.0 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in corporate overhead expense allocations of $3.9 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in employee medical benefits expenses of $1.1 million due to an increase in medical visits and other expense increases of $0.2 million.

Segment EBITDA in our Central segment increased $5.8 million, or 8.0%, to $79.0 million for the three months ended March 31, 2021, from $73.2 million for the three months ended March 31, 2020.

The increase was due primarily to an increase in revenues of $28.3 million from organic growth and acquisitions and a collective decrease in travel, meeting, training, and community activity expenses of $0.5 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, partially offset by a net $15.7 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in corporate overhead expense allocations of $3.2 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in labor expenses of $1.5 million due primarily to employee pay increases exceeding the benefit in the current year period of one less calendar and business day due to leap year occurring in the prior year period, an increase in employee medical benefits expenses of $1.1 million due to an increase in medical visits, an increase in expenses for uncollectible accounts receivable of $0.9 million due primarily to the prior period benefiting from the collection of certain accounts previously deemed uncollectible and other expense increases of $0.6 million.

Segment EBITDA in our Canada segment increased $14.5 million, or 24.5%, to $73.9 million for the three months ended March 31, 2021, from $59.4 million for the three months ended March 31, 2020.

Segment EBITDA in our Western segment increased $14.0 million, or 16.4%, to $99.4 million for the three months ended June 30, 2021, from $85.4 million for the three months ended June 30, 2020.

The increase was due primarily to an increase in revenues of $38.3 million, a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $2.1 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic and a decrease in taxes on revenues of $1.6 million at Chiquita Canyon landfill due to a reduction in certain fees and exactions resulting from our successful challenge of these expenses subsequent to June 30, 2020, partially offset by an increase in labor expenses of $7.0 million due primarily to employee pay increases and headcount additions to support solid waste volume increases, $4.7 million of additional operating costs from acquisitions closed subsequent to the three months ended June 30, 2020, an increase in taxes on revenues of $2.8 million due primarily to increased revenues, an increase in diesel fuel expense of $2.4 million due to higher fuel prices and increased consumption resulting from additional truck and equipment operating hours to support solid waste volume increases, an increase in third-party disposal expenses of $2.2 million due primarily to increased solid waste collection volumes, an increase in third-party trucking and transportation expenses of $2.2 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in truck, container, equipment and facility maintenance and repair expenses of $2.1 million due to parts and service rate increases and additional maintenance and repair requirements resulting from increased truck and equipment operating hours to support increases in our solid waste volumes, an increase in employee medical benefits expenses of $2.0 million due to an increase in medical visits, an increase in corporate overhead expense allocations of $1.4 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation and $1.2 million of other net expense increases.

Segment EBITDA in our Western segment increased $26.7 million, or 16.1%, to $193.2 million for the six months ended June 30, 2021, from $166.5 million for the six months ended June 30, 2020.

The increase was due primarily to an increase in revenues of $63.3 million, a decrease in taxes on revenues of $3.7 million at Chiquita Canyon landfill due to a reduction in certain fees and exactions resulting from our successful challenge of these expenses subsequent to June 30, 2020, a decrease in intermodal rail expenses of $2.8 million due to customer losses resulting in a reduction in cargo volume, a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $2.4 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic and a decrease in expenses for processing recyclable commodities in our Western segment

of $1.7 million due to increased recyclable commodity values resulting in price reductions charged by third-party recycling processors, partially offset by $11.0 million of additional operating costs from acquisitions closed subsequent to the six months ended June 30, 2020, an increase in labor expenses of $9.0 million due primarily to employee pay increases and headcount additions to support solid waste volume increases, an increase in corporate overhead expense allocations of $5.2 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in taxes on revenues of $5.0 million due primarily to increased revenues, an increase in third-party disposal expenses of $3.9 million due primarily to increased solid waste collection volumes, an increase in third-party trucking and transportation expenses of $3.4 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in employee medical benefits expenses of $3.0 million due to an increase in medical visits, an increase in diesel fuel expense of $2.3 million due to higher fuel prices, an increase in truck, container, equipment and facility maintenance and repair expenses of $2.2 million due primarily to parts and service rate increases, an increase in landfill maintenance, environmental compliance and daily cover expenses of $1.2 million due to increased compliance requirements under our landfill operating permits and $1.0 million of other net expense increases.

Segment EBITDA in our Eastern segment increased $16.7 million, or 20.2%, to $99.4 million for the three months ended June 30, 2021, from $82.7 million for the three months ended June 30, 2020.

The increase was due primarily to an increase in revenues of $50.7 million, a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $2.8 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic and a decrease in expenses for uncollectible accounts receivable of $2.2 million primarily due to the prior year period incurring increased expenses due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic, partially offset by an increase in labor expenses of $6.5 million due primarily to employee pay increases and headcount additions to support solid waste volume increases, $6.4 million of additional operating costs from acquisitions closed subsequent to the three months ended June 30, 2020, an increase in third-party trucking and transportation expenses of $4.7 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in third-party disposal expenses of $4.3 million due primarily to increased solid waste collection volumes, an increase in truck, container, equipment and facility maintenance and repair expenses of $3.9 million due to parts and service rate increases and additional maintenance and repair requirements resulting from increased truck and equipment operating hours to support increases in our solid waste volumes, an increase in employee medical benefits expenses of $2.6 million due to an increase in medical visits, an increase in diesel fuel expense of $2.2 million due to higher fuel prices and increased consumption resulting from additional truck and equipment operating hours to support solid waste volume increases, an increase in landfill maintenance expenses of $1.3 million due to increased disposal volumes and increased compliance requirements under our landfill operating permits, an increase in taxes on revenues of $1.2 million due primarily to increased revenues, an increase in corporate overhead expense allocations of $1.0 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation and other net expense increases of $4.9 million.

