What changed in this filing

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Item 1. Financial Statements

2024-04-25 compared with 2023-10-26 · 289 added, 348 removed, 660 unchanged (49% of the section changed)

4 unchanged sentences

dollars, except share and per share amounts)

September 30,

Current assets:

Cash and equivalents

Accounts receivable, net of allowance for credit losses of $ 23,970 and $ 22,939 at September 30, 2023 and December 31, 2022, respectively

Accounts receivable, net of allowance for credit losses of $ 22,858 and $ 23,553 at March 31, 2024 and December 31, 2023, respectively

Prepaid expenses and other current assets

24 unchanged sentences

Common shares:

257,640,960 shares issued and 257,581,304 shares outstanding at September 30, 2023;

258,019,417 shares issued and 257,961,725 shares outstanding at March 31, 2024;

257,659,921 shares issued and 257,600,479 shares outstanding at December 31, 2023

2 unchanged sentences

Treasury shares:

59,656 and 65,459 shares at September 30, 2023 and December 31, 2022, respectively

57,692 and 59,442 shares at March 31, 2024 and December 31, 2023, respectively

Retained earnings

7 unchanged sentences

dollars, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

6 unchanged sentences

Interest income

Other income, net

Other income (expense), net

Income before income tax provision

Income tax provision

Net income attributable to noncontrolling interests

Net loss (income) attributable to noncontrolling interests

Net income attributable to Waste Connections

6 unchanged sentences

(In thousands of U.S.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Other comprehensive income (loss), before tax:

3 unchanged sentences

Other comprehensive income (loss), before tax

Income tax expense related to items of other comprehensive income (loss)

Income tax expense (benefit) related to items of other comprehensive income (loss)

Other comprehensive income (loss), net of tax

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive loss (income) attributable to noncontrolling interests

Comprehensive income attributable to Waste Connections

23 unchanged sentences

Foreign currency translation adjustment

Balances at March 31, 2023

Vesting of restricted share units

Vesting of performance-based restricted share units

Tax withholdings related to net share settlements of equity-based compensation

Equity-based compensation

Exercise of warrants

Cash dividends on common shares

Amounts reclassified into earnings, net of taxes

Changes in fair value of cash flow hedges, net of taxes

Foreign currency translation adjustment

Net income (loss)

Balances at June 30, 2023

Vesting of restricted share units

Restricted share units released from deferred compensation plan

Tax withholdings related to net share settlements of equity-based compensation

Equity-based compensation

Exercise of warrants

Issuance of shares under employee share purchase plan

Cash dividends on common shares

Amounts reclassified into earnings, net of taxes

Changes in fair value of cash flow hedges, net of taxes

Foreign currency translation adjustment

Balances at September 30, 2023

Balances at March 31, 2024

The accompanying notes are an integral part of these condensed consolidated financial statements.

18 unchanged sentences

Issuance of shares under employee share purchase plan

Repurchase of common shares

( 3,388,155 )

Cash dividends on common shares

3 unchanged sentences

Balances at March 31, 2023

Sale of common shares held in trust

Vesting of restricted share units

Tax withholdings related to net share settlements of equity-based compensation

Equity-based compensation

Exercise of warrants

Cash dividends on common shares

Amounts reclassified into earnings, net of taxes

Changes in fair value of cash flow hedges, net of taxes

Foreign currency translation adjustment

Balances at June 30, 2022

Vesting of restricted share units

Restricted share units released from deferred compensation plan

Tax withholdings related to net share settlements of equity-based compensation

Equity-based compensation

Issuance of shares under employee share purchase plan

Cash dividends on common shares

Amounts reclassified into earnings, net of taxes

Changes in fair value of cash flow hedges, net of taxes

Foreign currency translation adjustment

Balances at September 30, 2022

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(In thousands of U.S.

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

7 unchanged sentences

Interest accretion

Payment of contingent consideration recorded in earnings

Adjustments to contingent consideration

8 unchanged sentences

( 1,334,579 )

( 1,858,586 )

CASH FLOWS FROM FINANCING ACTIVITIES:

2 unchanged sentences

( 1,350,932 )

( 2,052,412 )

Payment of contingent consideration recorded at acquisition date

Change in book overdraft

Payments for repurchase of common shares

Payments for cash dividends

17 unchanged sentences

The accompanying condensed consolidated financial statements relate to Waste Connections, Inc.

and its subsidiaries (the “Company”) for the three and nine month periods ended September 30, 2023 and 2022.

and its subsidiaries (the “Company”) for the three month periods ended March 31, 2024 and 2023.

In the opinion of management, the accompanying balance sheets and related interim statements of net income, comprehensive income, cash flows and equity include all adjustments, consisting only of normal recurring items, necessary for their fair statement in conformity with U.S.

18 unchanged sentences

Accounting Standards Pending Adoption

Clawback of Executive Compensation Rules .

In October 2022, the Securities and Exchange Commission (the “SEC”) adopted final rules regarding the recovery of erroneously awarded executive incentive compensation.

The rules direct U.S.

securities exchanges to establish standards to require listed issuers to develop and implement a written policy providing for the recovery of incentive compensation received by current and former executive officers in the event of a required accounting restatement when that compensation was based on an erroneously reported financial reporting measure.

The new rule and related amendments include a number of new disclosure requirements, including requiring issuers to file their recovery policy as an exhibit to their annual reports and establishing new cover page disclosures on Form 10-K indicating whether the financial statements included in the filing reflect the correction of an error and whether the error correction required an incentive compensation recovery analysis.

securities exchanges filed listing standards to implement the SEC’s directive, and those listing standards were effective on October 2, 2023.

Registrants listed on those exchanges will be required to adopt a recovery policy by December 1, 2023.

The Company will include an updated recovery policy as an exhibit to its 2023 Form 10-K.

The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

Disclosure of Significant Segment Expenses and Other Segment Items .

In November 2023, the Financial Accounting Standards Board (the “FASB”) amended its existing guidance for segment reporting to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

The amended guidance does not change how a public entity identifies its operating segments, aggregates them or applies the quantitative thresholds to determine its reportable segments.

The guidance is applied retrospectively to all periods presented in financial statements, unless it is impracticable.

The guidance applies to all public entities and is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024.

Early adoption is permitted.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Additional Income Tax Disclosures .

In December 2023, the FASB issued a final standard on improvements to income tax disclosures.

The standard requires public business entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold.

The guidance also requires all entities to disclose

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold.

The standard applies to all entities subject to income taxes.

For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2024.

The guidance will be applied on a prospective basis with the option to apply the standard retrospectively.

Early adoption is permitted.

The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

The Company’s operations primarily consist of providing non-hazardous waste collection, transfer, disposal and recycling services, non-hazardous oil and natural gas exploration and production (“E&P”) waste treatment, recovery and disposal services and intermodal services.

The following table disaggregates the Company’s revenues by service line for the periods indicated:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Industrial and construction roll off

4 unchanged sentences

In the event that the Company bills for services in advance of performance, it recognizes deferred revenue for the amount billed and subsequently recognizes revenue at the time the service is provided.

Substantially all of the deferred revenue recorded as of June 30, 2023 was recognized as revenue during the three months ended September 30, 2023 when the service was performed.

Substantially all of the deferred revenue recorded as of December 31, 2023 was recognized as revenue during the three months ended March 31, 2024 when the service was performed.

See Note 10 for additional information regarding revenue by reportable segment.

2 unchanged sentences

The Company recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company would have recognized is one year or less.

The Company had $ 26,518 and $ 23,818 of deferred sales incentives at September 30, 2023 and December 31, 2022, respectively.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash.

The carrying value of the Company’s receivables, net of the allowance for credit losses, represents their estimated net realizable value.

The allowance for credit losses is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics.

The Company monitors the collectability of its trade receivables as one overall pool due

The Company had $ 26,102 and $ 25,977 of deferred sales incentives at March 31, 2024 and December 31, 2023, respectively.

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

to all trade receivables having similar risk characteristics.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash.

