What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-16 compared with 2022-02-17 · 175 added, 176 removed, 471 unchanged (43% of the section changed)

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● 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.

● Other statements on a variety of topics such as the COVID-19 pandemic, inflation, 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.

These statements can be ‎identified by the use of forward-looking terminology such as “believes,” “expects,” “intends,” “may,” “might,” “will,” ‎‎“could,” “should” or “anticipates,” or the negative thereof or comparable terminology, or by discussions of strategy.

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

Crude oil and natural gas prices historically have been volatile.

Macroeconomic and geopolitical conditions, 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.

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.

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.

Crude oil and natural gas prices historically have been volatile, including as a result of macroeconomic and geopolitical conditions, which may impact levels of exploration and production activity, with a corresponding impact to our E&P waste activity.

Most recently, in 2022, sustained increases in prices of crude oil as a result of inflationary pressures, the uncertainty associated with the Ukrainian conflict and any related bans on oil sales from Russia or supply chain disruptions as recently experienced contributed to increased levels of drilling activity and demand for our E&P waste services.

Conversely, in 2020 and 2021, 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 E&P drilling activity and a corresponding decrease in demand for our E&P waste services.

Additionally, across the industry there was 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 services.

These energy companies wrote 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.

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

If the prices of crude oil and natural gas substantially decline, it could lead to declines in the level of drilling 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.

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 discussion of the impairment charges recorded during the years ended December 31, 2021 and 2020.

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In markets where waste collection services are provided under exclusive arrangements, or where waste disposal is municipally owned or funded or available at multiple municipal sources, we believe that controlling the waste stream by providing collection services under exclusive arrangements is often more important to our growth and profitability than owning or operating landfills.

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

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

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

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

March 11, 2022 marked the two-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.

Throughout the remaining fiscal year 2020 and during 2021, 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.

Most of the impacts to solid waste volumes associated with the pandemic have largely abated, with landfill volumes and roll off pulls returning to pre-pandemic levels.

In certain markets, commercial collection volumes have not returned to pre-pandemic levels.

The COVID-19 pandemic also contributed to a decline in demand for and the value of crude oil, which impacted E&P drilling activity and resulted in lower E&P waste revenue during 2020 and 2021.

During 2022, E&P waste revenue increased on higher levels of drilling activity in several of the major basins.

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.

To that end, since the onset of the pandemic through year-end 2022, we incurred over $50 million in incremental COVID-19-related costs, primarily supplemental pay and benefits for frontline employees, including approximately $10 million during 2022.

As a result of the COVID-19 pandemic and subsequent reopening activity, 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.

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, 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.

2022 Financial Performance

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Excluding the impact of such acquisitions, revenues increased 8.3% 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.

Solid waste internal growth was positive 7.4%, due to higher price increases and higher surcharges, partially offset by lower volumes and lower recycled commodities.

Pricing growth was 9.2%, with core pricing up 7.7%, plus materials and environmental surcharges of positive 1.5%.

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.

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.

Volumes decreased by 1.1% due primarily to the purposeful non-renewal of two residential hauling contracts, and decreases in the value of recycled commodities resulted in a 0.7% decrease to internal solid waste growth.

Higher E&P waste activity resulted in a 1.2% increase to overall growth, and increases in landfill gas sales, including renewable energy credits, contributed 0.2% to overall growth.

Net income attributable to Waste Connections increased 35.2% to $835.7 million in 2022, from $618.0 million in 2021.

In 2022, 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 15.7% to $2.221 billion, from $1.919 billion in 2021.

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.

As a percentage of revenue, adjusted EBITDA decreased from 31.2% in 2021, to 30.8% in 2022.

This 0.40 percentage point decrease reflects a 0.50 percentage point decrease from the margin dilutive impact of acquisitions completed during the period, as price-led organic growth in solid waste and higher E&P waste activity offset the impacts of lower recycled commodity values and continued inflationary pressures.

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 2022 increased 16.4% to $985.3 million from $846.6 million in 2021.

Adjusted Free Cash Flow

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Capital expenditures for property and equipment increased from $744.3 million in 2021 to $912.7 million in 2022, an increase of $168.4 million, or 22.6%.

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, 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 $155 million to $1.165 billion in 2022, from $1.010 billion in 2021.

Adjusted free cash flow as a percentage of revenues was 16.2% in 2022, as compared to 16.4% in 2021.

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In 2022, we distributed $668.0 million to shareholders through a combination of cash dividends and share repurchases.

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.

We paid $243.0 million to shareholders through cash dividends declared by our Board of Directors, which also increased the quarterly cash dividend by 10.9%, from $0.23 to $0.255 per common share in November 2022.

Cash dividends increased $22.8 million, or 10.4%, from $220.2 million in 2021 due to a 12.2% increase in the quarterly cash dividend declared by our Board of Directors in October 2021, followed by the additional increase in November 2022 and reflects the reduced share count resulting from repurchases.

