What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-04-27 compared with 2022-11-03 · 193 added, 313 removed, 248 unchanged (67% of the section changed)

7 unchanged sentences

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

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

● Statements regarding our ability to access capital resources or credit markets;

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

1 unchanged sentence

● 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 coronavirus disease 2019 (“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.

● Other statements on a variety of topics such as the coronavirus disease 2019 (“COVID-19”) pandemic, inflation, credit risk of customers, seasonality, labor/pension costs and labor union activity, operational and safety risks, acquisitions, litigation developments and 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.

6 unchanged sentences

and six provinces in Canada.

Waste Connections also provides non-hazardous oil and natural gas exploration and production (“E&P”) waste treatment, recovery and disposal services in several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.

Waste Connections also provides non-hazardous oil and natural gas exploration and production (“E&P”) waste treatment, recovery and disposal services in

several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.

Environmental, organizational and financial sustainability initiatives have been key components of our success since we were founded in 1997.

We remain committed to growing and expanding these efforts as our industry and technology continue to evolve.

To that end, in 2020, we introduced long-term, aspirational ESG targets and committed over $500 million for investments to meet or exceed such sustainability targets.

These investments primarily focus on reducing emissions, increasing resource recovery of both recyclable commodities and clean energy fuels, reducing reliance on off-site disposal for landfill leachate, further improving safety through reduced incidents and enhancing employee engagement through improved voluntary turnover and Servant Leadership scores.

Our 2022 Sustainability Report provides progress updates on its targets and investments towards their achievement.

This report can be found at www.wasteconnections.com/sustainability but does not constitute a part of, and is not incorporated by reference into, this Quarterly Report on Form 10-Q.

We continue to grow and expand these efforts and our disclosure regarding progress towards their achievement as our industry and technology continue to evolve.

To that end, we have committed $500 million to the advancement of long-term, aspirational ESG targets, which have been incorporated into executive compensation metrics.

Our investments primarily focus on reducing emissions, increasing resource recovery of both recyclable commodities and clean energy fuels, reducing reliance on off-site disposal for landfill leachate, further improving safety through reduced incidents and enhancing employee engagement through improved voluntary turnover and Servant Leadership scores.

Our 2022 Sustainability Report can be found at www.wasteconnections.com/sustainability but does not constitute a part of, and is not incorporated by reference into, this Quarterly Report on Form 10-Q.

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

13 unchanged sentences

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.

Subject to certain recent developments discussed below, 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 E&P 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 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 impairment charges on our intangible assets and property and equipment associated with our E&P operations.

Conversely, 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 could result in increasing levels of production activity and demand for our E&P waste services.

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.

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

March 11, 2022 marked the two-year anniversary of COVID-19 being declared a global pandemic by the World Health Organization.

March 11, 2023 marked the three-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.

2 unchanged sentences

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.

In recent quarters, E&P waste revenue has improved sequentially on increased drilling activity in several of the major basins.

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 incurred over $40 million in incremental COVID-19-related costs, primarily supplemental pay for frontline employees.

Through the nine months ended September 30, 2022, we have continued to provide support for our employees and their families, including approximately $10 million in supplemental pay and benefits due to surges in cases related to certain variants of COVID-19.

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.

7 unchanged sentences

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

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

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

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Cost of operations

6 unchanged sentences

Other income (expense), 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

Total revenues increased $282.7 million, or 17.7%, to $1.880 billion for the three months ended September 30, 2022, from $1.597 billion for the three months ended September 30, 2021.

Total revenues increased $815.5 million, or 18.0%, to $5.343 billion for the nine months ended September 30, 2022, from $4.527 billion for the nine months ended September 30, 2021.

Acquisitions closed during, or subsequent to, the comparable periods increased revenues for the three and nine months ended September 30, 2022 by $154.1 million and $410.6 million, respectively.

Operations that were divested subsequent to September 30, 2021 decreased revenues for the three and nine months ended September 30, 2022 by $3.4 million and $8.6 million, respectively.

During the three months ended September 30, 2022, the net increase in prices charged to our customers at our existing operations was $154.2 million, consisting of $126.3 million of core price increases and surcharges of $27.9 million.

During the nine months ended September 30, 2022, the net increase in prices charged to our customers at our existing operations was $376.9 million, consisting of $315.3 million of core price increases and surcharges of $61.6 million.

During the three months ended September 30, 2022, we recognized volume losses totaling $22.3 million, which were comprised of $14.5 million of declines primarily associated with the nonrenewal of two residential collection contracts subsequent to September 30, 2021 and $7.8 million of declines primarily attributable to decreases in landfill disposal volumes, partially offset by increases in roll off collection.

During the nine months ended September 30, 2022, we recognized volume losses totaling $24.3 million, which was comprised of $39.2 million of declines associated with the aforementioned residential collection contracts, partially offset by $14.9 million of increases primarily attributable to commercial and roll off collection.

E&P waste revenues at facilities owned during the three and nine months ended September 30, 2022 and 2021 increased $19.3 million and $55.7 million, respectively, 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 three and nine months ended September 30, 2022 and 2021 decreased $19.5 million and $0.3 million, respectively.

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 three months ended September 30, 2022.

The impact of lower prices on revenues from sales of recyclable commodities was partially offset by the impact of recognizing certain recyclable commodity sales gross of selling and processing expenses.

Total revenues increased $254.2 million, or 15.4%, to $1.901 billion for the three months ended March 31, 2023, from $1.646 billion for the three months ended March 31, 2022.

During the three months ended March 31, 2023, incremental revenue from acquisitions closed during, or subsequent to, the three months ended March 31, 2022, increased revenues by $132.6 million.

Operations that were divested during, or subsequent to, the three months ended March 31, 2022, decreased revenues by $0.5 million for the three months ended March 31, 2023.

During the three months ended March 31, 2023, the net increase in prices charged to our customers at our existing operations was $183.5 million, consisting of $171.2 million of core price increases and surcharges of $12.3 million.

During the three months ended March 31, 2023, we recognized volume losses totaling $20.5 million, primarily due to lower post-collection volumes in part due to weather impacting our operations in several markets, primarily in our Western segment.

E&P waste revenues at facilities owned during the three months ended March 31, 2023 and 2022 increased $7.8 million due to increases in overall demand for our E&P waste services as a result of increases in drilling and production activity levels in certain basins.

Revenues from sales of recyclable commodities at facilities owned during the three months ended March 31, 2023 and 2022 decreased $29.9 million.

The decrease is primarily attributable to lower commodity pricing for old corrugated cardboard, aluminum, plastics and other paper products as compared to the prior period.

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

dollar currency exchange rate resulted in a decrease in revenues for the three and nine months ended September 30, 2022 of $7.8 million and $16.2 million, respectively.

The average Canadian dollar to U.S.

dollar exchange rates on our Canadian revenues during the three months ended September 30, 2022 and 2021 were 0.7660 and 0.7936, respectively.

dollar currency exchange rate resulted in a decrease in revenues of $13.7 million for the three months ended March 31, 2023.

The average Canadian dollar to U.S.

dollar exchange rates on our Canadian revenues during the nine months ended September 30, 2022 and 2021 were 0.7792 and 0.7996, respectively.

Other revenues increased $8.1 million during the three months ended September 30, 2022, due primarily to a $3.6 million increase in intermodal revenues due primarily to reductions in shipping port logistical constraints which decreased intermodal cargo volumes in the prior year period, a $3.5 million increase in landfill gas revenue resulting from increased volumes generated and higher prices for renewable energy credits and a $1.0 million increase in other non-core revenue sources.

Other revenues increased $21.7 million during the nine months ended September 30, 2022, due primarily to a $9.6 million increase in landfill gas revenues and renewable energy credits, an $8.2 million increase in intermodal revenues and a $3.9 million increase in other non-core revenue sources.

dollar exchange rates on our Canadian revenues were 0.7397 and 0.7897 for the three months ended March 31, 2023 and 2022, respectively.

Other revenues decreased $5.1 million during the three months ended March 31, 2023, due primarily to a $4.3 million decrease in landfill gas revenues on lower values for renewable energy credits partially offset by higher landfill gas volumes, as well as a $1.9 million decrease in intermodal revenues, partially offset by a $1.1 million increase in other non-core revenue sources.

Cost of Operations .

Total cost of operations increased $174.5 million, or 18.4%, to $1.121 billion for the three months ended September 30, 2022, from $946.1 million for the three months ended September 30, 2021.

The increase was primarily the result of $101.8 million of additional operating costs from acquisitions closed during, or subsequent to, the three months ended September 30, 2021 and an increase in operating costs at our existing operations of $79.1 million, assuming foreign currency parity, partially offset by a decrease in operating costs of $4.0 million resulting from a lower average foreign currency exchange rate in effect during the current period and a decrease of $2.4 million from operations divested subsequent to the three months ended September 30, 2021.

The increase in operating costs of $79.1 million, assuming foreign currency parity, at our existing operations for the three months ended September 30, 2022 consisted of an increase in labor and recurring incentive compensation expenses of $24.0 million due primarily to employee pay increases, an increase in fuel expense of $16.8 million due to higher diesel and natural gas prices, an increase in third-party trucking and transportation expenses of $15.2 million due primarily to higher rates charged by third-party providers, an increase in truck, container, equipment and facility maintenance and repair expenses of $7.6 million due primarily to increased collection routes and equipment operating hours and parts and service rate increases, an increase in expenses for purchasing and processing recyclable commodities of $4.3 million due to processing expenses charged by third parties increasing as recyclable commodity values decline in certain of our regulated operating markets and the impact of recognizing certain recyclable commodity sales gross of selling and processing expenses, an increase in third-party disposal expenses of $4.0 million due primarily to disposal rate increases and higher roll off collection volumes, an increase in intermodal rail expenses of $2.0 million due to higher cargo volumes, an increase in subcontracted hauling services at our solid waste operations of $1.6 million due to higher costs charged by third-party providers, an increase in taxes on revenues of $1.2 million due primarily to increased revenues and $2.4 million of other net expense increases.

Total cost of operations increased $524.8 million, or 19.6%, to $3.198 billion for the nine months ended September 30, 2022, from $2.673 billion for the nine months ended September 30, 2021.

The increase was primarily the result of $271.5 million of additional operating costs from acquisitions closed during, or subsequent to, the nine months ended September 30, 2021 and an increase in operating costs at our existing operations of $268.4 million, assuming foreign currency parity, partially offset by a decrease in operating costs of $8.4 million resulting from a lower average foreign currency exchange rate in effect during the current period and a decrease of $6.7 million from operations divested subsequent to the nine months ended September 30, 2021.

The increase in operating costs of $268.4 million, assuming foreign currency parity, at our existing operations for the nine months ended September 30, 2022 consisted of an increase in labor and recurring incentive compensation expenses of $71.0 million due primarily to employee pay increases, an increase in fuel expense of $57.4 million due to higher diesel and natural gas prices, an increase in third-party trucking and transportation expenses of $40.6 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 $31.5 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 $18.5 million due primarily to increased solid waste collection volumes, an increase in expenses for purchasing and processing recyclable commodities of $11.4 million due to processing expenses charged by third parties increasing as recyclable commodity values decline in certain of our regulated operating markets and the impact of recognizing certain recyclable commodity sales gross of selling and processing expenses, 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 $7.4 million due primarily to increased revenues, an increase in intermodal rail expenses of $4.2 million due to higher cargo volumes, an increase in subcontracted hauling services at our solid waste operations of $3.3 million due to higher costs charged by third-party providers, an increase in leachate expense of $2.8 million due primarily to higher precipitation in certain markets where our landfills are located and higher costs charged by third parties to transport and treat leachate, an increase in landfill maintenance, environmental compliance and daily cover expenses of $1.7 million due to increased compliance requirements under our landfill operating permits, an increase in expenses for auto and workers’ compensation claims of $1.5 million due primarily to increased claim severity, an increase in 401(k) matching expenses of $1.5 million due to higher employee earnings and $6.6 million of other net expense increases.

Cost of operations as a percentage of revenues increased 0.4 percentage points to 59.6% for the three months ended September 30, 2022, from 59.2% for the three months ended September 30, 2021.

The increase as a percentage of revenues consisted of a 0.8 percentage point increase from higher diesel and natural gas expenses, a 0.6 percentage point increase from higher third-party trucking and transportation expenses and a 0.6 percentage point increase from acquisitions closed during, or subsequent to, the three months ended September 30, 2021 having operating margins lower than our company average, partially offset by a combined 1.4 percentage point decrease from disposal, taxes on revenues, labor and repairs and maintenance due to price-driven revenue increases and a 0.2 percentage point decrease from all other net changes.

Cost of operations as a percentage of revenues increased 0.8 percentage points to 59.9% for the nine months ended September 30, 2022, from 59.1% for the nine months ended September 30, 2021.

The increase as a percentage of revenues consisted of a 0.8 percentage point increase from higher fuel expense, a 0.5 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 nine months ended September 30, 2021 having operating margins lower than our company average and a 0.2 percentage point increase from supplemental compensation to provide 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 $31.4 million, or 20.2%, to $186.9 million for the three months ended September 30, 2022, from $155.5 million for the three months ended September 30, 2021.

The increase was comprised of an increase of $21.7 million, assuming foreign currency parity, at our existing operations and $10.7 million from acquisitions closed during, or subsequent to, the three months ended September 30, 2021, partially offset by a decrease of $0.7 million resulting from a lower average foreign currency exchange rate in effect during the current period and a decrease of $0.3 million from operations divested subsequent to the three months ended September 30, 2021.

The increase in SG&A expenses at our existing operations of $21.7 million, assuming foreign currency parity, for the three months ended September 30, 2022 was comprised of a collective increase in travel, meetings, training and community activity expenses of $6.6 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 direct acquisition expenses of $4.8 million due to an increase in acquisition activity in the current period, an increase in administrative payroll expenses of $4.7 million due primarily to annual pay increases, an increase in equity-based compensation expenses of $3.3 million associated with our annual recurring grant of restricted share units to our personnel, an increase in software license fees of $1.2 million associated with new information technology applications and an increase in professional fees of $1.1 million due primarily to increased legal services.

SG&A expenses increased $63.8 million, or 14.0%, to $518.7 million for the nine months ended September 30, 2022, from $454.9 million for the nine months ended September 30, 2021.

The increase was comprised of an increase of $36.2 million, assuming foreign currency parity, at our existing operations and $29.9 million from acquisitions closed during, or

subsequent to, the nine months ended September 30, 2021, partially offset by a decrease of $1.4 million resulting from a lower average foreign currency exchange rate in effect during the current period and a decrease of $0.9 million from operations divested subsequent to the nine months ended September 30, 2021.

The increase in SG&A expenses at our existing operations of $36.2 million, assuming foreign currency parity, for the nine months ended September 30, 2022 was comprised of a collective increase in travel, meetings, training and community activity expenses of $19.8 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 direct acquisition expenses of $12.5 million due to an increase in acquisition activity in the current period, an increase in administrative payroll expenses of $10.8 million due primarily to annual pay increases, an increase in equity-based compensation expenses of $6.0 million associated with our annual recurring grant of restricted share units to our personnel, an increase in professional fees of $2.8 million due primarily to increased legal services, an increase in software license fees of $2.3 million associated with new information technology applications, 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 $1.3 million of other net expense increases, partially offset by a decrease in deferred compensation expenses of $9.7 million as a result of decreases in the market value of investments to which employee deferred compensation liability balances are tracked, 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, a decrease in accrued recurring cash incentive compensation expense to our management of $3.1 million and a decrease in equity-based compensation expenses of $2.1 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 increased 0.2 percentage points to 9.9% for the three months ended September 30, 2022, from 9.7% for the three months ended September 30, 2021.

The increase as a percentage of revenues was primarily attributable to increased travel, meetings, training and community activity expenses and higher direct acquisition expenses, partially offset by the impact of price-driven revenue increases in our solid waste services and acquisitions closed during, or subsequent to, the three months ended September 30, 2021 having lower SG&A expenses as a percentage of revenues than our company average.

SG&A expenses as a percentage of revenues decreased 0.3 percentage points to 9.7% for the nine months ended September 30, 2022, from 10.0% for the nine months ended September 30, 2021.

The decrease as a percentage of revenues was primarily attributable to lower equity compensation expenses, lower cash incentive compensation expense, lower deferred compensation expense, acquisitions closed during, or subsequent to, the nine months ended September 30, 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.

Total cost of operations increased $157.4 million, or 15.9%, to $1.147 billion for the three months ended March 31, 2023, from $989.5 million for the three months ended March 31, 2022.

The increase was primarily the result of $86.4 million of additional operating costs from acquisitions closed during, or subsequent to, the three months ended March 31, 2022, and an increase in operating costs at our existing operations of $78.1 million, assuming foreign currency parity, partially offset by a decrease in operating costs of $7.1 million resulting from a lower average foreign currency exchange rate in effect during the current period.

The increase in operating costs of $78.1 million, assuming foreign currency parity, at our existing operations for the three months ended March 31, 2023 consisted of an increase in labor and recurring incentive compensation expenses of $34.3 million due primarily to employee pay increases, an increase in truck, container, equipment and facility maintenance and repair expenses of $17.6 million due primarily to increased collection routes and equipment operating hours, container parts and service rate increases, an increase in third-party trucking and transportation expenses of $9.8 million due primarily to higher rates charged by third-party providers, an increase in fuel expense of $8.4 million due to higher diesel and natural gas prices and increased fuel usage, an increase in leachate costs of $3.4 million, an increase in taxes on revenues of $3.2 million as the result of increased revenues, an increase in expenses for auto and workers’ compensation claims of $3.1 million due primarily to increased claims and inflation-led cost increases, an increase in landfill maintenance costs of $2.1 million and $5.2 million of other net expense increases, partially offset by a decrease in supplemental compensation to non-management personnel of $9.0 million associated with the impact of the COVID-19 pandemic that occurred in the prior year period.

Cost of operations as a percentage of revenues increased 0.2 percentage points to 60.3% for the three months ended March 31, 2023, from 60.1% for the three months ended March 31, 2022.

The increase as a percentage of revenues consisted of a 0.5 percentage point increase from acquisitions closed during, or subsequent to, the three months ended March 31, 2022 having operating costs as a percentage of revenue higher than our company average, a 0.4 percentage point increase in truck, container, equipment and facility repairs, a 0.2 percentage point increase related to higher labor and recurring incentive compensation expenses, partially offset by a 0.5 percentage point decrease in disposal costs driven by the relative impact of price-driven revenue increases, a 0.3 percentage point decrease in compensation to non-management personnel associated with the impact of the COVID-19 pandemic that occurred in the prior year period and a 0.1 percentage point decrease from all other net changes.

SG&A expenses increased $30.3 million, or 18.5%, to $193.7 million for the three months ended March 31, 2023, from $163.4 million for the three months ended March 31, 2022.

The increase was comprised of an increase of $22.2 million, assuming foreign currency parity, at our existing operations and $9.3 million from acquisitions closed during, or subsequent to, the three months ended March 31, 2022, partially offset by a decrease of $1.2 million resulting from a lower average foreign currency exchange rate in effect during the current period.

The increase in SG&A expenses at our existing operations of $22.2 million, assuming foreign currency parity, for the three months ended March 31, 2023 was comprised of an increase in administrative payroll expenses of $7.3 million due primarily to annual pay increases and increased headcount related to growth, an increase in equity-based compensation expenses of $5.1 million associated with our annual recurring grants of restricted share units to our personnel, an increase in deferred compensation expenses of $3.3 million as a result of increases in the market value of investments to which employee deferred compensation liability balances are tracked, a collective increase in travel, meetings, training and community activity expenses of $3.1 million due to increased activity in the current year period due to a reduction in restrictions associated with the COVID-19 pandemic, an increase in professional fees of $3.1 million due primarily to increased legal services, an increase in software license fees of $1.5 million associated with new information technology applications and $2.1 million of other net expense increases, partially offset by a decrease in direct acquisition expenses of $2.5 million due to a decrease in acquisition activity in the current period and a decrease of $0.8 million resulting from the prior year payment of supplemental bonuses to non-management employees associated with the impact of the COVID-19 pandemic that did not reoccur in the current year.

SG&A expenses as a percentage of revenues increased 0.3 percentage points to 10.2% for the three months ended March 31, 2023, from 9.9% for the three months ended March 31, 2022.

The increase as a percentage of revenues was primarily attributable to a 0.2 percentage point increase in equity-based compensation expense associated with our annual recurring grants of restricted share units to our personnel, a 0.2 percentage point increase in deferred compensation

expense, a 0.2 percentage point increase in travel and meetings costs and a 0.1 percentage point increase in professional services and legal costs, partially offset by a 0.2 percentage point decrease from acquisitions closed during, or subsequent to, the three months ended March 31, 2022 having lower SG&A costs as a percentage of revenue than our company average and a 0.2 percentage point decrease from lower direct acquisitions costs.

Depreciation .

Depreciation expense increased $21.3 million, or 12.4%, to $193.3 million for the three months ended September 30, 2022, from $172.0 million for the three months ended September 30, 2021.

The increase was comprised of an increase in depreciation and depletion expense of $16.5 million from acquisitions closed during, or subsequent to, the three months ended September 30, 2021 and an increase in depreciation expense of $7.7 million from the impact of additions to our fleet and equipment purchased to support our existing operations, partially offset by a decrease in depletion expense of $1.3 million resulting primarily from non-recurring charges recorded in the prior year period to adjust landfill closure liabilities, a decrease in depreciation and depletion expense of $0.8 million from operations divested subsequent to the three months ended September 30, 2021 and a decrease of $0.8 million resulting from a lower average foreign currency exchange rate in effect during the current period.

Depreciation expense increased $63.6 million, or 12.8%, to $562.2 million for the nine months ended September 30, 2022, from $498.6 million for the nine months ended September 30, 2021.

The increase was comprised of an increase in depreciation and depletion expense of $41.9 million from acquisitions closed during, or subsequent to, the nine months ended September 30, 2021, an increase in depreciation expense of $19.0 million from the impact of additions to our fleet and equipment purchased to support our existing operations and an increase in depletion expense of $6.9 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 in depreciation and depletion expense of $2.5 million from operations divested subsequent to the nine months ended September 30, 2021 and a decrease of $1.7 million resulting from a lower average foreign currency exchange rate in effect during the current period.

Depreciation expense as a percentage of revenues decreased 0.5 percentage points to 10.3% for the three months ended September 30, 2022, from 10.8% for the three months ended September 30, 2021.

Depreciation expense as a percentage of revenues decreased 0.5 percentage points to 10.5% for the nine months ended September 30, 2022, from 11.0% for the nine months ended September 30, 2021.

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

Depreciation expense increased $24.1 million, or 13.4%, to $204.0 million for the three months ended March 31, 2023, from $179.9 million for the three months ended March 31, 2022.

The increase was comprised of an increase in depreciation and depletion expense of $18.1 million from acquisitions closed during, or subsequent to, the three months ended March 31, 2022, an increase in depreciation expense of $6.8 million from the impact of additions to our fleet and equipment purchased to support our existing operations and $0.6 million of other net increases, partially offset by a decrease of $1.4 million resulting from a lower average foreign currency exchange rate in effect during the current period.

Depreciation expense as a percentage of revenues decreased 0.2 percentage points to 10.8% for the three months ended March 31, 2023, from 11.0% for the three months ended March 31, 2022.

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 $3.6 million, or 10.0%, to $38.9 million for the three months ended September 30, 2022, from $35.3 million for the three months ended September 30, 2021.

The increase was the result of $9.7 million from intangible assets acquired in acquisitions closed during, or subsequent to, the three months ended September 30, 2021, partially offset by a decrease of $5.9 million from certain intangible assets becoming fully amortized subsequent to September 30, 2021 and a decrease of $0.2 million resulting from a lower average foreign currency exchange rate in effect during the current period.

Amortization of intangibles expense increased $13.8 million, or 13.7%, to $114.0 million for the nine months ended September 30, 2022, from $100.2 million for the nine months ended September 30, 2021.

The increase was the result of $28.7 million from intangible assets acquired in acquisitions closed during, or subsequent to, the nine months ended September 30, 2021, partially offset by a decrease of $14.5 million from certain intangible assets becoming fully amortized subsequent to September 30, 2021 and a decrease of $0.4 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 was 2.2% for the three and nine months ended September 30, 2021 and 2.1% for the three and nine months ended September 30, 2022.

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

Amortization of intangibles expense increased $1.7 million, or 4.4%, to $39.3 million for the three months ended March 31, 2023, from $37.6 million for the three months ended March 31, 2022.

The increase was the result of $8.3 million from intangible assets acquired in acquisitions closed during, or subsequent to, the three months ended March 31, 2022, partially offset by a decrease of $6.2 million from certain intangible assets becoming fully amortized subsequent to March 31, 2022, and a decrease of $0.4 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 0.2 percentage points to 2.1% for the three months ended March 31, 2023, from 2.3% for the three months ended March 31, 2022.

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 increased $10.3 million, to net losses totaling $13.4 million for the three months ended September 30, 2022, from net losses totaling $3.1 million for the three months ended September 30, 2021.

The net losses of $13.4 million recorded during the three months ended September 30, 2022 consisted of an $8.4 million lawsuit judgment accrual and $5.5 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, partially offset by $0.5 million of other net credits.

The net losses of $3.1 million recorded during the three months ended September 30, 2021 consisted of $2.0 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to their original estimated termination date and $1.1 million of losses on property and equipment that were disposed of through sales or as a result of being damaged in operations.

Impairments and other operating items increased $9.7 million, to net losses totaling $19.5 million for the nine months ended September 30, 2022, from net losses totaling $9.8 million for the nine months ended September 30, 2021.

The net losses of $19.5 million recorded during the nine months ended September 30, 2022 consisted of $10.5 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, an $8.4 million lawsuit judgment accrual and $0.6 million of other net charges.

The net losses of $9.8 million recorded during the nine months ended September 30, 2021 consisted of a $4.6 million loss resulting from property and equipment damaged in a facility fire, $3.2 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to their original estimated

termination date, $1.5 million of losses on property and equipment that were disposed of through sales or as a result of being damaged in operations and $0.5 million of other net charges.

Impairments and other operating items remained unchanged, with net losses totaling $1.9 million for the three months ended March 31, 2023 and 2022.

The net losses of $1.9 million recorded during the three months ended March 31, 2023 resulted from disposal of property and equipment.

The net losses of $1.9 million recorded during the three months ended March 31, 2022 consisted of $3.6 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to their original estimated termination date, partially offset by net gains of $1.7 million from disposal of property and equipment.

Operating Income .

Operating income increased $41.7 million, or 14.6%, to $326.8 million for the three months ended September 30, 2022, from $285.1 million for the three months ended September 30, 2021.

The increase in our operating income for the three months ended September 30, 2022 was due primarily to price increases for our solid waste services, operating income generated from acquisitions closed during, or subsequent to, the three months ended September 30, 2021 and an increase in earnings at our E&P waste operations.

Operating income increased $139.9 million, or 17.7%, to $930.2 million for the nine months ended September 30, 2022, from $790.3 million for the nine months ended September 30, 2021.

The increase in our operating income for the nine months ended September 30, 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 nine months ended September 30, 2021 and an increase in earnings at our E&P waste operations.

Operating income as a percentage of revenues decreased 0.5 percentage points to 17.4% for the three months ended September 30, 2022, from 17.9% for the three months ended September 30, 2021.

The decrease in operating income as a percentage of revenues was comprised of a 0.4 percentage point increase in cost of operations, a 0.5 percentage point increase in impairments and other operating items and a 0.2 percentage point increase in SG&A expense, partially offset by a 0.5 percentage point decrease in depreciation expense and a 0.1 percentage point decrease in amortization expense.

Operating income as a percentage of revenues decreased 0.1 percentage points to 17.4% for the nine months ended September 30, 2022, from 17.5% for the nine months ended September 30, 2021.

The decrease in operating income as a percentage of revenues was comprised of a 0.8 percentage point increase in cost of operations and a 0.2 percentage point increase in impairments and other operating items, partially offset by a 0.5 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.

Operating income increased $40.8 million, or 14.9%, to $314.7 million for the three months ended March 31, 2023, from $273.9 million for the three months ended March 31, 2022.

The increase in our operating income for the three months ended March 31, 2023 was due primarily to price increases for our solid waste services, operating income generated from acquisitions closed during, or subsequent to, the three months ended March 31, 2022 and an increase in earnings at our E&P waste operations, partially offset by lower recyclable commodity pricing in the period.

Operating income as a percentage of revenues decreased 0.1 percentage points to 16.5% for the three months ended March 31, 2023, from 16.6% for the three months ended March 31, 2022.

The decrease as a percentage of revenues was comprised of a 0.3 percentage point increase in SG&A expense, a 0.2 percentage point increase in our costs of operations, partially offset by a 0.2 percentage point decrease in depreciation expense and a 0.2 percentage point decrease in amortization expense.

Interest Expense .

Interest expense increased $10.8 million, or 26.6%, to $51.2 million for the three months ended September 30, 2022, from $40.4 million for the three months ended September 30, 2021.

The increase was primarily attributable to an increase of $16.5 million from the issuance of $2.75 billion of senior unsecured notes during, or subsequent to, the three months ended September 30, 2021, an increase of $4.0 million from higher interest rates on borrowings outstanding under our Credit Agreement and an increase of $0.9 million due to an increase in the average borrowings outstanding under our Credit Agreement, partially offset by a decrease of $10.5 million from the repayment of $1.5 billion of senior unsecured notes in September 2021 and $0.1 million of other net decreases.

Interest expense increased $13.4 million, or 10.8%, to $137.6 million for the nine months ended September 30, 2022, from $124.2 million for the nine months ended September 30, 2021.

The increase was primarily attributable to an increase of $41.5 million from the issuance of $2.75 billion of senior unsecured notes during, or subsequent to, the nine months ended September 30, 2021, an increase of $6.2 million due to an increase in the average borrowings outstanding under our Credit Agreement and an increase of $3.6 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 nine months ended September 30, 2021 and $0.8 million of other net decreases.

Other Income .

Other income increased $5.4 million, to $8.5 million for the three months ended September 30, 2022, from $3.1 million for the three months ended September 30, 2021.

Other income decreased $3.1 million, to $2.4 million for the nine months ended September 30, 2022, from $5.5 million for the nine months ended September 30, 2021.

Other income of $8.5 million recorded during the three months ended September 30, 2022 consisted of income from transactions primarily as a result of the impact from changes in foreign currency exchange rates on certain debt of $6.0 million and $2.5 million of other income.

Other income of $3.1 million recorded during the three months ended September 30, 2021 consisted of $2.0 million of adjustments to certain current assets acquired in prior period acquisitions and a $1.1 million increase in other income.

Other income of $2.4 million recorded during the nine months ended September 30, 2022 consisted of income from transactions primarily as a result of the impact from changes in foreign currency exchange rates on certain debt of $7.9 million and $0.7 million of other income, partially offset by $6.2 million from a decline in the value of investments purchased to fund our employee deferred compensation obligations.

Other income of $5.5 million recorded during the nine months ended September 30, 2021 consisted of $2.0 million of income earned on investments purchased to fund our employee deferred compensation obligations, income from transactions primarily as a result of the impact from changes in foreign currency exchange rates on certain debt of $0.9 million and $2.6 million of other income sources.

Loss on Early Extinguishment of Debt .

Loss on early extinguishment of debt was $115.3 million for the three and nine months ended September 30, 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.

Interest expense increased $27.1 million, or 65.4%, to $68.4 million for the three months ended March 31, 2023, from $41.3 million for the three months ended March 31, 2022.

The increase was primarily attributable to an increase of $11.3 million due to an increase in the average borrowings outstanding under our Term Loan Agreement, an increase of $10.8 million from the issuance of $1.250 billion of senior unsecured notes during, or subsequent to, the three months ended March 31, 2022 and an increase of $5.9 million from higher interest rates on borrowings outstanding under our Credit Agreement, partially offset by $0.9 million of other net expense decreases.

Interest Income .

Interest income increased $2.6 million to $2.7 million for the three months ended March 31, 2023, from $0.1 million for the three months ended March 31, 2022.

The increase was primarily attributable to higher average investment rates in the current period.

Other Income (Expense), Net .

Other income (expense), net increased $6.7 million, to an income total of $3.2 million for the three months ended March 31, 2023, from an expense total of $3.5 million for the three months ended March 31, 2022.

Other income of $3.2 million recorded during the three months ended March 31, 2023 consisted of increases in other income of $1.9 million derived from higher interest rates in the current period on restricted cash and $1.3 million from an increase in the value of investments purchased to fund our employee deferred compensation obligations.

Other expense of $3.5 million recorded during the three months ended March 31, 2022 consisted of $1.9 million from a decline in the value of investments purchased to fund our employee deferred compensation obligations, a $1.0 million adjustment to increase certain acquisition-related accrued liabilities recorded in prior periods and $0.6 million of other net expenses.

Income Tax Provision .

Income taxes increased $30.4 million, to $48.8 million for the three months ended September 30, 2022, from $18.4 million for the three months ended September 30, 2021.

Our effective tax rate for the three months ended September 30, 2022 was 17.1%.

Our effective tax rate for the three months ended September 30, 2021 was 13.8%.

Income taxes increased $49.3 million, to $155.9 million for the nine months ended September 30, 2022, from $106.6 million for the nine months ended September 30, 2021.

Our effective tax rate for the nine months ended September 30, 2022 was 19.5%.

Our effective tax rate for the nine months ended September 30, 2021 was 19.1%.

The income tax provision for the nine months ended September 30, 2022 included a benefit of $2.5 million from share-based payment awards being recognized in the income statement when settled, as well as a portion of our internal financing being taxed at effective rates substantially lower than the U.S.

Income taxes increased $5.6 million, to $54.4 million for the three months ended March 31, 2023, from $48.8 million for the three months ended March 31, 2022.

Our effective tax rate for the three months ended March 31, 2023 was 21.6%.

Our effective tax rate for the three months ended March 31, 2022 was 21.3%.

The income tax provision for the three months ended March 31, 2023 included a benefit of $2.7 million from share-based payment awards being recognized in the income statement when settled, as well as a portion of our internal financing being taxed at effective rates substantially lower than the U.S.

federal statutory rate.

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

The income tax provision for the three months ended March 31, 2022 included a benefit of $2.4 million from share-based payment awards being recognized in the income statement when settled, as well as a portion of our internal financing being taxed at effective rates substantially lower than the U.S.

federal statutory rate.

1 unchanged sentence

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.

Three Months Ended September 30,

Nine Months Ended September 30,

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

Three Months Ended March 31,

Industrial and construction roll off

13 unchanged sentences

Depreciation and

September 30, 2022

March 31, 2023

Corporate (a)

1 unchanged sentence

Depreciation and

September 30, 2021

Corporate (a)

Nine Months Ended

Depreciation and

September 30, 2022

Corporate (a)

Nine Months Ended

Depreciation and

September 30, 2021

March 31, 2022

Corporate (a)

3 unchanged sentences

A reconciliation of segment EBITDA to Income before income tax provision is included in Note 10 to our Condensed Consolidated Financial Statements included in Part 1, Item 1 of this report.

Significant changes in revenue, EBITDA and depreciation, depletion and amortization for our reportable segments for the three and nine month periods ended September 30, 2022, compared to the three and nine month periods ended September 30, 2021, are discussed below.

Revenue increased $104.9 million to $501.1 million for the three months ended September 30, 2022, from $396.2 million for the three months ended September 30, 2021.

Revenue increased $299.1 million to $1.401 billion for the nine months ended September 30, 2022, from $1.102 billion for the nine months ended September 30, 2021.

The increase in revenues for the three and nine months ended September 30, 2022 was due to price increases, contributions from acquisitions and increased landfill gas sales attributable to higher volumes produced, partially offset by decreased residential collection volumes and lower prices for recyclable commodities.

EBITDA increased $26.5 million to $133.4 million for the three months ended September 30, 2022, from $106.9 million for the three months ended September 30, 2021.

EBITDA margin was 26.6% and 27.0% for the three months ended September 30, 2022 and 2021, respectively.

EBITDA increased $71.8 million to $367.2 million for the nine months ended September 30, 2022, from $295.4 million for the nine months ended September 30, 2021.

EBITDA margin was 26.2% and 26.8% for the nine months ended September 30, 2022 and 2021, respectively.

The decrease in our EBITDA margin for the three and nine months ended September 30, 2022 was due primarily to increased diesel fuel expenses, increased third-party trucking and transportation expenses, increased repair and maintenance 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 $11.3 million, to $72.3 million for the three months ended September 30, 2022, from $61.0 million for the three months ended September 30, 2021.

Depreciation, depletion and amortization expense increased $34.3 million, to $207.8 million for the nine months ended September 30, 2022, from $173.5 million for the nine months ended September 30, 2021.

Revenue increased $57.4 million to $428.4 million for the three months ended September 30, 2022, from $371.0 million for the three months ended September 30, 2021.

Revenue increased $159.4 million to $1.232 billion for the nine months ended September 30, 2022, from $1.072 billion for the nine months ended September 30, 2021.

The increase in revenues for the three and nine months ended September 30, 2022 was 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 loss of a collection contract subsequent to September 30, 2021, a decrease resulting from the divestiture of certain non-strategic operating locations and lower landfill special waste volumes.

EBITDA increased $31.1 million to $130.7 million for the three months ended September 30, 2022, from $99.6 million for the three months ended September 30, 2021.

EBITDA margin was 30.5% and 26.9% for the three months ended September 30, 2022 and 2021, respectively.

EBITDA increased $71.8 million to $363.8 million for the nine months ended September 30, 2022, from $292.0 million for the nine months ended September 30, 2021.

EBITDA margin was 29.5% and 27.2% for the nine months ended September 30, 2022 and 2021, respectively.

The increase in our EBITDA margin for the three and nine months ended September 30, 2022 was due to increased earnings at our E&P operations 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 cost of recyclable commodities expenses, increased travel, meetings, training and community activity expenses and increased legal expenses.

Depreciation, depletion and amortization expense increased $0.6 million, to $49.8 million for the three months ended September 30, 2022, from $49.2 million for the three months ended September 30, 2021.

Depreciation, depletion and amortization expense increased $5.9 million, to $147.0 million for the nine months ended September 30, 2022, from $141.1 million for the nine months ended September 30, 2021.

The increase for the three and nine months ended September 30, 2022 was 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, a reduction in amortization expense associated with the loss of a large residential collection contract and a decrease in depletion expense resulting from non-recurring charges recorded in the prior year period to adjust landfill closure liabilities.

Revenue increased $53.5 million to $385.5 million for the three months ended September 30, 2022, from $332.0 million for the three months ended September 30, 2021.

The increase for the three months ended September 30, 2022 was due to contributions from acquisitions, price increases, increased collection volumes and increased intermodal revenue, partially offset by lower prices for recyclable commodities.

Revenue increased $150.3 million to $1.093 billion for the nine months ended September 30, 2022, from $942.8 million for the nine months ended September 30, 2021.

The increase for the nine months ended September 30, 2022 was 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 third quarter period.

EBITDA increased $7.4 million to $115.7 million for the three months ended September 30, 2022, from $108.3 million for the three months ended September 30, 2021.

EBITDA margin was 30.0% and 32.6% for the three months ended September 30, 2022 and 2021, respectively.

EBITDA increased $29.5 million to $331.0 million for the nine months

ended September 30, 2022, from $301.5 million for the nine months ended September 30, 2021.

EBITDA margin was 30.3% and 32.0% for the nine months ended September 30, 2022 and 2021, respectively.

The decrease in our EBITDA margin for the three and nine months ended September 30, 2022 was due to increased diesel and natural gas fuel expenses, increased third-party trucking and transportation expenses, acquisitions having operating margins lower than our segment average, 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 $7.2 million, to $39.7 million for the three months ended September 30, 2022, from $32.5 million for the three months ended September 30, 2021.

Depreciation, depletion and amortization expense increased $19.9 million, to $113.9 million for the nine months ended September 30, 2022, from $94.0 million for the nine months ended September 30, 2021.

The increase for the three and nine months ended September 30, 2022 was due to assets acquired in acquisitions and additions to our fleet and equipment.

Revenue increased $49.0 million to $322.7 million for the three months ended September 30, 2022, from $273.7 million for the three months ended September 30, 2021.

The increase in revenues for the three months ended September 30, 2022 was due to price increases, contributions from acquisitions closed subsequent to September 30, 2021 and higher landfill and roll off collection volumes, partially offset by lower prices for recyclable commodities.

Revenue increased $132.9 million to $908.8 million for the nine months ended September 30, 2022, from $775.9 million for the nine months ended September 30, 2021.

The increase for the nine months ended September 30, 2022 was due to price increases, contributions from acquisitions, higher landfill and roll off 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 third quarter period.

EBITDA increased $21.3 million to $116.3 million for the three months ended September 30, 2022, from $95.0 million for the three months ended September 30, 2021.

EBITDA margin was 36.1% and 34.7% for the three months ended September 30, 2022 and 2021, respectively.

EBITDA increased $48.4 million to $317.4 million for the nine months ended September 30, 2022, from $269.0 million for the nine months ended September 30, 2021.

EBITDA margin was 34.9% and 34.7% for the nine months ended September 30, 2022 and 2021, respectively.

The increase in our EBITDA margin for the three and nine months ended September 30, 2022 was due to the benefits from price-led increases in revenue, partially offset by acquisitions having operating margins lower than our segment average and increased diesel and natural gas fuel expenses.

Depreciation, depletion and amortization expense increased $4.3 million, to $38.9 million for the three months ended September 30, 2022, from $34.6 million for the three months ended September 30, 2021.

Depreciation, depletion and amortization expense increased $12.7 million, to $111.9 million for the nine months ended September 30, 2022, from $99.2 million for the nine months ended September 30, 2021.

Revenue increased $18.0 million to $242.3 million for the three months ended September 30, 2022, from $224.3 million for the three months ended September 30, 2021, due to price increases, contributions from acquisitions, higher commercial and roll off collection volumes and higher prices for renewable energy credits associated with the generation of landfill gas, partially offset by a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods, lower prices for recyclable commodities, lower residential collection volumes due to the loss of a collection contract subsequent to September 30, 2021, lower landfill volumes and the divestiture of a non-strategic operating location.

Revenue increased $73.8 million to $707.4 million for the nine months ended September 30, 2022, from $633.6 million for the nine months ended September 30, 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 loss of a collection contract subsequent to September 30, 2021, lower landfill volumes, lower prices for recyclable commodities during the third quarter period and the divestiture of a non-strategic operating location.

EBITDA decreased $4.4 million to $87.9 million for the three months ended September 30, 2022, from $92.3 million for the three months ended September 30, 2021.

EBITDA margin was 36.3% and 41.1% for the three months ended September 30, 2022 and 2021, respectively.

EBITDA increased $10.5 million to $265.4 million for the nine months ended September 30, 2022, from $254.9 million for the nine months ended September 30, 2021.

EBITDA margin was 37.5% and 40.2% for the nine months ended September 30, 2022 and 2021, respectively.

The decrease in our EBITDA margin during the three and nine months ended September 30, 2022 was due to acquisitions having operating margins lower than our segment average, increased diesel fuel expenses, increased disposal expenses, increased employee benefits expenses, increased subcontracted hauling services, increased cost of recyclable commodities 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 $1.9 million, to $29.5 million for the three months ended September 30, 2022, from $27.6 million for the three months ended September 30, 2021.

Depreciation, depletion and amortization expense increased $4.5 million, to $88.8 million for the nine months ended September 30, 2022, from $84.3 million for the nine months ended September 30, 2021.

The increases were 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 $5.1 million, to a loss of $11.7 million for the three months ended September 30, 2022, from a loss of $6.6 million for the three months ended September 30, 2021.

The decrease was due to increased direct acquisition expenses, increased equity-based compensation expenses, increased travel, meetings, training and community activity expenses and increased software license expenses, partially offset by increased allocations of corporate overhead expenses to our segments.

EBITDA decreased $5.3 million, to a loss of $19.0 million for the nine months ended September 30, 2022, from a loss of $13.7 million for the nine months ended September 30, 2021.

The decrease was due to increased travel, meetings, training and community activity expenses, increased direct acquisition expenses, increased legal expenses, 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.

Significant changes in revenue, EBITDA and depreciation, depletion and amortization for our reportable segments for the three month period ended March 31, 2023, compared to the three month period ended March 31, 2022, are discussed below.

Effective April 1, 2023, we modified our organizational structure under new regional operating segments.

See “Subsequent Events” in Note 18 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Revenue increased $69.8 million to $491.4 million for the three months ended March 31, 2023, from $421.6 million for the three months ended March 31, 2022, due to price increases, contributions from acquisitions, and an increase in roll off volume, partially offset by decreased post-collection volumes, decreased residential collection volumes, lower prices for recyclable commodities and decreased recycle commodity volumes.

EBITDA increased $12.2 million to $120.0 million, or a 24.4% EBITDA margin for the three months ended March 31, 2023, from $107.8 million, or a 25.6% EBITDA margin for the three months ended March 31, 2022.

The decrease in our EBITDA margin was due primarily to the impact of acquisitions having lower EBITDA margins than our segment average, increased labor costs, increased third-party trucking and transportation expenses, higher costs associated with increased rates for truck, container, and facility repair parts and services, increased diesel fuel expenses driven by higher pricing, higher leachate and other landfill maintenance costs, an increase in professional fees driven by legal costs, and an increase in the average auto and workers’ compensation claim cost, partially offset by lower recycle commodity rebates driven by lower average commodity pricing.

Depreciation, depletion and amortization expense increased $4.3 million, to $69.6 million for the three months ended March 31, 2023, from $65.3 million for the three months ended March 31, 2022, 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, net of lower landfill volumes.

Revenue increased $59.9 million to $447.0 million for the three months ended March 31, 2023, from $387.1 million for the three months ended March 31, 2022, due to solid waste price increases, contributions from acquisitions, increased E&P waste revenues attributable to increases in the demand for our E&P waste services and increased landfill volumes in our Florida market driven by the impact of Hurricane Ian on construction and demolition activity, partially offset by lower residential collection volumes due to the purposeful non-renewal of a collection contract during the prior year period and a decrease in recyclable commodity prices as compared to the prior year.

EBITDA increased $24.7 million to $133.3 million, or a 29.8% EBITDA margin for the three months ended March 31, 2023, from $108.6 million, or a 28.1% EBITDA margin for the three months ended March 31, 2022.

The increase in our EBITDA margin was due to price-led increases in solid waste revenue, contribution from the aforementioned hurricane-driven construction and demolition activity increasing post-collection volumes, increased earnings at our E&P

waste operations, the impact of acquisitions having higher EBITDA margins than our segment average, and the purposeful non-renewal of a residential contract, partially offset by higher labor costs, an increase in costs for truck, container, and facility repair, increased diesel and natural gas fuel expenses, an increase in trucking costs, higher legal costs, an increase in auto and workers’ compensation claim costs, and increased leachate expense.

Depreciation, depletion and amortization expense increased $3.5 million, to $51.1 million for the three months ended March 31, 2023, from $47.6 million for the three months ended March 31, 2022, 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 reduction in amortization expense associated with the loss of certain residential service contracts.

Revenue increased $63.3 million to $410.0 million for the three months ended March 31, 2023, from $346.7 million for the three months ended March 31, 2022, due to contributions from acquisitions, price increases, partially offset by decreased roll off and post-collection volumes driven by significant weather events, a decrease in the price of recyclable commodities as compared to the prior year period, and lower intermodal revenue.

EBITDA increased $11.6 million to $116.3 million, or a 28.4% EBITDA margin for the three months ended March 31, 2023, from $104.7 million, or a 30.2% EBITDA margin for the three months ended March 31, 2022.

The decrease in our EBITDA margin was due to the impact of acquisitions having lower EBITDA margins than our segment average, higher labor costs due primarily to wage increases, an increase in costs for truck, container and facility repairs, increased diesel and natural gas fuel expenses, increased taxes on higher revenues, higher disposal costs driven by rate increases, partially offset by lower real estate rental costs and the benefits from price-led increases in revenue.

Depreciation, depletion and amortization expense increased $12.1 million, to $48.7 million for the three months ended March 31, 2023, from $36.6 million for the three months ended March 31, 2022, due to assets acquired in acquisitions and additions to our fleet and equipment.

Revenue increased $48.7 million to $324.9 million for the three months ended March 31, 2023, from $276.2 million for the three months ended March 31, 2022, due to price increases, contributions from acquisitions, partially offset by a decrease in the value of recyclable commodities compared to the prior year period.

EBITDA increased $17.8 million to $109.8 million, or a 33.8% EBITDA margin for the three months ended March 31, 2023, from $92.0 million, or a 33.3% EBITDA margin for the three months ended March 31, 2022.

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, increased labor costs related primarily to wage increases, an increase in the costs of truck, container and facility repairs, increased diesel and natural gas fuel expenses, higher taxes paid on increased revenues, an increase in trucking costs, higher disposal fees driven by rate increases, and higher recycle processing fees paid driven by a decrease in recyclable commodity prices.

Depreciation, depletion and amortization expense increased $5.2 million, to $40.2 million for the three months ended March 31, 2023, from $35.0 million for the three months ended March 31, 2022, 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 $12.5 million to $227.2 million for the three months ended March 31, 2023, from $214.7 million for the three months ended March 31, 2022, due to price increases, contributions from acquisitions, partially offset by a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods, lower prices for

renewable energy credits associated with the generation of landfill gas, lower landfill volumes driven by decreased special waste, and lower prices for recyclable commodities as compared to the prior year period.

EBITDA decreased $1.8 million to $83.0 million, or a 36.5% EBITDA margin for the three months ended March 31, 2023, from $84.8 million, or a 39.5% EBITDA margin for the three months ended March 31, 2022.

The decrease in our EBITDA margin was due to acquisitions having EBITDA margins lower than our segment average, increased disposal expenses, higher labor costs, increased allocated overhead costs from our corporate segment, and increased bad debt costs, partially offset by lower recyclable commodity rebate expenses driven by a decrease in recyclable commodity prices as compared to prior year.

Depreciation, depletion and amortization expense increased $2.6 million, to $30.0 million for the three months ended March 31, 2023, from $27.4 million for the three months ended March 31, 2022, 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 and a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods.

EBITDA increased $2.2 million, to a loss of $2.5 million for the three months ended March 31, 2023, from a loss of $4.7 million for the three months ended March 31, 2022.

The increase was due to compensation to non-management personnel associated with the impact of the COVID-19 pandemic that occurred in the prior year period that did not reoccur, increased allocation of costs to our operating segments driven by overall higher corporate expenses, lower costs associated with a decreased number of acquisitions when compared to prior year, partially offset by increased equity-based compensation expense associated with our annual recurring grants of restricted share units to our personnel, increased deferred compensation expenses, higher bad debt costs driven by increased revenue and acquisitions, and increased costs due to increased travel and meetings.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth certain cash flow information for the nine months ended September 30, 2022 and 2021 (in thousands of U.S.

Nine Months Ended

September 30,

The following table sets forth cash flow information for the three months ended March 31, 2023 and 2022 (in thousands of U.S.

Three Months Ended

Net cash provided by operating activities

2 unchanged sentences

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

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

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

1 unchanged sentence

Operating Activities Cash Flows

For the nine months ended September 30, 2022, net cash provided by operating activities was $1.500 billion.

For the nine months ended September 30, 2021, net cash provided by operating activities was $1.270 billion.

For the three months ended March 31, 2023, net cash provided by operating activities was $442.3 million.

For the three months ended March 31, 2022, net cash provided by operating activities was $440.9 million.

The $1.4 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 $156.0 million from an increase in net income, excluding depreciation, amortization of intangibles, share-based compensation, adjustments to and payments of contingent consideration recorded in earnings and loss on disposal of assets and impairments, due primarily to price increases, earnings from acquisitions, 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) Deferred income taxes — Our increase in net cash provided by operating activities was favorably impacted by $115.4 million from deferred income taxes as changes in deferred income taxes resulted in an increase to operating cash flows of $91.1 million for the nine months ended September 30, 2022, compared to a decrease to operating cash flows of $24.3 million for the nine months ended September 30, 2021.

The increase for the nine months ended September 30, 2022 was attributable to capital expenditures providing tax benefits resulting from accelerated depreciation and tax benefits resulting from the divestiture of certain non-strategic E&P disposal operating locations.

The decrease in deferred taxes for the nine months ended September 30, 2021 was primarily due to the tax deduction timing of make-whole premium payments attributable to the early extinguishment of the outstanding senior notes under our master note purchase agreements .

3) Accounts payable and accrued liabilities — Our increase in net cash provided by operating activities was favorably impacted by $74.0 million from accounts payable and accrued liabilities as changes in accounts payable and accrued liabilities resulted in an increase to operating cash flows of $126.7 million for the nine months ended September 30, 2022, compared to an increase to operating cash flows of $52.7 million for the nine months ended September 30, 2021.

The increase for the nine months ended September 30, 2022 was due primarily to increases in operating expenses during the period which remained as outstanding obligations at September 30, 2022, increased accrued interest due to the timing of interest payments for our senior unsecured notes issued subsequent to September 30, 2021, increased property taxes attributable to payment timing and the timing of payroll cycles, partially offset by the payment of annual cash incentive compensation to our management, which was accrued as a liability at year end.

The increase for the nine months ended September 30, 2021 was due primarily to increases in operating expenses during the period which remained as outstanding obligations at September 30, 2021, the settlement of an acquired compensation liability and the timing of payroll cycles .

4) Deferred revenue — Our increase in net cash provided by operating activities was favorably impacted by $10.7 million from deferred revenue as changes in deferred revenue resulted in an increase to operating cash flows of $26.5 million for the nine months ended September 30, 2022, compared to an increase to operating cash flows of $15.8 million for the nine months ended September 30, 2021.

1) Increase in earnings — Our increase in net cash provided by operating activities was favorably impacted by $46.3 million from an increase in net income, excluding depreciation, amortization of intangibles, share-based compensation, adjustments to and payments of contingent consideration recorded in earnings and loss on disposal of assets and impairments, due primarily to price increases, earnings from acquisitions closed during, or subsequent to, the three months ended March 31, 2022, a decrease in compensation to non-management personnel associated with the impact of the COVID-19 pandemic that occurred in the three months ended March 31, 2022 that did not reoccur in the current period, and an increase in earnings at our E&P waste operations.

2) Prepaid expenses – Our increase in net cash provided by operating activities was favorably impacted by $39.8 million from prepaid expenses as changes in prepaid expenses resulted in an increase to operating cash flows of $18.6 million for the three months ended March 31, 2023, compared to a decrease to operating cash flows of $21.2 million for the three months ended March 31, 2022.

The increase for the three months ended March 31, 2023 was due primarily to decreased prepaid income tax payments and lower payments of annual insurance premiums.

The decrease for the three months ended March 31, 2022 was due primarily to increases in prepaid income tax payments and prepaid vendor payments.

3) Accounts receivable – Our increase in net cash provided by operating activities was favorably impacted by $32.2 million from accounts receivable as changes in accounts receivable resulted in an increase to operating cash flows of $21.0 million for the three months ended March 31, 2023, compared to a decrease to operating cash flows of $11.2 million for the three months ended March 31, 2022.

The increase for the three months ended March 31, 2023 was due to one additional collection day in the period, partially offset by increases in revenue, which remained as outstanding receivables at March 31, 2023.

The decrease for the three months ended March 31, 2022 was due to increases in revenues, which remained as outstanding receivables at March 31, 2022.

4) Accounts payable and accrued liabilities — Our increase in net cash provided by operating activities was unfavorably impacted by $96.5 million from accounts payable and accrued liabilities as changes in accounts payable and accrued liabilities resulted in a decrease to operating cash flows of $92.9 million for the three months ended March 31, 2023, compared to an increase to operating cash flows of $3.6 million for the three months ended March 31, 2022.

The decrease for the three months ended March 31, 2023 was due primarily to outstanding obligations to vendors and accrued annual management bonus compensation as of December 31, 2022 that were paid in the current period.

The increase for the three months ended March 31, 2022 was due primarily to increases in operating expenses during the period which remained as outstanding obligations at March 31, 2022.

5) Deferred income taxes — Our increase in net cash provided by operating activities was unfavorably impacted by $10.2 million from deferred income taxes as changes in deferred income taxes resulted in an increase to operating cash flows of $28.2 million for the three months ended March 31, 2023, compared to an increase to operating cash flows of $38.4 million for the three months ended March 31, 2022.

For both comparative periods, the increase in deferred taxes was primarily due to accelerated tax depreciation from capital expenditures.

6) Deferred revenue — Our increase in net cash provided by operating activities was unfavorably impacted by $5.8 million from deferred revenue as changes in deferred revenue resulted in an increase to operating cash flows of $10.8 million for the three months ended March 31, 2023, compared to an increase to operating cash flows of $16.6 million for the three months ended March 31, 2022.

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

5) Accounts receivable – Our increase in net cash provided by operating activities was unfavorably impacted by $39.0 million from accounts receivable as changes in accounts receivable resulted in a decrease to operating cash flows of $90.6 million for the nine months ended September 30, 2022, compared to a decrease to operating cash flows of $51.6 million for the nine months ended September 30, 2021.

The decrease for the nine months ended September 30, 2022 was due to increases in revenues, which remained as outstanding receivables at September 30, 2022.

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

6) Other long-term liabilities – Our increase in net cash provided by operating activities was unfavorably impacted by $24.9 million from other long-term liabilities as changes in other long-term liabilities resulted in a decrease to operating cash flows of $12.2 million for the nine months ended September 30, 2022, compared to an increase to operating cash flows of $12.7 million for the nine months ended September 30, 2021.

The decrease for the nine months ended September 30, 2022 was due primarily to decreased employee deferred compensation liabilities.

The increase for the nine months ended September 30, 2021 was primarily attributable to the receipt of funds associated with the eminent domain purchase of an operating facility that will be replaced with a newly constructed facility in a future period and an increase in employee deferred compensation liabilities.

7) Prepaid expenses – Our increase in net cash provided by operating activities was unfavorably impacted by $59.1 million from prepaid expenses as changes in prepaid expenses resulted in a decrease to operating cash flows of $22.9 million for the nine months ended September 30, 2022, compared to an increase to operating cash flows of $36.2 million for the nine months ended September 30, 2021.

The decrease for the nine months ended September 30, 2022 was due primarily to increases from payments of annual insurance premiums and higher parts and fuel inventory.

The increase for the nine months ended September 30, 2021 was due primarily to decreases in prepaid income tax payments and prepaid vendor payments .

As of September 30, 2022, we had a working capital deficit of $148.4 million, including cash and equivalents of $200.2 million.

Our working capital increased $51.6 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 an increase in cash balances, accounts receivable and prepaid expenses, partially offset by an increase in accounts payable and deferred revenue.

At March 31, 2023, we had a working capital deficit of $248.9 million, including cash and equivalents of $133.9 million.

Our working capital increased $146.1 million from a working capital deficit of $395.0 million at December 31, 2022 including cash and equivalents of $78.6 million, due primarily to an increase in cash balances and decreases in accounts payable and accrued liabilities driven by the timing of payments for obligations to vendors and accrued annual management bonus compensation that were outstanding as of December 31, 2022, partially offset by decreased accounts receivable, a decrease in prepaid income tax and lower prepaid insurance costs.

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

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

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

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 $823.7 million to $1.859 billion for the nine months ended September 30, 2022, from $1.035 billion for the nine months ended September 30, 2021.

The significant components of the increase included the following:

1) An increase in cash paid for acquisitions of $711.6 million;

2) An increase in capital expenditures at operations owned in the comparable periods of $87.3 million due to increases in land and buildings, landfill site costs, trucks, equipment and containers;

3) An increase in capital expenditures at operations acquired during the comparative periods of $51.5 million due to additional trucks, equipment and containers;

4) An increase in proceeds from disposal of assets of $13.2 million due to additional disposal of non-strategic assets to provide funding toward new capital expenditures.

Net cash used in investing activities decreased $172.1 million to $317.8 million for the three months ended March 31, 2023, from $489.9 million for the three months ended March 31, 2022.

The significant components of the decrease included the following:

1) A decrease in cash paid for acquisitions of $210.6 million;

2) An increase in capital expenditures at operations acquired during the comparative periods of $12.9 million due to expenditures for landfill site costs, trucks and equipment;

3) An increase in capital expenditures at operations owned in the comparable periods of $10.6 million due to increases in trucks, equipment and landfill site costs;

4) A decrease in proceeds from disposal of assets of $13.8 million due to lower disposal of non-strategic assets to provide funding toward new capital expenditures.

Financing Activities Cash Flows

Net cash provided by financing activities increased $942.0 million to $450.4 million for the nine months ended September 30, 2022, from net cash used in financing activities of $491.6 million for the nine months ended September 30, 2021.

Net cash used in financing activities increased $357.5 million to $65.4 million for the three months ended March 31, 2023, from net cash provided by financing activities of $292.1 million for the three months ended March 31, 2022.

The significant components of the increase included the following:

1) An increase from the net change in long-term borrowings of $966.1 million (long-term borrowings increased $1.098 billion during the nine months ended September 30, 2022 and increased $131.9.million during the nine months ended September 30, 2021);

2) A decrease from higher payments to repurchase our common shares of $119.4 million due to an increased volume of shares repurchased;

3) A decrease from higher cash dividends paid of $17.0 million due primarily to an increase in our quarterly dividend rate for the nine months ended September 30, 2022 to $0.23 per share, from $0.205 per share for the nine months ended September 30, 2021;

4) A decrease from higher debt issuance costs of $6.5 million attributable to senior note offerings completed in 2022.

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.

1) An increase from the net change in long-term borrowings of $782.9 million in which long-term borrowings increased $17.3 million during the three months ended March 31, 2023 and increased $800.2 million during the three months ended March 31, 2022;

2) An increase from higher cash dividends paid of $6.4 million due primarily to an increase in our quarterly dividend rate for the three months ended March 31, 2023 to $0.255 per share, from $0.23 per share for the three months ended March 31, 2022;

3) An increase in tax withholdings related to net share settlements of equity-based compensation of $5.7 million due to an increase in the value of equity-based compensation awards vesting;

4) A decrease from lower payments to repurchase our common shares of $425.0 million that occurred in the three months ended March 31, 2022;

5) A decrease from costs incurred for the issuance of debt of $4.4 million from the issuance of $500 million of senior unsecured notes during the three months ended March 31, 2022.

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.

2 unchanged sentences

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

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

Information regarding our NCIB can be found under the section “Normal Course Issuer Bid” in Note 16 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

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

In October 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 October 2022, our Board of Directors authorized an increase to our regular quarterly cash dividend of $0.025, from $0.230 to $0.255 per share.

Cash dividends of $177.7 million and $160.8 million were paid during the nine months ended September 30, 2022 and 2021, respectively.

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

We made $618.3 million in capital expenditures for property and equipment during the nine months ended September 30, 2022, and we expect to make total capital expenditures for property and equipment of approximately $850 million in 2022, net of asset sales.

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 $65.8 million and $59.4 million were paid during the three months ended March 31, 2023 and 2022, respectively.

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

Our business is capital intensive.

We made $174.5 million in capital expenditures for property and equipment, net of proceeds from disposal of assets, during the three months ended March 31, 2023, and we expect to make total capital expenditures for property and equipment of approximately $895 million in 2023, net of proceeds from disposal of assets.

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

6 unchanged sentences

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

As of September 30, 2022, $650.0 million under the term loan and $738.2 million under the revolving credit facility were outstanding under the Credit Agreement, exclusive of outstanding standby letters of credit of $42.7 million.

We also had $84.7 million of letters of credit issued and outstanding at September 30, 2022 under a facility other than the Credit Agreement.

At March 31, 2023, $650.0 million under the term loan and $650.6 million under the revolving credit facility were outstanding under the Credit Agreement, exclusive of outstanding standby letters of credit of $39.5 million.

We also had $85.1 million of letters of credit issued and outstanding at March 31, 2023 under a facility other than the Credit Agreement.

Our Credit Agreement matures in July 2026.

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

We issued the New 2032 Senior Notes under the Indenture, dated as of November 16, 2018, by and between the Company and U.S.

Bank Trust Company, National Association, as successor in interest to U.S.

Bank National Association, as trustee, as supplemented by the Sixth Supplemental Indenture, dated as of March 9, 2022.

The New 2032 Senior Notes will mature on June 1, 2032.

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

We issued the 2033 Senior Notes under the Indenture, dated as of November 16, 2018, by and between the Company and U.S.

Bank Trust Company, National Association, as successor in interest to U.S.

Bank National Association, as trustee, as supplemented by the Seventh Supplemental Indenture, dated as of August 18, 2022.

The 2033 Senior Notes will mature on January 15, 2033.

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

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

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

On October 31, 2022, the Company, as borrower, Bank of America, N.A., as 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 the Company thereunder.

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

Pursuant to the terms and conditions of the Term Loan Agreement, the New TL Lenders committed to provide a term loan in an aggregate principal amount of $800.0 million, which term loan was fully drawn on October 31, 2022.

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

The Company is party to that certain Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of July 30, 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among the Company, as borrower, Bank of America, N.A., acting through its Canada Branch, as the global agent, the swing line lender and an l/c issuer, Bank of America, N.A., as the U.S.

agent and an l/c issuer, and the lenders and any other financial institutions from time to time party thereto.

On October 31, 2022, the Company entered into an amendment to the Credit Agreement, which among other things, (i) amended certain definitions and other provisions to replace the LIBOR-based benchmark rates for certain U.S.

dollar-denominated loans and other extensions of credit under the Credit Agreement with SOFR-based rates, and (ii) made certain changes conforming to the Term Loan Agreement

See Note 10 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this report for further details on the debt agreements.

At March 31, 2023, $800.0 million under the term loan was outstanding under the Term Loan Agreement, which matures in July 2026.

We are a well-known seasoned issuer with an effective shelf registration statement on Form S-3 filed in September 2021, which registers an unspecified amount of debt securities, including debentures, notes or other types of debt.

1 unchanged sentence

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

As of September 30, 2022, we had the following contractual obligations:

At March 31, 2023, we had the following contractual obligations:

Payments Due by Period

10 unchanged sentences

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

dollar LIBOR rate loans, U.S.

dollar Term SOFR rate loans, U.S.

dollar base rate loans, Canadian-based bankers’ acceptances or BA equivalent notes, and Canadian dollar prime rate loans.

At September 30, 2022, $601.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S.

LIBOR rate loans, which bear interest at the LIBOR rate plus the applicable margin (for a total rate of 4.12% on such date).

At September 30, 2022, $137.2 million of the outstanding borrowings drawn under the revolving credit facility were in Canadian-based bankers’ acceptances, which bear interest at the Canadian Dollar Offered Rate plus the applicable acceptance fee (for a total rate of 4.76% on such date).

At March 31, 2023, $440.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S.

Term SOFR rate loans, which bear interest at the Term SOFR rate plus the applicable margin (for a total rate ranging from 5.77% to 5.91% on such date).

At March 31, 2023, $210.6 million of the outstanding borrowings drawn under the revolving credit facility were in Canadian-based bankers’ acceptances, which bear

interest at the Canadian Dollar Offered Rate plus the applicable acceptance fee (for a total rate of 5.92% 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 September 30, 2022, 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 4.12% on such date).

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

At March 31, 2023, 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 5.77% 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.

At March 31, 2023, 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 5.78% on such date).

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

15 unchanged sentences

12) $36.0 million in principal payments related to our notes payable to sellers and other third parties.

Our notes payable to sellers and other third parties bear interest at rates between 2.42% and 10.35% at September 30, 2022, and have maturity dates ranging from 2028 to 2036.

Our notes payable to sellers and other third parties bear interest at rates between 2.42% and 10.35% at March 31, 2023, and have maturity dates ranging from 2024 to 2036.

13) $10.8 million in principal payments related to our financing leases.

Our financing leases bear interest at rates between 1.89% and 2.16% at September 30, 2022, and have expiration dates ranging from 2026 to 2027.

Our financing leases bear interest at rates between 1.89% and 2.16% at March 31, 2023, 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 September 30, 2022.

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 March 31, 2023.

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

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

Contingent consideration payments include $85.8 million recorded as liabilities in our Condensed Consolidated Financial Statements at September 30, 2022, and $18.0 million of future interest accretion on the recorded obligations.

2) We calculated cash interest payments on the Term Loan Agreement using the Term SOFR rate plus the applicable Term SOFR margin at March 31, 2023.

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 $85.8 million recorded as liabilities in our Condensed Consolidated Financial Statements at March 31, 2023, and $17.1 million of future interest accretion on the recorded obligations.

We are party to operating lease agreements and finance leases.

8 unchanged sentences

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

At September 30, 2022, our unconditional purchase obligations consisted of multiple fixed-price fuel purchase contracts under which we have 35.5 million gallons remaining to be purchased for a total of $92.5 million.

At March 31, 2023, our unconditional purchase obligations consisted of multiple fixed-price fuel purchase contracts under which we have 56.0 million gallons remaining to be purchased for a total of $175.8 million.

The current fuel purchase contracts expire on or before December 31, 2026.

These arrangements have not materially affected our financial position, results of operations or liquidity during the nine months ended September 30, 2022, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.

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

We provided customers and various regulatory authorities with surety bonds in the aggregate amounts of approximately $1.425 billion and $1.301 billion at September 30, 2022 and December 31, 2021, respectively.

These arrangements have not materially affected our financial position, results of operations or liquidity during the three months ended March 31, 2023, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.

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

We provided customers and various regulatory authorities with surety bonds in the aggregate amounts of approximately $1.486 billion and $1.447 billion at March 31, 2023 and December 31, 2022, respectively.

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

1 unchanged sentence

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

The disposal tonnage that we received in the nine month periods ended September 30, 2022 and 2021, at all of our landfills during the respective period, is shown below (tons in thousands):

Nine Months Ended September 30,

The disposal tonnage that we received in the three month periods ended March 31, 2023 and 2022, at all of our landfills during the respective period, is shown below (tons in thousands):

Three Months Ended March 31,

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

2 unchanged sentences

Adjusted Free Cash Flow

We present adjusted free cash flow, a non-GAAP financial measure, supplementally because it is widely used by investors as a valuation and liquidity measure in the solid waste industry.

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

We define adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, less capital expenditures for property and equipment and distributions to noncontrolling interests.

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

We present adjusted free cash flow, a non-GAAP financial measure, supplementally because it is widely used by investors as a liquidity measure in the solid waste industry.

We calculate adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, less capital expenditures for property and equipment and periodic distributions to noncontrolling interests.

We further adjust this calculation to exclude the effects of items management believes impact the ability to evaluate the liquidity of our business operations.

This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures.

Other companies may calculate adjusted free cash flow differently.

Our adjusted free cash flow for the nine month periods ended September 30, 2022 and 2021, are calculated as follows (amounts in thousands of U.S.

Nine Months Ended

September 30,

Our adjusted free cash flow for the three month periods ended March 31, 2023 and 2022, are calculated as follows (amounts in thousands of U.S.

Three Months Ended

Net cash provided by operating activities

2 unchanged sentences

Capital expenditures for property and equipment

Payment of contingent consideration recorded in earnings (a)

Cash received for divestitures (b)

Transaction-related expenses (c)

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

Tax effect (e)

Cash received for divestitures (a)

Transaction-related expenses (b)

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

Tax effect (d)

Adjusted free cash flow

____________________

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

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

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

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

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

(b) Reflects the addback of acquisition-related transaction costs and the settlement of an acquired tax liability .

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

Adjusted EBITDA

5 unchanged sentences

Other companies may calculate adjusted EBITDA differently.

Our adjusted EBITDA for the three and nine month periods ended September 30, 2022 and 2021, are calculated as follows (amounts in thousands of U.S.

Our adjusted EBITDA for the three month periods ended March 31, 2023 and 2022, are calculated as follows (amounts in thousands of U.S.

Three Months Ended

Nine Months Ended

September 30,

Net income attributable to Waste Connections

6 unchanged sentences

Impairments and other operating items

Other income, net

Loss on early extinguishment of debt

Other expense (income), net

Transaction-related expenses (a)

5 unchanged sentences

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

We present adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections, both non-GAAP financial measures, supplementally because they are widely used by investors as a valuation measure in the solid waste industry.

Management uses adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor the ongoing financial performance of our operations.

3 unchanged sentences

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

Our adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections for the three and nine month periods ended September 30, 2022 and 2021, are calculated as follows (amounts in thousands of U.S.

Our adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections for the three month periods ended March 31, 2023 and 2022, are calculated as follows (amounts in thousands of U.S.

dollars, except per share amounts):

Three Months Ended

Nine Months Ended

September 30,

Reported net income attributable to Waste Connections

3 unchanged sentences

Fair value changes to equity awards (d)

Loss on early extinguishment of debt (e)

Tax effect (f)

Tax effect (e)

Adjusted net income attributable to Waste Connections

4 unchanged sentences

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

(b) Reflects the addback of impairments and other operating items.

(b) Reflects adjustments for impairments and other operating items.

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

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

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

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

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.

11 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis