What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-02-17 compared with 2021-02-18 · 259 added, 329 removed, 388 unchanged (60% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the “Selected Financial Data” included in Item 6 of this Annual Report on Form 10-K, our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.

The following discussion should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.

We make statements in this Annual Report on Form 10-K that are forward-looking in nature.

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● Statements regarding our landfills, including capacity, duration, special projects, demand for and pricing of recyclables, landfill alternatives and related capital expenditures;

● Discussion of competition, loss of contracts, price increases and additional exclusive arrangements;

● Discussion of competition, loss of contracts, price increases and additional exclusive and/or long-term collection service arrangements;

● Forecasts of cash flows necessary for operations and free cash flow to reduce leverage as well as our ability to draw on our credit facility and access the capital markets to refinance or expand;

● Statements regarding oil prices and fuel price expectations;

● Reviews of regulatory developments and potential changes in environmental, health, safety and tax laws and regulations;

● Statements regarding our ability to access capital resources or credit markets at all or on favorable terms;

● Plans for, and the amount of, certain capital expenditures for our existing and newly acquired properties and equipment;

● Statements regarding fuel, oil and natural gas demand prices and price volatility;

● Assessments of regulatory developments and potential changes in environmental, health, safety and tax laws and regulations;

● Other statements on a variety of topics such as the COVID-19 pandemic, credit risk of customers, seasonality, labor/pension costs and labor union activity, operational and safety risks, acquisitions, litigation results, goodwill impairments, insurance costs and cybersecurity threats.

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There may be additional risks of which we are not presently aware or that we currently believe are immaterial that ‎could have an adverse impact on our business.

We make no commitment to revise or update any forward-looking ‎statements to reflect events or circu‎mstances that may change, unless required under applicable securities laws.

We make no commitment to revise or update any forward-looking ‎statements to reflect events or circumstances that may change, unless required under applicable securities laws.

Industry Overview

The solid waste industry is local and highly competitive in nature, requiring substantial labor and capital resources.

The participants compete for collection accounts primarily on the basis of price and, to a lesser extent, the quality of service, and compete for landfill business on the basis of tipping fees, geographic location and quality of operations.

We compete for collection accounts primarily on the basis of price and, to a lesser extent, the quality of service, and compete for landfill business on the basis of tipping fees, geographic location and quality of operations.

The solid waste industry has been consolidating and continues to consolidate as a result of a number of factors, including the increasing costs and complexity associated with waste management operations and regulatory compliance.

Many small independent operators and municipalities lack the capital resources, management, operating skills and technical expertise necessary to operate effectively in such an environment.

The consolidation trend has caused solid waste companies to operate larger landfills that have complementary collection routes that can use company-owned disposal capacity.

The consolidation trend has caused solid waste companies to operate larger

landfills that have complementary collection routes that can use company-owned disposal capacity.

Controlling the point of transfer from haulers to landfills has become increasingly important as landfills continue to close and disposal capacity moves farther from the collection markets it serves.

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

Through June 30, 2020, we maintained a separate E&P segment, which was combined with our Southern segment on July 1, 2020.

During the year ended December 31, 2020, our total E&P revenue declined 44%, compared to the prior year period, on rig count declines of 56% in certain basins.

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

Additionally, across the industry there is uncertainty regarding future demand for oil and related services, as noted by several energy companies, many of whom are customers of our E&P operations.

Additionally, across the industry there is uncertainty regarding future demand for oil and related services, as noted by several energy companies, many of whom are customers of our E&P waste operations.

These companies have written down the values of their oil and gas assets in anticipation of the potential for the decarbonization of their energy product mix given an increased global focus on reducing greenhouse gases and addressing climate change.

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.

Based on these events and the outlook for future drilling activity and resulting demand for our E&P waste services not showing significant improvement, we concluded that the carrying value of property and equipment at four E&P landfills exceeded their estimated fair value, resulting in an impairment charge of $417.4 million being recorded during the year ended December 31, 2020.

See the section Impairments of Property and Equipment and Finite-Lived Intangible Assets in Note 3, “Summary of Significant Accounting Policies,” of our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for a further discussion of this impairment charge.

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 waste operations.

Executive Overview

We are an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, along with recycling and resource recovery, in mostly exclusive and secondary markets across 43 states in the U.S.

We are an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, along with resource recovery primarily through recycling and renewable fuels generation, in mostly exclusive and secondary markets across 43 states in the U.S.

and six provinces in Canada.

Waste Connections also provides non-hazardous oilfield waste treatment, recovery and disposal services in several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.

Waste Connections also provides E&P waste services in several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.

We generally seek to avoid highly competitive, large urban markets and instead target markets where we can attain high market share either through exclusive contracts, vertical integration or asset positioning.

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The COVID-19 Pandemic’s impact on our Results of Operations

During the first quarter of 2020, COVID-19 emerged across North America.

The World Health Organization declared COVID-19 a global pandemic on March 11, 2020.

The COVID-19 pandemic has had adverse impacts on our business since March 2020, when we experienced decreasing revenues associated with declines primarily in commercial collection, transfer station and landfill volumes as a result of COVID-19-related economic disruptions.

In addition, and to a lesser extent, solid waste roll off revenue was impacted in some markets, and year-over-year reductions in E&P revenue, resulting primarily from the drop in the value of crude oil, were driven by both surplus production and supply, as well as the decrease in demand caused by factors including the COVID-19 pandemic.

In late February, we formed a task force to commence preparedness in the event the

scope of the COVID-19 outbreak expanded.

Protecting the health, safety and welfare of our employees was and remains our first priority, which led to our introduction of various health and safety protocols in early March, including the distribution of safety and preparedness updates, revised policies on employee time off, leaves of absence and short-term disability, modifications to our operations to minimize community spread of COVID-19, and enhanced resources to enable remote working, communications and digital connectivity to help non-frontline employees work from home more efficiently.

In recognition of the Company’s status as an essential services provider, and to reduce employee concerns regarding income, healthcare and family obligations, we implemented supplemental pay and bonuses for frontline employees representing 80% of our workforce, emergency wages for employees out of work due to COVID-19 and extended benefits coverage in markets where reductions in customer activity have impacted employee hours.

In addition, we expanded our Employee Relief Fund and initiated the Waste Connections Scholarship Program to help employee children achieve their vocational, technical and university education goals.

During 2020, the aggregate impact of these actions was an increase to our cost of operations of over $35 million, primarily due to supplemental pay for our frontline employees.

We also implemented a number of measures to reduce our operating costs and preserve cash, which included hiring limitations, wage freezes for all managers and region and corporate personnel, restrictions on travel, group meetings and other discretionary spending, and the suspension of the Company’s 401(k) match effective June 1, 2020.

In addition, we deferred qualified U.S.

payroll and other tax payments as permitted by the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, which the U.S.

government enacted on March 27, 2020.

In total in 2020, we deferred $44.6 million in payroll taxes in conjunction with the CARES Act, of which 50% is due by December 31, 2021 and 50% is due by December 31, 2022.

To the extent available, we also utilized similar programs being offered by the federal and provincial governments in Canada and received CAD $2.6 million in federal wage subsidies pursuant to the Canadian Emergency Wage Subsidy.

During the second quarter of 2020, our business was impacted by the COVID-19 pandemic due to a reduction in revenue primarily in solid waste commercial collection, roll off activity and solid waste transfer and disposal resulting from a slowdown in activity associated with shelter-in-place or other closure restrictions or requirements imposed in response to the COVID-19 pandemic.

Commercial collection activity slowed down in certain markets due to service reductions or suspensions by customers whose business activity was curtailed by such measures, with third party transfer and disposal volumes and roll off activity typically following similar patterns, and some of the declines in E&P waste activity may also be related to the COVID-19 pandemic.

The impacts to solid waste activity that we experienced during the second quarter varied by geography, the size and customer mix in each market, and the timing and extent of shutdown requirements and reopening policies across markets.

In some markets, the impacts abated during the second quarter, as reopenings resulted in increased service requirements by commercial customers and higher landfill volumes and roll off activity;

in other cases, where reopenings were delayed or more limited, the improvements were less pronounced.

Through the second quarter of 2020, about 53% of solid waste commercial customers and 42% of associated revenue in competitive markets we track that had suspended or reduced service due to the COVID-19 pandemic, had since reached out for either a resumption of service or an increase in frequency.

Volumes in all of our solid waste regions exceeded our initial expectations, resulting in solid waste revenue down 5.3% on a same store basis in the quarter, about 0.7 percentage points better than the expectations we provided in May.

Moreover, excluding the most impacted markets in the Northeast and Canada, where closures were widespread and volumes were most impacted, solid waste revenues were down only 1.3% year over year on a same store basis.

During the third quarter of 2020, our business continued to be impacted by the COVID-19 pandemic, albeit to a lesser extent than in the prior period in many markets.

The impacts to solid waste activity from the COVID-19 pandemic that we experienced during the third quarter reflected the pace of reopening activity and varied by geography, the size and customer mix in each market.

In some markets, impacts began to abate in the second quarter, when a portion of the lost volumes returned;

in other cases, the impacts of the pandemic abated more during the third quarter, when reopenings resulted in increased service requirements by commercial customers and higher landfill volumes and roll off activity.

In markets where reopenings continue to be delayed or where additional restrictions have been imposed, the improvements were less pronounced.

Through the third quarter, about 68% of solid waste commercial customers and 57% of associated revenue in competitive markets we track that had suspended or reduced service due to the COVID-19 pandemic, had since reached out for either a resumption of service or an increase in frequency, an increase from 53% and 42%, respectively, through

the second quarter.

As a result, solid waste collection, transfer and disposal revenue was down 2.0% year over year on a same store basis in the third quarter, but was an improvement of 3.3 percentage points from second quarter 2020 revenue, which was down 5.3% year over year.

During the fourth quarter of 2020, the impacts to our business related to the COVID-19 pandemic continued to moderate as compared to prior periods, in spite of the reinstatement of shutdowns and other restrictions on activity in many markets.

Throughout the pandemic, revenue in solid waste commercial collection and solid waste transfer and disposal has largely reflected the extent to which the slowdown in activity associated with shelter-in-place or other closure restrictions or requirements in effect since the first quarter of 2020 has persisted.

The recovery in more impacted markets, particularly those where reopenings continue to be delayed or where additional restrictions have been imposed, were generally less pronounced.

The impacts to solid waste activity from the COVID-19 pandemic that we experienced during the fourth quarter largely continued to reflect the pace of reopening activity and varied by geography, the size and customer mix in each market.

In some markets, improving trends in commercial service requirements, landfill tons and roll off activity that we had seen in prior quarters continued;

in others, commercial volume recovery remained steady or declined modestly.

Recovery in solid waste commercial activity remained essentially in line with the prior quarter, with 65% of customers and 56% of revenue in competitive markets we track that had previously suspended or reduced service due to the COVID-19 pandemic, that had since reached out for either a resumption of service or an increase in frequency.

Year over year landfill tons and roll off pulls both improved sequentially in the fourth quarter, with same store municipal solid waste tons up 2% year over year after being down 3% year over year in the third quarter.

All regions showed improving volumes, led by our mostly exclusive market Western Region, where volumes improved sequentially by 3.7 percentage points.

As a result, solid waste collection, transfer and disposal revenue was up 0.7% year over year on a same store basis in the fourth quarter, an improvement of 2.7 percentage points from the third quarter, which was down 2.0% year over year.

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 in the first quarter of 2020 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%.

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.

In the second half of 2021, volumes remained positive in spite of increasingly difficult year over year comparisons as a result of reopening activity in 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 through the first quarter of 2021.

On increased drilling activity in several active shale basins, E&P waste revenue increased to a quarterly run rate of approximately $35 million in the second half of 2021.

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

Recognizing the potential for financial hardship and other challenges, we have looked to provide a safety net for our employees on issues of income and family health.

To that end, since the onset of the pandemic through year-end 2021, we have incurred over $40 million in incremental COVID-19-related costs, primarily supplemental pay for frontline employees.

We continue to support our employees and their families, including with certain costs continuing in early 2022 due to surges in cases related to certain variants.

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.

and Canada, its severity, the actions to contain the novel coronavirus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

and Canada, the rate of vaccinations, the severity of COVID-19 variants, the actions to contain such coronavirus variants, and how quickly and to what extent normal economic and operating conditions can resume.

As a result of the COVID-19 pandemic and subsequent reopening activity in 2021, we have also experienced an impact to our operating costs as a result of factors including supply chain disruptions and labor constraints, as demand has recovered and competition has increased.

As a result, we have incurred incremental costs associated with higher wages, increased overtime as a result of higher turnover, and increased reliance on third party services.

2021 Financial Performance

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Acquisitions closed during, or subsequent to, the prior year, net of divestitures, accounted for $215.4 million in incremental revenues in 2021.

Excluding the impact of such acquisitions, revenues decreased 2.6% due principally to E&P waste revenue decreasing to $144.0 million from $256.0 million in 2019, with the remainder due predominantly to lower internal growth in solid waste, in both cases primarily as a result of the COVID-19 pandemic.

Solid waste internal growth was negative 0.4%, due to lower volumes and lower fuel, materials and environmental surcharges more than offsetting price increases and higher recycled commodity values.

Pricing growth was 4.3%, with core pricing up 4.5%, partially offset by materials and environmental surcharges of negative 0.2%.

Volumes decreased by 4.8% on decreases in landfill and hauling volumes primarily due to the impact of the COVID-19 pandemic.

Excluding the impact of such acquisitions, revenues increased 9.0% due predominantly to higher internal growth in solid waste.

Solid waste internal growth was positive 8.4%, due to higher price increases, higher surcharges and higher volumes, which turned positive following the anniversary of the onset of the COVID-19 pandemic in the first quarter.

Pricing growth was 5.0%, with core pricing up 4.7%, plus materials and environmental surcharges of positive 0.3%.

Volumes increased by 1.6% on increases in landfill and hauling volumes beginning in the second quarter, which reflected the prior year comparisons due primarily to the impact of the COVID-19 pandemic and subsequent reopening activity.