In 2022, we also repurchased 3.4 million common shares at an aggregate cost of $425 million pursuant to our Normal Course Issuer Bid, which was renewed in August and which provides for repurchases of up to 12,859,066 shares, being 5% of the shares outstanding as of August 2, 2022.

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 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 to repurchase our common shares and pay dividends provided that we maintain specified financial ratios.

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

We have the ability under our Credit Agreement and Term Loan 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.

We target a Leverage Ratio, as defined substantially identically in both our Credit Agreement and Term Loan Agreement, of approximately 2.5x – 3.0x total debt to EBITDA.

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.

Higher debt resulting primarily from acquisition outlays in 2022 was partially offset by higher EBITDA in 2022, resulting in an increase in our Leverage Ratio from 2.50x at December 31, 2021 to 2.93x at December 31, 2022.

Cash balances decreased from $147.4 million at December 31, 2021 to $78.6 million at December 31, 2022, and we had $1.194 billion of remaining borrowing capacity under our Credit Agreement, which matures in July 2026.

In total, we had $1.163 billion in prepayable debt outstanding at December 31, 2022.

Critical Accounting Estimates and Assumptions

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Such critical accounting estimates and assumptions are applicable to our reportable segments.

Based on this definition, we believe the following are our critical accounting estimates.

We believe that of our significant accounting policies, which are described in Note 3 of our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K, the following accounting policies involve a greater degree of judgment and complexity.

Accordingly, we believe these are the most critical to fully understand and evaluate our financial condition and results of operations.

Insurance liabilities .

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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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We calculate the net present value of our final capping, closure and post-closure commitments by estimating the total obligation in current dollars, inflating the obligation based upon the expected date of the expenditure and discounting the inflated total to its present value using a credit-adjusted risk-free rate.

Any changes in expectations that result in an upward revision to the estimated undiscounted cash flows are treated as a new liability and are inflated and discounted at rates reflecting current market conditions.

Any changes in expectations that result in a downward revision (or no revision) to the estimated undiscounted cash flows result in a liability that is inflated and discounted at rates reflecting the market conditions at the time the cash flows were originally estimated.

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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 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.

Our discount rate assumption for purposes of computing 2022 and 2021 “layers” for final capping, closure and post-closure obligations is based on our long-term credit adjusted risk free rate.

Our discount rate ranged from 3.25% to 5.50% for 2022 and was 3.25% for 2021.

Our long-term inflation rate assumption ranged from 2.25% to 2.75% for 2022 and was 2.25% for 2021.

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.

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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.

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, 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.

Our reporting units consisted of our five geographic solid waste operating segments at December 31, 2022, 2021 and 2020.

We compare the fair value of each reporting unit with the carrying value of the net assets assigned to the reporting unit.

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

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

Significant judgments

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

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, 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.

For our impairment testing of our operating segments for the year ended December 31, 2022, we determined that the indicated fair value of each of our reporting units exceeded their carrying value in excess of 200% and, therefore, we did not record an impairment charge.

The detailed results of our 2022, 2021 and 2020 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 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.

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

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.

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

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

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

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

Years Ended December 31,

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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.

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

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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Interest income

Other income (expense), net

Other income, net

Loss on early extinguishment of debt

Income tax provision

Net loss (income) attributable to noncontrolling interests

Net income attributable to noncontrolling interests

Net income attributable to Waste Connections

Years Ended December 31, 2022 and 2021

Total revenues increased $705.4 million, or 13.0%, to $6.151 billion for the year ended December 31, 2021, from $5.446 billion for the year ended December 31, 2020.

Total revenues increased $1.060 billion, or 17.2%, to $7.212 billion for the year ended December 31, 2022, from $6.151 billion for the year ended December 31, 2021.

During the year ended December 31, 2022, incremental revenue from acquisitions closed during, or subsequent to, the year ended December 31, 2021, increased revenues by approximately $563.1 million.

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.

Operations that were divested in 2022 and the full year impact of operations that were divested in 2021, decreased revenues by $11.1 million for the year ended December 31, 2022.

During the year ended December 31, 2022, the net increase in prices charged to our customers at our existing operations was $541.7 million, consisting of $455.8 million of core price increases and surcharges of $85.9 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.

During the year ended December 31, 2022, we recognized volume losses totaling $63.2 million, which was comprised of $51.8 million of declines associated with the aforementioned residential collection contracts, lower post-collection volumes related to transportation shortages, partially offset by increases primarily attributable to commercial and roll off collection.

E&P waste revenues at facilities owned during the years ended December 31, 2022 and 2021 increased $75.8 million due to increases in overall demand for our E&P waste services resulting from higher demand for crude oil contributing to increases in drilling and production activity levels.