Segment EBITDA in our Eastern segment increased $21.2 million, or 12.6%, to $188.5 million for the six months ended June 30, 2021, from $167.3 million for the six months ended June 30, 2020.

The increase was due primarily to an increase in revenues of $55.0 million, a decrease in expenses for uncollectible accounts receivable of $3.6 million primarily due to the prior year period incurring increased expenses due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic and a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $3.2 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic, partially offset by $11.4 million of additional operating costs from acquisitions closed subsequent to the six months ended June 30, 2020, an increase in labor expenses at our solid waste operations of $5.0 million due primarily to employee pay increases, an increase in corporate overhead expense allocations of $4.9 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in third-party disposal expenses of $4.2 million due primarily to increased rates paid for third party disposal and increased volumes in our Northeastern markets as they began to recover in 2021 from economic disruptions attributable to the COVID-19 pandemic, an increase in employee medical benefits expenses of $3.7 million due to an increase in medical visits, an increase in third-party trucking and transportation expenses of $3.0 million due primarily to opening a new transfer station facility in the latter half of 2020 and increased transfer station volumes in our Northeastern markets as they began to recover in 2021 from

economic disruptions attributable to the COVID-19 pandemic, an increase in truck, container, equipment and facility maintenance and repair expenses of $2.5 million due primarily to parts and service rate increases, an increase in landfill maintenance expenses of $1.8 million due to increased disposal volumes and increased compliance requirements under our landfill operating permits, an increase in diesel fuel expense of $1.6 million due to higher fuel prices, an increase in taxes on revenues of $1.5 million due primarily to increased revenues and other net expense increases of $1.0 million.

Segment EBITDA in our Southern segment increased $9.8 million, or 11.0%, to $98.9 million for the three months ended June 30, 2021, from $89.1 million for the three months ended June 30, 2020.

The increase was due to an increase in revenues of $32.0 million from organic growth and acquisitions, a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $3.2 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic, a decrease in labor at our E&P operations of $1.7 million due to headcount reductions resulting from disposal volume decreases, a decrease in subcontracted operating and remediation services at our E&P operations of $1.2 million due to disposal volume decreases and a decrease in expenses for uncollectible accounts receivable of $1.0 million at our E&P operations primarily due to the prior year period incurring increased expenses due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic, partially offset by an increase in labor expenses of $5.5 million due primarily to employee pay increases and headcount additions to support solid waste volume increases, an increase in third-party disposal expenses of $4.5 million due primarily to increased solid waste collection volumes, an increase in truck, container, equipment and facility maintenance and repair expenses of $3.6 million due to parts and service rate increases and additional maintenance and repair requirements resulting from increased truck and equipment operating hours to support increases in our solid waste volumes, an increase in subcontracted hauling services at our solid waste operations of $2.9 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in employee medical benefits expenses of $2.8 million due to an increase in medical visits, an increase in third-party trucking and transportation expenses of $2.5 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in diesel fuel expense of $2.0 million due to higher fuel prices and increased consumption resulting from additional truck and equipment operating hours to support solid waste volume increases, a decrease to EBITDA of $1.2 million from the impact of operations disposed of during, or subsequent to, the three months ended June 30, 2020, an increase in taxes on revenues of $0.9 million due primarily to increased revenues in our solid waste markets, an increase in corporate overhead expense allocations of $0.9 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation and other net expense increases of $2.5 million.

Segment EBITDA in our Southern segment decreased $3.0 million, or 1.6%, to $192.4 million for the six months ended June 30, 2021, from $195.4 million for the six months ended June 30, 2020.

The decrease was due to a decline in E&P revenues of $39.5 million, an increase in subcontracted hauling services at our solid waste operations of $5.6 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in employee medical benefits expenses of $4.0 million due to an increase in medical visits, an increase in labor expenses at our solid waste operations of $3.2 million due primarily to employee pay increases and headcount additions to support solid waste volume increases, an increase in truck, container, equipment and facility maintenance and repair expenses at our solid waste operations of $3.0 million due primarily to parts and service rate increases, an increase in corporate overhead expense allocations of $2.9 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in third-party disposal expenses at our solid waste operations of $2.8 million due primarily to increased solid waste collection volumes, an increase in third-party trucking and transportation expenses at our solid waste operations of $2.8 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, a decrease to EBITDA of $2.0 million from the impact of operations disposed of subsequent to the six months ended June 30, 2020 and an increase in diesel fuel expense at our solid waste operations of $1.1 million due to higher fuel prices, partially offset by an increase in solid waste revenues of $42.2 million from organic growth and acquisitions, a decrease in expenses for auto and workers’ compensation claims of $6.5 million due primarily to higher claims severity in the prior year period and adjustments recorded in the current year period to decrease projected losses on outstanding claims originally recorded prior to 2021, a decrease in labor at our E&P operations of $4.7 million due to headcount reductions resulting from disposal volume decreases, a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $3.7 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic, a decrease in subcontracted operating and remediation services at our E&P

operations of $3.4 million due to disposal volume decreases, a decrease in equipment and facility maintenance and repair expenses at our E&P operations of $1.7 million due to decreased equipment operating hours resulting from disposal volume decreases, a decrease in expenses for uncollectible accounts receivable of $1.3 million at our E&P operations primarily due to the prior year period incurring increased expenses due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic and other net expense decreases of $0.4 million.

Segment EBITDA in our Central segment increased $15.2 million, or 19.0%, to $94.9 million for the three months ended June 30, 2021, from $79.7 million for the three months ended June 30, 2020.