Increases in the value of recycled commodities resulted in a 1.8% increase to internal solid waste growth.

Net income attributable to Waste Connections decreased 63.9% to $204.7 million in 2020, from $566.8 million in 2019.

In 2020, adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, a non-GAAP financial measure (refer to page 76 of this Annual Report on Form 10-K for a definition and reconciliation to Net income attributable to Waste Connections), decreased 0.7% to $1.662 billion, from $1.674 billion in 2019.

As a percentage of revenue, adjusted EBITDA decreased from 31.1% in 2019, to 30.5% in 2020.

This 0.6% decrease was due to the decline in E&P waste revenue, which was partially offset by the expansion of adjusted EBITDA margin in solid waste.

Adjusted net income attributable to Waste Connections, a non-GAAP financial measure (refer to page 77 of this Annual Report on Form 10-K for a definition and reconciliation to Net income attributable to Waste Connections), in 2020 decreased 3.3% to $695.8 million from $719.6 million in 2019.

Increases in the value of renewable fuels resulted in an increase of 0.6% to overall growth;

and lower E&P waste activity resulted in a 0.3% decrease to overall growth.

Net income attributable to Waste Connections increased 202.0% to $618.0 million in 2021, from $204.7 million in 2020.

In 2021, adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, a non-GAAP financial measure (refer to page 73 of this Annual Report on Form 10-K for a definition and reconciliation to Net income attributable to Waste Connections), increased 15.5% to $1.919 billion, from $1.662 billion in 2020.

As a percentage of

revenue, adjusted EBITDA increased from 30.5% in 2020, to 31.2% in 2021.

This 0.7 percentage point increase was due to price-led organic growth in solid waste and the benefit of higher commodity-driven revenue, partially offset by lower E&P waste activity.

Adjusted net income attributable to Waste Connections, a non-GAAP financial measure (refer to page 74 of this Annual Report on Form 10-K for a definition and reconciliation to Net income attributable to Waste Connections), in 2021 increased 21.7% to $846.6 million from $695.8 million in 2020.

Adjusted Free Cash Flow

Net cash provided by operating activities decreased 8.6% to $1.409 billion in 2020, from $1.541 billion in 2019.

Capital expenditures for property and equipment decreased from $634.4 million in 2019 to $597.1 million in 2020, a decrease of $37.3 million, or 5.9%, while capital expenditures for undeveloped landfill properties increased from $31.7 million in 2019 to $67.5 million in 2020, an increase of $35.8 million, or 112.9%.

Adjusted free cash flow, a non-GAAP financial measure (refer to page 75 of this Annual Report on Form 10-K for a definition and reconciliation to Net cash provided by operating activities), decreased by $74.9 million to $841.9 million in 2020, from $916.8 million in 2019.

Net cash provided by operating activities increased 20.6% to $1.698 billion in 2021, from $1.409 billion in 2020.

Capital expenditures for property and equipment increased from $597.1 million in 2020 to $744.3 million in 2021, an increase of $147.2 million, or 24.7%.

Adjusted free cash flow, a non-GAAP financial measure (refer to page 72 of this Annual Report on Form 10-K for a definition and reconciliation to Net cash provided by operating activities), increased by $167.7 million to $1.010 billion in 2021, from $841.9 million in 2020.

Adjusted free cash flow as a percentage of revenues was 16.4% in 2021, as compared to 15.5% in 2020.

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In 2021, we distributed $559.2 million to shareholders through a combination of cash dividends and share repurchases.

We paid cash dividends of $199.9 million to shareholders through cash dividends declared by our Board of Directors, which also increased the quarterly cash dividend by 10.8%, from $0.185 to $0.205 per common share in October 2020.

We paid $220.2 million to shareholders through cash dividends declared by our Board of Directors, which also increased the quarterly cash dividend by 12.2%, from $0.205 to $0.23 per common share in October 2021.

Cash dividends increased $20.3 million, or 10.2%, from $199.9 million in 2020 due to a 10.8% increase in the quarterly cash dividend declared by our Board of Directors in October 2020, followed by the additional increase in October 2021.

Our Board of Directors intends to review the quarterly dividend during the fourth quarter of each year, with a long-term objective of increasing the amount of the dividend.

In 2020, we also repurchased 1,271,977 common shares at an aggregate cost of $105.7 million.

In 2021, we also repurchased 3.004 million common shares at an aggregate cost of $339.0 million.

We expect the amount of capital we return to shareholders through share repurchases to vary depending on our financial condition and results of operations, capital structure, the amount of cash we deploy on acquisitions, expectations regarding the timing and size of acquisitions, the market price of our common shares, and overall market conditions.

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

We have the ability under our Credit Agreement and master note purchase agreements to repurchase our common shares and pay dividends provided that we maintain specified financial ratios.

We have the ability under our Credit Agreement to repurchase our common shares and pay dividends provided that we maintain specified financial ratios.

Capital Position

We target a Leverage Ratio, as defined in our Credit Agreement, of approximately 2.5x – 3.0x total debt to EBITDA.

Higher debt in 2020, along with a small reduction in EBITDA, resulted in an increase in our leverage ratio from 2.41x at December 31, 2019 to 2.68x at December 31, 2020.

Cash balances increased from $326.7 million at December 31, 2019 to $617.3 million at December 31, 2020, and we had $1.239 billion of remaining borrowing capacity under our Credit Agreement, which matures in March 2023.

The Leverage Ratio is a non-GAAP ratio (refer to page 74 of this Annual Report on Form 10-K for more information on this ratio).

Higher EBITDA in 2021 more than offset the impact of higher debt, resulting in a decrease in our Leverage Ratio from 2.68x at December 31, 2020 to 2.50x at December 31, 2021.

Cash balances decreased from $617.3 million at December 31, 2020 to $147.4 million at December 31, 2021, and we had $933.8 million of remaining borrowing capacity under our Credit Agreement, which matures in July 2026.

Critical Accounting Estimates and Assumptions

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We carry umbrella policies for certain types of claims to provide excess coverage over the underlying policies and per incident deductibles or self-insured retentions.

Our insurance accruals are based on claims filed and estimates of claims incurred but not reported and are developed by our management with assistance from our third-party actuary and third-party claims administrator.

Our insurance accruals are based on claims filed and estimates of claims incurred but not reported and are developed by our management with assistance from

our third-party actuary and third-party claims administrator.

The insurance accruals are influenced by our past claims experience factors and by published industry development factors.

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The accounting methods discussed below require us to make certain estimates and assumptions.

Changes to these estimates and assumptions could have a material effect on our financial condition and results of operations.

Changes to these estimates and assumptions, including as a result of inflation, could have a material effect on our financial condition and results of operations.

Any changes to our estimates are applied prospectively.

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We could have additional material financial obligations relating to final capping, closure and post-closure costs at other disposal facilities that we currently own or operate or that we may own or operate in the future.

Our discount rate assumption for purposes of computing 2020 and 2019 “layers” for final capping, closure and post-closure obligations was 4.75% for both years, which reflects our long-term credit adjusted risk free rate.

Our inflation rate assumption was 2.5% for the years ended December 31, 2020 and 2019.

Our discount rate assumption for purposes of computing 2021 and 2020 “layers” for final capping, closure and post-closure obligations was 3.25% and 4.75%, which reflects our long-term credit adjusted risk free rate as of the end of 2020 and 2019.

Our inflation rate assumption was 2.25% and 2.50% for the years ended December 31, 2021 and 2020, respectively.

Significant reductions in our estimates of the remaining lives of our landfills or significant increases in our estimates of the landfill final capping, closure and post-closure maintenance costs could have a material adverse effect on our financial condition and results of operations.

Additionally, changes in

regulatory or legislative requirements could increase our costs related to our landfills, resulting in a material adverse effect on our financial condition and results of operations.

We own two landfills for which the prior owner is obligated to reimburse us for certain costs we incur for final capping, closure and post-closure activities on the portion of the landfills utilized by the prior owner.

We accrue the prior owner’s portion of the final capping, closure and post-closure obligation within the balance sheet classification of Other long-term liabilities, and a corresponding receivable from the prior owner in long-term Other assets.

Additionally, changes in regulatory or legislative requirements could increase our costs related to our landfills, resulting in a material adverse effect on our financial condition and results of operations.

Disposal capacity .

Our internal and third-party engineers perform surveys at least annually to estimate the remaining disposal capacity at our landfills.

Our landfill depletion rates are based on the remaining disposal capacity, considering both permitted and probable expansion airspace, at the landfills that we own and at landfills that we operate, but do not own, under life-of-site agreements.

own, under life-of-site agreements.

Our landfill depletion rate is based on the term of the operating agreement at our operated landfill that has capitalized expenditures.

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As part of our goodwill impairment test, we estimate the fair value of each of our reporting units using discounted cash flow analyses.

At December 31, 2019 and 2018, our reporting units consisted of our five geographic solid waste operating segments and our E&P segment.

At December 31, 2019, our reporting units consisted of our five geographic solid waste operating segments and our E&P segment.

As of July 1, 2020, we combined all operations of our E&P segment into the Southern segment, based on our determination that the two operating segments met the aggregation criteria, and eliminated the E&P segment.

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If the fair value of a reporting unit is greater than the carrying value of the net assets, including goodwill, assigned to the reporting unit, then no impairment results.

If the fair value is less than its carrying value, an impairment

charge is recorded for the amount by which the carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

If the fair value is less than its carrying value, an impairment charge is recorded for the amount by which the carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

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

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In assessing the reasonableness of our determined fair values of our reporting units, we evaluate our results against our current market capitalization.

For our impairment testing of our operating segments for the year ended December 31, 2020, we determined that the indicated fair value of our reporting units exceeded their carrying value by approximately 150% on average and, therefore, we did not record an impairment charge.

For our impairment testing of our operating segments for the year ended December 31, 2021, we determined that the indicated fair value of our reporting units

exceeded their carrying value by approximately 200% on average and, therefore, we did not record an impairment charge.

The detailed results of our 2021, 2020 and 2019 impairment tests are described in Note 3 of our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

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We measure and recognize goodwill as of the acquisition date as the excess of:

(a) the aggregate of the fair value of consideration transferred, the fair value of any noncontrolling interest in the acquiree (if any) and the acquisition date fair value of our previously held equity interest in the acquiree (if any), over (b) the fair value of net assets acquired and liabilities assumed.

(a) the aggregate of the fair value of consideration transferred, the fair value of the noncontrolling interest in the acquiree (if any) and the acquisition date fair value of our previously held equity interest in the acquiree (if any), over (b) the fair value of net assets acquired and liabilities assumed.

At the acquisition date, we measure the fair values of all assets acquired and liabilities assumed that arise from contractual contingencies.

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Our revenues from E&P waste services are primarily generated through the treatment, recovery and disposal of non-hazardous exploration and production waste from vertical and horizontal drilling, hydraulic fracturing, production and clean-up activity, as well as other services.

Our revenues from recycling services result from the sale of recycled commodities, which are generated by offering residential, commercial, industrial and municipal customers recycling services for a variety of recyclable materials, including compost, cardboard, mixed paper, plastic containers, glass bottles and ferrous and aluminum metals.

including compost, cardboard, mixed paper, plastic containers, glass bottles and ferrous and aluminum metals.

We own and operate recycling operations and market collected recyclable materials to third parties for processing before resale.

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We also receive rebates when we dispose of recycled commodities at third-party facilities.

Other revenues consist primarily of the sale of methane gas generated from our MSW landfills and revenues from intermodal services.

Other revenues consist primarily of the sale of methane gas and renewable energy credits generated from our MSW landfills and revenues from intermodal services.

Intermodal revenue is primarily generated through providing intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest through a network of intermodal facilities.

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Cost of operations includes labor and benefits, tipping fees paid to third-party disposal facilities, vehicle and equipment maintenance, workers’ compensation, vehicle and equipment insurance, insurance and employee group health claims expense, third-party transportation expense, fuel, the cost of materials we purchase for recycling, district and state taxes and host community fees and royalties.

Our significant costs of operations in 2020 were labor, including the discretionary costs added for frontline employee support, as well as employee benefits, third-party disposal and transportation, vehicle, equipment and property maintenance, taxes and fees, insurance and fuel.

Our significant costs of operations in 2021 were labor, employee benefits, third-party disposal and transportation, vehicle, equipment and property maintenance, taxes and fees, insurance and fuel.

We use a number of programs to reduce overall cost of operations, including increasing the use of automated routes to reduce labor and workers’ compensation exposure, utilizing comprehensive maintenance and health and safety programs, and increasing the use of transfer stations to further enhance internalization rates.

We carry insurance for automobile liability, general liability, employer’s liability, environmental liability, cyber liability, employment practices liability and directors’ and

officers’ liability as well as for employee group health claims, property and workers’ compensation.

We carry insurance for automobile liability, general liability, employer’s liability, environmental liability, cyber liability, employment practices liability and directors’ and officers’ liability as well as for employee group health claims, property and workers’ compensation.

If we experience insurance claims or costs above or below our historically evaluated levels, our estimates could be materially affected.

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Remaining airspace at our landfills includes both permitted and probable expansion airspace.

Amortization expense includes the amortization of finite-lived intangible assets, consisting primarily of long-term franchise agreements and contracts, customer lists and non-competition agreements, over their estimated useful lives using the straight-line method.

Goodwill and indefinite-lived intangible assets, consisting primarily of certain perpetual rights to provide solid waste collection and transportation services in specified territories, are not amortized.

Amortization expense includes the amortization of finite-lived intangible assets, consisting primarily of long-term franchise agreements and contracts, customer lists and non-competition agreements.

We use an accelerated or straight line basis for amortization, depending on the attributes of the related intangibles.

Goodwill and indefinite-lived

intangible assets, consisting primarily of certain perpetual rights to provide solid waste collection and transportation services in specified territories, are not amortized.

We capitalize some third-party expenditures related to development projects, such as legal and engineering.

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Other income (expense), net

Loss on early extinguishment of debt

Income tax provision

Net loss attributable to noncontrolling interests

Net loss (income) attributable to noncontrolling interests

Net income attributable to Waste Connections

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Operations that were divested in 2021, and the full year impact of operations that were divested in 2020, decreased revenues by approximately $12.6 million for the year ended December 31, 2021.

During the year ended December 31, 2020, the net increase in prices charged to our customers at our existing operations was $216.0 million, consisting of $227.7 million of core price increases, partially offset by a decrease in surcharges of $11.7 million.

During the year ended December 31, 2020, volume decreases in our existing business decreased solid waste revenues by $238.8 million, due primarily to the economic disruptions resulting from the COVID-19 pandemic that began in March 2020 and continued throughout 2020.

The decreases during the year ended December 31, 2020 resulting from the COVID-19 pandemic were partially offset by increased residential municipal solid waste and recycling collection services, increased landfill municipal solid waste and special waste volumes in certain markets and the impact of one additional business day in 2020 resulting from leap year.

E&P revenues at facilities owned during the year ended December 31, 2020 and 2019 decreased $112.1 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.

Drilling and production activity was also adversely impacted by the drop in the value of crude oil due to the increased supply of oil resulting from Saudi Arabia and Russia abandoning production quotas and increasing production levels, which was exacerbated by the impact of the COVID-19 pandemic.

A decrease in the average Canadian dollar to U.S.

dollar currency exchange rate resulted in a decrease in revenues of $7.1 million for the year ended December 31, 2020.

During the year ended December 31, 2021, the net increase in prices charged to our customers at our existing operations was $257.2 million, consisting of $243.5 million of core price increases and surcharges of $13.7 million.

During the year ended December 31, 2021, volume increases in our existing business increased solid waste revenues by $85.0 million as many of our markets benefitted from increased business activity resulting from reductions in COVID-19-related restrictions.

E&P waste revenues at facilities owned during the years ended December 31, 2021 and 2020 decreased $18.9 million attributable to the first and second quarter results in 2021 (which had a combined decrease of $39.0 million) being adversely impacted by 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, with our third and fourth quarter results in 2021 (which had a combined increase of $20.1 million) benefitting from recoveries in the demand for crude oil and 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 $48.1 million for the year ended December 31, 2021.

The average Canadian dollar to U.S.

dollar exchange rates on our Canadian revenues were 0.7472 and 0.7537 in the years ended December 31, 2020 and 2019, respectively.

Revenues from sales of recyclable commodities at facilities owned during the years ended December 31, 2020 and 2019 increased $4.3 million due primarily to higher prices for old corrugated cardboard 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 and decreased prices for plastic and aluminum.

Other revenues decreased by $2.2 million during the year ended December 31, 2020, due primarily to a $6.6 million decrease in intermodal revenues resulting from a reduction in intermodal cargo volumes and a $0.2 million decrease in other non core revenue sources, partially offset by a $4.6 million increase resulting from higher prices for renewable energy credits associated with the generation of landfill gas at our Canada segment.

dollar exchange rates on our Canadian revenues were 0.7982 and 0.7472 for the years ended December 31, 2021 and 2020, respectively.

Revenues from sales of recyclable commodities at facilities owned during the years ended December 31, 2021 and 2020 increased $92.7 million due primarily to higher prices for old corrugated cardboard, aluminum, plastics and other paper products, higher volumes collected from residential recycling customers and the partial recovery 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 $25.9 million during the year ended December 31, 2021, due primarily to a $24.4 million increase resulting from higher prices for renewable energy credits associated with the generation of landfill gas at our Canada segment, a $5.4 million increase in landfill gas sales at our U.S.

segments and a $1.9 million increase in other non-core revenue sources, partially offset by a $5.8 million decrease in intermodal revenues due primarily to customer losses and shipping port logistical constraints resulting in a reduction in intermodal cargo volumes.

Cost of Operations .

Total cost of operations increased $377.3 million, or 11.5%, to $3.654 billion for the year ended December 31, 2021, from $3.277 billion for the year ended December 31, 2020.

The increase was primarily the result of $134.6 million of additional operating costs from acquisitions closed during, or subsequent to, the year ended December 31, 2019, partially offset by a decrease in operating costs at our existing operations of $35.3 million, assuming foreign currency parity, a decrease in operating costs of $17.6 million at operations divested during, or subsequent to, the year ended December 31, 2019 and a decrease of $3.7 million resulting from a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods.

The decrease in operating costs at our existing operations for the year ended December 31, 2020 of $35.3 million, assuming foreign currency parity, included the following decreases totaling $74.4 million due to solid waste, intermodal and E&P volume losses resulting from the impact of the COVID-19 pandemic:

a decrease in third-party disposal expenses of $23.1 million, a decrease in third-party trucking and transportation expenses of $15.2 million, a decrease in direct labor expenses at our Eastern segment and E&P operations of $11.1 million due to headcount reductions, a decrease in intermodal rail expenses of $6.1 million;

a decrease in subcontracted E&P operating expenses of $5.7 million, a decrease in equipment and facility maintenance and repair expenses of $5.5 million at our E&P operations, a decrease in expenses for processing recyclable commodities of $5.3 million due to a decrease in commercial recycling volumes collected and a decrease in revenue-based royalties paid by our E&P operations of $2.4 million.

The remaining increase in operating costs at our existing operations of $39.1 million for the year ended December 31, 2020 consisted of an increase in truck, container, equipment and facility maintenance and repair expenses at our solid waste operations of $17.7 million due to cost increases and a higher quantity of large repairs, an increase in labor expenses totaling $15.7 million at the solid waste operations of our Southern segment and our Western, Central and Canada segments due primarily to annual pay increases and the impact of an additional working day during the year ended December 31, 2020, an increase in other cash incentive compensation to non-management personnel of $13.8 million to recognize the services they are providing during the COVID-19 pandemic, an increase of $11.4 million resulting from the payment of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic, an increase in expenses for auto and workers’ compensation claims of $9.4 million due primarily to increases in our deductibles for auto claims, higher claims severity in the current year period and adjustments recorded in the prior year period to decrease projected losses on outstanding claims originally recorded prior to 2019, an increase in compressed natural gas expense of $4.6 million due primarily to 2020 expenses being net of one year of tax credits for purchases occurring in 2020 whereas 2019 expenses were net of two years of tax credits for purchases occurring in 2019 and 2018, an increase in landfill gas system operating supplies and maintenance expenses at our solid waste operations of $3.5 million, an increase in recurring taxes on revenues of $3.4 million due primarily to increased revenues in our Western Region, an increase in leachate expense of $3.1 million due to higher per gallon disposal costs, an increase in leachate gallons disposed of due to storms causing higher precipitation in certain markets where our landfills are located, increased leachate in landfill cells constructed in 2020 and an increase in the percentage of leachate generated that required processing and disposal at third-party locations, an increase in property tax expenses of $2.0 million due primarily to reassessed values of certain landfills and property acquired in recent acquisitions and $0.9 million of other net expense increases, partially offset by a decrease in fuel expense of $24.0 million due to a decrease in the price of diesel fuel and declines in the volume of fuel used in our operations, a decrease in employee medical benefits expenses of $9.1 million due to a reduction in medical visits, a decrease in 401(k) matching expenses of $8.4 million as we suspended our 401(k) match as of June 1, 2020 and a decrease in taxes on revenues of $4.9 million from the reversal of recorded liabilities for certain fees and exactions at Chiquita Canyon landfill due to our successful challenge of increases assessed in prior periods.

Cost of operations as a percentage of revenues increased 0.8 percentage points to 60.2% for the year ended December 31, 2020, from 59.4% for the year ended December 31, 2019.

The increase as a percentage of revenues consisted of a 0.5 percentage point increase from higher labor expenses, a 0.5 percentage point increase resulting from the payment of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic and other cash incentive compensation paid to non-management personnel, a 0.4 percentage point increase from higher maintenance and repair expenses, a 0.2 percentage point increase from an increase in expenses for auto and workers’ compensation claims, a 0.2 percentage point increase from the net impact of cost of operations expenses from acquisitions closed during, or subsequent to, the year ended December 31, 2019 and a 0.2 percentage point increase from all other net changes, partially offset by a 0.4 percentage point decrease from lower diesel fuel expenses, a 0.3 percentage point decrease from lower trucking and transportation expenses, a 0.3 percentage point decrease from lower disposal expenses and a 0.2 percentage point decrease from lower 401(k) match expenses.

SG&A expenses decreased $8.7 million, or 1.6%, to $537.6 million for the year ended December 31, 2020, from $546.3 million for the year ended December 31, 2019.

The decrease was comprised of a decline of $20.7 million in SG&A expenses at our existing operations, assuming foreign currency parity, a decrease in SG&A expenses of $0.7 million at operations divested during, or subsequent to, the year ended December 31, 2019 and a decline of $0.7 million resulting from a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by $13.4 million of additional SG&A expenses from operating locations at acquisitions closed during, or subsequent to, the year ended December 31, 2019.

The decrease in SG&A expenses at our existing operations, assuming foreign currency parity, of $20.7 million for the year ended December 31, 2020, was comprised of a collective decrease in travel, meeting, training and community activity expenses of $22.4 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 401(k) matching expenses of $2.9 million due to our suspension of our 401(k) match as of June 1, 2020, a decrease in professional fees of $2.9 million due primarily to work on legal matters being postponed from temporary court closures and a decrease in third party tax consulting expenses, a decrease in office supplies and office utilities of $2.8 million due to office closures resulting from shelter at home restrictions, a decrease in direct acquisition expenses of $2.5 million due to changes in acquisition activity, a decrease in employee medical benefits expenses of $2.1 million due to a reduction in medical visits, a decrease in deferred compensation expenses of $1.6 million as a result of decreases in the market value of investments to which employee deferred compensation liability balances are tracked, a decrease in share-based compensation expenses of $1.5 million due primarily to decreased share price volatility and fewer outstanding shares 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 $1.7 million of other net expense decreases, partially offset by an increase in accrued recurring cash incentive compensation expense to our management of $6.0 million, an increase of $4.0 million in equity-based compensation expenses associated with fair value adjustments to Company common shares held in our deferred compensation plan by certain key executives as a result of the shares being exchanged for other investment options, an increase in payroll expenses of $3.5 million as a result of annual pay increases, additional paid time off benefits and the impact of an additional working day during the year ended December 31, 2020, an increase in expenses for uncollectible accounts receivable of $3.3 million due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic, an increase in software licenses and subscriptions expenses of $1.7 million due primarily to the addition of new sales and customer service applications and an increase of $1.2 million resulting from the payment of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic.

SG&A expenses as a percentage of revenues decreased 0.2 percentage points to 9.9% for the year ended December 31, 2020, from 10.1% for the year ended December 31, 2019.

The decrease as a percentage of revenues consisted of a 0.4 percentage point decrease from a reduction in travel, meeting, training and community activity expenses, partially offset by a 0.2 percentage point increase associated with administrative salaries and wages.

The increase was primarily the result of an increase in operating costs at our existing operations of $235.3 million, assuming foreign currency parity, $123.6 million of additional operating costs from acquisitions closed during, or subsequent to, the year ended December 31, 2020 and $26.5 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 $8.1 million at operations divested during or subsequent to the year ended December 31, 2020.

The increase in operating costs of $235.3 million, assuming foreign currency parity, at our existing operations for the year ended December 31, 2021, consisted of an increase in labor expenses at our solid waste operations of $80.6 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 $35.8 million due primarily to increased collection routes and equipment operating hours and parts and service rate increases, an increase in diesel fuel expense of $29.7 million due to higher fuel prices, an increase in third-party disposal expenses of $28.7 million due primarily to increased solid waste collection volumes, an increase in third-party trucking and transportation expenses of $27.7 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 $16.8 million due primarily to increased revenues in our solid waste markets, an increase in employee medical benefits expenses of $13.2 million due to an increase in medical visits, an increase in subcontracted hauling services at our solid waste operations of $10.8 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in 401(k) matching expenses of $10.8 million due to the prior year period reflecting less expenses as we suspended our 401(k) match

from June 1, 2020 to December 31, 2020, an increase in landfill maintenance, environmental compliance and daily cover expenses of $4.6 million due to increased compliance requirements under our landfill operating permits, an increase in leachate expense of $4.5 million due primarily to the impact of hurricanes and tropical storms causing higher precipitation in certain markets where our landfills are located, an increase in expenses for processing recyclable commodities of $3.4 million due to the net impact of increases attributable to changes in our accounting policy associated with recognizing certain recyclable commodity sales gross of selling and processing expenses exceeding decreases attributable to price reductions charged by third-party recycling processors resulting from recyclable commodity values, an increase in insurance premium expenses of $2.9 million due primarily to increased insurance premium costs for auto and environmental compliance, an increase in heavy equipment rental expenses of $2.0 million to provide support for solid waste volume increases at our disposal operations and $4.5 million of other net expense increases, partially offset by a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel of $20.4 million due to the prior year period including non-recurring expenses to recognize services provided by our frontline employees during the COVID-19 pandemic, a decrease in expenses for auto and workers’ compensation claims of $8.6 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 combined decrease in labor and subcontracted operating and remediation services at our E&P waste operations of $7.6 million due to E&P disposal volume decreases and a decrease in intermodal rail expenses of $4.1 million due to a reduction in cargo volume.

Cost of operations as a percentage of revenues decreased 0.8 percentage points to 59.4% for the year ended December 31, 2021, from 60.2% for the year ended December 31, 2020.

The decrease as a percentage of revenues consisted of a 0.4 percentage point decrease from a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel, a combined 0.4 percentage point decrease associated with solid waste labor and disposal due to price-driven revenue increases in our solid waste services, recyclable commodity sales and renewable energy credits, a 0.3 percentage point decrease from a reduction in expenses for auto and workers’ compensation claims and a 0.1 percentage point decrease from all other net changes, partially offset by a 0.2 percentage point increase from higher fuel expenses and a 0.2 percentage point increase from higher 401(k) expenses.

SG&A expenses increased $74.7 million, or 13.9%, to $612.3 million for the year ended December 31, 2021, from $537.6 million for the year ended December 31, 2020.