Revenues from sales of recyclable commodities at facilities owned during the years ended December 31, 2022 and 2021 decreased $45.0 million.

Prices for old corrugated cardboard, aluminum, plastics and other paper products increased from the prior period during the six months ended June 30, 2022 before declining during the six months ended December 31, 2022.

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

dollar currency exchange rate resulted in a decrease in revenues of $32.4 million for the year ended December 31, 2022.

The average Canadian dollar to U.S.

dollar exchange rates on our Canadian revenues were 0.7682 and 0.7982 for the years ended December 31, 2022 and 2021, 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.

Other revenues increased $31.6 million during the year ended December 31, 2022, due primarily to a $14.1 million increase in landfill gas revenues and renewable energy credits, a $12.1 million increase in intermodal revenues and a $5.4 million increase in other non-core revenue sources.

Cost of Operations .

Total cost of operations increased $681.9 million, or 18.7%, to $4.336 billion for the year ended December 31, 2022, from $3.654 billion for the year ended December 31, 2021.

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.

The increase was primarily the result of $369.4 million of additional operating costs from acquisitions closed during, or subsequent to, the year ended December 31, 2021 and an increase in operating costs at our existing operations of $337.8 million, assuming foreign currency parity, partially offset by a decrease in operating costs of $16.9 million resulting from a lower average foreign currency exchange rate in effect during the current period and a decrease of $8.4 million from operations divested subsequent to the year ended December 31, 2021.

The increase in operating costs of $337.8 million, assuming foreign currency parity, at our existing operations for the year ended December 31, 2022 consisted of an increase in labor and recurring incentive compensation expenses of $92.2 million due primarily to employee pay increases, an increase in fuel expense of $73.1 million due to higher diesel and natural gas prices, an increase in third-party trucking and transportation expenses of $52.9 million due primarily to increased landfill special waste volumes requiring trucking and transportation services to our landfills and higher rates charged by third-party providers, an increase in truck, container, equipment and facility maintenance and repair expenses of $43.1 million due primarily to increased collection routes and equipment operating hours and parts and service rate increases, an increase in third-party disposal expenses of $17.7 million due primarily to rate increases at third-party post-collection sites, an increase in expenses for auto and workers’ compensation claims of $9.1 million due primarily to increased claim severity and inflation-led cost increases, an increase in supplemental compensation to non-management personnel of $9.0 million to provide financial assistance associated with the impact of the COVID-19 pandemic, an increase in taxes on revenues of $8.9 million due primarily to increased revenues, an increase in intermodal rail expenses of $6.1 million due to higher cargo volumes, an increase in expenses for purchasing and processing recyclable commodities of $4.9 million due to processing expenses charged by third parties increasing as recyclable commodity values decline in certain regulated operating markets, an increase in subcontracted hauling services at our solid waste operations of $3.8

million due to higher costs charged by third-party providers, an increase in landfill maintenance, environmental compliance and daily cover expenses of $3.2 million due to increased compliance requirements under our landfill operating permits, an increase in 401(k) matching expenses of $2.0 million due to higher employee earnings, an increase in property tax expense of $1.9 million due to higher property value assessments and $9.9 million of other net expense increases.

Cost of operations as a percentage of revenues increased 0.7 percentage points to 60.1% for the year ended December 31, 2022, from 59.4% for the year ended December 31, 2021.

The increase as a percentage of revenues consisted of a 0.7 percentage point increase from higher fuel expense, a 0.6 percentage point increase from higher third-party trucking and transportation expenses, a 0.5 percentage point increase from acquisitions closed during, or subsequent to, the year ended December 31, 2021 having operating margins lower than our company average, and a 0.1 percentage point increase in compensation to non-management personnel for financial assistance associated with the impact of the COVID-19 pandemic, partially offset by a combined 1.2 percentage point decrease from disposal, taxes on revenues, labor and employee benefits due to price-driven revenue increases.

SG&A expenses increased $84.2 million, or 13.7%, to $696.5 million for the year ended December 31, 2022, from $612.3 million for the year ended December 31, 2021.

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.

The increase was comprised of an increase of $45.8 million, assuming foreign currency parity, at our existing operations and $42.3 million from acquisitions closed during, or subsequent to, the year ended December 31, 2021, partially offset by a decrease of $2.8 million resulting from a lower average foreign currency exchange rate in effect during the current period and a decrease of $1.1 million from operations divested subsequent to the year ended December 31, 2021.