The carrying value of the Company’s receivables, net of the allowance for credit losses, represents their estimated net realizable value.

The allowance for credit losses is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics.

The Company monitors the collectability of its trade receivables as one overall pool due to all trade receivables having similar risk characteristics.

The Company estimates its allowance for credit losses based on historical collection trends, the age of outstanding receivables, geographical location of the customer, existing economic conditions and reasonable forecasts.

2 unchanged sentences

The following is a rollforward of the Company’s allowance for credit losses for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

Beginning balance

5 unchanged sentences

LANDFILL ACCOUNTING

At September 30, 2023, the Company’s landfills consisted of 91 owned landfills, five landfills operated under life-of-site operating agreements and seven landfills operated under limited-term operating agreements.

The Company’s landfills had site costs with a net book value of $ 3,333,390 at September 30, 2023.

At March 31, 2024, the Company’s landfills consisted of 100 owned landfills, five landfills operated under life-of-site operating agreements and seven landfills operated under limited-term operating agreements.

The Company’s landfills had site costs with a net book value of $ 3,297,752 at March 31, 2024.

For the Company’s landfills operated under limited-term operating agreements and life-of-site operating agreements, the owner of the property (generally a municipality) usually owns the permit and the Company operates the landfill for a contracted term.

7 unchanged sentences

Expansion airspace that meets certain criteria is included in the estimate of total landfill airspace.

Based on remaining permitted capacity as of September 30, 2023, and projected annual disposal volumes, the average remaining landfill life for the Company’s owned landfills and landfills operated under life-of-site operating agreements is estimated to be approximately 33 years .

As of September 30, 2023, the Company is seeking to expand permitted capacity at nine of its owned landfills and two landfills that it operates under life-of-site operating agreements, and considers the achievement of these expansions to be probable.

Although the Company cannot be certain that all future expansions will be permitted as designed, the average remaining life, when considering remaining permitted capacity, probable expansion capacity and projected annual disposal volume, of the Company’s owned landfills and landfills operated under life-of-site operating agreements is approximately 36 years .

The estimated remaining lives of the Company’s owned landfills and

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

landfills operated under life-of-site operating agreements range from 2 to 308 years , with approximately 90 % of the projected annual disposal volume from landfills with remaining lives of less than 70 years .

During the nine months ended September 30, 2023 and 2022, the Company expensed $ 192,314 and $ 172,118 , respectively, or an average of $ 5.11 and $ 4.88 per ton consumed, respectively, related to landfill depletion at owned landfills and landfills operated under life-of-site agreements.

Based on remaining permitted capacity as of March 31, 2024, and projected annual disposal volumes, the average remaining landfill life for the Company’s owned landfills and landfills operated under life-of-site operating agreements is estimated to be approximately 32 years .

As of March 31, 2024, the Company is seeking to expand permitted capacity at nine of its owned landfills and two landfills that it operates under life-of-site operating agreements, and considers the achievement of these expansions to be probable.

The estimated remaining lives of the Company’s owned landfills and landfills operated under life-of-site operating agreements range from two to 382 years , with approximately 90 % of the projected annual disposal volume from landfills with remaining lives of less than 70 years .

During the three months ended March 31, 2024 and 2023, the Company expensed $ 62,525 and $ 59,055 , respectively, or an average of $ 5.29 and $ 5.06 per ton consumed, respectively, related to landfill depletion at owned landfills and landfills operated under life-of-site agreements.

The Company reserves for estimated final capping, closure and post-closure maintenance obligations at the landfills it owns and landfills it operates under life-of-site operating agreements.

3 unchanged sentences

This policy results in the Company’s final capping, closure and post-closure liabilities being recorded in “layers.” The Company’s discount rate assumption for purposes of computing “layers” for final capping, closure and post-closure liabilities is based on its long-term credit adjusted risk-free rate.

The Company’s discount rate assumption for purposes of computing 2023 and 2022 “layers” for final capping, closure and post-closure obligations is 5.50 % for 2023 and ranged from 3.25 % to 5.50 % for 2022.

The Company’s long-term inflation rate assumption is 2.75 % for the year ending December 31, 2023 and ranged from 2.25 % to 2.75 % for the year ending December 31, 2022.

The Company’s discount rate assumption for purposes of computing 2024 and 2023 “layers” for final capping, closure and post-closure obligations was 5.50 % for both periods.

The Company’s long-term inflation rate assumption is 2.75 % for each of the years ending December 31, 2024 and 2023.

The resulting final capping, closure and post-closure obligations are recorded on the Condensed Consolidated Balance Sheets along with an offsetting addition to site costs which is amortized to depletion expense as the remaining landfill airspace is consumed.

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

During the nine months ended September 30, 2023 and 2022, the Company expensed $ 13,554 and $ 12,008 , respectively, or an average of $ 0.36 and $ 0.34 per ton consumed, respectively, related to final capping, closure and post-closure accretion expense.

The following is a reconciliation of the Company’s final capping, closure and post-closure liability balance from December 31, 2022 to September 30, 2023:

During the three months ended March 31, 2024 and 2023, the Company expensed $ 9,356 and $ 4,474 , respectively, or an average of $ 0.78 and $ 0.38 per ton consumed, respectively, related to final capping, closure and post-closure accretion expense.

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 following is a reconciliation of the Company’s final capping, closure and post-closure liability balance from December 31, 2023 to March 31, 2024:

Final capping, closure and post-closure liability at December 31, 2023

4 unchanged sentences

Foreign currency translation adjustment

Final capping, closure and post-closure liability at September 30, 2023

Liability adjustments of $ 25,542 for the nine months ended September 30, 2023, represent non-cash changes to final capping, closure and post-closure liabilities and are recorded on the Condensed Consolidated Balance Sheets along with an offsetting addition to site costs, which is amortized to depletion expense as the remaining landfill airspace is consumed.

The final capping, closure and post-closure liability is included in Other long-term liabilities in the Condensed Consolidated Balance Sheets.

The Company performs its annual review of its cost and capacity estimates in the first quarter of each year.

At September 30, 2023 and December 31, 2022, $ 7,197 and $ 6,890 , respectively, of the Company’s restricted cash balance and $ 64,090 and $ 57,469 , respectively, of the Company’s restricted investments balance was for purposes of securing its performance of future final capping, closure and post-closure obligations.

Final capping, closure and post-closure liability at March 31, 2024

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company acquired nine individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses and one E&P landfill during the nine months ended September 30, 2023.

The total transaction-related expenses incurred during the nine months ended September 30, 2023 for these acquisitions were $ 7,014 .

Liability adjustments of $ 8,726 for the three months ended March 31, 2024, represent non-cash changes to final capping, closure and post-closure liabilities and are recorded on the Condensed Consolidated Balance Sheets along with an offsetting addition to site costs, which is amortized to depletion expense as the remaining landfill airspace is consumed.

The final capping, closure and post-closure liability is included in Other long-term liabilities in the Condensed Consolidated Balance Sheets.

The Company performs its annual review of its cost and capacity estimates in the first quarter of each year.

At March 31, 2024 and December 31, 2023, $ 7,655 and $ 12,381 , respectively, of the Company’s restricted cash balance and $ 63,697 and $ 59,551 , respectively, of the Company’s restricted investments balance was for purposes of securing its performance of future final capping, closure and post-closure obligations.

The Company acquired nine individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses and one E&P waste treatment and disposal business during the three months ended March 31, 2024.

The total transaction-related expenses incurred during the three months ended March 31, 2024 for these acquisitions were $ 9,847 .

These expenses are included in Selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Net Income.

The Company acquired 15 individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the nine months ended September 30, 2022.

The total transaction-related expenses incurred during the nine months ended September 30, 2022 for these acquisitions were $ 18,694 .

The Company acquired four individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the three months ended March 31, 2023.

The total transaction-related expenses incurred during the three months ended March 31, 2023 for these acquisitions were $ 2,081 .

These expenses are included in Selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Net Income.

6 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The following table summarizes the consideration transferred to acquire these businesses and the preliminary amounts of identifiable assets acquired and liabilities assumed at the acquisition dates for the acquisitions consummated in the nine months ended September 30, 2023 and 2022:

Fair value of consideration transferred:

16 unchanged sentences

Total identifiable net assets

Goodwill acquired during the nine months ended September 30, 2023 and 2022, totaling $ 317,190 and $ 272,186 , respectively, is expected to be deductible for tax purposes.

The fair value of acquired working capital related to four individually immaterial acquisitions completed during the twelve months ended September 30, 2023, is provisional pending receipt of information from the acquirees to support the fair value of the assets acquired and liabilities assumed.

Any adjustments recorded relating to finalizing the working capital for these four acquisitions are not expected to be material to the Company’s financial position.

The gross amount of trade receivables due under contracts acquired during the nine months ended September 30, 2023, was $ 15,538 , of which $ 126 was expected to be uncollectible.

The gross amount of trade receivables due under contracts acquired during the nine months ended September 30, 2022, was $ 37,486 , of which $ 5,157 was expected to be uncollectible.

Goodwill acquired during the three months ended March 31, 2024 and 2023, totaling $ 234,743 and $ 36,853 , respectively, is expected to be deductible for tax purposes.

The fair value of acquired working capital related to nine individually immaterial acquisitions completed during the twelve months ended March 31, 2024, is provisional pending receipt of information from the acquirees to support the fair value of the assets acquired and liabilities assumed.

Any adjustments recorded relating to finalizing the working capital for these nine acquisitions are not expected to be material to the Company’s financial position.

The adjustments recorded during the three months ended March 31, 2024 relating to finalizing the acquired working capital for the individually immaterial acquisitions completed during the twelve months ended March 31, 2024 were not material to the Company’s financial position.

The gross amount of trade receivables due under contracts acquired during the three months ended March 31, 2024, was $ 52,335 , of which $ 483 was expected to be uncollectible.

The gross amount of trade receivables due under contracts acquired during the three months ended March 31, 2023, was $ 4,164 , of which $ 282 was expected to be uncollectible.

The Company did not acquire any other class of receivable as a result of the acquisition of these businesses.

4 unchanged sentences

INTANGIBLE ASSETS, NET

Intangible assets, exclusive of goodwill, consisted of the following at September 30, 2023:

Intangible assets, exclusive of goodwill, consisted of the following at March 31, 2024:

Finite-lived intangible assets:

7 unchanged sentences

( 1,124,291 )

The weighted-average amortization period of long-term franchise agreements and contracts acquired during the nine months ended September 30, 2023 was 20.5 years.

The weighted-average amortization period of customer lists acquired during the nine months ended September 30, 2023 was 11.7 years.

The weighted-average amortization period of finite-lived permits and other acquired during the nine months ended September 30, 2023 was 40.0 years.

The weighted-average amortization period of long-term franchise agreements and contracts acquired during the three months ended March 31, 2024 was 12.1 years.

The weighted-average amortization period of customer lists acquired during the three months ended March 31, 2024 was 10.1 years.

The weighted-average amortization period of finite-lived permits and other acquired during the three months ended March 31, 2024 was 40.0 years.

Intangible assets, exclusive of goodwill, consisted of the following at December 31, 2023:

3 unchanged sentences

Permits and other

( 1,088,483 )

Indefinite-lived intangible assets:

1 unchanged sentence

Intangible assets, exclusive of goodwill

Estimated future amortization expense for the next five years relating to finite-lived intangible assets owned as of September 30, 2023 is as follows:

( 1,088,483 )

Estimated future amortization expense for the next five years relating to finite-lived intangible assets owned as of March 31, 2024 is as follows:

For the year ending December 31, 2024

7 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company rents certain equipment and facilities under short-term agreements, non-cancelable operating lease agreements and finance leases.

The Company determines if an arrangement is or contains a lease at contract inception.

The Company recognizes a right-of-use (“ROU”) asset and a lease liability at the lease commencement date.

The lease liability is initially measured at the present value of the unpaid lease payments at the lease commencement date.

Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

The lease guidance requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate.

Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs.

Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease.

The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The lease term for the Company’s leases includes the noncancelable period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

Lease payments included in the measurement of the lease liability comprise fixed payments or variable lease payments.

The variable lease payments take into account annual changes in the consumer price index and common area maintenance charges, if known.

ROU assets for operating and finance leases are periodically reviewed for impairment losses.

The Company uses the long-lived asset impairment guidance in ASC Subtopic 360-10, Property, Plant, and Equipment – Overall, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.

The Company did not recognize an impairment charge for any of its ROU assets during the nine months ended September 30, 2023 and 2022.

The Company monitors for events or changes in circumstances that require a reassessment of one of its leases.

When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset.

The Company did not recognize any significant remeasurements during the nine months ended September 30, 2023 and 2022.

The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less.

The Company has elected to apply the short-term lease recognition and measurement exemption allowed for in the lease accounting standard.

The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term.

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Lease cost for operating and finance leases for the three and nine months ended September 30, 2023 and 2022 were as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

Operating lease cost

Finance lease cost:

Amortization of leased assets

Interest on leased liabilities

Total lease cost

Supplemental cash flow information and non-cash activity related to the Company’s leases are as follows:

Nine Months Ended September 30,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Non-cash activity:

Right-of-use assets obtained in exchange for lease liabilities - operating leases

Right-of-use assets obtained in exchange for lease liabilities - finance leases

Weighted-average remaining lease term and discount rate for the Company’s leases are as follows:

Nine Months Ended September 30,

Weighted average remaining lease term - operating leases

Weighted average remaining lease term - finance leases

Weighted average discount rate - operating leases

Weighted average discount rate - finance leases

As of September 30, 2023, future minimum lease payments, reconciled to the respective lease liabilities, are as follows:

Operating Leases

Finance Leases

Last 3 months of 2023

Minimum lease payments

imputed interest

Present value of minimum lease payments

current portion of lease liabilities

Long-term portion of lease liabilities

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

LONG-TERM DEBT

The following table presents the Company’s long-term debt at September 30, 2023 and December 31, 2022:

September 30,

Revolver under Credit Agreement, bearing interest ranging from 6.38 % to 8.50 % (a)

Term loan under Credit Agreement, bearing interest at 6.43 % (a)

Term loan under Term Loan Agreement, bearing interest at 6.43 % (a)

The following table presents the Company’s long-term debt at March 31, 2024 and December 31, 2023:

Revolving Credit Agreement, bearing interest ranging from 6.30 % to 6.43 % (a)

Revolver under 2021 Revolving and Term Credit Agreement, bearing interest ranging from 6.40 % to 8.50 % (b)

Term loan under 2021 Revolving and Term Credit Agreement, bearing interest at 6.50 % (b)

Term loan under 2022 Term Loan Agreement, bearing interest at 6.44 % (b)

4.25 % Senior Notes due 2028

6 unchanged sentences

3.05 % Senior Notes due 2050

2.95 % Senior Notes due 2052

Notes payable to sellers and other third parties, bearing interest ranging from 2.42 % to 10.35 %, principal and interest payments due periodically with due dates ranging from 2028 to 2036 (a)

4 unchanged sentences

____________________

(a) Interest rates represent the interest rates at September 30, 2023.

(a) Interest rates represent the interest rates at March 31, 2024.

(b) Interest rates represent the interest rates at December 31, 2023.

2021 Revolving Credit and Term Loan Agreement

On February 27, 2024, the Company used a portion of the proceeds from borrowings under the Revolving Credit Agreement (as defined and described below) to (i) prepay the amounts outstanding under that certain Second Amended and Restated Revolving Credit and Term Loan Agreement, dated as of July 30, 2021 (as amended, restated, supplemented or otherwise modified from time to time, the “2021 Revolving and Term Credit Agreement”), among the Company, as borrower, Bank of America, N.A., acting through its Canada Branch, as the global agent, the swing line lender and a letter of credit issuer, Bank of America, N.A., as the U.S.

agent and a letter of credit issuer, and the lenders and any other financial institutions from time to time party thereto and (ii) terminate the 2021 Revolving and Term Credit Agreement and the loan documents associated therewith.