The increase was due primarily to an increase in revenues of $51.6 million from organic growth and acquisitions and a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $2.2 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic, partially offset by $16.5 million of additional operating costs from certain acquisitions closed subsequent to the three months ended June 30, 2020, an increase in labor expenses of $6.2 million due primarily to employee pay increases and headcount additions to support solid waste volume increases, an increase in truck, container, equipment and facility maintenance and repair expenses of $3.5 million due to parts and service rate increases and additional maintenance and repair requirements resulting from increased truck and equipment operating hours to support increases in our solid waste volumes, an increase in third-party disposal expenses of $2.2 million due primarily to increased solid waste collection volumes, an increase in employee medical benefits expenses of $2.0 million due to an increase in medical visits, an increase in corporate overhead expense allocations of $1.6 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in third-party trucking and transportation expenses of $1.5 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in taxes on revenues of $1.2 million due primarily to increased revenues, an increase in diesel fuel expense of $1.0 million due to higher fuel prices and increased consumption resulting from additional truck and equipment operating hours to support solid waste volume increases, a decrease to EBITDA of $0.2 million from the impact of operations disposed of subsequent to the three months ended June 30, 2020 and other net expense increases of $2.7 million.

Segment EBITDA in our Central segment increased $21.0 million, or 13.8%, to $173.9 million for the six months ended June 30, 2021, from $152.9 million for the six months ended June 30, 2020.

The increase was due primarily to an increase in revenues of $79.8 million from organic growth and acquisitions and a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $2.4 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic, partially offset by $32.2 million of additional operating costs from certain acquisitions closed subsequent to the six months ended June 30, 2020, an increase in labor expenses at our solid waste operations of $7.6 million due primarily to employee pay increases, an increase in corporate overhead expense allocations of $4.8 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in truck, container, equipment and facility maintenance and repair expenses of $4.0 million due primarily to parts and service rate increases, an increase in employee medical benefits expenses of $3.0 million due to an increase in medical visits, an increase in third-party trucking and transportation expenses of $2.5 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in taxes on revenues of $1.7 million due primarily to increased revenues, an increase in expenses for uncollectible accounts receivable of $1.4 million due to the prior year period including the collection of amounts deemed uncollectible in 2019, an increase in third-party disposal expenses of $1.1 million due primarily to increased solid waste collection volumes, a decrease to EBITDA of $0.2 million from the impact of operations disposed of subsequent to the six months ended June 30, 2020 and other net expense increases of $2.7 million.

Segment EBITDA in our Canada segment increased $34.9 million, or 65.1%, to $88.6 million for the three months ended June 30, 2021, from $53.7 million for the three months ended June 30, 2020.

The increase was comprised of an increase of $28.2 million assuming foreign currency parity during the comparable reporting periods and an increase of $6.7 million from a higher average foreign currency exchange rate in effect during the comparable reporting periods.

The $10.8 million increase, which assumes foreign currency parity, was due primarily to an increase in revenues of $8.2 million, a decrease in third-party disposal expenses of $1.4 million attributable to declines in commercial and roll off collection volumes requiring disposal at third-party locations, a decrease in expenses for uncollectible accounts receivable of $0.8 million due primarily to collections in the current period of customer accounts deemed uncollectible in prior periods and a collective decrease in travel, meeting, training, and community activity expenses of $0.4 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities.

Segment EBITDA at Corporate increased $2.9 million, to a loss of $0.7 million for the three months ended March 31, 2021, from a loss of $3.6 million for the three months ended March 31, 2020.

The increase was due to an increase in corporate overhead allocated through charges to our segments of $13.9 million due to an increase in expenses qualifying for allocation, a decrease in equity-based compensation expenses of $3.4 million associated with an adjustment during the prior year period of our common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, a collective decrease in travel, meeting, training and community activity expenses of $2.2 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, a decrease in direct acquisition expenses of $0.6 million due to a decrease in acquisition activity in the comparable periods and a decrease in equity-compensation expenses of $0.6 million due primarily to a decrease in the amount of performance-based restricted share

units granted in 2019 and 2020 estimated to ultimately vest based on the achievement of required financial performance results, partially offset by an increase in accrued cash incentive compensation expense to our management and non-management employees of $8.5 million, an increase in deferred compensation expenses of $5.7 million as a result of decreases in the market value of investments to which employee deferred compensation liability balances are tracked, an increase in professional fees of $1.8 million due primarily to adjustments recorded during the prior year period to reduce estimated accrued liabilities associated with unbilled legal services, an increase in share-based compensation expenses of $1.2 million due primarily to increased average share price values in the current period for equity awards accounted for as liabilities that were granted to employees of Progressive Waste prior to June 1, 2016 which are subject to valuation adjustments each period based on changes in fair value and $0.6 million of other net expense increases.

The $28.2 million increase, which assumes foreign currency parity, was due primarily to an increase in revenues of $38.5 million, a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $1.3 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic and a decrease in expenses for uncollectible accounts receivable of $1.1

million primarily due to the prior year period incurring increased expenses due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic, partially offset by an increase in labor expenses of $4.3 million due primarily to employee pay increases and headcount additions to support solid waste volume increases, an increase in diesel fuel expense of $2.3 million due to higher fuel prices and increased consumption resulting from additional truck and equipment operating hours to support solid waste volume increases, an increase in third-party disposal expenses of $1.9 million due primarily to increased solid waste collection volumes, an increase in third-party trucking and transportation expenses of $1.2 million due primarily to increased transfer station and landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in truck, container, equipment and facility maintenance and repair expenses of $1.2 million due to parts and service rate increases and additional maintenance and repair requirements resulting from increased truck and equipment operating hours to support increases in our solid waste volumes and other net expense increases of $1.8 million.

Segment EBITDA in our Canada segment increased $49.5 million, or 43.8%, to $162.6 million for the six months ended June 30, 2021, from $113.1 million for the six months ended June 30, 2020.