The increase in SG&A expenses at our existing operations of $45.8 million, assuming foreign currency parity, for the year ended December 31, 2022 was comprised of a collective increase in travel, meetings, training and community activity expenses of $22.6 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 administrative payroll expenses of $16.4 million due primarily to annual pay increases, an increase in direct acquisition expenses of $13.6 million due to an increase in acquisition activity in the current period, an increase in equity-based compensation expenses of $6.2 million associated with our annual recurring grant of restricted share units to our personnel, an increase in software license fees of $3.7 million associated with new information technology applications, an increase in bad debt costs of $2.8 million associated with increased revenue, an increase in professional fees of $1.6 million due primarily to increased legal services, an increase of $0.8 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 and $4.1 million of other net expense increases, partially offset by a decrease in deferred compensation expenses of $9.1 million as a result of decreases in the market value of investments to which employee deferred compensation liability balances are tracked, a decrease in accrued recurring cash incentive compensation expense to our management of $8.6 million, a decrease of $5.2 million in equity-based compensation expenses associated with the prior year period including adjustments to increase the fair value of our common shares held in our deferred compensation plan by certain key executives as a result of the shares being exchanged for other investment options, and a decrease in equity-based compensation expenses of $3.1 million associated with changes in our share price resulting in fair value measurement decreases to 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.

SG&A expenses as a percentage of revenues decreased 0.3 percentage points to 9.7% for the year ended December 31, 2022, from 10.0% for the year ended December 31, 2021.

The decrease as a percentage of revenues was primarily attributable to lower cash incentive compensation expense, lower deferred compensation expense, acquisitions closed during, or subsequent to, the year ended December 31, 2021 having lower SG&A expenses as a percentage of revenues than our company average and the impact of price-driven revenue increases in our solid waste services, partially offset by increased travel, meetings, training and community activity expenses and higher direct acquisition expenses.

Depreciation .

Depreciation expense increased $89.6 million, or 13.3%, to $763.3 million for the year ended December 31, 2022, from $673.7 million for the year ended December 31, 2021.

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.

The increase was comprised of an increase in depreciation and depletion expense of $62.4 million from acquisitions closed during, or subsequent to, the year ended December 31, 2021, an increase in depreciation expense of $24.5 million from the impact of additions to our fleet and equipment purchased to support our existing operations and an increase in depletion expense of $9.2 million resulting from

increased landfill special waste and E&P volumes and higher landfill development costs increasing our per ton landfill depletion rates, partially offset by a decrease of $3.4 million resulting from a lower average foreign currency exchange rate in effect during the current period, and a decrease in depreciation and depletion expense of $3.1 million from operations divested subsequent to the year ended December 31, 2021.

Depreciation expense as a percentage of revenues decreased 0.3 percentage points to 10.6% for the year ended December 31, 2022, from 10.9% for the year ended December 31, 2021.

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.

The decrease as a percentage of revenues was primarily attributable to the impact of price-driven revenue increases in our solid waste services.

Amortization of Intangibles .

Amortization of intangibles expense increased $16.4 million, or 11.8%, to $155.7 million for the year ended December 31, 2022, from $139.3 million for the year ended December 31, 2021.

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.

The increase was the result of $37.7 million from intangible assets acquired in acquisitions closed during, or subsequent to, the year ended December 31, 2021, partially offset by a decrease of $20.5 million from certain intangible assets becoming fully amortized subsequent to December 31, 2021 and a decrease of $0.8 million resulting from a lower average foreign currency exchange rate in effect during the current period.

Amortization of intangibles expense as a percentage of revenues decreased 0.1 percentage points to 2.2% for the year ended December 31, 2022, from 2.3% for the year ended December 31, 2021.

The decrease as a percentage of revenues was attributable to the impact of price-driven revenue increases in our solid waste services.

Impairments and Other Operating Items .

Impairments and other operating items decreased $14.1 million, to net losses totaling $18.2 million for the year ended December 31, 2022, from net losses totaling $32.3 million for the year ended December 31, 2021.

The net losses of $18.2 million recorded during the year ended December 31, 2022 consisted of $10.8 million of charges to 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 and an $8.4 million lawsuit judgment accrual, partially offset by $1.0 million of other net gains.

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 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 increased $202.6 million, or 19.5%, to $1.242 billion for the year ended December 31, 2022, from $1.040 billion for the year ended December 31, 2021.

The increase in our operating income for the year ended December 31, 2022 was due primarily to price increases for our solid waste services, operating income contributions from increased sales of 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, 2021 and an increase in earnings at our E&P waste operations.

Operating income as a percentage of revenues increased 0.3 percentage points to 17.2% for the year ended December 31, 2022, from 16.9% for the year ended December 31, 2021.

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.

The increase in operating income as a percentage of revenues was comprised of a 0.3 percentage point decrease in impairments and other operating items, a 0.3 percentage point decrease in depreciation expense, a 0.3 percentage point decrease in SG&A expense and a 0.1 percentage point decrease in amortization expense, partially offset by a 0.7 percentage point increase in cost of operations.

Interest Expense .

Interest expense increased $39.5 million, or 24.3%, to $202.3 million for the year ended December 31, 2022, from $162.8 million for the year ended December 31, 2021.

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.

The increase was primarily attributable to an increase of $53.3 million from the issuance of $2.75 billion of senior unsecured notes during, or subsequent to, the year ended

December 31, 2021, an increase of $13.9 million due to an increase in the average borrowings outstanding under our Credit Agreement and Term Loan Agreement and an increase of $9.8 million from higher interest rates on borrowings outstanding under our Credit Agreement, partially offset by a decrease of $37.1 million from the repayment of $1.75 billion of senior unsecured notes during the year ended December 31, 2021 and $0.4 million of other net decreases.

Interest Income .

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 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.

Interest income increased $3.1 million to $6.0 million for the year ended December 31, 2022, from $2.9 million for the year ended December 31, 2021.

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

Other Income, Net .

Other income, net decreased $3.1 million, to $3.2 million for the year ended December 31, 2022, from $6.3 million for the year ended December 31, 2021.

Other income of $3.2 million recorded during the year ended December 31, 2022 consisted of income from transactions primarily as a result of the impact from changes in foreign currency exchange rates of $7.0 million related to the decrease in the Canadian dollar to the U.S.

dollar exchange rate in the period, and $1.4 million of other income, partially offset by $5.2 million from a decline in the value of investments purchased to fund our employee deferred compensation obligations.

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.

Loss on early extinguishment of debt was $115.3 million for the year ended December 31, 2021 and consisted 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 .

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federal statutory rate.

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.

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.

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

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

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

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

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

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Significant changes in revenue, EBITDA and depreciation, depletion and amortization for our reportable segments for the year ended December 31, 2022, compared to the year ended December 31, 2021, 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.

Revenue increased $369.4 million to $1.891 billion for 2022, from $1.521 billion for 2021, due to price increases, contributions from acquisitions and increased landfill gas sales attributable to higher volumes produced, partially offset by decreased post-collection volumes, decreased residential collection volumes, and lower prices for recyclable commodities.

EBITDA increased $82.1 million to $486.6 million, or a 25.7% EBITDA margin for 2022, from $404.5 million, or a 26.6% EBITDA margin for 2021.

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.

The decrease in our EBITDA margin was due primarily to increased diesel fuel expenses, increased third-party trucking and transportation expenses, increased corporate overhead allocations and increased travel, meetings, training and community activity expenses, partially offset by benefits from price-led revenue increases and the impact of acquisitions having higher EBITDA margins than our segment average.

Depreciation, depletion and amortization expense increased $42.1 million, to $281.2 million for 2022, from $239.1 million for 2021, due to assets acquired in acquisitions, additions to our fleet and equipment and higher depletion expense due to higher landfill development costs increasing our per ton landfill depletion rates.

Revenue increased $221.0 million to $1.668 billion for 2022, from $1.447 billion for 2021, due to solid waste price increases, increased E&P waste revenues attributable to increases in drilling and production activity levels resulting in increases in the demand for our E&P waste services and contributions from acquisitions, partially offset by lower residential collection volumes due to the purposeful non-renewal of a collection contract subsequent to December 31, 2021, a decrease resulting from the divestiture of certain non-strategic operating locations and lower post-collection volumes.

EBITDA increased $102.8 million to $497.8 million, or a 29.9% EBITDA margin for 2022, from $395.0 million, or a 27.3% EBITDA margin for 2021.

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.

The increase in our EBITDA margin was due to increased earnings at our E&P operations, the purposeful non-renewal of a residential contract, and price-led increases in solid waste revenue, partially offset by increased diesel and natural gas fuel expenses, the impact of acquisitions having lower EBITDA margins than our segment average, increased travel, meetings, training and community activity expenses and increased legal expenses.

Depreciation, depletion and amortization expense increased $9.5 million, to $198.5 million for 2022, from $189.0 million for 2021, due to assets acquired in acquisitions, additions to our fleet and equipment and higher depletion expense due to increased landfill volumes and higher landfill development costs increasing our per ton landfill depletion rates, partially offset by a decrease resulting from the divestiture of certain non-strategic operating locations and a reduction in amortization expense associated with the loss of a large residential collection contract.

Revenue increased $204.4 million to $1.485 billion for 2022, from $1.280 billion for 2021, due to contributions from acquisitions, price increases, increased collection volumes, higher prices during the first six months in the comparable periods for recyclable commodities and increased intermodal revenue, partially offset by lower prices for recyclable commodities during the last six months in the comparable period.

EBITDA increased $40.1 million to $445.9 million, or a 30.0% EBITDA margin for 2022, from $405.8 million, or a 31.7% EBITDA margin for 2021.

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.

The decrease in our EBITDA margin was due to increased diesel and natural gas fuel expenses, increased third-party trucking and transportation expenses, increased cost of recyclable commodities expenses, increased labor and recurring incentive compensation expenses and increased travel, meetings, training and community activity expenses, partially offset by benefits from price-led increases in revenue.