2022 Term Loan Agreement

On February 27, 2024, the Company used a portion of the proceeds from borrowings under the Revolving Credit Agreement to (i) prepay the amounts outstanding under that certain Term Loan Agreement, dated as of October 31, 2022

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Credit Agreement

Details of the Credit Agreement are as follows:

September 30,

Revolver under Credit Agreement

(as amended, restated, supplemented or otherwise modified from time to time, the “2022 Term Loan Agreement”), among the Company, as borrower, Bank of America, N.A., as administrative agent, and the lenders and any other financial institutions from time to time party thereto and (ii) terminate the 2022 Term Loan Agreement and the loan documents associated therewith.

Revolving Credit Agreement

On February 27, 2024, the Company, as borrower, Bank of America, N.A., acting through its Canada Branch, as the global agent, the swing line lender, and a letter of credit issuer, Bank of America, N.A., as the U.S.

agent and a letter of credit issuer, and the other lenders from time to time party thereto (the “Lenders”) entered into that certain Revolving Credit Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Revolving Credit Agreement”), pursuant to which the Lenders made loans and other credit extensions to the Company under a revolving credit facility.

Details of the Revolving Credit Agreement at March 31, 2024 and details of the 2021 Revolving and Term Credit Agreement at December 31, 2023 are as follows:

Letters of credit outstanding

12 unchanged sentences

base rate loan

Amount drawn – Canadian Term CORRA loan

Interest rate applicable - Canadian term CORRA loan

Amount drawn – Canadian Term CORRA loan

Interest rate applicable - Canadian term CORRA loan

Amount drawn – Canadian prime rate loan

5 unchanged sentences

Commitment – rate applicable

Term loan under Credit Agreement

Amount drawn – U.S.

2 unchanged sentences

Term SOFR rate loan

In addition to the $ 39,523 of letters of credit at September 30, 2023 issued and outstanding under the Credit Agreement, the Company has issued and outstanding letters of credit totaling $ 102,229 under facilities other than the Credit Agreement.

SEGMENT REPORTING

The Company’s revenues are generated from the collection, transfer, recycling and disposal of non-hazardous solid waste and the treatment, recovery and disposal of non-hazardous E&P waste.

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

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

The Company now reports revenue and segment EBITDA based on the following six geographic solid waste operating segments:

Southern, Western, 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.

The Company’s six geographic solid waste operating segments comprise its 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.

In addition to the $ 38,820 of letters of credit at March 31, 2024 issued and outstanding under the Revolving Credit Agreement, the Company has issued and outstanding letters of credit totaling $ 102,960 under facilities other than the Revolving Credit Agreement.

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Pursuant to the terms and conditions of the Revolving Credit Agreement, the Lenders committed to provide the revolving credit facility as set forth above.

The Revolving Credit Agreement (i) has a scheduled maturity date of February 27, 2029 (subject to certain extension mechanics therein by which the Company may request two additional one-year maturity date extensions), (ii) provides for revolving advances up to an aggregate principal amount of $ 3,000,000 at any one time outstanding (subject to satisfaction of certain conditions at the time advances are made) and (iii) provides for, at the Company’s discretion, flexibility for an uncommitted upsize of the aggregate principal amount by up to $ 1,000,000 (to an aggregate principal amount of up to $ 4,000,000 ).

The Revolving Credit Agreement provides for letters of credit in an aggregate amount not to exceed $ 320,000 and swing line loans in an aggregate amount not to exceed $ 100,000 , in each case, to be issued at the request of the Company subject to the terms therein and with such sublimits included in the aggregate commitments of the credit facility.

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

dollars and Canadian dollars.

Interest accrues on revolving advances, at the Company’s option, (i) at a term rate based on the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator thereof) (“term SOFR”) or a base rate for U.S.

dollar borrowings, plus an applicable margin, and (ii) at a term rate based on the Canadian Overnight Repo Rate Average as administered and published by the Bank of Canada (or a successor administrator thereof) (“term CORRA”) or at the Canadian prime rate for Canadian dollar borrowings, plus an applicable margin.

Interest for term SOFR loans has a credit spread adjustment of 0.10 % for all applicable interest periods and interest for term CORRA loans has a credit spread adjustment of 0.29547 % for an interest period of one month’s duration and 0.32138 % for an interest period of three months’ duration.

Fees for letters of credit in U.S.

dollars and Canadian dollars are also based on the applicable margin.

The applicable margin used in connection with interest rates and fees is based on the debt rating of the Company’s public non-credit-enhanced, senior unsecured long-term debt (the “Debt Rating”).

The applicable margin for term SOFR loans, term CORRA loans and letter of credit fees ranges from 0.750 % to 1.250 %, and the applicable margin for U.S.

base rate loans, Canadian prime rate loans and swing line loans ranges from 0.00 % to 0.250 %.

The Company will also pay a commitment fee based on the Debt Rating on the actual daily unused amount of the aggregate revolving commitments ranging from 0.065 % to 0.150 %.

Borrowings under the Revolving Credit Agreement are unsecured and there are no subsidiary guarantors under the Revolving Credit Agreement.

The Revolving Credit Agreement contains customary representations, warranties, covenants and events of default, including, among others, a change of control event of default and limitations on the incurrence of indebtedness and liens, new lines of business, mergers, transactions with affiliates and burdensome agreements.

During the continuance of an event of default, the Lenders may take a number of actions, including, among others, declaring the entire amount then outstanding under the Revolving Credit Agreement to be due and payable.

The Revolving Credit Agreement includes a financial covenant limiting, as of the last day of each fiscal quarter, the ratio of (a) Consolidated Total Funded Debt (as defined in the Revolving Credit Agreement) as of such date to (b) Consolidated EBITDA (as defined in the Revolving Credit Agreement), measured for the preceding 12 months, to not more than 3.75 to 1.00 (or 4.25 to 1.00 during material acquisition periods, subject to certain limitations) .

As of March 31, 2024, the Company was in compliance with all applicable covenants in the Revolving Credit Agreement .

On February 21, 2024, the Company completed an underwritten public offering (the “Offering”) of $ 750,000 aggregate principal amount of its 5.00 % Senior Notes due 2034 (the “2034 Senior Notes”).

The Company issued the 2034 Senior Notes under the Indenture, dated as of November 16, 2018 (the “Base Indenture”), by and between the Company and U.S.

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

Bank National Association, as trustee (the “Trustee”), as supplemented by the Eighth Supplemental Indenture, dated as of February 21, 2024 (the “Supplemental Indenture” and the Base Indenture as so supplemented, the “Indenture”).

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company will pay interest on the 2034 Senior Notes on March 1 and September 1 of each year, beginning September 1, 2024, and the 2034 Senior Notes will mature on March 1, 2034 .

The 2034 Senior Notes are the Company’s senior unsecured obligations, ranking equally in right of payment with its other existing and future unsubordinated debt and senior to any of its future subordinated debt.

The 2034 Senior Notes will not be guaranteed by any of the Company’s subsidiaries.

The Company may, prior to December 1, 2033 (three months before the maturity date) (the “Par Call Date”), redeem some or all of the 2034 Senior Notes, at any time and from time to time, at a redemption price equal to the greater of 100 % of the principal amount of the 2034 Senior Notes redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest on the 2034 Senior Notes redeemed discounted to the redemption date (assuming the 2034 Senior Notes matured on the Par Call Date), plus, in either case, accrued and unpaid interest thereon to the redemption date.

Commencing on December 1, 2033 (three months before the maturity date), the Company may redeem some or all of the 2034 Senior Notes, at any time and from time to time, at a redemption price equal to the principal amount of the 2034 Senior Notes being redeemed plus accrued and unpaid interest thereon to the redemption date.

Under certain circumstances, the Company may become obligated to pay additional amounts (the “Additional Amounts”) with respect to the 2034 Senior Notes to ensure that the net amounts received by each holder of the 2034 Senior Notes will not be less than the amount such holder would have received if withholding taxes or deductions were not incurred on a payment under or with respect to the 2034 Senior Notes.

If such payment of Additional Amounts are a result of a change in the laws or regulations, including a change in any official position, the introduction of an official position or a holding by a court of competent jurisdiction, of any jurisdiction from or through which payment is made by or on behalf of the 2034 Senior Notes having power to tax, and the Company cannot avoid such payments of Additional Amounts through reasonable measures, then the Company may redeem the 2034 Senior Notes then outstanding at a redemption price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).

If the Company experiences certain kinds of changes of control, each holder of the 2034 Senior Notes may require the Company to purchase all or a portion of the 2034 Senior Notes for cash at a price equal to 101 % of the aggregate principal amount of such 2034 Senior Notes, plus accrued and unpaid interest, if any, to, but excluding, the purchase date.

The covenants in the Indenture include limitations on liens, sale-leaseback transactions and mergers and sales of all or substantially all of the Company’s assets.

The Indenture also includes customary events of default with respect to the 2034 Senior Notes.

Upon an Event of Default, the principal of and accrued and unpaid interest on all the 2034 Senior Notes may be declared to be due and payable by the Trustee or the holders of not less than 25 % in principal amount of the outstanding 2034 Senior Notes.

Upon such a declaration, such principal and accrued interest on all of the 2034 Senior Notes will be due and payable immediately.

In the case of an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization, the principal (or such specified amount) of and accrued and unpaid interest, if any, on all outstanding 2034 Senior Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any holder of the 2034 Senior Notes.

Under certain circumstances, the holders of a majority in principal amount of the outstanding 2034 Senior Notes may rescind any such acceleration with respect to the 2034 Senior Notes and its consequences.

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

SEGMENT REPORTING

The Company’s revenues are generated primarily from the collection, transfer, recycling and disposal of non-hazardous solid waste and the treatment, recovery and disposal of non-hazardous E&P waste.

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

For the three months ended March 31, 2024, the Company managed its operations through the following six geographic solid waste operating segments:

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

The Company’s six geographic solid waste operating segments comprise its reportable segments.

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

Certain corporate or regional overhead expense allocations may affect comparability of the segment information presented herein on a period-over-period basis.

The Company’s 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.

3 unchanged sentences

A reconciliation of segment EBITDA to Income before income tax provision is included at the end of this Note 10.

Summarized financial information concerning the Company’s reportable segments for the three and nine months ended September 30, 2023 and 2022, is shown in the following tables:

Three Months Ended

September 30, 2023

Corporate (a)

Summarized financial information concerning the Company’s reportable segments for the three months ended March 31, 2024 and 2023, is shown in the following tables:

Three Months Ended

September 30, 2022

Corporate (a)

Nine Months Ended

September 30, 2023

March 31, 2024

Corporate (a)

3 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Nine Months Ended

September 30, 2022

Three Months Ended

March 31, 2023

Corporate (a)

3 unchanged sentences

(b) Intercompany revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments.

Transactions within and between segments are made on a basis intended to reflect the market value of the service.

Transactions within and between segments are generally made on a basis intended to reflect the market value of the service.

(c) For those items included in the determination of segment EBITDA, the accounting policies of the segments are the same as those described in the Company’s most recent Annual Report on Form 10-K.

Total assets for each of the Company’s reportable segments at September 30, 2023 and December 31, 2022, were as follows:

September 30,

The following tables show changes in goodwill during the nine months ended September 30, 2023 and 2022, by reportable segment:

Total assets for each of the Company’s reportable segments at March 31, 2024 and December 31, 2023, were as follows:

The following tables show changes in goodwill during the three months ended March 31, 2024 and 2023, by reportable segment:

Balance as of December 31, 2023

2 unchanged sentences

Impact of changes in foreign currency

Balance as of September 30, 2023

Balance as of March 31, 2024

WASTE CONNECTIONS, INC.

6 unchanged sentences

Impact of changes in foreign currency

Balance as of September 30, 2022

Balance as of March 31, 2023

A reconciliation of the Company’s primary measure of segment profitability (segment EBITDA) to Income before income tax provision in the Condensed Consolidated Statements of Net Income is as follows:

Three Months Ended

Nine Months Ended

September 30,

Southern segment EBITDA

Western segment EBITDA

Southern segment EBITDA

Central segment EBITDA

8 unchanged sentences

Interest income

Other income, net

Other income (expense), net

Income before income tax provision

4 unchanged sentences

The Company classifies cash inflows and outflows from derivatives within operating activities on the Condensed Consolidated Statements of Cash Flows.

One of the Company’s objectives for utilizing derivative instruments is to reduce its exposure to fluctuations in cash flows due to changes in the variable interest rates of certain borrowings under the Credit Agreement.

The Company’s strategy to achieve that objective involves entering into interest rate swaps.

The interest rate swaps outstanding at September 30, 2023 were specifically designated to the Credit Agreement and accounted for as cash flow hedges.

The interest rate swaps outstanding at March 31, 2024 were specifically designated to the Revolving Credit Agreement and accounted for as cash flow hedges.

WASTE CONNECTIONS, INC.

2 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

At September 30, 2023, the Company’s derivative instruments included four interest rate swap agreements as follows:

At March 31, 2024, the Company’s derivative instruments included four interest rate swap agreements as follows:

Interest Rate

15 unchanged sentences

The Company did not record any gains or losses upon the conversion of the reference rates in these interest rate swap contracts, and the Company believes these amendments will not have a material impact on its Condensed Consolidated Financial Statements.

The fair values of derivative instruments designated as cash flow hedges at September 30, 2023, were as follows:

The fair values of derivative instruments designated as cash flow hedges at March 31, 2024, were as follows:

Derivatives Designated as Cash

9 unchanged sentences

____________________

(a) Represents the estimated amount of the existing unrealized gains on interest rate swaps at September 30, 2023 (based on the interest rate yield curve at that date), included in AOCIL expected to be reclassified into pre-tax earnings within the next 12 months.

(a) Represents the estimated amount of the existing unrealized gains on interest rate swaps at March 31, 2024 (based on the interest rate yield curve at that date), included in AOCIL expected to be reclassified into pre-tax earnings within the next 12 months.

The actual amounts reclassified into earnings are dependent on future movements in interest rates.

10 unchanged sentences

Total derivatives designated as cash flow hedges

The following table summarizes the impact of the Company’s cash flow hedges on the results of operations, comprehensive income (loss) and AOCIL for the three and nine months ended September 30, 2023 and 2022:

The following table summarizes the impact of the Company’s cash flow hedges on the results of operations, comprehensive income (loss) and AOCIL for the three months ended March 31, 2024 and 2023:

Amount of (Gain) or Loss Reclassified

7 unchanged sentences

Three Months Ended

September 30,

Interest rate swaps

Interest expense

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Amount of (Gain) or Loss Reclassified

Designated as Cash

Amount of Gain or (Loss) Recognized

from AOCIL into Earnings,

as AOCIL on Derivatives, Net of Tax (a)

Classification

Net of Tax (b)

Nine Months Ended

September 30,

Interest rate swaps

Interest expense

____________________

2 unchanged sentences

(b) Amounts reclassified from AOCIL into earnings related to realized gains and losses on interest rate swaps are recognized when interest payments or receipts occur related to the swap contracts, which correspond to when interest payments are made on the Company’s hedged debt.

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

See Note 15 for further discussion on the impact of the Company’s hedge accounting to its consolidated comprehensive income (loss) and AOCIL.

1 unchanged sentence

The Company’s financial instruments consist primarily of cash and equivalents, trade receivables, restricted cash and investments, trade payables, debt instruments, contingent consideration obligations and interest rate swaps.

As of September 30, 2023 and December 31, 2022, the carrying values of cash and equivalents, trade receivables, restricted cash and investments, trade payables and contingent consideration are considered to be representative of their respective fair values.

The carrying values of the Company’s debt instruments, excluding certain notes as listed in the table below, approximate their fair values as of September 30, 2023 and December 31, 2022, based on current borrowing rates, current remaining average life to maturity and borrower credit quality for similar types of borrowing arrangements, and are classified as Level 2 within the fair value hierarchy.

The carrying values and fair values of the Company’s debt instruments where the carrying values do not approximate their fair values as of September 30, 2023 and December 31, 2022, are as follows:

As of March 31, 2024 and December 31, 2023, the carrying values of cash and equivalents, trade receivables, restricted cash and investments, trade payables and contingent consideration are considered to be representative of their respective fair values.

The carrying values of the Company’s debt instruments, excluding certain notes as listed in the table below, approximate their fair values as of March 31, 2024 and December 31, 2023, based on current borrowing rates, current remaining average life to maturity and borrower credit quality for similar types of borrowing arrangements, and are classified as Level 2 within the fair value hierarchy.

The carrying values and fair values of the Company’s debt instruments where the carrying values do not approximate their fair values as of March 31, 2024 and December 31, 2023, are as follows:

Carrying Value at

Fair Value (a) at

September 30,

4.25 % Senior Notes due 2028

6 unchanged sentences

3.05 % Senior Notes due 2050

2.95 % Senior Notes due 2052

____________________

7 unchanged sentences

NET INCOME PER SHARE INFORMATION

The following table sets forth the calculation of the numerator and denominator used in the computation of basic and diluted net income per common share attributable to the Company’s shareholders for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended

Nine Months Ended

September 30,

Net income attributable to Waste Connections for basic and diluted earnings per share

9 unchanged sentences

The Company’s financial assets and liabilities recorded at fair value on a recurring basis include derivative instruments and restricted cash and investments.

At September 30, 2023 and December 31, 2022, the Company’s derivative instruments included pay-fixed, receive-variable interest rate swaps.

At March 31, 2024 and December 31, 2023, the Company’s derivative instruments included pay-fixed, receive-variable interest rate swaps.

The Company’s interest rate swaps are recorded at their estimated fair values based on quotes received from financial institutions that trade these contracts.

11 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022, were as follows:

Fair Value Measurement at September 30, 2023 Using

The Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023, were as follows:

Fair Value Measurement at March 31, 2024 Using

Quoted Prices in

13 unchanged sentences

Contingent consideration

The following table summarizes the changes in the fair value for Level 3 liabilities related to contingent consideration for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

The following table summarizes the changes in the fair value for Level 3 liabilities related to contingent consideration for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Beginning balance

1 unchanged sentence

Payment of contingent consideration recorded at acquisition date

Payment of contingent consideration recorded in earnings

Adjustments to contingent consideration

Interest accretion expense

Foreign currency translation adjustment

Ending balance

1 unchanged sentence

Other comprehensive income (loss) includes changes in the fair value of interest rate swaps that qualify for hedge accounting.

The components of other comprehensive income (loss) and related tax effects for the three and nine months ended September 30, 2023 and 2022 are as follows:

Three Months Ended September 30, 2023

The components of other comprehensive income (loss) and related tax effects for the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended March 31, 2024

Interest rate swap amounts reclassified into interest expense

5 unchanged sentences

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Three Months Ended September 30, 2022

Interest rate swap amounts reclassified into interest expense

Changes in fair value of interest rate swaps

Foreign currency translation adjustment

Nine Months Ended September 30, 2023

Interest rate swap amounts reclassified into interest expense

Changes in fair value of interest rate swaps

Foreign currency translation adjustment

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Interest rate swap amounts reclassified into interest expense

1 unchanged sentence

Foreign currency translation adjustment

A rollforward of the amounts included in AOCIL, net of taxes, for the nine months ended September 30, 2023 and 2022, is as follows:

A rollforward of the amounts included in AOCIL, net of taxes, for the three months ended March 31, 2024 and 2023, is as follows:

Comprehensive

4 unchanged sentences

Foreign currency translation adjustment

Balance at September 30, 2023

Balance at March 31, 2024

Comprehensive

4 unchanged sentences

Foreign currency translation adjustment

Balance at September 30, 2022

Balance at March 31, 2023

See Note 11 for further discussion on the Company’s derivative instruments.

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

SHAREHOLDERS’ EQUITY

1 unchanged sentence

Restricted Share Units

A summary of activity related to restricted share units (“RSUs”) during the nine-month period ended September 30, 2023, is presented below:

A summary of activity related to restricted share units (“RSUs”) during the three-month period ended March 31, 2024, is presented below:

Unvested Shares

1 unchanged sentence

Vested and issued

Outstanding at September 30, 2023

The weighted average grant-date fair value per share for the common shares underlying the RSUs granted during the nine-month period ended September 30, 2023 was $ 133.65 .

Outstanding at March 31, 2024

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The weighted average grant-date fair value per share for the common shares underlying the RSUs granted during the three-month period ended March 31, 2024 was $ 164.63 .

Recipients of the Company’s RSUs who participate in the Company’s Nonqualified Deferred Compensation Plan may have elected in years prior to 2015 to defer some or all of their RSUs as they vest until a specified date or dates they choose.

At the end of the deferral periods, unless a qualified participant makes certain other elections, the Company issues to recipients who deferred their RSUs common shares of the Company underlying the deferred RSUs.

At September 30, 2023 and 2022, the Company had 62,059 and 81,352 vested deferred RSUs outstanding, respectively.

At March 31, 2024 and 2023, the Company had 29,980 and 62,201 vested deferred RSUs outstanding, respectively.

Performance-Based Restricted Share Units

A summary of activity related to performance-based restricted share units (“PSUs”) during the nine-month period ended September 30, 2023, is presented below:

A summary of activity related to performance-based restricted share units (“PSUs”) during the three-month period ended March 31, 2024, is presented below:

Unvested Shares

1 unchanged sentence

Vested and issued

Outstanding at September 30, 2023

During the nine months ended September 30, 2023, the Company’s Compensation Committee granted PSUs with three-year performance-based metrics that the Company must meet before those awards may be earned, and the performance period for those grants ends on December 31, 2025 .

Outstanding at March 31, 2024

During the three months ended March 31, 2024, the Company’s Compensation Committee granted PSUs with three-year performance-based metrics that the Company must meet before those awards may be earned, and the performance period for those grants ends on December 31, 2026 .

The Compensation Committee will determine the achievement of performance results and corresponding vesting of PSUs for each performance period.

The weighted average grant-date fair value per share for the common shares underlying all PSUs granted during the nine-month period ended September 30, 2023 was $ 133.83 .

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The weighted average grant-date fair value per share for the common shares underlying all PSUs granted during the three-month period ended March 31, 2024 was $ 138.29 .

Deferred Share Units

A summary of activity related to deferred share units (“DSUs”) during the nine-month period ended September 30, 2023, is presented below:

A summary of activity related to deferred share units (“DSUs”) during the three-month period ended March 31, 2024, is presented below:

Vested Shares

Outstanding at December 31, 2023

Outstanding at September 30, 2023

Outstanding at March 31, 2024

The DSUs consist of a combination of DSU grants outstanding under the Progressive Waste share-based compensation plans that were continued by the Company following the Progressive Waste acquisition and DSUs granted by the Company since the Progressive Waste acquisition.

The weighted average grant-date fair value per share for the common shares underlying the DSUs granted during the nine-month period ended September 30, 2023 was $ 136.47 .

The weighted average grant-date fair value per share for the common shares underlying the DSUs granted during the three-month period ended March 31, 2024 was $ 167.56 .

Other Restricted Share Units

RSU grants outstanding under the Progressive Waste share-based compensation plans were continued by the Company following the Progressive Waste acquisition and allow for the issuance of shares or cash settlement to employees upon vesting.

A summary of activity related to Progressive Waste RSUs during the nine-month period ended September 30, 2023, is presented below:

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

vesting or other distribution events.

A summary of activity related to Progressive Waste RSUs during the three-month period ended March 31, 2024, is presented below:

Outstanding at December 31, 2023

Outstanding at September 30, 2023

Outstanding at March 31, 2024

No RSUs under the Progressive Waste share-based compensation plans were granted subsequent to June 1, 2016.

All remaining RSUs were vested as of March 31, 2019.

Share-Based Options

Share-based options outstanding under the Progressive Waste share-based compensation plans were continued by the Company following the Progressive Waste acquisition and allow for the issuance of shares or cash settlement to employees upon vesting.

A summary of activity related to Progressive Waste share-based options during the nine-month period ended September 30, 2023, is presented below:

Outstanding at December 31, 2022

Outstanding at September 30, 2023

No share-based options under the Progressive Waste share-based compensation plans were granted subsequent to June 1, 2016.

All outstanding share-based options were vested as of December 31, 2017.

Employee Share Purchase Plan

On May 15, 2020, the Company’s shareholders approved the 2020 Employee Share Purchase Plan (the “ESPP”).

Under the ESPP, qualified employees may elect to have payroll deductions withheld from their eligible compensation on

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(DOLLAR AMOUNTS IN THOUSANDS OF U.S.

DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

each payroll date in amounts equal to or greater than one percent (1%) but not in excess of ten percent (10%) of eligible compensation in order to purchase the Company’s common shares under certain terms and subject to certain restrictions set forth in the ESPP.

Under the ESPP, qualified employees may elect to have payroll deductions withheld from their eligible compensation on each payroll date in amounts equal to or greater than one percent (1%) but not in excess of ten percent (10%) of eligible compensation in order to purchase the Company’s common shares under certain terms and subject to certain restrictions set forth in the ESPP.

The exercise price is equal to 95 % of the closing price of the Company’s common shares on the last day of the relevant offering period, provided, however, that such exercise price will not be less than 85 % of the volume weighted average price of the Company’s common shares as reflected on the Toronto Stock Exchange (the “TSX”) over the final five trading days of such offering period.

The maximum number of shares that may be issued under the ESPP is 1,000,000 .

Under the ESPP, employees purchased 29,808 of the Company’s common shares for $ 3,908 during the nine months ended September 30, 2023.

Under the ESPP, employees purchased 26,582 of the Company’s common shares for $ 3,271 during the nine months ended September 30, 2022.

Under the ESPP, employees purchased 15,407 of the Company’s common shares for $ 2,183 during the three months ended March 31, 2024.

Under the ESPP, employees purchased 14,594 of the Company’s common shares for $ 1,841 during the three months ended March 31, 2023.

Normal Course Issuer Bid

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The maximum number of shares that can be purchased per day on the NYSE will be 25 % of the average daily trading volume for the four calendar weeks preceding the date of purchase, subject to certain exceptions for block purchases.

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

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

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

For the nine months ended September 30, 2023, the Company did not repurchase any common shares pursuant to the NCIB in effect during that period.

For the nine months ended September 30, 2022, the Company repurchased 3,388,155 common shares pursuant to the NCIB in effect during that period at an aggregate cost of $ 424,999 .

As of September 30, 2023, the remaining maximum number of shares available for repurchase under the current NCIB was 12,881,534 .

Cash Dividend

In November 2022, the Company announced that its Board of Directors increased its regular quarterly cash dividend by $ 0.025 , from $ 0.23 to $ 0.255 per Company common share.

Cash dividends of $ 196,815 and $ 177,710 were paid during the nine months ended September 30, 2023 and 2022, respectively.

COMMITMENTS AND CONTINGENCIES

In the normal course of its business and as a result of the extensive governmental regulation of the solid waste and E&P waste industries, the Company is subject to various judicial and administrative proceedings involving Canadian regulatory authorities as well as U.S.

federal, state and local agencies.

In these proceedings, an agency may subpoena the

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DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Company for records, or seek to impose fines on the Company or revoke or deny renewal of an authorization held by the Company, including an operating permit.

For each of the three months ended March 31, 2024 and 2023, the Company did not repurchase any common shares pursuant to the NCIB in effect during that period.

As of March 31, 2024, the maximum number of shares available for repurchase under the current NCIB was 12,881,534 .

Cash Dividend

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

Cash dividends of $ 73,573 and $ 65,788 were paid during the three months ended March 31, 2024 and 2023, respectively.

COMMITMENTS AND CONTINGENCIES

federal, state and local agencies.

In these proceedings, an agency may subpoena the Company for records, or seek to impose fines on the Company or revoke or deny renewal of an authorization held by the Company, including an operating permit.

From time to time, the Company may also be subject to actions brought by special interest or other groups, adjacent landowners or residents in connection with the permitting and licensing of landfills, transfer stations, and E&P waste treatment, recovery and disposal operations, or alleging environmental damage or violations of the permits and licenses pursuant to which the Company operates.

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In addition, the Company is a party to various claims and suits pending for alleged damages to persons and property, alleged violations of certain laws and alleged liabilities arising out of matters occurring during the normal operation of the Company’s business.

Except as noted in the matters described below, as of September 30, 2023, there is no current proceeding or litigation involving the Company or its property that the Company believes could have a material adverse effect on its business, financial condition, results of operations or cash flows.

Except as noted in the matters described below, as of March 31, 2024, there is no current proceeding or litigation involving the Company or its property that the Company believes could have a material adverse effect on its business, financial condition, results of operations or cash flows.

Jefferson Parish, Louisiana Landfill Litigation

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The claims of the mass action plaintiffs were removed to and consolidated in federal court in the Eastern District of Louisiana, also before Judge Susie Morgan (the “ Addison ” action).

The putative class actions and the Addison action assert claims for damages from odors allegedly emanating from the JP Landfill.

On December 19, 2023, 52 plaintiffs filed a mass action in the federal district court of the Eastern District of Louisiana, Areceneaux v.

Louisiana Regional Landfill Company, et al .

The complaint is substantially identical to the consolidated Addison action (which together with

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Areceneaux now totals 593 plaintiffs), asserting the same causes of action against the same defendants, but was filed by a new law firm.

The Company and Aptim were served on March 21, 2024.

The putative class actions and the Addison and Areceneaux mass actions assert claims for damages from odors allegedly emanating from the JP Landfill.

The consolidated putative class action complaint alleges that the JP Landfill released “noxious odors” into the plaintiffs’ properties and the surrounding community and asserts a range of liability theories—nuisance, negligence (since dismissed), and strict liability—against all defendants.

The putative class is described as all residents of Jefferson Parish who have sustained legally cognizable damages as a result of odors from the JP Landfill, but the complaint proposes to revise the geographic definition based on further evidence.

The putative class plaintiffs seek unspecified damages for nuisance.

The Addison plaintiffs assert causes of action for nuisance, negligence, and (with respect to the Parish) unconstitutional takings under the Louisiana Constitution;

The putative class is described currently as Jefferson Parish residents suffering an injury as a result of exposure to odors from the Landfill, who live in a delineated area that expands roughly five miles from the Landfill in a northerly and easterly direction.

The putative class plaintiffs propose that a class be certified on liability and allocation issues and that specific causation be left for individual determination.

Following the completion of fact and expert discovery, the putative class plaintiffs will be able to file an amended motion for class certification.

The putative class plaintiffs seek unspecified damages.

The Addison and Areceneaux plaintiffs assert causes of action for nuisance, negligence, and (with respect to the Parish) unconstitutional takings under the Louisiana Constitution;

on behalf of two plaintiffs, the Addison complaint also asserts causes of action for wrongful death and survivorship.

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The Court held that it only needed to determine the level of exposure necessary to result in injuries and that the level existed somewhere offsite, and that it was not required to delineate this level of exposure within a geographic area.

The Court did, however, limit the time period for

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damages, to between July 2017 and December 2019, and the types of alleged injuries for which the plaintiffs are able to seek damages, to headaches, nausea, vomiting, loss of appetite, sleep disruption, dizziness, fatigue, anxiety and worry, a decrease in quality of life, and loss of enjoyment or use of property.

The Court did, however, limit the time period for damages, to between July 2017 and December 2019, and the types of alleged injuries for which the plaintiffs are able to seek damages, to headaches, nausea, vomiting, loss of appetite, sleep disruption, dizziness, fatigue, anxiety and worry, a decrease in quality of life, and loss of enjoyment or use of property.

The Addison plaintiffs’ claims of diminution of property value were put on a separate track from these damages and not addressed.

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On April 17, 2023, the Company and the other Defendants filed a petition for a writ of mandamus from the Fifth Circuit Court of Appeals challenging the April 17 case management order’s sequencing of a merits trial before class certification.

The Fifth Circuit granted the Company’s motion to stay proceedings in the Addison action pending its decision on the petition.

After oral argument, on August 24, 2023 the Fifth Circuit denied the Company’s petition for a writ of mandamus.

Defendants filed a motion for rehearing en banc on September 7, 2023, which was denied on September 19, 2023.

Following the Fifth Circuit’s decision, the District Court and the parties have discussed case management orders for both cases.

The Court has ordered the following key deadlines:

On August 24, 2023 the Fifth Circuit denied the Company’s petition for a writ of mandamus.

Following the Fifth Circuit’s decision, the Court has ordered the following key deadlines:

(i) the Parties will complete briefing of class certification by June 26, 2024;

and (ii) the Parties will commence a three-week merits trial on the first 13 Addison plaintiffs on August 12, 2024.

The Company has already obtained dismissal of approximately one third of the original Addison plaintiffs, the number of which now totals 544, and believes it has strong defenses to the merits of the Addison action, including specific causation issues due to other odor sources in the area.

The Company also believes it has strong defenses to certification of the putative class actions.

The Company has already obtained dismissal of approximately one third of the original Addison plaintiffs, and believes it has defenses to the merits of the Addison and Areceneaux actions, including specific causation issues due to other odor sources in the area.

The Company also believes it has defenses to certification of the putative class actions.

The Company is continuing to vigorously defend itself in these lawsuits;

however, at this time, the Company is not able to determine the likelihood of any outcome regarding the underlying claims, including the allocation of any potential liability among the Company, the Parish, and Aptim Corporation.

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Los Angeles County, California Landfill Expansion Litigation

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Current estimates for new costs imposed on CCL under the CUP are in excess of $ 300,000 .

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CCL appealed the Commission’s decision to the County Board of Supervisors, but the appeal was not successful.

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On October 11, 2022, CCL and the County entered into a settlement agreement that requires CCL to file a CUP modification application with the County embodying the terms of the settlement agreement.

CCL filed the CUP modification application on November 10, 2022.

CCL filed the CUP modification application on November 10, 2022, and an addendum to CCL’s environmental impact report in accordance with the California Environmental Quality Act on January 12, 2024.

Upon completion of review by the County, the CUP modification application will be scheduled for a hearing before the Los Angeles County Regional Planning Commission.

If the CUP modification application is approved by the County and certain other contingencies are satisfied, CCL will dismiss this lawsuit.

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The alleged B&T fee was ostensibly to fund the construction of transportation infrastructure in the area of the Landfill.

At the time the NOV was issued, CCL had already contested the legality of the B&T fee in the October 20, 2017 Complaint filed against the County in Los Angeles County Superior Court, described above under paragraph A (the “CUP lawsuit”).

At the time the NOV was issued, CCL had

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already contested the legality of the B&T fee in the October 20, 2017 Complaint filed against the County in Los Angeles County Superior Court, described above under paragraph A (the “CUP lawsuit”).

On January 12, 2018, CCL filed an appeal of the alleged violations in the NOV.

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However, at this time, the Company is not able to determine the likelihood of any outcome in this matter.

Elevated Temperature Landfill Event

In 2023, the Company’s subsidiary, Chiquita Canyon, LLC (“CCL”), began receiving notices of violation from regulatory agencies for odors and other impacts that CCL’s retained expert consultants in Elevated Temperature Landfill (“ETLF”) events have attributed to an ETLF event that is occurring in a lined, non-active area of the Chiquita Canyon Landfill (the “CC Landfill”).

Beginning in May 2023, CCL received notices of violation (“NOVs”) from the South Coast Air Quality Management District (“SCAQMD”) for alleged violations of Section 41700 of the California Health & Safety Code and SCAQMD Rule 402 based on complaints from the public of odors from the CC Landfill, which SCAQMD inspectors stated that they verified.

Each Rule 402 NOV alleges the CC Landfill is “discharging such quantities of air contaminants to cause injury, detriment, nuisance or annoyance to a considerable number of persons.”

Since May 2023, CCL has received approximately 163 NOVs for alleged violations of SCAQMD Rule 402.

CCL has also received seven additional NOVs from SCAQMD alleging violations of other SCAQMD rules and CCL’s Title V permit.

The majority of these additional NOVs appear related to the increase in liquids and landfill gas caused by the ETLF event.

On August 15, 2023, SCAQMD petitioned its Hearing Board for an Order for Abatement in Hearing Board Case No.

6177-4 to address the Rule 402 NOVs issued by SCAQMD inspectors as a result of the ETLF event.

SCAQMD and CCL negotiated a Stipulated Order for Abatement (the “Stipulated Order”), which was issued by the Hearing Board on September 6, 2023.

Modifications to the Stipulated Order were approved by the Hearing Board after hearings on January 16 and 17, 2024, and March 21, 2024.

The modified Stipulated Order contains 72 conditions.

A status and modification hearing is scheduled for April 24 and 25, 2024.

On February 15, 2024, CCL received a Summary of Violations (“SOV”) from the Department of Toxic Substances Control (“DTSC”).

The SOV alleges violations of California’s hazardous waste control laws and their implementing regulations.

Specifically, the SOV alleges five class I violations:

four alleged violations of various laws and regulations related to one December 27, 2023 offsite shipment of leachate, a grab sample of which tested above a regulatory threshold, that was shipped to a non-hazardous waste treatment and disposal facility;

and one alleged violation of 22 CCR § 66265.31

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for “fail[ing] to minimize the possibility of releases of hazardous waste or hazardous waste constituents to air, soil, or surface water which could threaten human health or the environment.”

On March 29, 2024, CCL received a second SOV from DTSC, again alleging violations of the California hazardous waste control laws and their implementing regulations.

Specifically, the SOV alleges three class 1 violations:

an additional alleged violation of 22 CCR § 66265.31;

and two alleged violations of section 25189.2(c) of the Health & Safety Code for allegedly “dispos[ing], or caus[ing] the disposal of, a hazardous or extremely hazardous waste at a point that is not authorized” in two separate incidents.

CCL has submitted full responses to each SOV.

At this time, CCL is not able to determine the likely penalties that the regulatory agencies will seek for these violations, but they could be substantial.

CCL also is incurring substantial costs in conjunction with efforts to address the ETLF event and any related impacts, including attendant air emissions, and to manage the increased production and changing composition of the liquids.

At this time, the Company is not able to determine the likelihood of any outcome of the resolution of the SCAQMD NOVs or the DTSC SOVs, including the amount of penalties.

SUBSEQUENT EVENT

On October 25, 2023 , the Company announced that its Board of Directors increased its regular quarter cash dividend by $ 0.03 , from $ 0.255 to $ 0.285 per Company common share, and then declared a regular quarterly cash dividend of $ 0.285 per Company common share.

The dividend will be paid on November 28, 2023 , to shareholders of record on the close of business on November 8, 2023 .

On April 24, 2024 , the Company announced that its Board of Directors approved a regular quarterly cash dividend of $ 0.285 per Company common share.

The dividend will be paid on May 23, 2024 , to shareholders of record on the close of business on May 8, 2024 .

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

What changed 10-Q

Item 1. Financial Statements