The increase was comprised of an increase of $39.1 million assuming foreign currency parity during the comparable reporting periods and an increase of $10.4 million from a higher average foreign currency exchange rate in effect during the comparable reporting periods.

The $39.1 million increase, which assumes foreign currency parity, was due primarily to an increase in revenues of $46.7 million, a decrease in expenses for uncollectible accounts receivable of $1.9 million primarily due to the prior year period incurring increased expenses due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic and a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $1.4 million due to the prior year period including non-recurring expenses to recognize services provided by our front-line employees during the COVID-19 pandemic, partially offset by an increase in labor expenses of $4.3 million due primarily to employee pay increases, an increase in diesel fuel expense of $2.3 million due to higher fuel prices, an increase in third-party trucking and transportation expenses of $1.0 million due primarily to increased landfill special waste volumes requiring trucking and transportation services to our landfills, an increase in truck, container, equipment and facility maintenance and repair expenses of $1.0 million due to parts and service rate increases and other net expense increases of $2.3 million.

Segment EBITDA at Corporate decreased $3.7 million, to a loss of $6.4 million for the three months ended June 30, 2021, from a loss of $2.7 million for the three months ended June 30, 2020.

The decrease was due to an increase in equity-based compensation expenses of $5.3 million associated with an adjustment during the current year period of our common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, a collective increase in travel, meeting, training and community activity expenses of $2.8 million due to event cancelation credits recognized in the prior year period and increased travel and social gatherings in the current year period due to a reduction in restrictions associated with the COVID-19 pandemic, an increase in equity-based compensation expenses of $2.3 million resulting primarily from adjustments to the amount of performance-based restricted share units granted in 2019 and 2020 that are estimated to ultimately vest based on the achievement of required financial performance results and $0.5 million of other net expense increases, partially offset by an increase in corporate overhead allocated through charges to our segments of $4.8 million due to an increase in expenses qualifying for allocation, a decrease in deferred compensation expenses of $1.4 million as a result of higher increases during the prior year period in the market value of investments to which employee deferred compensation liability balances are tracked and a decrease in direct acquisition expenses of $1.0 million due to a decrease in acquisition activity in the comparable periods.

Segment EBITDA at Corporate decreased $0.9 million, to a loss of $7.2 million for the six months ended June 30, 2021, from a loss of $6.3 million for the six months ended June 30, 2020.

The decrease was due to an increase in accrued recurring cash incentive compensation expense to our management of $8.8 million, an increase in deferred compensation expenses of $4.2 million as a result of increases in the market value of investments to which employee deferred compensation liability balances are tracked, an increase in equity-based compensation expenses of $2.0 million associated with the net impact of current and prior period adjustments of our common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, an increase in equity-based compensation expenses of $1.8 million resulting primarily from adjustments to the amount of performance-based restricted share units granted in 2019 and 2020 that are estimated to ultimately vest based on the achievement of required financial performance results, an increase in professional fees of $1.1 million due primarily to increased expenses

associated with professional tax services, an increase in administrative payroll expenses of $1.0 million due primarily to annual pay increases and $0.6 million of other net expense increases, partially offset by an increase in corporate overhead allocated through charges to our segments of $18.6 million due to an increase in expenses qualifying for allocation.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth certain cash flow information for the three months ended March 31, 2021 and 2020 (in thousands of U.S.

Three Months Ended

The following table sets forth certain cash flow information for the six months ended June 30, 2021 and 2020 (in thousands of U.S.

Six Months Ended

Net cash provided by operating activities

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Operating Activities Cash Flows

For the three months ended March 31, 2021, net cash provided by operating activities was $400.4 million.

For the three months ended March 31, 2020, net cash provided by operating activities was $369.6 million.

For the six months ended June 30, 2021, net cash provided by operating activities was $848.5 million.

For the six months ended June 30, 2020, net cash provided by operating activities was $753.2 million.

The $95.3 million increase was due primarily to the following:

1) Increase in earnings — Our increase in net cash provided by operating activities was favorably impacted by $21.6 million from an increase in net income, excluding depreciation, amortization of intangibles, share-based compensation, adjustments to and payments of contingent consideration recorded in earnings and loss on disposal of assets and impairments, due primarily to price increases, earnings from acquisitions closed subsequent to the three months ended March 31, 2020, earnings generated from the increased sales of recyclable commodities and renewal energy credits associated with the generation of landfill gas and an increase in the average Canadian dollar to U.S.

dollar currency exchange rate offsetting a decline in earnings at our E&P operations, as well as solid waste volume losses resulting from the COVID-19 pandemic.

2) Other long-term liabilities — Our increase in net cash provided by operating activities was favorably impacted by $19.3 million from other long-term liabilities, as changes in other long-term liabilities resulted in an increase to operating cash flows of $6.1 million for the three months ended March 31, 2021, compared to a decrease to operating cash flows of $13.2 million for the three months ended March 31, 2020.

The increase for the three months ended March 31, 2021 was primarily attributable to the receipt of funds associated with the eminent domain purchase of an operating facility that will be replaced with a newly constructed facility in a future period.

The decrease for the three months ended March 31, 2020 was primarily attributable to declines in our deferred compensation liabilities due to distributions and the cash settlement of equity awards accounted for as liabilities that were granted to employees of Progressive Waste prior to June 1, 2016.

3) Prepaid expenses — Our increase in net cash provided by operating activities was favorably impacted by $15.7 million from prepaid expenses due primarily to a decrease in prepaid insurance and prepaid vendor payments.

Our prepaid expenses at March 31, 2021 include $49.7 million of prepaid income taxes.

4) Deferred revenue — Our increase in net cash provided by operating activities was favorably impacted by $9.8 million from deferred revenue as changes in deferred revenue resulted in an increase to operating cash flows of $8.9 million for the three months ended March 31, 2021, compared to a decrease to operating cash flows of $0.9 million for the three months ended March 31, 2020.

During the three months ended March 31, 2021, deferred revenue increased due to price increases on our advanced billed residential and commercial collection services, the timing of bi-monthly advance service billings and a landfill in our Southern segment receiving a $3.3 million advance payment for future disposal services.

During the three months ended March 31, 2020, our deferred revenue decreased due primarily to commercial collection customer closures resulting from the COVID-19 pandemic that began in March 2020 which reduced the amount of advance service billings sent to our customers.

5) Deferred income taxes — Our increase in net cash provided by operating activities was unfavorably impacted by $14.9 million from deferred income taxes as changes in deferred income taxes resulted in an increase to operating cash flows of $8.4 million for the three months ended March 31, 2021, compared to an increase to operating cash flows of $23.3 million for the three months ended March 31, 2020.

The higher increase in deferred taxes in the prior year period was attributable to increased capital expenditures providing tax benefits resulting from accelerated tax depreciation.

6) Accounts payable and accrued liabilities — Our increase in net cash provided by operating activities was unfavorably impacted by $10.8 million from accounts payable and accrued liabilities due primarily to the timing of interest payments and payroll cycles .

As of March 31, 2021, we had a working capital surplus of $397.1 million, including cash and equivalents of $743.5 million.

Our working capital surplus increased $17.5 million from a working capital surplus of $379.6 million at December 31, 2020 including cash and equivalents of $617.3 million, due primarily to the impact of increased cash balances, decreased accounts payable and decreased book overdraft being partially offset by an increase in the current portion of notes payable, higher deferred revenue and a reduction in accounts receivable.

1) Increase in earnings — Our increase in net cash provided by operating activities was favorably impacted by $21.0 million from an increase in net income, excluding depreciation, amortization of intangibles, share-based compensation, adjustments to and payments of contingent consideration recorded in earnings and loss on disposal of assets and impairments, due primarily to price increases, earnings from acquisitions closed subsequent to the six months ended June 30, 2020, earnings generated from the increased sales of recyclable commodities and renewal energy credits associated with the generation of landfill gas and an increase in the average Canadian dollar to U.S.

dollar currency exchange rate offsetting a decline in earnings at our E&P operations.

2) Deferred income taxes — Our increase in net cash provided by operating activities was favorably impacted by $70.3 million from deferred income taxes as changes in deferred income taxes resulted in an increase to operating cash flows of $3.5 million for the six months ended June 30, 2021, compared to a decrease to operating cash flows of $66.8 million for the six months ended June 30, 2020.

The decrease in deferred taxes in the prior year period was attributable to the impairment of certain assets within our E&P operations .

3) Accounts payable and accrued liabilities — Our increase in net cash provided by operating activities was favorably impacted by $41.4 million from accounts payable and accrued liabilities as changes in accounts payable and accrued liabilities resulted in an increase to operating cash flows of $35.6 million for the six months ended June 30, 2021, compared to a decrease to operating cash flows of $5.8 million for the six months ended June 30, 2020.

The increase for the six months ended June 30, 2021 was due primarily to increases in operating expenses during the period which remained as outstanding obligations at June 30, 2021 and the timing of payroll cycles .

4) Other long-term liabilities — Our increase in net cash provided by operating activities was favorably impacted by $21.4 million from other long-term liabilities, as changes in other long-term liabilities resulted in an increase to operating cash flows of $10.6 million for the six months ended June 30, 2021, compared to a decrease to operating cash flows of $10.8 million for the six months ended June 30, 2020.

The increase for the six months ended June 30, 2021 was primarily attributable to the receipt of funds associated with the eminent domain purchase of an operating facility that will be replaced with a newly constructed facility in a future period.

The decrease for the six months ended June 30, 2020 was primarily attributable to declines in our deferred compensation liabilities due to distributions and the cash settlement of equity awards accounted for as liabilities that were granted to employees of Progressive Waste prior to June 1, 2016.

5) Deferred revenue — Our increase in net cash provided by operating activities was favorably impacted by $12.6 million from deferred revenue as changes in deferred revenue resulted in an increase to operating cash flows of $14.5 million for the six months ended June 30, 2021, compared to an increase to operating cash flows of $1.9 million for the six months ended June 30, 2020.

During the six months ended June 30, 2021, deferred revenue increased due to price increases on our advanced billed residential and commercial collection services, the timing of bi-monthly advance service billings and a landfill in our Southern segment receiving an advance payment for future disposal services.

6) Accounts receivable – Our increase in net cash provided by operating activities was unfavorably impacted by $63.2 million from accounts receivable as changes in accounts receivable resulted in a decrease to operating cash flows of $14.2 million for the six months ended June 30, 2021, compared to an increase to operating cash flows of $49.0 million for the six months ended June 30, 2020.

The decrease for the six months ended June 30, 2021 was due to increases in revenues, which remained as outstanding receivables at June 30, 2021.

The increase for the six months ended June 30, 2020 was attributable to the collection of outstanding accounts receivable existing prior to the COVID-19-driven economic downturn, with accounts receivable at June 30, 2020 reflecting the impact of lower uncollected revenues.

As of June 30, 2021, we had a working capital surplus of $414.2 million, including cash and equivalents of $727.4 million.

Our working capital surplus increased $34.6 million from a working capital surplus of $379.6 million at December 31, 2020 including cash and equivalents of $617.3 million, due primarily to the impact of increases in cash balances and accounts receivable being partially offset by deceased prepaid income taxes, increased accounts payable and increased deferred revenue.