Depreciation, depletion and amortization expense increased $29.9 million, to $159.9 million for 2022, from $130.0 million for 2021, due to assets acquired in acquisitions and additions to our fleet and equipment.

Revenue increased $181.7 million to $1.228 billion for 2022, from $1.046 billion for 2021, due to price increases, contributions from acquisitions, higher landfill and residential collection volumes and higher prices during the first six months in the comparable periods for recyclable commodities, partially offset by lower prices for recyclable commodities during the last six months in the comparable period.

EBITDA increased $65.2 million to $424.6 million, or a 34.6% EBITDA margin for 2022, from $359.4 million, or a 34.3% EBITDA margin for 2021.

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.

The increase in our EBITDA margin was due to the benefits from price-led increases in revenue, partially offset by acquisitions having EBITDA margins lower than our segment average and increased diesel and natural gas fuel expenses.

Depreciation, depletion and amortization expense increased $18.1 million, to $152.2 million for 2022, from $134.1 million for 2021, due to assets acquired in acquisitions, additions to our fleet and equipment and higher depletion expense due to higher landfill development costs increasing our per ton landfill depletion rates.

Revenue increased $83.9 million to $940.6 million for 2022, from $856.7 million for 2021, due to price increases, contributions from acquisitions, higher commercial and roll off collection volumes, higher prices for renewable energy credits associated with the generation of landfill gas and higher prices during the first six months in the comparable periods for recyclable commodities, partially offset by a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods, lower residential collection volumes due to the purposeful non-renewal of a collection contract subsequent to December 31, 2021, lower landfill volumes, lower prices for recyclable commodities during the last six months in the comparable period and the divestiture of a non-strategic operating location.

EBITDA increased $9.5 million to $349.4 million, or a 37.1% EBITDA margin for 2022, from $339.9 million, or a 39.7% EBITDA margin for 2021.

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.

The decrease in our EBITDA margin was due to acquisitions having EBITDA margins lower than our segment average, increased diesel fuel expenses, increased disposal expenses, increased employee benefits expenses, increased subcontracted hauling services, increased travel, meetings, training and community activity expenses, partially offset by benefits from price-led increases in revenue and the purposeful non-renewal of a collection contract.

Depreciation, depletion and amortization expense increased $6.9 million, to $118.4 million for 2022, from $111.5 million for 2021, due to assets acquired in acquisitions and additions to our fleet and equipment, partially offset by a decrease in depletion expense due to lower landfill disposal volumes, a decrease resulting from the divestiture of a non-strategic operating location and a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods.

EBITDA decreased $5.4 million, to a loss of $25.0 million for 2022, from a loss of $19.6 million for 2021.

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.

The decrease was due to increased travel, meetings, training and community activity expenses, increased direct acquisition expenses, increased employee payroll expense, increased software license fees and the payment of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic, partially offset by decreased equity-based compensation expenses, decreased deferred compensation expenses, decreased cash incentive compensation expense to our management and decreased allocations of corporate overhead expenses to our segments.

Liquidity and Capital Resources

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Net cash used in investing activities

Net cash used in financing activities

Net cash provided by (used in) financing activities

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

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

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of year

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The $324.4 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.

1) Increase in earnings — Our increase in net cash provided by operating activities was favorably impacted by $192.1 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, impairments and early extinguishment of debt, due primarily to price increases, earnings from acquisitions, earnings generated from an increase in landfill gas revenues and renewable energy credits and an increase 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 $94.2 million from accounts payable and accrued liabilities as changes in accounts payable and accrued liabilities resulted in an increase to operating cash flows of $164.8 million for the year ended December 31, 2022, compared to an increase to operating cash flows of $70.6 million for the year ended December 31, 2021.

The increase for the year ended December 31, 2022 was due primarily to increases in operating expenses during the period which remained as outstanding obligations at December 31, 2022, the timing of processing year-end payments to vendors for capital expenditures and increased accrued interest due to the timing of interest payments for our senior unsecured notes issued subsequent to December 31, 2021, partially offset by the payment of deferred payroll taxes.

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.

3) Deferred income taxes — Our increase in net cash provided by operating activities was favorably impacted by $75.8 million from deferred income taxes as changes in deferred income taxes resulted in an increase to operating cash flows of $93.5 million for the year ended December 31, 2022, compared to an increase to operating cash flows of $17.7 million for the year ended December 31, 2021.

The increase for the year ended December 31, 2022 was primarily attributable to tax benefits resulting from the divestiture of certain non-strategic E&P disposal operating locations.

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 $10.5 million from deferred revenue as changes in deferred revenue resulted in an increase to operating cash flows of $42.2 million for the year ended December 31, 2022, compared to an increase to operating cash flows of $31.7 million for the year ended December 31, 2021.

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 .

For both comparative periods, deferred revenue increased due to price increases on our advanced billed residential and commercial collection services.

5) Prepaid expenses – Our increase in net cash provided by operating activities was favorably impacted by $7.5 million from prepaid expenses as changes in prepaid expenses resulted in a decrease to operating cash flows of $0.7 million for the year ended December 31, 2022, compared to a decrease to operating cash flows of $8.2 million for the year ended December 31, 2021.

The decrease for the year ended December 31, 2022 was due primarily to increases from payments of annual insurance premiums, payments of annual information system licenses and higher parts and fuel inventory, partially offset by a decrease in prepaid income tax payments.

The decrease for the year ended December 31, 2021 was due primarily to increases in prepaid income tax payments and prepaid vendor payments.

6) Accounts receivable – Our increase in net cash provided by operating activities was unfavorably impacted by $45.9 million from accounts receivable as changes in accounts receivable resulted in a decrease to operating cash flows of $100.5 million for the year ended December 31, 2022, compared to a decrease to operating cash flows of $54.7 million for the year ended December 31, 2021.

The decrease for the years ended December 31, 2022 and 2021 was due to increases in revenues, which remained as outstanding receivables at year end.

7) Other long-term liabilities – Our increase in net cash provided by operating activities was unfavorably impacted by $14.7 million from other long-term liabilities as changes in other long-term liabilities resulted in a decrease to operating cash flows of $14.0 million for the year ended December 31, 2022, compared to an increase to operating cash flows of $0.7 million for the year ended December 31, 2021.

The decrease for the year ended December 31, 2022 was due primarily to decreased employee deferred compensation liabilities at year end.

As of December 31, 2022, we had a working capital deficit of $395.0 million, including cash and equivalents of $78.6 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.

Our working capital decreased $195.0 million from a working capital deficit of $200.0 million at December 31, 2021 including cash and equivalents of $147.4 million, due primarily to a decrease in cash balances and increases in accounts payable and deferred revenue, partially offset by increased accounts receivable, increased inventory balances, and higher prepaid expenses.

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

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

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.

Investing Activities Cash Flows

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.

Net cash used in investing activities increased $1.394 billion to $3.087 billion for the year ended December 31, 2022, from $1.693 billion for the year ended December 31, 2021.

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.

1) An increase in cash paid for acquisitions of $1.246 billion;

2) An increase in capital expenditures at operations owned in the comparable periods of $103.5 million due to increases in land and buildings and landfill site costs;

3) An increase in capital expenditures at operations acquired during the comparative periods of $64.9 million due to expenditures for landfill site costs, trucks, equipment and containers;

4) A decrease in cash paid for investments in noncontrolling interests of $25.0 million resulting from a 2021 expenditure that did not reoccur in 2022;

5) A decrease in proceeds from disposal of assets of $12.1 million due to lower disposal of non-strategic assets to provide funding toward new capital expenditures.

Financing Activities Cash Flows

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.

Net cash provided by financing activities increased $1.528 billion to $1.028 billion for the year ended December 31, 2022, from net cash used in financing activities of $499.5 million for the year ended December 31, 2021.

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;

1) An increase from the net change in long-term borrowings of $1.522 billion in which long-term borrowings increased $1.745 billion during the year ended December 31, 2022 and increased $222.2 million during the year ended December 31, 2021;

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.

Our capital requirements include acquisitions and capital expenditures for landfill cell construction, landfill development, landfill closure activities and intermodal facility construction in the future.

3) A decrease from higher payments to repurchase our common shares of $86.0 million due to an increased volume of shares repurchased;

4) A decrease from higher cash dividends paid of $22.8 million due primarily to an increase in our average quarterly dividend rate for the year ended December 31, 2022 to $0.236 per share, from $0.211 per share for the year ended December 31, 2021.

On July 26, 2022, our Board of Directors approved, subject to receipt of regulatory approvals, the annual renewal of our normal course issuer bid, or the NCIB, to purchase up to 12,859,066 of our common shares during the period of August 10, 2022 to August 9, 2023 or until such earlier time as the NCIB is completed or terminated at our option.

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

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.

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.

In October 2021, our Board of Directors authorized an increase to our regular quarterly cash dividend of $0.025, from $0.205 to $0.230 per share.

In November 2022, we announced that our Board of Directors increased our regular quarterly cash dividend by $0.025, from $0.230 to $0.255 per share.

Cash dividends of $243.0 million and $220.2 million were paid during the years ended December 31, 2022 and 2021, respectively.

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

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.

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

We made $882.0 million in capital expenditures for property and equipment, net of proceeds from disposal of assets, during the year ended December 31, 2022, and we expect to make total capital expenditures for property and equipment of $895 million in 2023, net of proceeds from disposal of assets.

We intend to fund our planned 2023 capital expenditures principally through cash on hand, internally generated funds and borrowings under our Credit Agreement.

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As of December 31, 2022, $650.0 million under the term loan and $614.7 million under the revolving credit facility were outstanding under the Credit Agreement, exclusive of outstanding standby letters of credit of $41.8 million.

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 also had $85.3 million of letters of credit issued and outstanding at December 31, 2022 under a facility other than the Credit Agreement.

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

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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.

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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.

On March 9, 2022, we completed an underwritten public offering of $500.0 million aggregate principal amount of 3.20% Senior Notes due June 1, 2032 (the “New 2032 Senior Notes”).

The New 2032 Senior Notes were issued under the Indenture, as supplemented through the Sixth Supplemental Indenture, dated as of March 9, 2022.

On August 18, 2022, we completed an underwritten public offering of $750.0 million aggregate principal amount of 4.20% Senior Notes due January 15, 2033 (the “2033 Senior Notes” and, together with the 2028 Senior Notes, the 2029 Senior Notes, the 2030 Senior Notes, the 2032 Senior Notes, the New 2032 Senior Notes, the 2050 Senior Notes and the 2052 Senior Notes, the “Senior Notes”).

The 2033 Senior Notes were issued under the Indenture, as supplemented through the Seventh Supplemental Indenture, dated as of August 18, 2022.

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

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

On October 31, 2022, we, as borrower, Bank of America, N.A., as administrative agent, and the other lenders from time to time party thereto (the “New TL Lenders”) entered into that certain Term Loan Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Agreement”), pursuant to which the New TL Lenders made loans to us in an aggregate stated principal amount of $800.0 million.

We used substantially all of the proceeds of borrowings under the Term Loan Agreement to repay revolving borrowings under the Credit Agreement.

Amounts borrowed under the Term Loan Agreement and repaid or prepaid may not be reborrowed.

The Term Loan Agreement has a scheduled maturity date of July 30, 2026.

See Note 11 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further details on the debt agreements.

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At December 31, 2022, $391.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S.

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.

Term SOFR rate loans, bearing interest at a total rate of 5.42% on such date.

At December 31, 2022, $223.7 million of the outstanding borrowings drawn under the revolving credit facility were in Canadian-based bankers’ acceptances, bearing interest at a total rate of 5.74% on such date.

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.

At December 31, 2021, all amounts outstanding under the term loan were in LIBOR loans which bear interest at the LIBOR rate plus the applicable margin (for a total rate of 1.10% on such date).

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

At December 31, 2022, all amounts outstanding under the term loan were in Term SOFR loans which bear interest at the Term SOFR rate plus the applicable margin (for a total rate of 5.42% on such date).

3) $800.0 million in principal payments due July 2026 related to our term loan under our Term Loan Agreement.

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

4) $500.0 million in principal payments due 2028 related to our 2028 Senior Notes.

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The 2032 Senior Notes bear interest at a rate of 2.20%.

8) $500.0 million in principal payments due 2032 related to our New 2032 Senior Notes.

The New 2032 Senior Notes bear interest at a rate of 3.20%.

9) $750.0 million in principal payments due 2033 related to our 2033 Senior Notes.

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

11) $850.0 million in principal payments due 2052 related to our 2052 Senior Notes.

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

12) $37.2 million in principal payments related to our notes payable to sellers and other third parties.

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13) $11.5 million in principal payments related to our financing leases.

Our financing leases bear interest at a rate of 1.89% at December 31, 2021, and have a lease expiration date of 2027.

Our financing leases bear interest at rates between 1.89% and 2.16% at December 31, 2022, and have expiration dates ranging from 2026 to 2027.

The following assumptions were made in calculating cash interest payments:

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

1) We calculated cash interest payments on the Credit Agreement using the Term SOFR rate plus the applicable Term SOFR 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, 2022.

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.

2) We calculated cash interest payments on the Term Loan Agreement using the Term SOFR rate plus the applicable Term SOFR margin at December 31, 2022.

We assumed the Term Loan Agreement is paid off when it matures in July 2026.

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

Contingent consideration payments include $81.4 million recorded as liabilities in our consolidated financial statements at December 31, 2022, and $17.4 million of future interest accretion on the recorded obligations.

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Capital expenditures for property and equipment

Distributions to noncontrolling interests

Payment of contingent consideration recorded in earnings (a)

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

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

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Reflects the elimination of the non-cash amortization of acquisition-related intangible assets.

Reflects the addback of impairments and other operating items.

Reflects adjustments for impairments and other operating items.

Reflects the addback of acquisition-related transaction costs.

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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 calculated by dividing our Consolidated Total Funded Debt by Consolidated EBITDA (each as defined substantially identically in our Credit Agreement and Term Loan 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.

We present this ratio because it is used for the purposes of calculating financial covenants under our Credit Agreement and Term Loan 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.

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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.

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

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

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

However, competitive pressures or delays in the timing of rate increases under 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.

However, competitive pressures or delays in the timing of rate increases under certain of our contracts 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