The increase was comprised of an increase of $56.1 million in SG&A expenses at our existing operations, assuming foreign currency parity, $14.7 million of additional SG&A expenses from operating locations at acquisitions closed during, or subsequent to, the year ended December 31, 2020 and $4.7 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 $0.8 million at operations divested during, or subsequent to, the year ended December 31, 2020.

The increase in SG&A expenses at our existing operations of $56.1 million, assuming foreign currency parity, for the year ended December 31, 2021, was comprised of an increase in accrued recurring cash incentive compensation expense to our management of $16.5 million, a collective increase in travel, meeting, training and community activity expenses of $10.4 million due to 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 $7.2 million associated with our annual recurring grant of restricted share units to our personnel, an increase in administrative payroll expenses of $6.5 million due primarily to annual pay and headcount increases, an increase in professional fees of $5.7 million due primarily to increased legal services and increased expenses associated with professional tax services, an increase in 401(k) matching expenses of $3.8 million due to the prior year period suspension of our 401(k) match, an increase in employee medical benefits expenses of $3.4 million due to an increase in medical visits, an increase in employee relocation expenses of $2.3 million, an increase in advertising expenses of $2.0 million due primarily to cost reduction efforts associated with the COVID-19 pandemic reducing the prior year period expenses, an increase in credit card and bank fees of $2.0 million due to increased revenues and customer counts, an increase in share-based compensation expenses of $1.6 million associated with 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, due primarily to share price increases in the current period, an increase in direct acquisition expenses of $1.5 million due to an increase in acquisition activity in the current period, an increase in equity-based compensation expenses of $1.2 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 and an increase

in deferred compensation expenses of $1.1 million as a result of increases in the market value of investments to which employee deferred compensation liability balances are tracked, partially offset by a decrease in expenses for uncollectible accounts receivable of $7.1 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 and $2.0 million of other net expense decreases.

SG&A expenses as a percentage of revenues increased 0.1 percentage points to 10.0% for the year ended December 31, 2021, from 9.9% for the year ended December 31, 2020.

The increase as a percentage of revenues consisted of a 0.2 percentage point increase from higher cash incentive compensation expense, a 0.1 percentage point increase from higher legal expenses, a 0.1 percentage point increase from higher 401(k) expenses and a 0.1 percentage point increase from higher travel and meeting expenses, partially offset by a 0.3 percentage point decrease from leveraging existing personnel to support our solid waste volume and price-driven revenue increases and a 0.1 percentage point decrease from lower expenses for uncollectible accounts receivable.

Depreciation .

Depreciation expense increased $52.6 million, or 8.5%, to $673.7 million for the year ended December 31, 2021, from $621.1 million for the year ended December 31, 2020.

The increase was comprised of an increase in depreciation and depletion expense of $20.8 million from acquisitions closed during, or subsequent to, the year ended December 31, 2019 and an increase in depreciation expense at our existing operations of $10.2 million due primarily to

the impact of additions to our fleet and equipment purchased to support our existing operations exceeding certain equipment acquired from the Progressive Waste acquisition becoming fully depreciated in June 2019 and June 2020, partially offset by a decrease in depletion expense of $26.7 million at our existing landfills due primarily to economic disruptions resulting from the COVID-19 pandemic causing a decrease in E&P and municipal solid waste, a decrease in depreciation and depletion expense of $0.8 million from operations divested during, or subsequent to, the year ended December 31, 2019 and a decrease of $0.8 million resulting from a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods.

The increase was comprised of an increase in depreciation expense of $21.0 million from the impact of additions to our fleet and equipment purchased to support our existing operations, an increase in depreciation and depletion expense of $17.4 million from acquisitions closed during, or subsequent to, the year ended December 31, 2020, an increase in depletion expense of $11.9 million resulting from increased landfill MSW and special waste volumes 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 depreciation and depletion expense of $3.3 million from operations divested during, or subsequent to, the year ended December 31, 2020.

Depreciation expense as a percentage of revenues decreased 0.5 percentage points to 10.9% for the year ended December 31, 2021, from 11.4% for the year ended December 31, 2020.

The decrease as a percentage of revenues consisted of a 0.4 percentage point decrease from depletion expense due to declines in E&P and municipal solid waste landfill volumes, partially offset by a 0.3 percentage point increase from depreciation expense attributable to a decrease in our revenues due to economic disruptions resulting from the COVID-19 pandemic.

The decrease as a percentage of revenues was primarily attributable to the impact of price-driven revenue increases in our solid waste services, recyclable commodity sales and renewable energy credits.

Amortization of Intangibles .

Amortization of intangibles expense increased $8.0 million, or 6.1%, to $139.3 million for the year ended December 31, 2021, from $131.3 million for the year ended December 31, 2020.

The increase was the result of $17.8 million from intangible assets acquired in acquisitions closed during, or subsequent to, the year ended December 31, 2019, partially offset by a decrease of $11.1 million from certain intangible assets becoming fully amortized subsequent to December 31, 2019, a decrease of $0.7 million from operations divested during, or subsequent to, the year ended December 31, 2019 and a decrease of $0.2 million resulting from a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods.

Amortization expense as a percentage of revenues increased 0.1 percentage points to 2.4% for the year ended December 31, 2020, from 2.3% for the year ended December 31, 2019.

The increase as a percentage of revenues was due primarily to the impact of amortization expense from intangible assets acquired in acquisitions closed during, or subsequent to, the year ended December 31, 2019.

The increase was the result of $14.5 million from intangible assets acquired in acquisitions closed during, or subsequent to, the year ended December 31, 2020 and $1.5 million from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by a decrease of $7.7 million from certain intangible assets becoming fully amortized subsequent to December 31, 2020 and a decrease of $0.3 million from operations divested during, or subsequent to, the year ended December 31, 2020.

Amortization expense as a percentage of revenues decreased 0.1 percentage points to 2.3% for the year ended December 31, 2021, from 2.4% for the year ended December 31, 2020.

Impairments and Other Operating Items .

Impairments and other operating items increased $404.8 million, to net losses totaling $466.7 million for the year ended December 31, 2020, from net losses totaling $61.9 million for the year ended December 31, 2019.

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

During the year ended December 31, 2020, our E&P revenue declined $112.1 million on rig count declines of 56% in certain basins.

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

Additionally, across the industry there is uncertainty regarding future demand for oil and related services, as noted by several energy companies, many of whom are customers of our E&P operations.

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.

Based on these events, we concluded during the second quarter of 2020 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 determined that the carrying value of four landfills in our E&P operations exceeded their estimated fair value, resulting in recording an impairment charge of $417.4 million to property and equipment during the year ended December 31, 2020.

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, $3.6 million of losses on the disposal of certain non-strategic operating locations and $1.0 million of other net charges.

The net losses of $61.9 million recorded during the year ended December 31, 2019 consisted of $25.8 million of charges in our Eastern segment associated with the write-down of an operating permit and equipment at a non-strategic materials recovery facility that was disposed of by sale on January 2, 2020, $15.4 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, $8.5 million of losses on property and equipment at our existing operations that were disposed of through sales or as a result of being damaged in operations, $8.0 million resulting from the abandonment of a landfill development project at our E&P segment, $2.0 million of expenses associated with the settlement of various litigation claims, a $1.5 million expense charge to increase the fair value of amounts payable under liability-classified contingent consideration arrangements from acquisitions closed in periods prior to 2019 and $0.7 million of other net losses.

Impairments and other operating items decreased $434.4 million, to net losses totaling $32.3 million for the year ended December 31, 2021, from net losses totaling $466.7 million for the year ended December 31, 2020.

The net losses of $32.3 million recorded during the year ended December 31, 2021 consisted of $18.7 million of impairment charges to property and equipment and intangible assets at three of our E&P waste operations, $4.9 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 the original estimated termination date, a $4.6 million loss resulting from property and equipment damaged in a facility fire, $2.8 million of adjustments to increase the carrying value of certain contingent consideration liabilities, $1.5 million of losses on property and equipment disposals and $1.8 million of other net charges, partially offset by $2.0 million of gains from the disposal of assets at two non-strategic operating locations.

During the year ended December 31, 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 waste 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 $49.3 million recorded during the year ended December 31, 2020 consisted of $18.4 million to adjust the carrying value of contingent consideration liabilities, $13.3 million of charges to adjust the carrying values of certain long-lived assets acquired in the Progressive Waste acquisition, $6.9 million of losses on property and equipment that were disposed of through sales or as a result of being damaged in operations, $6.1 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, $3.6 million of losses on the disposal of certain non-strategic operating locations and $1.0 million of other net charges.

Operating Income .

Operating income decreased $425.4 million, or 50.8%, to $412.4 million for the year ended December 31, 2020, from $837.8 million for the year ended December 31, 2019.

The decrease was due primarily to declines in our existing solid waste and E&P volumes resulting from the impact of the COVID-19 pandemic, additional discretionary costs primarily for frontline support and the impairment charge attributable to four of our E&P landfills, partially offset by price increases and cost containment efforts implemented at our solid waste operations and operating income generated from acquisitions.

Operating income as a percentage of revenues decreased 7.9 percentage points to 7.6% for the year ended December 31, 2020, from 15.5% for the year ended December 31, 2019.

The decrease as a percentage of revenues was comprised of a 7.3 percentage point increase in impairments and other operating items, a 0.8 percentage point increase in cost of operations and a 0.1 percentage point increase in amortization expense, partially offset by a 0.2 percentage point decrease in SG&A expense and a 0.1 percentage point decrease in depreciation expense.

Operating income increased $627.2 million, or 152.1%, to $1.040 billion for the year ended December 31, 2021, from $412.4 million for the year ended December 31, 2020.

Our operating results for the year ended December 31, 2020 were adversely impacted by the aforementioned impairment charge at our E&P waste operations of $417.4 million.

The remaining increase in our operating income for the year ended December 31, 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 during, or subsequent to, the year ended December 31, 2020 and an increase in the average Canadian dollar to U.S.

dollar currency exchange rate.

Operating income as a percentage of revenues increased 9.3 percentage points to 16.9% for the year ended December 31, 2021, from 7.6% for the year ended December 31, 2020.

The increase as a percentage of revenues was comprised of an 8.0 percentage point decrease in impairments and other operating items, a 0.8 percentage point decrease in cost of operations, a 0.5 percentage point decrease in depreciation expense and a 0.1 percentage point decrease in amortization expense, partially offset by at 0.1 percentage point increase in SG&A expense.

Interest Expense .

Interest expense increased $0.4 million, or 0.3%, to $162.8 million for the year ended December 31, 2021, from $162.4 million for the year ended December 31, 2020.

The increase was primarily attributable to an increase of $14.7 million from the January 2020 issuance of our 2030 Senior Notes (as defined below), an increase of $12.2 million from the March 2020 issuance of our 2050 Senior Notes (as defined below), an increase of $5.1 million from full year impact of the April 2019 issuance of our 2029 Senior Notes (as defined below), an increase of $3.4 million from higher net interest rates on borrowings outstanding under our Credit Agreement due primarily to a $150 million interest rate swap agreement commencing in February 2020 at a higher interest rate than two interest rate swap agreements totaling $175 million which expired in February 2020 and $1.2 million of other net increases, partially offset by a decrease of $13.9 million due to a reduction in the average borrowings outstanding under our Credit Agreement and a decrease of $7.7 million from full year impact of the repayment of $175 million of our 2019 Senior Notes (as defined below).

The increase was primarily attributable to an increase of $11.2 million from the September 2021 issuance of our 2032 Senior Notes (as defined below) and our 2052 Senior Notes (as defined below), an increase of $4.3 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 $4.0 million from the full year impact of the January 2020 issuance of our 2030 Senior Notes (as defined below) and the March 2020 issuance of our 2050 Senior Notes (as defined below) and an increase of $0.5 million due to an increase in the average borrowings outstanding under our Credit Agreement, partially offset by a decrease of $18.9 million from the repayment of $1.75 billion of senior unsecured notes in 2021 and $0.7 million of other net decreases.

Interest Income .

Interest income decreased $4.5 million, or 46.3%, to $5.3 million for the year ended December 31, 2020, from $9.8 million for the year ended December 31, 2019.

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

Interest income decreased $2.4 million to $2.9 million for the year ended December 31, 2021, from $5.3 million for the year ended December 31, 2020.

The decrease was primarily attributable to lower reinvestment rates and lower average cash balances in the current period.

Other Income (Expense), Net .

Other income (expense), net decreased $7.1 million, to an expense total of $1.4 million for the year ended December 31, 2020, from an income total of $5.7 million for the year ended December 31, 2019.

The decrease was due primarily to an increase in foreign currency transaction losses of $4.5 million attributable to the impact of an increase in the Canadian dollar to U.S.

dollar exchange rate during latter half of 2020 impacting our cash accounts held in U.S.

dollars by our Canadian entities and $2.6 million of adjustments to increase certain accrued liabilities acquired in acquisitions closed prior to 2019.

Other income (expense), net increased $7.7 million, to an income total of $6.3 million for the year ended December 31, 2021, from an expense total of $1.4 million for the year ended December 31, 2020.

Other income of $6.3 million recorded during the year ended December 31, 2021 consisted of $3.8 million of income earned on investments purchased to fund our employee deferred compensation obligations, a $1.4 million adjustment to decrease certain non-acquisition accrued liabilities recorded in prior periods, an increase in foreign currency transaction gains of $0.7 million attributable to the impact of an increase in the Canadian dollar to U.S.

dollar exchange rate during the period and a $0.4 million increase in other net income sources.

Other expense of $1.4 million recorded during the year ended December 31, 2020 consisted of an increase in foreign currency transaction losses of $3.1 million attributable to the impact of a decrease in the Canadian dollar to U.S.

exchange rate during the period and a $3.0 million adjustment to increase certain accrued liabilities acquired in the Progressive Waste acquisition, partially offset by $3.0 million of income earned 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 $0.7 million increase in other net income sources.

Loss on Early Extinguishment of Debt .

Loss on early extinguishment of debt was $115.3 million for the year ended December 31, 2021 and consists of the payment of a make-whole premium and the write-off of remaining unamortized loan fees associated with the early repayment of the outstanding senior notes under our master note purchase agreements.

Income Tax Provision .

Income taxes decreased $89.3 million, or 64.1%, to $49.9 million for the year ended December 31, 2020, from $139.2 million for the year ended December 31, 2019.

Our effective tax rate was 19.7% for the years ended December 31, 2020 and 2019.

The income tax provision for the year ended December 31, 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 year ended December 31, 2020 included a benefit of $5.4 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.

Income taxes increased $102.4 million, to $152.3 million for the year ended December 31, 2021, from $49.9 million for the year ended December 31, 2020.

Our effective tax rate for the year ended December 31, 2021 was 19.8%.

Our effective tax rate for the year ended December 31, 2020 was 19.7%.

The income tax provision for the year ended December 31, 2021 included a benefit of $2.1 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.

federal statutory rate.

The income tax provision for the year ended December 31, 2019 included a $3.8 million expense primarily associated with a reduction in deferred income tax assets related to compensation of executive officers no longer deemed deductible for tax purposes.

Additionally, the income tax provision for the year ended December 31, 2019 included a benefit of $5.5 million from share-based payment awards being recognized in the income statement when settled.

The income tax provision for the year ended December 31, 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 waste operations, which impacted the geographical apportionment of our state income taxes.

Additionally, the income tax benefit for the year ended December 31, 2020 included a benefit of $5.4 million from share-based payment awards being recognized in the income statement when settled.

Our effective tax rate is dependent upon the proportion of pre-tax income among the jurisdictions where we do business.

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Segment Reporting

We manage our operations through the following five geographic solid waste operating segments:

Eastern, Southern, Western, Central and Canada.

Our five geographic solid waste operating segments comprise our reportable segments.

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

We define segment EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and other operating items and other income (expense).

We define segment EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and other operating items, other income (expense) and loss on early extinguishment of debt.

Segment EBITDA is not a measure of operating income, operating performance or liquidity under GAAP and may not be comparable to similarly titled measures reported by other companies.

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

Prior to the third quarter of 2020, we managed our operations through five geographic solid waste operating segments and our E&P segment, which were also our reportable segments.

In the third quarter of 2020, our Chief Operating Decision Maker determined that the E&P and Southern operating segments met all of the aggregation criteria and eliminated our E&P segment by combining all operations of the E&P segment into the Southern segment.

After giving effect to this combination, our reportable segments consist of our five geographic operating segments and no longer include a separate E&P segment.

Our management uses segment EBITDA in the evaluation of segment operating performance as it is a profit measure that is

generally within the control of the operating segments.

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

In the first quarter of 2019, we moved two districts from our Eastern segment to our Central segment because their location was closer in proximity to operations in our Central segment.

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

Segment results for the 2019 and 2018 periods reflected in this report have been reclassified to reflect the realignment of our reportable segments for comparison with the same period in 2020.

At December 31, 2020, 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;

our Western segment services customers located in Alaska, California, Idaho, Montana, Nevada, Oregon, Washington and western Wyoming;

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

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

Revenues, net of intercompany eliminations, for our reportable segments are shown in the following table in thousands of U.S.

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

Years Ended December 31,

% of Revenues

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:

Years Ended December 31,

% of Revenues

Summarized financial information for our reportable segments are shown in the following table in thousands of U.S.

dollars and as a percentage of total segment revenue for the periods indicated:

Depreciation and

December 31, 2021

Corporate (a)

Depreciation and

December 31, 2020

Corporate (a)

The majority of Corporate expenses are allocated to the five operating segments.

Direct acquisition expenses and share-based compensation expenses associated with Progressive Waste share-based grants outstanding at June 1, 2016 that were continued by the Company are not allocated to the five operating segments and comprise the net EBITDA of our Corporate segment for the periods presented.

Direct acquisition expenses, expenses associated with common shares held in the deferred compensation plan exchanged for other investment options and share-based compensation expenses associated with Progressive Waste share-based grants outstanding at June 1, 2016 that were continued by the Company are not allocated to the five operating segments and comprise the net EBITDA for our Corporate segment for the periods presented.

A reconciliation of segment EBITDA to Income before income tax provision is included in Note 17 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

Significant changes in revenue and segment EBITDA for our reportable segments for the year ended December 31, 2020, compared to the year ended December 31, 2019, are discussed below.

Segment Revenue

Revenue in our Southern segment decreased $79.4 million, or 5.5%, to $1.370 billion for the year ended December 31, 2020, from $1.449 billion for the year ended December 31, 2019.

The components of the decrease consisted of a decline in revenue at our E&P operations of $109.0 million, partially offset by an increase in revenue at our solid waste operations of $29.6 million.

The $109.0 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.

Drilling and production activity during the year ended December 31, 2020 were also adversely impacted by the drop in the value of crude oil due to the increased supply of oil resulting from Saudi Arabia and Russia abandoning production quotas and increasing production levels, which was exacerbated by the impact of the COVID-19 pandemic.

The components of the $29.6 million increase in revenue at our solid waste operations consisted of net price increases of $54.3 million and net revenue growth from acquisitions closed during, or subsequent to, the year ended December 31, 2019 of $12.5 million, partially offset by solid waste volume decreases of $36.0 million attributable primarily to COVID-19-related economic disruptions driving declines in commercial collection, roll off collection and municipal solid waste landfill volumes that exceeded increases in landfill special waste volumes, net revenue reductions from divestitures closed subsequent to December 31, 2019 of $0.6 million and other revenue decreases of $0.6 million.

Revenue in our Eastern segment increased $66.9 million, or 5.3%, to $1.336 billion for the year ended December 31, 2020, from $1.269 billion for the year ended December 31, 2019.

The components of the increase consisted of net revenue growth from acquisitions closed during, or subsequent to, the year ended December 31, 2019, of $141.1 million and net price increases of $57.6 million, partially offset by solid waste volume decreases of $116.0 million attributable primarily to COVID-19-related economic disruptions driving declines in commercial collection, roll off collection, transfer station and landfill volumes, net revenue reductions from divestitures closed subsequent to December 31, 2019 of $13.7 million and other revenue decreases of $2.1 million.

Revenue in our Western segment increased $51.0 million, or 4.6%, to $1.150 billion for the year ended December 31, 2020, from $1.099 billion for the year ended December 31, 2019.

The components of the increase consisted of net price increases of $30.6 million, net revenue growth from acquisitions closed during, or subsequent to, the year ended December 31, 2019, of $16.5 million, solid waste volume increases of $9.2 million attributable to increased residential collection, transfer station and landfill municipal solid waste volumes and an increase in revenues from sales of recyclable commodities of $2.1 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 $6.6 million due to a reduction in intermodal cargo volumes and other revenue decreases of $0.8 million.

Revenue in our Central segment increased $41.7 million, or 5.0%, to $880.3 million for the year ended December 31, 2020, from $838.6 million for the year ended December 31, 2019.

The components of the increase consisted of revenue growth from acquisitions closed during, or subsequent to, the year ended December 31, 2019, of $41.9 million and net price increases of $38.3 million, partially offset by solid waste volume decreases of $37.1 million due to the impact of COVID-19-related economic disruptions driving decreases in commercial collection, roll off collection, transfer station and landfill volumes, net revenue reductions from divestitures closed subsequent to December 31, 2019 of $1.3 million and other revenue decreases of $0.1 million.

Revenue in our Canada segment decreased $22.8 million, or 3.1%, to $710.5 million for the year ended December 31, 2020, from $733.3 million for the year ended December 31, 2019.

The components of the decrease consisted of solid waste volume decreases of $58.8 million due to the net impact of COVID-19-related economic disruptions driving decreases in commercial collection, roll off collection, transfer station and landfill volumes and a decrease of $7.1 million resulting from a lower average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by net price increases of $35.2 million, an increase of $4.6 million resulting from higher prices for renewable energy credits associated with the generation of landfill gas, an increase in revenues from sales of recyclable commodities of $2.0 million due primarily to higher prices for old corrugated cardboard and higher volumes collected from residential recycling customers, net revenue growth from acquisitions closed during, or subsequent to, the year ended December 31, 2019 of $0.8 million and other revenue increases of $0.5 million.

Segment EBITDA

Segment EBITDA in our Southern segment decreased $72.0 million, or 16.3%, to $369.4 million for the year ended December 31, 2020, from $441.4 million for the year ended December 31, 2019.

The decrease was due to a decline in E&P revenues of $109.0 million, an increase in truck, container, equipment and facility maintenance and repair expenses at our solid waste operations of $9.9 million due to cost increases and a higher quantity of large repairs, a net $8.3 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in labor expenses at our solid waste operations of $6.9 million due primarily to employee pay rate increases, an increase in expenses for auto and workers’ compensation claims of $6.4 million at our solid waste operations due primarily to increases in our deductibles for auto claims, higher claims severity in the current year period and adjustments recorded in the prior year period to decrease projected losses on outstanding claims originally recorded prior to 2019, an increase of $3.6 million resulting from the payment of supplemental bonuses to non-management employees at our solid waste operations to provide financial assistance associated with the impact of the COVID-19 pandemic, an increase in subcontracted hauling services of $3.2 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in third party trucking and transportation expenses of $2.9 million at our solid waste operations due to increased landfill special waste volumes requiring transportation services to our disposal sites, an increase in leachate expense of $2.1 million due to higher per gallon disposal costs and an increase in leachate gallons disposed due to storms causing higher precipitation in certain markets where our landfills are located, an increase in

expenses for uncollectible accounts receivable at our E&P operations of $2.1 million due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic, an increase in corporate overhead expense allocations to our solid waste operations of $1.8 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation and an increase in compressed natural gas expense of $1.4 million due primarily to 2020 expenses being net of one year of tax credits for purchases occurring in 2020 whereas 2019 expenses were net of two years of tax credits for purchases occurring in 2019 and 2018, partially offset by an increase in revenues at our solid waste operations of $29.6 million, a decrease in third party disposal expenses at our solid waste operations of $8.8 million due primarily to declines in commercial and roll off collection volumes, a decrease in 401(k) matching expenses at our solid waste operations of $4.2 million as we suspended our 401(k) match as of June 1, 2020, a decrease in employee medical benefits expenses at our solid waste operations of $3.2 million due to a reduction in medical visits, a collective decrease in travel, meeting, training, and community activity expenses at our solid waste operations of $2.9 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 fuel expense at our solid waste operations of $2.0 million due to a decrease in the price of diesel fuel and declines in the volume of fuel used in our operations, a net $0.8 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 $6.4 million, a decrease in operating activities outsourced to third-parties of $5.7 million, a decrease in equipment and property repair and maintenance expenses of $5.5 million, a decrease in third-party trucking and transportation services of $4.2 million, a decrease in fuel expense of $2.8 million, a decrease in royalty expenses paid on revenues of $2.4 million, a decrease in landfill operating supplies of $1.6 million, a decrease in travel, meetings and training expenses of $1.6 million, a decrease in equipment rental expenses of $0.8 million, a decrease in cell processing expenses of $0.8 million and $2.3 million of other net expense decreases.

Segment EBITDA in our Western segment increased $26.2 million, or 7.7%, to $364.8 million for the year ended December 31, 2020, from $338.6 million for the year ended December 31, 2019.

The increase was due primarily to an increase in revenues of $51.0 million, a decrease in intermodal rail expenses of $6.0 million due to a reduction in cargo volume, a decrease in taxes on revenues of $4.9 million from the reversal of recorded liabilities for certain fees and exactions at Chiquita Canyon landfill due to our successful challenge of increases assessed in prior periods, a decrease in fuel expense of $3.3 million due to a decrease in the price of diesel fuel, a collective decrease in travel, meeting, training, and community activity expenses of $3.2 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 and a decrease in 401(k) matching expenses of $2.5 million as we suspended our 401(k) match as of June 1, 2020, partially offset by a net $12.1 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in labor expenses of $7.2 million due primarily to employee pay rate increases, an additional calendar and business day in the current year period due to leap year, as well as emergency wages and other COVID-19-related employee costs, an increase in recurring taxes on revenues of $5.2 million attributable to price-led increases in residential collection and landfill municipal solid waste revenues, an increase in third party disposal expenses of $3.9 million due primarily to disposal rate increases and higher residential collection tonnage, an increase in corporate overhead expense allocations of $2.5 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase of $2.3 million resulting from the payment of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic, an increase in landfill site maintenance expenses of $1.9 million due primarily to increased daily cover costs, an increase in third-party trucking and transportation expenses of $1.8 million due primarily to higher transfer station volumes and landfill special waste volumes in certain markets that require transportation services to our disposal sites and increased rates charged by third parties to provide trucking and transportation services, an increase in leachate expense of $1.5 million due to higher per gallon disposal costs, increased leachate in landfill cells constructed in 2020 and an increase in the percentage of leachate generated that required processing and disposal at third-party locations, an increase in compressed natural gas expense of $1.3 million due primarily to 2020 expenses being net of one year of tax credits for purchases occurring in 2020 whereas 2019 expenses were net of two years of tax credits for purchases occurring in 2019 and 2018, an increase in expenses for auto and workers’ compensation claims of $1.0 million due primarily to non-recurring adjustments recorded in the prior year period to decrease projected losses on outstanding claims originally recorded prior to 2019, an increase in expenses for uncollectible accounts receivable of $0.9 million due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic, an increase in truck, container, equipment and facility maintenance and repair expenses of $0.6 million due to cost increases and other expense increases of $2.5 million.

Segment EBITDA in our Eastern segment increased $12.8 million, or 3.9%, to $343.4 million for the year ended December 31, 2020, from $330.6 million for the year ended December 31, 2019.

The increase was due primarily to an increase in revenues of $80.6 million from organic growth and acquisitions, $32.6 million of collective decreases in third-party disposal expenses, third-party trucking expenses, labor expenses, expenses for processing recyclable commodities and taxes on revenues attributable to declines in solid waste and commercial recycling volumes resulting primarily from economic disruptions caused by the COVID-19 pandemic, a decrease in fuel expense of $7.6 million due to a decrease in the price of diesel fuel and declines in the volume of fuel used in our operations, a decrease in employee medical benefits expenses of $4.5 million due to a reduction in medical visits, a collective decrease in travel, meeting, training, and community activity expenses of $3.1 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, an increase to EBITDA of $2.8 million from the impact of operations disposed of during the year ended December 31, 2020, a decrease in 401(k) matching expenses of $2.4 million as we suspended our 401(k) match as of June 1, 2020 and other expense decreases of $0.7 million, partially offset by a net $103.0 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in corporate overhead expense allocations of $5.8 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 $2.7 million due to cost increases and a higher quantity of large repairs, an increase of $2.7 million resulting from the payment of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic, an increase in landfill gas system operating supplies and maintenance expenses of $2.3 million, an increase in expenses for uncollectible accounts receivable of $2.3 million due to customers experiencing financial difficulties resulting from the economic impact of the COVID-19 pandemic, an increase in compressed natural gas expense of $1.6 million due primarily to 2020 expenses being net of one year of tax credits for purchases occurring in 2020 whereas 2019 expenses were net of two years of tax credits for purchases occurring in 2019 and 2018 and an increase in subcontracted hauling services of $1.1 million due to outsourcing the servicing of certain non-strategic collection customers to third party haulers.

Segment EBITDA in our Central segment increased $20.9 million, or 7.2%, to $313.0 million for the year ended December 31, 2020, from $292.1 million for the year ended December 31, 2019.

The increase was due primarily to an increase in revenues of $43.0 million from organic growth and acquisitions, $6.2 million of collective decreases in third-party disposal expenses and third-party trucking expenses attributable to declines in solid waste volumes resulting from economic disruptions caused by the COVID-19 pandemic, a decrease in expenses for uncollectible accounts receivable of $2.4 million due primarily to the current period collection of certain accounts deemed uncollectible in prior periods, a decrease in fuel expense of $2.4 million due to a decrease in the price of diesel fuel, a decrease in 401(k) matching expenses of $2.4 million as we suspended our 401(k) match as of June 1, 2020, a decrease in employee medical benefits expenses of $2.1 million due to a reduction in medical visits, a collective decrease in travel, meeting, training, and community activity expenses of $1.5 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 and other expense decreases of $1.6 million, partially offset by a net $24.6 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in labor expenses of $7.5 million due primarily to employee pay rate increases, an additional calendar and business day in the current year period due to leap year, as well as emergency wages and other COVID-19-related employee costs exceeding decreases in hours worked attributable to solid waste volume reductions resulting from COVID-19-related economic disruptions, an increase in truck, container, equipment and facility maintenance and repair expenses of $3.0 million due to cost increases and a higher quantity of large repairs, an increase of $2.3 million resulting from the payment of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic, an increase in corporate overhead expense allocations of $2.2 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation and an increase in expenses for auto and workers’ compensation claims of $1.1 million due primarily to non-recurring adjustments recorded in the prior year period to decrease projected losses on outstanding claims.

Segment EBITDA in our Canada segment decreased $0.3 million, or 0.1%, to $256.1 million for the year ended December 31, 2020, from $256.4 million for the year ended December 31, 2019.

The decrease was comprised of a decrease of $2.5 million from a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods, partially offset by an increase of $2.2 million assuming foreign currency parity during the comparable reporting periods.

The $2.2 million increase, which assumes foreign currency parity, was due primarily to collective decreases totaling $8.9 million in third-party disposal expenses and third-party trucking expenses attributable to declines

in solid waste volumes resulting primarily from economic disruptions caused by the COVID-19 pandemic, a decrease in fuel expense of $6.0 million due to declines in the market price of diesel fuel, a decrease in subcontracted hauling services at our solid waste operations of $4.7 million due primarily to declines in commercial customers requiring less outsourcing of certain collection activities to third party collection companies and the impact of reversing expenses accrued in a prior period and incurring less expenses in the current period associated with estimated equipment charge overages related to an outsourced collection contract, a decrease in labor expenses of $2.4 million due to the receipt of government subsidies reimbursing us for certain payroll expenditures remitted to our employees during the COVID-19 pandemic and a collective decrease in travel, meeting, training, and community activity expenses of $1.5 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 decrease in revenues of $15.7 million, an increase in truck, container, equipment and facility maintenance and repair expenses of $1.7 million due to parts and service rate increases and variability impacting the timing of major repairs, additional expenses of $1.3 million resulting from the payment of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic, an increase in landfill gas system operating supplies and maintenance expenses of $1.0 million, an increase in labor expenses of $1.0 million due primarily to employee pay rate increases exceeding the impact of headcount reductions and an increase in corporate overhead expense allocations of $0.6 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation.

Segment EBITDA at Corporate increased $0.1 million, to a loss of $15.3 million for the year ended December 31, 2020, from a loss of $15.4 million for the year ended December 31, 2019.

The increase was due to an increase in corporate overhead allocated through charges to our segments of $13.1 million due to an increase in expenses qualifying for allocation, a collective decrease in travel, meeting, training, office supplies and community activity expenses of $7.6 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 professional fees of $2.5 million due primarily to work on legal matters being postponed resulting from temporary court closures and a decrease in third party tax consulting expenses, a decrease in direct acquisition expenses of $2.5 million due to changes in acquisition activity, a decrease in deferred compensation expenses of $1.6 million as a result of decreases in the market value of investments to which employee deferred compensation liability balances are tracked and a decrease in share-based compensation expenses of $1.5 million due primarily to decreased share price volatility and fewer outstanding shares 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, partially offset by an increase in accrued cash incentive compensation expense to our management and non-management employees of $19.4 million, an increase of $4.0 million in equity-based compensation expenses associated with fair value adjustments to Company common shares held in our deferred compensation plan by certain key executives as a result of the shares being exchanged for other investment options, an increase in software licenses and subscriptions expenses of $1.7 million due primarily to the addition of new sales and customer service applications, an increase in payroll and payroll related expenses of $1.5 million due to annual pay increases and increased employee termination pay and $2.1 million of other net expense increases.

Significant changes in revenue, EBITDA and depreciation, depletion and amortization for our reportable segments for the year ended December 31, 2021, compared to the year ended December 31, 2020, are discussed below.

Revenue increased $185.4 million to $1.521 billion for 2021, from $1.336 billion for 2020, due to price increases, solid waste collection and disposal volume increases in the third and fourth quarters of 2021, contributions from acquisitions, higher prices for recyclable commodities and higher volumes collected from commercial recycling customers, partially offset by solid waste volume decreases occurring in the first two quarters of 2021 attributable primarily to COVID-19-related economic disruptions in our Northeastern markets.

EBITDA increased $61.1 million to $404.5 million, or a 26.6% EBITDA margin for 2021, from $343.4 million, or a 25.7% EBITDA margin for 2020.

The increase in our EBITDA margin was due to price-led increases in revenue at locations owned in the comparable periods, a decrease in expenses for uncollectible accounts receivable and a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel, partially offset by increased diesel fuel expenses, increased medical benefits expenses and increased 401(k) matching expenses.

Depreciation, depletion and amortization for 2021 increased $16.2 million, to $239.1 million for 2021, from $222.9 million for 2020, due to assets acquired in acquisitions, higher depreciation from additions to our fleet and equipment and higher depletion from increased landfill volumes.

Revenue increased $77.1 million to $1.447 billion for 2021, from $1.370 billion for 2020, due to increased solid waste collection and disposal volumes, solid waste price increases, contributions from acquisitions and higher prices for recyclable commodities, partially offset by reduced E&P waste revenues attributable to decreases in drilling and production activity levels resulting in decreases in the demand for our E&P waste services and a decrease resulting from the divestiture of certain non-strategic operating locations.

EBITDA increased $25.6 million to $395.0 million, or a 27.3% EBITDA margin for 2021, from $369.4 million, or a 27.0% EBITDA margin for 2020.

The increase in our EBITDA margin was due to price-led increases in solid waste revenue at locations owned in the comparable periods, a decrease in expenses for auto and workers’ compensation claims, a decrease in expenses for uncollectible accounts receivable and a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel, partially offset by an increase in subcontracted hauling services at our solid waste operations, increased diesel fuel expenses, increased medical benefits expenses, increased legal expenses and increased 401(k) matching expenses.

Depreciation, depletion and amortization for 2021 decreased $0.7 million, to $189.0 million for 2021, from $189.7 million for 2020, due to a decrease from the divestiture of certain non-strategic operating locations and our E&P locations recognizing lower depreciation as a result of reductions in operating equipment and lower depletion due to reductions in customer disposal volumes, partially offset by higher depreciation from additions to fleet and equipment at our solid waste operations and higher depletion from increased solid waste landfill volumes.

Revenue increased $130.4 million to $1.280 billion for 2021, from $1.150 billion for 2020, due to increased collection and disposal volumes, price increases, contributions from acquisitions, higher prices for recyclable commodities and higher volumes collected from residential recycling customers, partially offset by reduced intermodal revenue.

EBITDA increased $41.0 million to $405.8 million, or a 31.7% EBITDA margin for 2021, from $364.8 million, or a 31.7% EBITDA margin for 2020.

Our EBITDA margin was unchanged due the favorable impacts of the increase in revenue at locations owned in the comparable periods resulting from the economic recovery, a decrease in expenses for processing recyclable commodities and a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel being offset by the impact of acquisitions closed during, or subsequent to, the year ended December 31, 2020 having lower EBITDA margins than our segment average, increased diesel fuel expenses, increased medical benefits expenses and increased 401(k) matching expenses.

Depreciation, depletion and amortization for 2021 increased $14.8 million, to $130.0 million for 2021, from $115.2 million for 2020, due to assets acquired in acquisitions, higher depreciation from additions to our fleet and equipment and higher depletion from increased landfill volumes.

Revenue increased $166.1 million to $1.046 billion for 2021, from $880.3 million for 2020, due to increased collection and disposal volumes, price increases, contributions from acquisitions and higher prices for recyclable commodities.

EBITDA increased $46.4 million to $359.4 million, or a 34.3% EBITDA margin for 2021, from $313.0 million, or a 35.6% EBITDA margin for 2020.

The decrease in our EBITDA margin was due to the impact of acquisitions closed during, or subsequent to, the year ended December 31, 2020 having lower EBITDA margins than our segment average, increased labor expenses attributable to pay rate increases, increased vehicle and equipment maintenance and repair

expenses, increased medical benefits expenses, increased 401(k) matching expenses and increased expenses for uncollectible accounts receivable.

Depreciation, depletion and amortization for 2021 increased $21.1 million, to $134.1 million for 2021, from $113.0 million for 2020, due to assets acquired in acquisitions, higher depreciation from additions to our fleet and equipment and higher depletion from increased landfill volumes.

Revenue increased $146.2 million to $856.7 million for 2021, from $710.5 million for 2020, due to price increases, increased collection and disposal volumes, a higher average foreign currency exchange rate in effect during the comparable reporting periods, higher prices for renewable energy credits associated with the generation of landfill gas, higher prices for recyclable commodities and higher volumes collected from commercial recycling customers.

EBITDA increased $83.8 million to $339.9 million, or a 39.7% EBITDA margin for 2021, from $256.1 million, or a 36.0% EBITDA margin for 2020.

The increase in our EBITDA margin was due to price-led increases in revenue at locations owned in the comparable periods, a decrease in expenses for uncollectible accounts receivable and a decrease in supplemental bonuses and other cash incentive compensation to non-management personnel, partially offset by increased diesel fuel expenses and increased cost of recyclable commodities expenses.

Depreciation, depletion and amortization for 2021 increased $8.2 million, to $111.5 million for 2021, from $103.3 million for 2020, due to a higher average foreign currency exchange rate, higher depreciation from additions to our fleet and equipment and higher depletion from increased landfill volumes, partially offset by lower amortization expense attributable to intangible assets becoming fully amortized during the current reporting period.

EBITDA decreased $4.3 million, to a loss of $19.6 million for 2021, from a loss of $15.3 million for 2020.

The decrease was due to increased equity-based compensation expenses, increased travel, meeting, training and community activity expenses, increased direct acquisition expenses, increased legal expenses, increased employee payroll and relocation expenses and increased deferred compensation expenses, partially offset by increased allocations of corporate overhead expenses to our segments.

Liquidity and Capital Resources

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

Net increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of year

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For the year ended December 31, 2020, net cash provided by operating activities was $1.409 billion.

The $132.0 million decrease was due primarily to the following:

1) Accounts payable and accrued liabilities — Our decrease in net cash provided by operating activities was unfavorably impacted by $108.0 million from accounts payable and accrued liabilities.

Although certain operating expenses declined as a result of solid waste and E&P volume losses due to economic disruptions resulting from the COVID-19 pandemic, our operating cash flows were adversely impacted from the timing of vendor payments and payroll cycles as well as the payment of higher outstanding liabilities existing prior to the recent economic downturn.

This decrease was partially offset by an increase in accrued payroll tax liabilities of $44.6 million associated with our deferral of qualifying U.S.

payroll and other tax payments as permitted by the CARES Act, of which a minimum of 50% will be remitted in 2021 and the remainder remitted in 2022, an increase in liabilities for cash incentive compensation of $6.3 million and an increase in accrued interest expense liabilities of $12.3 million due to the timing of interest payments for our outstanding senior note obligations.

2) Deferred income taxes — Our decrease in net cash provided by operating activities was unfavorably impacted by $105.1 million from deferred income taxes as changes in deferred income taxes resulted in a decrease to operating cash flows of $50.5 million for the year ended December 31, 2020, compared to an increase to operating cash flows of $54.6 million for the year ended December 31, 2019.

During the year ended December 31, 2020, deferred income taxes were unfavorably impacted by the impairment of certain property and equipment at our E&P operations.

During the year ended December 31, 2019, deferred income taxes were favorably impacted by accelerated tax depreciation from vehicles, equipment and containers acquired in business combinations.

3) Prepaid expenses — Our decrease in net cash provided by operating activities was unfavorably impacted by $26.9 million from prepaid expenses due primarily to an increase in prepaid income taxes, prepaid insurance and prepaid vendor payments.

4) Increase in earnings — Our decrease in net cash provided by operating activities was favorably impacted by $40.5 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 and cost containment efforts implemented in our solid waste markets and earnings from acquisitions closed during, or subsequent to, the year ended December 31, 2019 offsetting a decline in earnings at our E&P operations, as well as solid waste volume losses resulting from the COVID-19 pandemic.

5) Accounts receivable — Our decrease in net cash provided by operating activities was favorably impacted by $69.7 million from accounts receivable, as changes in accounts receivable, net of acquisitions, resulted in an increase to operating cash flows of $46.8 million for the year ended December 31, 2020, compared to a decrease to operating cash flows of $22.9 million for the year ended December 31, 2019.

During the year ended December 31, 2020, net price increases of $216.0 million were offset by volume decreases in our solid waste business and E&P business of $238.8 million and $112.1 million, respectively.

The net decrease in revenues resulting from volume losses in excess of price increases during the year ended December 31, 2020 contributed to a decrease in accounts receivable at December 31, 2020.

During the year ended December 31, 2019, we recognized net price increases of $237.0 million and a total of $1.9 million of net volume increases in our solid waste business and E&P business.

The increase in revenues resulting from price increases and volume increases during the year ended December 31, 2019 contributed to an increase in accounts receivable at December 31, 2019.

As of December 31, 2020, we had a working capital surplus of $379.6 million, including cash and equivalents of $617.3 million.

Our working capital surplus increased $256.2 million from a working capital surplus of $123.4 million at December 31, 2019, including cash and equivalents of $326.7 million, due primarily to the impact of increased cash balances, increased prepaid expenses and decreased accounts payable being partially offset by higher accrued liabilities, short-term contingent consideration liabilities, higer deferred revenue and a reduction in accounts receivable.

The $289.7 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 $179.3 million from an increase in net income, excluding depreciation, amortization of intangibles, loss on early extinguishment of debt, 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 during, or subsequent to, the year ended December 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 waste operations.

2) Accounts payable and accrued liabilities — Our increase in net cash provided by operating activities was favorably impacted by $130.4 million from accounts payable and accrued liabilities as changes in accounts payable and accrued liabilities resulted in an increase to operating cash flows of $70.6 million for the year ended December 31, 2021, compared to a decrease to operating cash flows of $59.8 million for the year ended December 31, 2020.

The increase for the year ended December 31, 2021 was due primarily to increases in operating expenses during the period which remained as outstanding obligations at December 31, 2021.

The decrease for the year ended December 31, 2020 was due primarily to the timing of processing vendor payments and the timing of payroll cycles resulting in a reduction in unpaid amounts at year end .

3) Deferred income taxes — Our increase in net cash provided by operating activities was favorably impacted by $65.1 million from deferred income taxes as changes in deferred income taxes resulted in a decrease to operating cash flows of $14.6 million for the year ended December 31, 2021, compared to a decrease to operating cash flows of $50.5 million for the year ended December 31, 2020.

The increase in deferred taxes for the year ended December 31, 2021 was primarily due to accelerated tax depreciation from vehicles, equipment and containers.

The decrease in deferred taxes for the year ended December 31, 2020 was attributable to the impairment of certain assets within our E&P waste operations .

4) Deferred revenue — Our increase in net cash provided by operating activities was favorably impacted by $16.7 million from deferred revenue as changes in deferred revenue resulted in an increase to operating cash flows of $31.7 million for the year ended December 31, 2021, compared to an increase to operating cash flows of $15.0 million for the year ended December 31, 2020.

During the year ended December 31, 2021, deferred revenue increased due to price increases on our advanced billed residential and commercial collection services and the timing of bi-monthly advance service billings.

5) Prepaid expenses – Our increase in net cash provided by operating activities was favorably impacted by $9.5 million from prepaid expenses due primarily to a decrease in prepaid vendor payments.

6) Accounts receivable – Our increase in net cash provided by operating activities was unfavorably impacted by $86.0 million from accounts receivable as changes in accounts receivable resulted in a decrease to operating cash flows of $54.7 million for the year ended December 31, 2021, compared to an increase to operating cash flows of $31.3 million for the year ended December 31, 2020.

The decrease for the year ended December 31, 2021 was due to increases in revenues, which remained as outstanding receivables at December 31, 2021.

The increase for the year ended December 31, 2020 was attributable to the collection of outstanding accounts receivable existing prior to the COVID-19-driven economic downturn, with accounts receivable at December 31, 2020 reflecting the impact of lower uncollected revenues.

7) Capping, closure and post-closure expenditures – Our increase in net cash provided by operating activities was unfavorably impacted by a $14.6 million increase in capping, closure and post-closure expenditures due to the timing of interim capping requirements .

As of December 31, 2021, we had a working capital deficit of $200.0 million, including cash and equivalents of $147.4 million.

Our working capital decreased $579.6 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 decreased cash balances, increased deferred revenue and increased current portion of contingent consideration being partially offset by increased accounts receivable.

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

however, we can provide no assurances that access to our cash and equivalents will not be impacted by adverse conditions in the financial markets.

Our strategy in managing our working capital is generally to apply the cash generated from our operations that remains after satisfying our working

capital and capital expenditure requirements, along with share repurchase and dividend programs, to reduce the unhedged portion of our indebtedness under our Credit Agreement and to minimize our cash balances.

we can provide no assurances that access to our cash and equivalents will not be impacted by adverse conditions in the financial markets.

Our strategy in managing our working capital is generally to apply the cash generated from our operations that remains after satisfying our working capital and capital expenditure requirements, along with share repurchase and dividend programs, to reduce the unhedged portion of our indebtedness under our Credit Agreement and to minimize our cash balances.

Investing Activities Cash Flows

Net cash used in investing activities decreased $380.0 million to $1.046 billion for the year ended December 31, 2020, from $1.426 billion for the year ended December 31, 2019.

The significant components of the decrease included the following:

1) A decrease in cash paid for acquisitions of $347.8 million;

2) A decrease in cash paid for investments in noncontrolling interests of $25.0 million;

3) A decrease in capital expenditures at operations owned in the comparable periods of $55.8 million due to decreases in container and vehicles for our collection operations and equipment for our disposal operations exceeding capital expenditures for landfill sites;

4) An increase from higher proceeds from the sale of divested operations and property and equipment of $15.5 million;

5) An increase in capital expenditures at operations acquired subsequent to December 31, 2018 of $18.5 million due to additional trucks, containers, heavy equipment and landfill site costs;

6) An increase in capital expenditures for undeveloped landfill property of $35.8 million attributable to expenditures during the year ended December 31, 2020 for expansion land at certain existing landfill facilities exceeding expenditures during the year ended December 31, 2019 for the purchase of a greenfield landfill site in our Southern segment that will be developed into an operating location in the future.

Net cash used in investing activities increased $647.4 million to $1.693 billion for the year ended December 31, 2021, from $1.046 billion for the year ended December 31, 2020.

The significant components of the increase included the following:

1) An increase in cash paid for acquisitions of $571.7 million;

2) An increase in capital expenditures at operations owned in the comparable periods of $125.8 million due to increases in land and buildings, trucks, heavy equipment and containers;

3) An increase in cash paid for investments in noncontrolling interests of $25.0 million;

4) An increase in capital expenditures at operations acquired during the comparative periods of $21.5 million due to additional trucks and containers;

5) A decrease in capital expenditures for undeveloped landfill property of $67.5 million attributable to expenditures during the year ended December 31, 2020 for expansion land at certain existing landfill facilities;

6) An increase in proceeds from disposal of assets of $23.7 million due to additional disposals of non-strategic assets to provide funding towards new capital expenditures.

Financing Activities Cash Flows

Net cash used in financing activities decreased $17.7 million to $78.2 million for the year ended December 31, 2020, from $95.9 million for the year ended December 31, 2019.

The significant components of the decrease included the following:

1) A decrease from the net change in long-term borrowings of $167.6 million (long-term borrowings increased $272.7 million during the year ended December 31, 2020 and increased $105.1 million during the year ended December 31, 2019) due primarily to maintaining a portion of the proceeds from our 2050 Senior Notes in cash;

2) An increase in payments to repurchase our common shares of $105.7 million as we resumed our share repurchase activity during the year ended December 31, 2020;

3) An increase in cash dividends paid of $24.8 million due primarily to an increase in our average quarterly dividend rate for the year ended December 31, 2020 to $0.190 per share, from $0.166 per share for the year ended December 31, 2019;

4) An increase in contingent consideration payments of $9.4 million due primarily to payments during the year ended December 31, 2020 attributable to the settlement of certain legal matters at an acquired solid waste collection company;

5) An increase in tax withholdings related to net share settlements of equity-based compensation of $5.8 million due to an increase in the value of equity-based compensation awards vesting;

6) An increase in debt issuance costs of $5.2 million due to costs incurred during the year ended December 31, 2020 for our 2030 Senior Notes and 2050 Senior Notes exceeding costs incurred during the year ended December 31, 2019 for our 2029 Senior Notes.

Net cash used in financing activities increased $421.3 million to $499.5 million for the year ended December 31, 2021, from $78.2 million for the year ended December 31, 2020.

The significant components of the increase included the following:

1) An increase in payments to repurchase our common shares of $233.3 million due to a higher volume of shares repurchased;

2) An increase from premiums paid on early extinguishment of debt of $110.6 million resulting from the repayment in September 2021 of all of our outstanding senior notes under our master note purchase agreements;

3) An increase from the net change in long-term borrowings of $50.5 million (long-term borrowings increased $222.2 million during the year ended December 31, 2021 and increased $272.7 million during the year ended December 31, 2020);

4) An increase in cash dividends paid of $20.3 million due primarily to an increase in our average quarterly dividend rate the year ended December 31, 2021 to $0.211 per share, from $0.190 per share for the year ended December 31, 2020;

5) An increase in debt issuance costs of $7.4 million attributable to senior note offerings completed in the comparative periods.

Our business is capital intensive.

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Shareholders may obtain a copy of our TSX Form 12 – Notice of Intention to Make a Normal Course Issuer Bid, without charge, by request directed to our Executive Vice President and Chief Financial Officer at (832) 442-2200.

and amounts of any repurchases pursuant to the NCIB will depend on many factors, including our capital structure, the market price of our common shares and overall market conditions.

The timing and amounts of any repurchases pursuant to the NCIB will depend on many factors, including our capital structure, the market price of our common shares and overall market conditions.

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

Information regarding our NCIB plan can be found under the “Shareholders’ Equity” section in Note 13 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10K and is incorporated herein by reference.

Information regarding our NCIB plan can be found under the section

Normal Course Issuer Bid in Note 14, “Shareholders’ Equity,” of our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K and is incorporated herein by reference.

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

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We made $744.3 million in capital expenditures for property and equipment during the year ended December 31, 2021, and we expect to make total capital expenditures for property and equipment of approximately $850 million in 2022.

In addition, we made $67.5 million in capital expenditures for undeveloped landfill property during the year ended December 31, 2020 and may opportunistically make other capital expenditures for undeveloped landfill property in 2021.

We intend to fund our planned 2022 capital expenditures principally through cash on hand, internally generated funds and borrowings under our Credit Agreement.

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

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

If we acquire additional landfill disposal facilities, we may also have to make significant expenditures to bring them into compliance with applicable regulatory requirements, obtain permits or expand our available disposal capacity.

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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.

We have a revolving credit and term loan agreement (the “Credit Agreement”) with Bank of America, N.A., acting through its Canada Branch, as global agent, the swing line lender and letter of credit issuer, Bank of America, N.A., as the U.S.

Agent and a letter of credit issuer, the lenders (the “Lenders”) and any other financial institutions from time to time party thereto.

We have a revolving credit and term loan agreement (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) with Bank of America, N.A., acting through its Canada Branch, as the global agent, the swing line lender and a letter of credit issuer, Bank of America, N.A., as the U.S.

Agent and a letter of credit issuer, the other lenders named therein (the “Lenders”) and any other financial institutions from time to time party thereto.

There are no subsidiary guarantors under the Credit Agreement.

The Credit Agreement has a scheduled maturity date of March 21, 2023.

The Credit Agreement has a scheduled maturity date of July 30, 2026, which may be extended further upon agreement by Lenders holding at least 50% of the commitments and credit extensions outstanding, with respect to their respective commitments and credit extensions outstanding.

Any Lender that does not agree to an extension of the maturity date shall not be so extended with respect to their commitments and credit extensions.

As of December 31, 2021, $650.0 million under the term loan and $803.9 million under the revolving credit facility were outstanding under the Credit Agreement, exclusive of outstanding standby letters of credit of $112.3 million.

We also have issued $6.6 million of letters of credit at December 31, 2020 under facilities other than the Credit Agreement.

On June 1, 2016, we entered into a Master Note Purchase Agreement (as supplemented by the First Supplement dated as of February 13, 2017 (the “2016 First Supplement”) and as amended, restated, amended and restated, assumed, supplemented or modified from time to time, the “2016 NPA”) with certain accredited institutional investors.

On April 20, 2017, pursuant to the 2016 NPA, and the 2016 First Supplement, we issued and sold to certain accredited institutional investors $400.0 million aggregate principal amount of senior unsecured notes consisting of $150.0 million aggregate principal amount, which will mature on April 20, 2024, with an annual interest rate of 3.24% (the “2024 Senior Notes”) and $250.0 million aggregate principal amount, which will mature on April 20, 2027, with an annual interest rate of 3.49% (the “2027 Senior Notes” and collectively with the 2024 Senior Notes, the “2017A Senior Notes”) in a private placement.

On March 21, 2018, we entered into that certain Amendment No.

1 to Master Note Purchase Agreement (the “2016 NPA First Amendment”), with each of the holders party thereto, which amended the 2016 NPA.

The 2016 NPA First Amendment, among other things, provided for certain amendments to the 2016 NPA to facilitate (i) certain conforming changes to align certain provisions of the 2016 NPA, the 2008 NPA (as defined below) and the

Credit Agreement and (ii) the release of all subsidiary guarantors in relation to obligations under the 2016 NPA and the 2016 NPA Notes (as defined below) (the “2016 Release”).

Pursuant to the terms and conditions of the 2016 NPA, we have outstanding senior unsecured notes (the “2016 NPA Notes”) at December 31, 2019 consisting of (i) $150.0 million of 2.39% senior notes due June 1, 2021 (the “New 2021 Senior Notes”), (ii) $200.0 million of 2.75% senior notes due June 1, 2023 (the “2023 Senior Notes”), (iii) $400.0 million of 3.03% senior notes due June 1, 2026 (the “2026 Senior Notes”) and (iv) $400.0 million of the 2017A Senior Notes.

The New 2021 Senior Notes, the 2023 Senior Notes, the 2026 Senior Notes and the 2017A Senior Notes bear interest at fixed rates with interest payable in arrears semi-annually, and on the respective maturity dates, until the principal thereunder becomes due and payable.

In July 2008, the Company, certain subsidiaries of the Company (together with the Company, the “Obligors”) and certain accredited institutional investors entered into that certain Master Note Purchase Agreement, dated July 15, 2008 (as amended, restated, assumed, supplemented or otherwise modified from time to time, the “2008 NPA”).

On March 21, 2018, we entered into that certain Amendment No.

7 to the 2008 NPA (the “2008 NPA Seventh Amendment”), with each of the holders party thereto, which amended the 2008 NPA.

The 2008 NPA Seventh Amendment, among other things, provides certain amendments to the 2008 NPA to facilitate (i) certain conforming changes to align the provisions of the 2008 NPA, the 2016 NPA and the Credit Agreement and (ii) the release of all subsidiary guarantors in relation to obligations under the 2008 NPA and the 2008 NPA Notes (the “2008 Release”).

Pursuant to the terms and conditions of the 2008 NPA, we have outstanding senior unsecured notes (the “2008 NPA Notes”) at December 31, 2019 consisting of (i) $100.0 million of 4.64% senior notes due 2021 (the “2021 Senior Notes”), (ii) $125.0 million of 3.09% senior notes due 2022 (the “2022 Senior Notes”) and (iii) $375.0 million of 3.41% senior notes due 2025 (the “2025 Senior Notes”).

We repaid at maturity our $50.0 million of 4.00% senior notes due April 2018 (the “2018 Senior Notes”) in April 2018.

We also repaid at maturity our $175.0 million of 5.25% senior notes due 2019 (the “2019 Senior Notes”) in November 2019.

The 2021 Senior Notes, the 2022 Senior Notes and the 2025 Senior Notes bear interest at fixed rates with interest payable in arrears semi-annually, and on the respective maturity dates, until the principal thereunder becomes due and payable.

On November 16, 2018, we completed an underwritten public offering of $500.0 million aggregate principal amount of our 4.25% Senior Notes due 2028 (the “2028 Senior Notes”).

The 2028 Senior Notes were issued under the Indenture, dated as of November 16, 2018 (the “Base Indenture”), by and between the Company and U.S.

Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of November 16, 2018.

We will pay interest on the 2028 Senior Notes semi-annually, commencing on June 1, 2019, and the 2028 Senior Notes will mature on December 1, 2028.

The 2028 Senior Notes are our senior unsecured obligations, ranking equally in right of payment with our other existing and future unsubordinated debt and senior to any of our future subordinated debt.

The 2028 Senior Notes are not guaranteed by any of our subsidiaries.

On April 16, 2019, we completed an underwritten public offering of $500.0 million aggregate principal amount of our 3.50% Senior Notes due 2029 (the “2029 Senior Notes”).

The 2029 Senior Notes were issued under the Base Indenture, as supplemented by the Second Supplemental Indenture, dated as of April 16, 2019.

We will pay interest on the 2029 Senior Notes semi-annually in arrears and the 2029 Senior Notes will mature on May 1, 2029.

The 2029 Senior Notes are our senior unsecured obligations, ranking equally in right of payment with our other existing and future unsubordinated debt and senior to any of our future subordinated debt.

The 2029 Senior Notes are not guaranteed by any of our subsidiaries.

On January 23, 2020, we completed an underwritten public offering of $600.0 million aggregate principal amount of 2.60% Senior Notes due 2030 (the “2030 Senior Notes”).

The 2030 Senior Notes were issued under the Base Indenture, as supplemented by the Third Supplemental Indenture, dated as of January 23, 2020.

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

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

The 2030 Senior Notes are not guaranteed by any of our subsidiaries.

On March 13, 2020, we completed an underwritten public offering of $500.0 million aggregate principal amount of 3.05% Senior Notes due 2050 (the “2050 Senior Notes”).

The 2050 Senior Notes were issued under the Base Indenture, as supplemented by the Fourth Supplemental Indenture, dated as of March 13, 2020.

We will pay interest on the 2050 Senior Notes semi-annually in arrears and the 2050 Senior Notes will mature on April 1, 2050.

The 2050 Senior Notes are our senior unsecured obligations, ranking equally in right of payment with our other existing and future unsubordinated debt and senior to any of our future subordinated debt.

We also had $13.5 million of letters of credit issued and outstanding at December 31, 2021 under facilities other than the Credit Agreement.

We did not have any amounts outstanding under our master note purchase agreements.

Pursuant to the terms and conditions of a Master Note Purchase Agreement dated as of June 1, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “2016 NPA”) between us and certain accredited institutional investors, we issued senior unsecured notes (the “2016 Private Placement Notes”) consisting of (i) $150.0 million of senior notes due June 1, 2021 (the “June 2021 Private Placement Notes”), (ii) $200.0 million of senior notes due June 1, 2023, (iii) $150.0 million of senior notes due April 20, 2024, (iv) $400.0 million of senior notes due June 1, 2026 and (v) $250.0 million of senior notes due April 20, 2027.

Pursuant to the terms and conditions of a Master Note Purchase Agreement dated as of July 15, 2008 (as amended, restated, amended and restated, assumed, supplemented or otherwise modified from time to time, the “2008 NPA”) between us and certain accredited institutional investors, we issued senior unsecured notes (the “2008 Private Placement Notes” and together with the 2016 Private Placement Notes, the “Private Placement Notes”) consisting of (i) $100.0 million of senior notes due April 1, 2021 (the “April 2021 Private Placement Notes” and together with the June 2021 Private Placement Notes, the “2021 Private Placement Notes”), (ii) $125.0 million of senior notes due August 20, 2022 and (iii) $375.0 million of senior notes due August 20, 2025.

We repaid at maturity the 2021 Private Placement Notes and repaid the other Private Placement Notes in connection with the Offering (defined below) in September 2021.

On November 16, 2018, we completed an underwritten public offering of $500.0 million aggregate principal amount of our 4.25% Senior Notes due December 1, 2028 (the “2028 Senior Notes”).

The 2028 Senior Notes were issued under the Indenture, dated as of November 16, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Indenture”), by and between the Company and U.S.

Bank National Association, as trustee (the “Trustee”), as supplemented through the First Supplemental Indenture, dated as of November 16, 2018.

On April 16, 2019, we completed an underwritten public offering of $500.0 million aggregate principal amount of our 3.50% Senior Notes due May 1, 2029 (the “2029 Senior Notes”).

The 2029 Senior Notes were issued under the Indenture, as supplemented through the Second Supplemental Indenture, dated as of April 16, 2019.

On January 23, 2020, we completed an underwritten public offering of $600.0 million aggregate principal amount of 2.60% Senior Notes due February 1, 2030 (the “2030 Senior Notes”).

The 2030 Senior Notes were issued under the Indenture, as supplemented through the Third Supplemental Indenture, dated as of January 23, 2020.

On March 13, 2020, we completed an underwritten public offering of $500.0 million aggregate principal amount of 3.05% Senior Notes due April 1, 2050 (the “2050 Senior Notes”).

The 2050 Senior Notes were issued under the Indenture, as supplemented through the Fourth Supplemental Indenture, dated as of March 13, 2020.

On September 20, 2021, we completed an underwritten public offering (the “Offering”) of $650.0 million aggregate principal amount of 2.20% Senior Notes due January 15, 2032 (the “2032 Senior Notes”) and $850.0 million aggregate principal amount of 2.95% Senior Notes due January 15, 2052 (the “2052 Senior Notes” and, together with the 2028 Senior Notes, the 2029 Senior Notes, the 2030 Senior Notes, the 2032 Senior Notes and the 2050 Senior Notes, the “Senior Notes”).

The 2032 Senior Notes and the 2052 Senior Notes were issued under the Indenture, as supplemented through the Fifth Supplemental Indenture, dated as of September 20, 2021.

In connection with the Offering, we exercised our right to repay the $1.500 billion of Private Placement Notes then outstanding governed by the 2008 NPA and the 2016 NPA.

We repaid the Private Placement Notes then outstanding, including the $110.6 million make-whole premium, with the net proceeds from the Offering and borrowings under the revolving credit facility provided under our Credit Agreement.

We recorded $115.3 million to Loss on early extinguishment of debt during the year ended December 31, 2021 due to the repayment of the Private Placement Notes and associated make-whole premium and related fees.

We pay interest on the Senior Notes semi-annually in arrears.

The Senior Notes are our senior unsecured obligations, ranking equally in right of payment with our existing and future unsubordinated debt and senior to any of our future subordinated debt.

The Senior Notes are not guaranteed by any of our subsidiaries.

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Long-term debt payments include:

1) $203.9 million in principal payments due March 2023 related to our revolving credit facility under our Credit Agreement.

1) $803.9 million in principal payments due July 2026 related to our revolving credit facility under our Credit Agreement.

Advances are available under the Credit Agreement in U.S.

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LIBOR rate loans, bearing interest at a total rate of 1.10% on such date.

At December 31, 2021, $158.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S.

base rate loans, bearing interest at a total rate of 3.25% on such date.

At December 31, 2021, $11.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S.

swingline loans, bearing interest at a total rate of 3.25% on such date.

At December 31, 2021, $3.9 million of the outstanding borrowings drawn under the revolving credit facility were in Canadian-based bankers’ acceptances, bearing interest at a total rate of 1.45% 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 Credit Agreement.

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

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The 2028 Senior Notes bear interest at a rate of 4.25%.

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 2021 Senior Notes on April 1, 2021 using borrowings under our Credit Agreement.

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.

4) $500.0 million in principal payments due 2029 related to our 2029 Senior Notes.

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The 2052 Senior Notes bear interest at a rate of 2.95%.

10) $250.0 million in principal payments due 2027 related to our 2027 Senior Notes.

The 2027 Senior Notes bear interest at a rate of 3.49%.

11) $500.0 million in principal payments due 2028 related to our 2028 Senior Notes.

The 2028 Senior Notes bear interest at a rate of 4.25%.

12) $500.0 million in principal payments due 2029 related to our 2029 Senior Notes.

The 2029 Senior Notes bear interest at a rate of 3.50%.

13) $600.0 million in principal payments due 2030 related to our 2030 Senior Notes.

The 2030 Senior Notes bear interest at a rate of 2.60%.

14) $500.0 million in principal payments due 2050 related to our 2050 Senior Notes.

The 2050 Senior Notes bear interest at a rate of 3.05%.

9) $37.5 million in principal payments related to our notes payable to sellers and other third parties.

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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 December 31, 2021.

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

We assumed the 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.

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We have obtained standby letters of credit as discussed in Note 11 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K and financial surety bonds as discussed in Note 13 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.

These standby letters of credit and financial surety bonds are generally obtained to support our financial assurance needs and landfill and E&P operations.

These standby letters of credit and financial surety bonds are generally obtained to support our financial assurance needs and landfill and E&P waste operations.

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

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Transaction-related expenses (c)

Integration-related and other expenses (d)

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

Tax effect (f)

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

Tax effect (e)

Adjusted free cash flow

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

Reflects the addback of integration-related items, including rebranding costs, associated with the Progressive Waste acquisition.

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

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

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, minus net 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 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, plus loss on early extinguishment of debt.

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 expense (income), net

Loss on early extinguishment of debt

Transaction-related expenses (a)

Fair value changes to equity awards (b)

Integration-related and other expenses (c)

Adjusted EBITDA

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(b) Reflects fair value accounting changes associated with certain equity awards .

Reflects the addback of integration-related items, including rebranding costs, associated with the Progressive Waste acquisition.

Adjusted Net Income Attributable to Waste Connections and Adjusted Net Income per Diluted Share Attributable to Waste Connections

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Fair value changes to equity awards (d)

Integration-related and other expenses (e)

Loss on early extinguishment of debt (e)

Tax effect (f)

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Reflects fair value accounting changes associated with certain equity awards.

Reflects the addback of integration-related items, including rebranding costs, associated with the Progressive Waste acquisition.

Reflects the make-whole premium and related fees associated with the early termination of $1.5 billion in senior notes.

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

In 2020, r eflects 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.

In 2018, primarily reflects refinements to the estimates, as provided by Staff Accounting Bulletin No.

118, of the impact of a portion of our U.S.

earnings no longer permanently reinvested in conjunction with the Tax Act.

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.

Leverage Ratio

The Leverage Ratio is calculated by dividing our Consolidated Total Funded Debt by Consolidated EBITDA (each as defined in our Credit Agreement).

The Leverage Ratio is based on EBITDA, a non-GAAP financial measure.

We present this ratio because it is used by our lending syndicate for the purposes of calculating financial covenants under our Credit Agreement.

Management also uses this ratio as one of the principal measures to evaluate and monitor the indebtedness of the Company relative to its ability to generate income to service such debt.

The Leverage Ratio is not a substitute for, and should be used in conjunction with, GAAP financial ratios.

Other companies may calculate leverage ratios differently.

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.

To the extent that there are decreases in fuel costs, in some cases, a portion of these reductions are passed through to customers in the form

of lower fuel and material surcharges.

To the extent that there are decreases in fuel costs, in some cases, a portion of these reductions are passed through to customers in the form of lower fuel and material surcharges.

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.

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-K

Item 7. Management’s Discussion and Analysis