To date, we have experienced no loss or lack of access to our cash and equivalents;

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Investing Activities Cash Flows

Net cash used in investing activities decreased $33.0 million to $100.6 million for the three months ended March 31, 2021, from $133.6 million for the three months ended March 31, 2020.

Net cash used in investing activities decreased $27.2 million to $332.8 million for the six months ended June 30, 2021, from $360.0 million for the six months ended June 30, 2020.

The significant components of the decrease included the following:

1) A decrease in capital expenditures of $41.0 million due to decreases in vehicles for our collection operations and landfill site costs;

2) An increase in cash paid for acquisitions of $2.6 million.

1) A decrease in cash paid for acquisitions of $18.8 million;

2) A decrease in capital expenditures for undeveloped landfill property of $16.4 million associated with expansion land at certain existing landfill facilities;

3) An increase from restricted asset accounts of $6.2 million due to higher draws on existing accounts in the prior year period.

Financing Activities Cash Flows

Net cash used in financing activities increased $792.9 million to net cash used in financing activities of $165.5 million for the three months ended March 31, 2021, from net cash provided by financing activities of $627.4 million for the three months ended March 31, 2020.

Net cash used in financing activities increased $460.7 million to net cash used in financing activities of $393.2 million for the six months ended June 30, 2021, from net cash provided by financing activities of $67.5 million for the six months ended June 30, 2020.

The significant components of the increase included the following:

1) An increase from the net change in long-term borrowings of $825.6 million (long-term borrowings decreased $5.4 million during the three months ended March 31, 2021 and increased $820.2 million during the three months ended March 31, 2020) due primarily to maintaining a portion of the proceeds from our 2050 Senior Notes offering in March 2020 in cash and borrowing on our credit facility in March 2020 to provide us with additional available cash reserves;

2) An increase in book overdraft of $13.0 million due primarily to maintaining additional funds in our bank accounts that are used to fund outstanding checks;

3) An increase in cash dividends paid of $5.9 million due primarily to an increase in our quarterly dividend rate for the three months ended March 31, 2021 to $0.205 per share, from $0.185 per share for the three months ended March 31, 2020;

4) A decrease in payments to repurchase our common shares of $39.7 million due to fewer shares repurchased;

1) An increase from the net change in long-term borrowings of $262.0 million (long-term borrowings increased $44.5 million during the six months ended June 30, 2021 and increased $306.5 million during the six months ended June 30, 2020) due primarily to maintaining a portion of the proceeds from our 2050 Senior Notes offering in cash;

2) An increase in payments to repurchase our common shares of $200.0 million due to a higher volume of shares repurchased;

3) An increase in cash dividends paid of $10.4 million due primarily to an increase in our quarterly dividend rate for the six months ended June 30, 2021 to $0.205 per share, from $0.185 per share for the six months ended June 30, 2020;

4) A decrease in debt issuance costs of $11.0 million due to the prior year period including costs incurred for the issuance of our 2030 Senior Notes and 2050 Senior Notes;

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Information regarding our NCIB can be found under the “Shareholders’ Equity” section in Note 17 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

On July 27, 2021, our Board of Directors approved, subject to receipt of regulatory approvals, the annual renewal of our NCIB.

The renewal is expected to commence following the conclusion of our current NCIB expiring August 9, 2021.

Upon approval, we anticipate that we will be authorized to make purchases during the period of August 10, 2021 to August 9, 2022 or until such earlier time as the NCIB is completed or terminated at our option.

Our Board of Directors authorized the initiation of a quarterly cash dividend in October 2010 and has increased it on an annual basis.

In October 2020, our Board of Directors authorized an increase to our regular quarterly cash dividend of $0.02, from $0.185 to $0.205 per share.

Cash dividends of $53.9 million and $48.0 million were paid during the three months ended March 31, 2021 and 2020, respectively.

Cash dividends of $107.3 million and $96.9 million were paid during the six months ended June 30, 2021 and 2020, respectively.

We cannot assure you as to the amounts or timing of future dividends.

We made $96.8 million in capital expenditures for property and equipment during the three months ended March 31, 2021, and we expect to make total capital expenditures for property and equipment of approximately $625 million in 2021.

We have funded and intend to fund the balance of our planned 2021 capital expenditures principally through cash on hand, internally generated funds and borrowings under our Credit Agreement.

We made $271.4 million in capital expenditures for property and equipment during the six months ended June 30, 2021, and we expect to make total capital expenditures for property and equipment of approximately $675 million in 2021.

We have funded and intend to fund the balance of our planned 2021 capital expenditures principally through cash on hand, internally generated funds and borrowings under our Credit Agreement and 2021 Credit Agreement.

In addition, we may make substantial additional capital expenditures in acquiring land and solid waste businesses.

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Those banks may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time.

As of March 31, 2021, $650.0 million under the term loan and $204.0 million under the revolving credit facility were outstanding under our Credit Agreement, exclusive of outstanding standby letters of credit of $118.4 million.

We also have issued $6.8 million of letters of credit at March 31, 2021 under facilities other than the Credit Agreement.

Our Credit Agreement matures in March 2023.

We are a well-known seasoned issuer with an effective shelf registration statement on Form S-3 filed with the SEC in May 2018, which registers an unspecified amount of debt securities, including debentures, notes or other types of debt.

In the future, we may issue debt securities under our shelf registration statement or in private placements from time to time on an opportunistic basis, based on market conditions and available pricing.

Unless otherwise indicated in the relevant

offering documents, we expect to use the proceeds from any such offerings for general corporate purposes, including repaying, redeeming or repurchasing debt, acquiring additional assets or businesses, capital expenditures and increasing our working capital.

As of March 31, 2021, we had the following contractual obligations:

As of June 30, 2021, $650.0 million under the term loan and $505.0 million under the revolving credit facility were outstanding under our Credit Agreement, exclusive of outstanding standby letters of credit of $114.4 million.

We also have issued $7.2 million of letters of credit at June 30, 2021 under facilities other than the Credit Agreement.

Our 2021 Credit Agreement matures in July 2026.

We are a well-known seasoned issuer.

In the future, we may issue debt securities under a shelf registration statement on Form S-3 filed with the SEC or in private placements from time to time on an opportunistic basis, based on market conditions and available pricing.

Unless otherwise indicated in the relevant offering documents, we expect to use the

proceeds from any such offerings for general corporate purposes, including repaying, redeeming or repurchasing debt, acquiring additional assets or businesses, capital expenditures and increasing our working capital.

As of June 30, 2021, we had the following contractual obligations:

Payments Due by Period

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Long-term debt payments include:

1) $204.0 million in principal payments due March 2023 related to our revolving credit facility under our Credit Agreement.

1) $505.0 million in principal payments due July 2026 related to our revolving credit facility under our 2021 Credit Agreement.

We may elect to draw amounts on our 2021 Credit Agreement in U.S.

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dollar base rate loans, Canadian-based bankers’ acceptances, and Canadian dollar prime rate loans.

At March 31, 2021, $200.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S.

At June 30, 2021, $501.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S.

LIBOR rate loans, which bear interest at the LIBOR rate plus the applicable margin (for a total rate of 1.30% on such date) and $4.0 million of the outstanding borrowings drawn under the revolving credit facility were in Canadian-based bankers’ acceptances, which bear interest at the Canadian Dollar Offered Rate plus the applicable acceptance fee (for a total rate of 1.61% on such date).

2) $650.0 million in principal payments due March 2023 related to our term loan under our Credit Agreement.

2) $650.0 million in principal payments due July 2026 related to our term loan under our 2021 Credit Agreement.

Outstanding amounts on the term loan can be either base rate loans or LIBOR loans.

At March 31, 2021, all amounts outstanding under the term loan were in LIBOR loans which bear interest at the LIBOR rate plus the applicable margin (for a total rate of 1.31% on such date).

3) $100.0 million in principal payments due 2021 related to our 2021 Senior Notes.

The 2021 Senior Notes bear interest at a rate of 4.64%.

We redeemed the 2021 Senior Notes on April 1, 2021.

4) $150.0 million in principal payments due 2021 related to our New 2021 Senior Notes.

The New 2021 Senior Notes bear interest at a rate of 2.39%.

We have recorded this obligation in the payments due in 1 to 3 years category in the table above as we have the intent and ability to redeem the New 2021 Senior Notes on June 1, 2021 using borrowings under our Credit Agreement.

At June 30, 2021, all amounts outstanding under the term loan were in LIBOR loans which bear interest at the LIBOR rate plus the applicable margin (for a total rate of 1.30% on such date).

3) $125.0 million in principal payments due 2022 related to our 2022 Senior Notes.

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13) $37.2 million in principal payments related to our notes payable to sellers and other third parties.

Our notes payable to sellers and other third parties bear interest at rates between 2.42% and 10.35% at March 31, 2021, and have maturity dates ranging from 2028 to 2036.

Our notes payable to sellers and other third parties bear interest at rates between 2.42% and 10.35% at June 30, 2021, and have maturity dates ranging from 2028 to 2036.

14) $9.4 million in principal payments related to our financing leases.

Our financing leases bear interest at a rate of 1.89% at March, 31 2021, and have a lease expiration date of 2026.

Our financing leases bear interest at a rate of 1.89% at June 30, 2021, and have a lease expiration date of 2026.

The following assumptions were made in calculating cash interest payments:

1) We calculated cash interest payments on the Credit Agreement using the LIBOR rate plus the applicable LIBOR margin, the base rate plus the applicable base rate margin, the Canadian Dollar Offered Rate plus the applicable acceptance fee and the Canadian prime rate plus the applicable prime rate margin at March 31, 2021.

We assumed the Credit Agreement is paid off when it matures in March 2023.

We assumed the 2021 Credit Agreement is paid off when it matures in July 2026.

2) We calculated cash interest payments on our interest rate swaps using the stated interest rate in the swap agreement less the LIBOR rate through the earlier expiration of the term of the swaps or the term of the credit facility.

Contingent consideration payments include $67.0 million recorded as liabilities in our Condensed Consolidated Financial Statements at March 31, 2021, and $19.5 million of future interest accretion on the recorded obligations.

Contingent consideration payments include $68.0 million recorded as liabilities in our Condensed Consolidated Financial Statements at June 30, 2021, and $19.5 million of future interest accretion on the recorded obligations.

We are party to operating lease agreements and finance leases.

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These purchase obligations are established in the ordinary course of our business and are designed to provide us with access to products at competitive, market-driven prices.

At March 31, 2021, our unconditional purchase obligations consisted of multiple fixed-price fuel purchase contracts under which we have 46.7 million gallons remaining to be purchased for a total of $116.6 million.

The current fuel purchase contracts expire on or before

December 31, 2023.

These arrangements have not materially affected our financial position, results of operations or liquidity during the three months ended March 31, 2021, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.

At June 30, 2021, our unconditional purchase obligations consisted of multiple fixed-price fuel purchase contracts under which we have 37.7 million gallons remaining to be purchased for a total of $93.5 million.

The current fuel purchase contracts expire on or before December 31, 2023.

These arrangements have not materially affected our financial position, results of operations or liquidity during the six months ended June 30, 2021, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.

We have obtained financial surety bonds, primarily to support our financial assurance needs and landfill and E&P operations.

We provided customers and various regulatory authorities with surety bonds in the aggregate amounts of approximately $1.242 billion and $1.210 billion at March 31, 2021 and December 31, 2020, respectively.

We provided customers and various regulatory authorities with surety bonds in the aggregate amounts of approximately $1.255 billion and $1.210 billion at June 30, 2021 and December 31, 2020, respectively.

These arrangements have not materially affected our financial position, results of operations or liquidity during the six months

ended June 30, 2021, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.

From time to time, we evaluate our existing operations and their strategic importance to us.

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Although we believe our reporting units would not be impaired by such dispositions, we could incur losses on them.

The disposal tonnage that we received in the three month periods ended March 31, 2021 and 2020, at all of our landfills during the respective period, is shown below (tons in thousands):

Three Months Ended March 31,

The disposal tonnage that we received in the six month periods ended June 30, 2021 and 2020, at all of our landfills during the respective period, is shown below (tons in thousands):

Six Months Ended June 30,

Owned operational landfills and landfills operated under life-of-site agreements

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Other companies may calculate adjusted free cash flow differently.

Our adjusted free cash flow for the three month periods ended March 31, 2021 and 2020, are calculated as follows (amounts in thousands of U.S.

Three Months Ended

Our adjusted free cash flow for the six month periods ended June 30, 2021 and 2020, are calculated as follows (amounts in thousands of U.S.

Six Months Ended

Net cash provided by operating activities

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Payment of contingent consideration recorded in earnings (a)

Transaction-related expenses (b)

Pre-existing Progressive Waste share-based grants (c)

Tax effect (d)

Cash received for divestitures (b)

Transaction-related expenses (c)

Pre-existing Progressive Waste share-based grants (d)

Tax effect (e)

Adjusted free cash flow

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(a) Reflects the addback of acquisition-related payments for contingent consideration that were recorded as expenses in earnings and as a component of cash flows from operating activities as the amounts paid exceeded the fair value of the contingent consideration recorded at the acquisition date.

(b) Reflects the addback of acquisition-related transaction costs.

(d) The aggregate tax effect of footnotes (a) through (c) is calculated based on the applied tax rates for the respective periods.

(b) Reflects the elimination of cash received in conjunction with the divestiture of certain operations.

(d) Reflects the cash settlement of pre-existing Progressive Waste share-based awards during the period.

(e) The aggregate tax effect of footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

Adjusted EBITDA

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Management uses adjusted EBITDA as one of the principal measures to evaluate and monitor the ongoing financial performance of our operations.

We define adjusted EBITDA as net income attributable to Waste Connections, plus or minus net income (loss) attributable to noncontrolling interests, plus income tax provision, plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income.

We define adjusted EBITDA as net income (loss) attributable to Waste Connections, plus or minus net income (loss) attributable to noncontrolling interests, plus or minus income tax provision (benefit), plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income.

We further adjust this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of our business.

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Other companies may calculate adjusted EBITDA differently.

Our adjusted EBITDA for the three month periods ended March 31, 2021 and 2020, are calculated as follows (amounts in thousands of U.S.

Our adjusted EBITDA for the three and six month periods ended June 30, 2021 and 2020, are calculated as follows (amounts in thousands of U.S.

Three Months Ended

Net income attributable to Waste Connections

Net loss attributable to noncontrolling interests

Income tax provision

Six Months Ended

Net income (loss) attributable to Waste Connections

Net income (loss) attributable to noncontrolling interests

Income tax provision (benefit)

Interest expense

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Other companies may calculate these non-GAAP financial measures differently.

Our adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections for the three month periods ended March 31, 2021 and 2020, are calculated as follows (amounts in thousands of U.S.

Our adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections for the three and six month periods ended June 30, 2021 and 2020, are calculated as follows (amounts in thousands of U.S.

dollars, except per share amounts):

Three Months Ended

Reported net income attributable to Waste Connections

Six Months Ended

Reported net income (loss) attributable to Waste Connections

Amortization of intangibles (a)

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Tax effect (e)

Tax items (f)

Adjusted net income attributable to Waste Connections

Diluted earnings per common share attributable to Waste Connections’ common shareholders:

Reported net income

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

Reported net income (loss)

Adjusted net income

Shares used in the per share calculations:

Reported diluted shares

Adjusted diluted shares (g)

____________________

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(e) The aggregate tax effect of the adjustments in footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

Other than volatility in fuel prices, third party brokerage and labor costs in certain markets, inflation has not materially affected our operations in recent years.

(f) Reflects the impact of a portion of our 2019 inter-entity payments no longer being deductible for tax purposes due to the finalization of tax regulations on April 7, 2020 under Internal Revenue Code section 267A and an increase in deferred tax liabilities resulting from the E&P impairment.

(g) Reflects reported diluted shares adjusted for shares that were excluded from the reported diluted shares calculation due to our reporting a net loss during the three and six months ended June 30, 2020.

In the current environment, we have seen inflationary pressures resulting from higher fuel and labor costs in certain markets and higher resulting third party costs in areas such as brokerage, repairs and construction.

Consistent with industry practice, many of our contracts allow us to pass through certain costs to our customers, including increases in landfill tipping fees and, in some cases, fuel costs.

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Therefore, we believe that we should be able to increase prices to offset many cost increases that result from inflation in the ordinary course of business.

However, competitive pressures or delays in the timing of rate increases under our contracts, particularly amid the economic impact of the COVID-19 pandemic, may require us to absorb at least part of these cost increases, especially if cost increases exceed the average rate of inflation.

However, competitive pressures or delays in the timing of rate increases under certain of our contracts, particularly amid the economic impact of the COVID-19 pandemic, may require us to absorb at least part of these cost increases, especially if cost increases exceed the average rate of inflation.

Management’s estimates associated with inflation have an impact on our accounting for landfill liabilities.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis