What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-14 compared with 2023-02-16 · 166 added, 177 removed, 469 unchanged (42% of the section changed)

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These include:

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

● Statements regarding our landfills, including capacity, duration, special projects, demand for and pricing of recyclables, estimated closure and post-closure liabilities, landfill alternatives and related capital expenditures, operating expenses and leachate;

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

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

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

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

● Other statements on a variety of topics such as the COVID-19 pandemic, 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 COVID-19 pandemic, inflation, credit risk of customers, seasonality, labor/pension costs and labor union activity, employee retention costs, 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.

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

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

The consolidation trend has caused solid waste companies to operate larger

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

Many small independent

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

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

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

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and (3) the efficiencies gained by being able to aggregate and process waste at a transfer station prior to landfilling.

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, including as a result of macroeconomic and geopolitical conditions, which may impact levels of exploration and production activity, with a corresponding impact to our E&P waste activity.

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

Conversely, in 2020 and 2021, a significant decline in oil prices driven by both surplus production and supply, as well as the decrease in demand caused by factors including the COVID-19 pandemic, resulted in decreased levels of E&P drilling activity and a corresponding decrease in demand for our E&P waste services.

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

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

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

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

See the section Impairments of Property and Equipment and Finite-Lived Intangible Assets in Note 3, “Summary of Significant Accounting Policies,” of our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for a discussion of the impairment charges recorded during the years ended December 31, 2021 and 2020.

Executive Overview

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

We are an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, including by rail, along with resource recovery primarily through recycling and renewable fuels generation, in mostly exclusive and secondary markets across 44 states in the U.S.

and six provinces in Canada.

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

Waste Connections also provides E&P waste services in several basins across the U.S.

and Canada, as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.

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

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

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

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

The related economic disruptions largely associated with closures or restrictions put into effect following the onset of the COVID-19 pandemic in the first quarter of 2020 resulted in declines in solid waste commercial collection, transfer station and landfill volumes, and roll off activity.

Throughout the remaining fiscal year 2020 and during 2021, solid waste revenue and reported volumes largely reflected the pace and shape of the closures and subsequent

reopening activity, with the timing and magnitude of recovery varying by market.

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

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

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

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

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

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

To that end, since the onset of the pandemic through year-end 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.

2023 Financial Performance

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Excluding the impact of such acquisitions, revenues increased 5.6% due predominantly to higher internal growth in solid waste.

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

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

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

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

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

Solid waste internal growth was up 6.2%, due to higher price increases, partially offset by lower surcharges, lower volumes and lower recycled commodities.

Pricing growth was 9.0%, with core pricing up 9.5%, offset by materials and environmental surcharges of 0.5%.

Volumes decreased by 2.0% due primarily to the intentional shedding of lower quality revenue, including through the purposeful non-renewal of certain residential hauling contracts, and decreases in the value of recycled commodities resulted in a 0.8% offset to internal solid waste growth.

Higher E&P waste activity resulted in a 0.2% increase to overall growth, while decreases in landfill gas sales, including renewable energy credits, and other revenue resulted in a 0.2% decrease to overall growth and foreign exchange impacts resulted in a 0.5% decrease to overall growth.

Net income attributable to Waste Connections decreased 8.7% to $762.8 million in 2023, from $835.7 million in 2022, principally as a result of impairments and other operating items, which increased to $238.8 million in 2023 from $18.2

million in 2022.

In 2023, adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, a non-GAAP financial measure (refer to page 75 of this Annual Report on Form 10-K for a definition and reconciliation to Net income attributable to Waste Connections), increased 13.6% to $2.523 billion, from $2.221 billion in 2022.

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

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

Adjusted net income attributable to Waste Connections, a non-GAAP financial measure

(refer to page 74 of this Annual Report on Form 10-K for a definition and reconciliation to Net income attributable to Waste Connections), in 2022 increased 16.4% to $985.3 million from $846.6 million in 2021.

As a percentage of revenue, adjusted EBITDA increased from 30.8% in 2022, to 31.5% in 2023.

This 0.7 percentage point increase reflects a 1.3 percentage point increase primarily from price-led organic growth in solid waste exceeding cost inflation and lower cost of fuel during the year, partially offset by a 0.6 percentage point decrease from lower recycled commodity and landfill gas revenues.

Adjusted net income attributable to Waste Connections, a non-GAAP financial measure (refer to page 76 of this Annual Report on Form 10-K for a definition and reconciliation to Net income attributable to Waste Connections), in 2023 increased 9.7% to $1.081 billion from $985.3 million in 2022.

Adjusted Free Cash Flow

Net cash provided by operating activities increased 19.1% to $2.022 billion in 2022, from $1.698 billion in 2021.

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

Net cash provided by operating activities increased 5.2% to $2.127 billion in 2023, from $2.022 billion in 2022, on increases in cash interest from $177.4 million to $260.9 million and increases in cash taxes from $100.2 million to $207.0 million.

Capital expenditures for property and equipment increased from $912.7 million in 2022 to $934.0 million in 2023.

Adjusted free cash flow, a non-GAAP financial measure (refer to page 74 of this Annual Report on Form 10-K for a definition and reconciliation to Net cash provided by operating activities), increased by $59.3 million to $1.224 billion in 2023, from $1.165 billion in 2022.

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Return of Capital and Distributions to Shareholders

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

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

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

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

In 2023, we distributed $270.6 million to shareholders through cash dividends declared by our Board of Directors, which also increased the quarterly cash dividend by 11.8%, from $0.255 to $0.285 per common share in October 2023.

Cash dividends increased $27.6 million, or 11.4%, from $243.0 million in 2022 due to a 10.9% increase in the quarterly cash dividend declared by our Board of Directors in November 2022, followed by the additional increase in October 2023.

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

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

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

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

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

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The Leverage Ratio is a non-GAAP ratio (refer to page 76 of this Annual Report on Form 10-K for more information on this ratio).

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

The combination of lower debt resulting from opportunistic repayment during 2023 and higher EBITDA in 2023 resulted in a decrease in our Leverage Ratio from 2.93x at December 31, 2022 to 2.60x at December 31, 2023.

Cash balances decreased from $78.6 million at December 31, 2022 to $78.4 million at December 31, 2023, and we had $1.357 billion of remaining borrowing capacity under our Credit Agreement, which matures in July 2026.

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

In the event that changes in an estimate for a closure and post-closure liability are associated with a significant change in facts and circumstances at a landfill or a non-operating section of a landfill, corresponding adjustments to recorded liabilities and Impairments and other operating items are made as soon as is practical.

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

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Final capping, closure and post-closure obligations .

We accrue for estimated final capping, closure and post-closure maintenance obligations at the landfills we own, and the landfills that we operate, but do not own, under life-of-site agreements.

We accrue for estimated final capping, closure and post-closure maintenance obligations at the landfills we own, and the landfills that we operate, but do not own, under life-of-site

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

Our discount rate assumption for purposes of computing 2023 and 2022 “layers” for final capping, closure and post-closure obligations is based on our long-term credit adjusted risk free rate.

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

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

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

condition and results of operations.

Our discount rate was 5.50% for 2023 and ranged from 3.25% to 5.50% for 2022.

Our long-term inflation rate assumption was 2.75% for 2023 and ranged from 2.25% to 2.75% for 2022.

In 2023, we recorded an additional $159.5 million of charges to adjust the carrying value of a closure and post-closure liability at an area of a landfill site that has been deemed to reach final capacity.

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

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

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

Our reporting units consisted of our six geographic solid waste operating segments at December 31, 2023, 2022 and 2021.

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

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

Significant judgments

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

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

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

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These exclusive arrangements are awarded, at least initially, on a competitive bid basis and subsequently on a bid or negotiated basis.

The standard customer service agreements generally range from one to three years in duration, although some exclusive franchises are for significantly longer periods.

The standard customer service agreements generally range from one to five years in duration, although some exclusive franchises are for significantly longer periods.

Residential collection services are also provided on a subscription basis with individual households.

The fees received for collection services are based primarily on the market, collection frequency and level of service, route density, type and volume or weight of the waste collected, type of equipment and containers furnished, the distance to the disposal or processing facility, the cost of disposal or processing, and prices charged by competitors for similar services.

The fees we charge for collection services are based primarily on the market, collection frequency and level of service, route density, type and volume or weight of the waste collected, type of equipment and containers furnished, the distance to the disposal or processing facility, the cost of disposal or processing, and prices charged by competitors for similar services.

The terms of our contracts sometimes limit our ability to pass on price increases.

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Revenue at transfer stations is primarily generated by charging tipping or disposal fees on a per ton and/or per yard basis.

The fees charged to third parties are based primarily on the market, type and volume or weight of the waste accepted, the distance to the disposal facility and the cost of disposal.

The fees charged to third parties are based primarily on the market, type and volume or weight of the waste accepted, the distance to the disposal facility, the method of transportation used and the cost of disposal.

Many of our landfill and transfer station customers have entered into one to ten year disposal contracts with us, most of which provide for annual indexed price increases.

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

Our significant costs of operations in 2022 were labor, employee benefits, third-party disposal and transportation, vehicle, equipment and property maintenance, taxes and fees, insurance and fuel.

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

Our significant costs of operations in 2023 were labor, employee benefits, third-party disposal and transportation, vehicle, equipment and property maintenance, taxes and fees, risk management and fuel.

programs, and increasing the use of transfer stations to further enhance internalization rates.

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

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The following discussion and analysis of our Results of Operations, Segment Reporting, and Liquidity and Capital Resources includes a comparison for the year ended December 31, 2023 to the year ended December 31, 2022.

A similar discussion and analysis that compares the year ended December 31, 2021 to the year ended December 31, 2020 can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021.

A similar discussion and analysis that compares the year ended December 31, 2022 to the year ended December 31, 2021 can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Exhibit 99.2 of our Form 8-K filed on August 3, 2023.

Results of Operations

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Other income, net

Loss on early extinguishment of debt

Income tax provision

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Years Ended December 31, 2023 and 2022

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

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

Total revenues increased $810.1 million, or 11.2%, to $8.022 billion for the year ended December 31, 2023, from $7.212 billion for the year ended December 31, 2022.

Acquisitions closed during, or subsequent to, the year ended December 31, 2022, increased revenues by $410.9 million for the year ended December 31, 2023.

Operations that were divested in 2023 and the full year impact of operations that were divested in 2022, decreased revenues by $3.6 million for the year ended December 31, 2023.

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

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

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

During the year ended December 31, 2023, the net increase in prices charged to our customers at our existing operations was $616.6 million, consisting of $651.1 million of core price increases and decreases in surcharges of $34.5 million.

During the year ended December 31, 2023, we recognized volume losses totaling $137.0 million, due to lower collection and post collection volumes primarily in our Eastern, Canada and Southern segments.

E&P waste revenues at facilities owned during the years ended December 31, 2023 and 2022 increased $17.1 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 years ended December 31, 2023 and 2022 decreased $51.3 million.

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

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

Commodity pricing was unfavorable for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

Commodity pricing for the three months ended December 31, 2023 was favorable as compared to the three months ended December 31, 2022.

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

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dollar exchange rates on our Canadian revenues were 0.7410 and 0.7682 for the years ended December 31, 2023 and 2022, respectively.

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

Other revenues decreased $9.3 million during the year ended December 31, 2023, due primarily to a $9.4 million decrease in intermodal revenues, as well as a $2.3 million decrease in landfill gas revenues on lower values for renewable energy credits net of higher landfill gas volumes, partially offset by a $2.4 million increase in other non-core revenue sources.

Cost of Operations .

Total cost of operations increased $408.5 million, or 9.4%, to $4.745 billion for the year ended December 31, 2023, from $4.336 billion for the year ended December 31, 2022.

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

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

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

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

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

The increase was primarily the result of $241.0 million of additional operating costs from acquisitions closed during, or subsequent to, the year ended December 31, 2022, and an increase in operating costs at our existing operations of $187.1 million, assuming foreign currency parity, partially offset by a decrease in operating costs of $17.7 million resulting from a lower average foreign currency exchange rate in effect during the current period and a decrease of $1.9 million from operations divested during, or subsequent to, the year ended December 31, 2022.

The increase in operating costs of $187.1 million, assuming foreign currency parity, at our existing operations for the year ended December 31, 2023, consisted of higher labor and recurring incentive compensation expenses of $91.3 million, an increase in risk management expenses of $44.6 million due to higher claim and premium costs, an increase in truck, container, equipment and facility maintenance and repair expenses of $34.2 million, an increase in other facility operating costs of $15.3 million, an increase in taxes on revenues of $14.9 million as the result of increased revenues, an increase in landfill maintenance and leachate costs of $11.7 million and a net increase of other expenses of $7.3 million, partially offset by a decrease in third-party trucking and transportation expenses of $16.3 million due to lower transfer station and intermodal volumes, 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 and a decrease in fuel expense of $6.9 million due to lower diesel and natural gas prices.

Cost of operations as a percentage of revenues decreased 1.0 percentage points to 59.1% for the year ended December 31, 2023, from 60.1% for the year ended December 31, 2022.

The decrease as a percentage of revenues was primarily driven by the impact of price-led revenue growth, a 0.6 percentage point decrease in third-party trucking and transportation expenses, a 0.5 percentage point decrease in disposal costs and a 0.4 percentage point decrease in fuel costs due to lower diesel and natural gas prices, partially offset by a 0.5 percentage point increase in risk management expenses.

SG&A expenses increased $102.6 million, or 14.7%, to $799.1 million for the year ended December 31, 2023, from $696.5 million for the year ended December 31, 2022.

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

The increase in SG&A expenses at our existing operations of $45.8 million, assuming foreign currency parity, for the year ended December 31, 2022 was comprised of a collective increase in travel, meetings, training and community activity expenses of $22.6 million due to increased travel and social gatherings in the current year period due to a reduction in restrictions associated with the COVID-19 pandemic, an increase in administrative payroll expenses of $16.4 million due primarily to annual pay increases, an increase in direct acquisition expenses of $13.6 million due to an increase in acquisition activity in the current period, an increase in equity-based compensation expenses of $6.2 million associated with our annual recurring grant of restricted share units to our personnel, an increase in software license fees of $3.7 million associated with new information technology applications, an increase in bad debt costs of $2.8 million associated with increased revenue, an increase in professional fees of $1.6 million due primarily to increased legal services, an increase of $0.8 million resulting from the payment of supplemental bonuses to non-management employees to provide financial assistance associated with the impact of the COVID-19 pandemic and $4.1 million of other net expense increases, partially offset by a decrease in deferred compensation expenses of $9.1 million as a result of decreases in the market value of investments to which employee deferred compensation liability balances are tracked, a decrease in accrued recurring cash incentive compensation expense to our management of $8.6 million, a decrease of $5.2 million in equity-based compensation expenses associated with the prior year period including adjustments to increase the fair value of our common shares held in our deferred compensation plan by certain key executives as a result of the shares being exchanged for other investment options, and a decrease in equity-based compensation expenses of $3.1 million associated with changes in our share price resulting in fair value measurement decreases to equity awards accounted for as liabilities that were granted to employees of Progressive Waste prior to June 1, 2016, which are subject to valuation adjustments each period.

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

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

The increase was comprised of an increase of $76.6 million, assuming foreign currency parity, at our existing operations and $28.9 million from acquisitions closed during, or subsequent to, the year ended December 31, 2022, partially offset by a decrease of $2.9 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 $76.6 million, assuming foreign currency parity, for the year ended December 31, 2023 was comprised of an increase in administrative payroll expenses of $22.8 million, an increase in incentive compensation expense of $16.5 million, an increase in executive separation costs of $16.1 million, an increase in deferred compensation expenses of $9.9 million as a result of increases in the market value of investments to which employee deferred compensation liability balances are tracked, an increase in equity-based compensation expenses of $8.9 million associated with our annual recurring grants of restricted share units to our personnel, an increase in professional fees of $5.4 million, an increase in software license fees of $5.2 million, a collective increase in travel, meetings and training expenses of $4.5 million and $1.6 million of other net expense increases, partially offset by a decrease in direct acquisition expenses of $14.3 million due to a decrease in acquisition activity in the current period.

SG&A expenses as a percentage of revenues increased 0.3 percentage points to 10.0% for the year ended December 31, 2023, from 9.7% for the year ended December 31, 2022.

The increase as a percentage of revenues was primarily attributable to a 0.2 percentage point increase in executive separation costs, a 0.2 percentage point increase in incentive based compensation costs and a 0.1 percentage point increase in deferred compensation expense, partially offset by a 0.2 percentage point decrease in direct acquisition expenses due to a decrease in acquisition activity.

Depreciation .

Depreciation expense increased $82.3 million, or 10.8%, to $845.6 million for the year ended December 31, 2023, from $763.3 million for the year ended December 31, 2022.

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

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

The increase was comprised of an increase in

depreciation and depletion expense of $56.7 million from acquisitions closed during, or subsequent to, the year ended December 31, 2022, an increase in depreciation expense of $24.4 million from the impact of additions to our fleet and equipment purchased to support our existing operations and $4.5 million of other net increases, partially offset by a decrease of $3.3 million resulting from a lower average foreign currency exchange rate in effect during the current period.

Depreciation expense as a percentage of revenues decreased 0.1 percentage points to 10.5% for the year ended December 31, 2023, from 10.6% for the year ended December 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.

The decrease as a percentage of revenues was primarily attributable to the impact of price driven revenue increases in our solid waste services, partially offset by acquisitions closed during, or subsequent to, the year ended December 31, 2022 having higher depreciation expense as a percentage of revenue than our company average.

Amortization of Intangibles .

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Impairments and Other Operating Items .

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

Impairments and other operating items increased $220.6 million, to net losses totaling $238.8 million for the year ended December 31, 2023, from net losses totaling $18.2 million for the year ended December 31, 2022.

The net losses of $238.8 million recorded during the year ended December 31, 2023 consisted of $159.5 million of charges to adjust the carrying value of a closure and post-closure liability related to a non-active area of a landfill site, $31.3 million of charges to adjust the carrying value of contingent consideration liabilities associated with acquisitions closed in prior periods, $25.0 million of charges to adjust the carrying value of certain assets impaired as a result of an adjustment to fair market value, $17.3 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, $13.2 million of net losses on property and equipment disposal and uninsured damages to an operating facility and $10.6 million lawsuit judgment charges, partially offset by an $8.7 million gain related to insured recoveries for damages to an operating facility, $7.8 million of gains on the disposal of certain non-strategic operating locations and $1.6 million other net adjustments.

The net losses of $18.2 million recorded during the year ended December 31, 2022 consisted of $10.8 million of charges to write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to the original estimated termination date and an $8.4 million lawsuit judgment accrual, partially offset by $1.0 million of other net gains.

The net losses of $32.3 million recorded during the year ended December 31, 2021 consisted of $18.7 million of impairment charges to property and equipment and intangible assets at three of our E&P waste operations, $4.9 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to the original estimated termination date, a $4.6 million loss resulting from property and equipment damaged in a facility fire, $2.8 million of adjustments to increase the carrying value of certain contingent consideration liabilities, $1.5 million of losses on property and equipment disposals and $1.8 million of other net charges, partially offset by $2.0 million of gains from the disposal of assets at two non-strategic operating locations.

Operating Income .

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

The increase in our operating income for the year ended December 31, 2022 was due primarily to price increases for our solid waste services, operating income contributions from increased sales of renewable energy credits associated with the generation of landfill gas, operating income generated from acquisitions closed during, or subsequent to, the year ended December 31, 2021 and an increase in earnings at our E&P waste operations.

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

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

Operating income decreased $5.9 million, or 0.5%, to $1.236 billion for the year ended December 31, 2023, from $1.242 billion for the year ended December 31, 2022.

The decrease in our operating income for the year ended December 31, 2023 was due primarily to an increase in charges to adjust the carrying value of a closure and post-closure liability related to a non-active area of a landfill site, an increase in charges related to adjustments for contingent consideration liabilities and impairments, lower recyclable commodity pricing and an increase in executive separation costs, partially offset by price increases for our solid waste services, operating income generated from acquisitions closed during, or subsequent to, the year ended December 31, 2022 and an increase in earnings at our E&P waste operations.

Operating income as a percentage of revenues decreased 1.8 percentage points to 15.4% for the year ended December 31, 2023, from 17.2% for the year ended December 31, 2022.

The decrease as a percentage of revenues was comprised of a 2.8 percentage point increase in impairments and other operating items and a 0.3 percentage point increase in SG&A

expenses, partially offset by a 1.0 percentage point decrease in our costs of operations, a 0.2 percentage point decrease in amortization expense and a 0.1 percentage point decrease in depreciation expense.

Interest Expense .

Interest expense increased $72.3 million, or 35.7%, to $274.6 million for the year ended December 31, 2023, from $202.3 million for the year ended December 31, 2022.

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

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

The increase was primarily attributable to an increase of $30.7 million due to a net increase in the average borrowings outstanding under our Credit Agreement and Term Loan Agreement, an increase of $22.7 million from the issuance of $1.250 billion of senior unsecured notes during, or subsequent to, the year ended December 31, 2022, an increase of $15.5 million from higher interest rates on borrowings outstanding under our Credit Agreement and Term Loan Agreement and $3.4 million of other net expense increases.

Interest Income .

Interest income increased $3.4 million to $9.4 million for the year ended December 31, 2023, from $6.0 million for the year ended December 31, 2022.

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

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

Other Income, Net .

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

Other income, net increased $9.3 million, to $12.5 million for the year ended December 31, 2023, from $3.2 million for the year ended December 31, 2022.

Other income of $12.5 million recorded during the year ended December 31, 2023 consisted of $4.3 million from an increase in the value of investments purchased to fund our employee deferred compensation obligations, a $4.2 million reduction to certain accrued liabilities acquired in an acquisition closed in a prior year period, $3.6 million in other net income sources and $0.4 million from an increase in the average foreign currency exchange rate in effect during the comparable reporting period reducing the U.S.

dollar consideration required to settle international liabilities.

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

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

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

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

Loss on Early Extinguishment of Debt .

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

Income Tax Provision .

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Segment Reporting

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

Eastern, Southern, Western, Central and Canada.

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

Effective April 1, 2023, we modified our organizational structure under new regional operating segments as the result of continued growth in our business.

We now report revenue and segment EBITDA based on the following six geographic solid waste operating segments:

Western, Southern, Central, Eastern, Canada and MidSouth.

A small number of operating locations have been reallocated from the Western segment to the Central segment, the previous Eastern segment has been bifurcated into two smaller geographies now referred to as the Eastern segment and MidSouth segment, and a small number of operating locations have been reallocated from the Southern segment to the MidSouth segment.

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

Each operating segment is responsible for managing

several vertically integrated operations, which are comprised of districts.

While certain corporate or regional overhead expense allocations may affect comparability on a period-over-period basis, the segment information presented herein reflects the realignment of these regions.

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

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

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

generally within the control of the operating segments.

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

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

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

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Corporate (a)

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

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

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

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

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

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

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

Revenue increased $241.3 million to $1.669 billion for 2023, from $1.428 billion for 2022, due to contributions from acquisitions, price increases and increases in residential and commercial collection volumes, partially offset by decreased

roll off and post-collection volumes, lower intermodal revenue and a decrease in the price of recyclable commodities as compared to the prior year period.

EBITDA increased $58.3 million to $483.2 million, or a 28.9% EBITDA margin for 2023, from $424.9 million, or a 29.8% EBITDA margin for 2022.

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

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

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

The decrease in our EBITDA margin was due to an increase in risk management expenses due to higher claim and premium costs, an increase in allocated corporate overhead, higher labor costs due primarily to wage increases and increases in other operating costs, partially offset by lower trucking costs.

Depreciation, depletion and amortization expense increased $43.5 million, to $199.4 million for 2023, from $155.9 million for 2022, due to assets acquired in acquisitions and additions to our fleet and equipment.

Revenue increased $147.8 million to $1.642 billion for 2023, from $1.494 billion for 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, partially offset by lower residential collection volumes due to the purposeful non-renewal of collection contracts during the current and prior year periods and other decreases in residential volumes, lower transfer station volumes and a decrease in recyclable commodity prices as compared to the prior year period.

EBITDA increased $51.5 million to $518.0 million, or a 31.5% EBITDA margin for 2023, from $466.5 million, or a 31.2% EBITDA margin for 2022.

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

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

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

The increase in our EBITDA margin was due to price-led increases in solid waste revenue, the impact of acquisitions having higher EBITDA margins than our segment average, lower trucking costs related to lower transfer station volumes, the purposeful non-renewal of certain residential contracts and increased earnings at our E&P waste operations, partially offset by an increase in risk management expenses due to higher claim and premium costs, higher labor costs due to wage increases, the operational impact of temporary volume limitations at a landfill that occurred in the three months ended December 31, 2023 and increased leachate expense.

Depreciation, depletion and amortization expense increased $4.3 million, to $179.9 million for 2023, from $175.6 million for 2022, due to assets acquired in acquisitions, partially offset by a reduction in amortization expense associated with the loss of certain residential service contracts.

Revenue increased $151.8 million to $1.440 billion for 2023, from $1.288 billion for 2022, due to price increases and contributions from acquisitions, partially offset by lower residential revenues and a decrease in the value of recyclable commodities compared to the prior year period.

EBITDA increased $66.0 million to $512.3 million, or a 35.6% EBITDA margin for 2023, from $446.3 million, or a 34.6% EBITDA margin for 2022.

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

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

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

The increase in our EBITDA margin was due to the benefits from price-led increases in revenue and lower benefits costs, partially offset by an increase in risk management expenses due to higher claim and premium costs, a decrease in the value of recyclable commodities as compared to the prior year periods and an increase in allocated corporate overhead.

Depreciation, depletion and amortization expense increased $12.5 million, to $169.4 million for 2023, from $156.9 million for 2022, due to assets acquired in acquisitions and additions to our fleet and equipment as compared to the prior year periods.

Revenue increased $146.5 million to $1.380 billion for 2023, from $1.234 billion for 2022, due to price increases and contributions from acquisitions, partially offset by decreased post-collection volumes, decreased residential and commercial service revenues, lower roll off volumes and a decrease in the value of recyclable commodities compared to the prior year period.

EBITDA increased $71.6 million to $353.1 million, or a 25.6% EBITDA margin for 2023, from $281.5 million, or a 22.8% EBITDA margin for 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 and increased diesel and natural gas fuel expenses.

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

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

The increase in our EBITDA margin was due primarily to price-led increases in revenue, lower benefits costs, a decrease in trucking and disposal expenses as a result of purposefully lost volumes, lower diesel costs due to a decline in average fuel prices and a decrease in truck, container, equipment and facility maintenance and repair expenses, partially offset by higher labor costs, the impact of acquisitions having lower EBITDA margins than our segment average, an increase in risk management expenses due to higher claim and premium costs and lower recycle commodity revenues, net of lower rebates, driven by lower average commodity pricing.

Depreciation, depletion and amortization expense increased $17.4 million, to $207.9 million for 2023, from $190.5 million for 2022, due to assets acquired in acquisitions and additions to our fleet and equipment, partially offset by a reduction in amortization expense associated with the loss of certain residential service contracts.

Revenue increased $55.2 million to $995.8 million for 2023, from $940.6 million for 2022, due to price increases, contributions from acquisitions, and an increase in landfill volumes, partially offset by a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods, a decrease in residential collection volumes and lower prices for recyclable commodities as compared to the prior year period.

EBITDA increased $41.3 million to $390.7 million, or a 39.2% EBITDA margin for 2023, from $349.4 million, or a 37.1% EBITDA margin for 2022.

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

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

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

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

The increase in our EBITDA margin was due to price-led increases in revenue, decreases in diesel and natural gas costs due to a decline in average fuel prices, lower labor expenses and a decrease in trucking costs, partially offset by lower recycle commodity revenues, net of lower rebates, driven by lower average commodity pricing, an increase in risk management expenses due to higher claim and premium costs, an increase in truck, container, equipment and facility maintenance and repair expenses and an increase in allocated corporate expense as compared to the prior year period.

Depreciation, depletion and amortization expense increased $2.9 million, to $121.3 million for 2023, from $118.4 million for 2022, due to assets acquired in acquisitions, partially offset by a decrease in the average foreign currency exchange rate in effect during the comparable reporting periods.

Revenue increased $67.5 million to $894.2 million for 2023, from $826.7 million for 2022, due to price increases partially offset by a decrease in the value of recyclable commodities compared to the prior year periods.

EBITDA increased $10.4 million to $246.1 million, or a 27.5% EBITDA margin for 2023, from $235.7 million, or a 28.5% EBITDA margin for 2022.

The decrease in our EBITDA margin was due primarily to an increase in risk management expenses due to higher claim and premium costs, an increase in allocated corporate overhead and benefits expense, lower recycle commodity revenues and an increase in recycle processing costs driven by lower average commodity pricing, partially offset by price-led revenue growth, lower disposal costs due to increased internalization in certain markets and decreases in diesel and natural gas costs due to a decline in average fuel prices.

Depreciation, depletion and amortization expense increased $4.5 million, to $117.4 million for 2023, from $112.9 million for 2022, due to additions to our fleet and equipment, higher depletion expense due to higher landfill development costs increasing our per ton landfill depletion rates and increased landfill volumes.

EBITDA remained flat as compared to 2022 with a loss of $25.0 million for both periods.

As compared to prior year, expense increases included higher incentive compensation costs, an increase in executive separation expenses, increased deferred compensation expenses, increased equity-based compensation expense associated with our annual recurring grants of restricted share units to our personnel, increased administrative payroll costs primarily driven by wage increases and additional headcount to support continued growth, higher professional fees driven by legal costs, increased costs due

to increased travel and meetings and increased expenses associated with information systems and applications, partially offset by increased allocation of costs to our operating segments driven by overall higher corporate expenses, lower direct acquisition expenses associated with a decrease in acquisition activity in the current year period, and lower compensation to non-management personnel associated with the impact of the COVID-19 pandemic that occurred in the first three months of 2022 that did not reoccur in the current year period.

Liquidity and Capital Resources

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

Net decrease in cash, cash equivalents and restricted cash

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

Cash, cash equivalents and restricted cash at beginning of year

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Operating Activities Cash Flows

For the year ended December 31, 2022, net cash provided by operating activities was $2.022 billion.

For the year ended December 31, 2021, net cash provided by operating activities was $1.698 billion.

The $324.4 million increase was due primarily to the following:

1) Increase in earnings — Our increase in net cash provided by operating activities was favorably impacted by $192.1 million from an increase in net income, excluding depreciation, amortization of intangibles, share-based compensation, adjustments to and payments of contingent consideration recorded in earnings and loss on disposal of assets, impairments and early extinguishment of debt, due primarily to price increases, earnings from acquisitions, earnings generated from an increase in landfill gas revenues and renewable energy credits and an increase in earnings at our E&P waste operations.

2) Accounts payable and accrued liabilities — Our increase in net cash provided by operating activities was favorably impacted by $94.2 million from accounts payable and accrued liabilities as changes in accounts payable and accrued liabilities resulted in an increase to operating cash flows of $164.8 million for the year ended December 31, 2022, compared to an increase to operating cash flows of $70.6 million for the year ended December 31, 2021.

Net cash provided by operating activities increased $104.3 million to $2.127 billion for the year ended December 31, 2023, from net cash provided by operating activities of $2.022 billion for the year ended December 31, 2022.

The significant components of the increase included the following:

1) Increase in earnings — Our increase in net cash provided by operating activities was favorably impacted by $241.3 million from an increase in net income, excluding depreciation, amortization of intangibles, share-based compensation, adjustments to closure and post-closure liabilities, adjustments to and payments of contingent consideration recorded in earnings and loss on disposal of assets and impairments, due primarily to price increases, earnings from acquisitions closed during, or subsequent to, the year ended December 31, 2022, a decrease in compensation to non-management personnel associated with the impact of the COVID-19 pandemic that occurred in the year ended December 31, 2022 that did not reoccur in the current period and an increase in earnings at our E&P waste operations.

2) Accounts receivable — Our increase in net cash provided by operating activities was favorably impacted by $79.9 million from accounts receivable as changes in accounts receivable resulted in a decrease to operating cash flows of $20.6 million for the year ended December 31, 2023, compared to a decrease to operating cash flows of $100.5 million for the year ended December 31, 2022.

The decreases for the years ended December 31, 2023 and 2022 were due to increases in revenue, which remained as outstanding receivables at the end of the period.

3) Prepaid expenses — Our increase in net cash provided by operating activities was favorably impacted by $11.0 million from prepaid expenses as changes in prepaid expenses resulted in an increase to operating cash flows of $10.3 million for the year ended December 31, 2023, compared to a decrease to operating cash flows of $0.7 million for the year ended December 31, 2022.

The increase for the year ended December 31, 2023 was due primarily to decreased prepaid income tax payments, partially offset by a net decrease in prepaids related to insurance claim and premium payments.

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

4) Accounts payable and accrued liabilities — Our increase in net cash provided by operating activities was unfavorably impacted by $110.7 million from accounts payable and accrued liabilities as changes in accounts payable and accrued liabilities resulted in an increase to operating cash flows of $54.1 million for the year ended December 31, 2023, compared to an increase to operating cash flows of $164.8 million for the year ended December 31, 2022.

The increase for the year ended December 31, 2023 was due primarily to an increase in accrued insurance costs, an increase in accrued compensation costs, an increase in accrued interest due to the timing of interest payments, an increase in property taxes attributable to payment timing and an increase in outstanding obligations to vendors, partially offset by a decrease from the timing of tax payments.

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

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

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

5) Deferred income taxes — Our increase in net cash provided by operating activities was unfavorably impacted by $87.2 million from deferred income taxes as changes in deferred income taxes resulted in an increase to operating cash flows of $6.3 million for the year ended December 31, 2023, compared to an increase to operating cash flows of $93.5 million for the year ended December 31, 2022.

The increase for the year ended December 31, 2023 was primarily due to accelerated tax depreciation from capital expenditures.

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

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

4) Deferred revenue — Our increase in net cash provided by operating activities was favorably impacted by $10.5 million from deferred revenue as changes in deferred revenue resulted in an increase to operating cash flows of $42.2 million for the year ended December 31, 2022, compared to an increase to operating cash flows of $31.7 million for the year ended December 31, 2021.

6) Deferred revenue — Our increase in net cash provided by operating activities was unfavorably impacted by $15.7 million from deferred revenue as changes in deferred revenue resulted in an increase to operating cash flows of $26.5 million for the year ended December 31, 2023, compared to an increase to operating cash flows of $42.2 million for the year ended December 31, 2022.

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

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

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

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

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

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

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

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

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

7) Closure and post closure expenditures – Our increase in net cash provided by operating activities was unfavorably impacted by $20.6 million from an increase in payments for closure and post closure activities as changes in expenditures for these items resulted in a decrease to operating cash flows of $39.4 million for the year ended December 31, 2023, compared to a decrease in operating cash flows of $18.9 million for the year ended December 31, 2022.

The increase in expenditures as compared to the prior year period was due primarily to additional costs incurred in relation to an Elevated Temperature Landfill event at a landfill.

At December 31, 2023, we had a working capital deficit of $546.1 million, including cash and equivalents of $78.4 million.

Our working capital deficit increased $151.1 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 the short-term portion of closure and post closure accruals, an increase in contingent consideration liabilities, an increase in deferred revenues, an increase in accrued insurance costs and a decrease in prepaid income tax, partially offset by an increase in accounts receivables as a result of increases in revenue and decreases in accounts payable and accrued liabilities driven by the timing of payments for obligations to vendors.

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

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Investing Activities Cash Flows

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

The significant components of the increase included the following:

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

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

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

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

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

Net cash used in investing activities decreased $1.506 billion to $1.581 billion for the year ended December 31, 2023, from $3.087 billion for the year ended December 31, 2022.

The significant components of the decrease included the following:

1) A decrease in cash paid for acquisitions of $1.530 billion;

2) A decrease in capital expenditures at operations owned in the comparable periods of $15.8 million due to decreases in land and facility expenditures and landfill site costs, partially offset by increased truck and equipment purchases;

3) An increase in capital expenditures at operations acquired during the comparative periods of $37.1 million due to increased expenditures for landfill site costs, trucks, containers and equipment.

Financing Activities Cash Flows

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

Net cash used in financing activities increased $1.573 billion to $544.4 million for the year ended December 31, 2023, from net cash provided by financing activities of $1.028 billion for the year ended December 31, 2022.

The significant components of the increase included the following:

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

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

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

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

1) An increase from the net change in long-term borrowings of $1.975 billion in which long-term borrowings decreased $230.6 million during the year ended December 31, 2023 and increased $1.745 billion during the year ended December 31, 2022;

2) An increase from higher cash dividends paid of $27.6 million due primarily to an increase in our average quarterly dividend rate for the year ended December 31, 2023 to $0.263 per share, from $0.236 per share for the year ended December 31, 2022;

3) An increase in tax withholdings related to net share settlements of equity-based compensation of $12.7 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 year ended December 31, 2022;

5) A decrease from lower payments related to the issuance of debt of $13.3 million that occurred during the year ended December 31, 2022.

On July 25, 2023, 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 12,881,534 of our common shares during the period of August 10, 2023 to August 9, 2024 or until such earlier time as the NCIB is completed or terminated at our option.

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

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

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

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

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

In 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.

In October 2023, we announced that our Board of Directors increased our regular quarterly cash dividend by $0.03, from $0.255 to $0.285 per share.

Cash dividends of $270.6 million and $243.0 million were paid during the years ended December 31, 2023 and 2022, respectively.

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

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

We made $934.0 million in capital expenditures for property and equipment during the year ended December 31, 2023, and we expect to make total capital expenditures for property and equipment of $1.15 billion in 2024, including approximately $150 million associated with renewable natural gas facilities.

We intend to fund our planned 2024 capital expenditures principally through cash on hand, internally generated funds and borrowings under our Credit Agreement.

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However, disruptions in the capital and credit markets could adversely affect our ability to draw on our Credit Agreement or raise other capital.

Our access to funds under the Credit Agreement is dependent on the ability of the banks that are parties to the agreement to meet their funding commitments.

Our access to funds under the Credit Agreement is dependent on

the ability of the banks that are parties to the agreement to meet their funding commitments.

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.

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At December 31, 2023, $240.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S.

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

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

Term SOFR rate loans, bearing interest at a total rate ranging from 6.46% to 6.50% on such date.

At December 31, 2023, $28.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S.

base rate loans, bearing interest at a total rate of 8.50% on such date.

At December 31, 2023, $15.1 million of the outstanding borrowings drawn under the revolving credit facility were in Canadian prime rate loans, bearing interest at a total rate of 7.20% on such date.

At December 31, 2023, $170.1 million of the outstanding borrowings drawn under the revolving credit facility were in Canadian-based bankers’ acceptances, bearing interest at a total rate ranging from 6.40% to 6.46% on such date.

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

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At December 31, 2023, our unconditional purchase obligations consisted of multiple fixed-price fuel purchase contracts under which we have 56.8 million gallons remaining to be purchased for a total of $175.7 million.

The current fuel purchase contracts expire on or before December 31, 2024.

These arrangements have not materially affected our financial position, results of operations or liquidity during the year ended December 31, 2022, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.

The current fuel purchase contracts expire on or before September 30, 2029.

These arrangements have not materially affected our financial position, results of operations or liquidity during the year ended December

31, 2023, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.

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

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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.

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Transaction-related expenses (c)

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

Tax effect (e)

Executive separation costs (d)

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

Tax effect (f)

Adjusted free cash flow

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

(c) Reflects the addback of acquisition-related transaction costs and, in 2022, the settlement of an acquired tax liability.

(d) Reflects the cash component of severance expense associated with an executive departure.

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.

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

Adjusted EBITDA

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Net income attributable to Waste Connections

Net income (loss) attributable to noncontrolling interests

Net income attributable to noncontrolling interests

Income tax provision

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Impairments and other operating items

Other expense (income), net

Other income, net

Loss on early extinguishment of debt

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Fair value changes to equity awards (b)

Executive separation costs (c)

Adjusted EBITDA

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

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.

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Loss on early extinguishment of debt (e)

Tax effect (f)

Tax items (g)

Executive separation costs (f)

Tax effect (g)

Adjusted net income attributable to Waste Connections

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

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

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

Reflects the cash and non-cash components of severance expense associated with an executive departure.

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

Leverage Ratio

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

What changed 10-K

Item 7. Management’s Discussion and Analysis