What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-07-27 compared with 2022-04-26 · 188 added, 143 removed, 260 unchanged (56% of the section changed)

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failure to identify acquisition targets, consummate and integrate acquisitions;

failure to obtain the results anticipated from acquisitions, including continuing to realize the strategic benefits and cost synergies from our acquisition of Advanced Disposal Services, Inc.

(“Advanced Disposal”);

failure to obtain the results anticipated from acquisitions;

environmental and other regulations, including developments related to emerging contaminants, gas emissions and renewable fuel;

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commodity price fluctuations;

impacts from Russia’s recent invasion of Ukraine and the resulting geopolitical conflict and international response, including increased risk of cyber incidents and exacerbation of market disruption, inflationary cost pressure and changes in commodity prices, fuel and other energy costs;

impacts from Russia’s invasion of Ukraine and the resulting geopolitical conflict and international response, including increased risk of cyber incidents and exacerbation of market disruption, inflationary cost pressure and changes in commodity prices, fuel and other energy costs;

international trade restrictions;

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We assume no obligation to update any forward-looking statement, including financial estimates and forecasts, whether as a result of future events, circumstances or developments or otherwise.

We are North America’s leading provider of comprehensive waste management environmental services, providing services throughout the United States (“U.S.”) and Canada.

We are North America’s leading provider of comprehensive environmental solutions, providing services throughout the United States (“U.S.”) and Canada.

We partner with our residential, commercial, industrial, and municipal customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy.

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We are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S.

that produce renewable natural gas, which is a significant source of fuel for our natural gas fleet.

and Canada that produce renewable electricity and renewable natural gas, which is a significant source of fuel for our natural gas fleet.

Additionally, we are a leading recycler in the U.S.

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Our “Solid Waste” business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, and recycling and resource recovery services.

Consistent with our Company’s long-standing commitment to sustainability and environmental stewardship, we published our 2021 Sustainability Report, which details our people-first commitment to help make the communities in which we live and work

safe, resilient, and sustainable.

The information in this report can be found at https://sustainability.wm.com but it does not constitute a part of, and is not incorporated by reference into, this Quarterly Report on Form 10-Q.

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we remain dedicated to providing long-term value to our stockholders by successfully executing our core strategy of focused differentiation and continuous improvement.

As North America’s leading provider of comprehensive waste management environmental services, sustainability and environmental stewardship is embedded in all that we do.

As North America’s leading provider of comprehensive environmental solutions, sustainability and environmental stewardship is embedded in all that we do.

We have enabled a people-first, technology-led focus to drive our mission to maximize resource value, while minimizing environmental impact, so that both our economy and our environment can thrive.

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We believe that focused differentiation, which is driven by capitalizing on our unique and extensive network of assets, will deliver profitable growth and position us to leverage competitive advantages.

Simultaneously, we believe the combination of cost control, enhancements to our digital platform, process improvement and operational efficiency will deliver on the Company’s strategy of continuous improvement and yield an attractive total cost structure and enhanced service quality.

Simultaneously, we believe the combination of cost control and investing in automation to improve processes and drive operational efficiency will yield an attractive total cost structure and enhanced service quality.

While we continue to improve existing diversion technologies, such as through investments in our recycling operations, we are also evaluating and pursuing emerging diversion technologies that may generate additional value.

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As the leading waste management environmental services provider in North America, we are taking big, bold steps to catalyze positive change – change that will impact our Company as well as the communities we serve.

Our sustainability agenda includes expanding recycling and focuses on meeting or exceeding specific 2025 and

2038 sustainability goals around people, customers, the environment, and community, which align with eight of the United Nations Sustainable Development Goals.

Our sustainability agenda includes expanding recycling and focuses on meeting or exceeding specific 2025 and 2038 sustainability goals around people, customers, the environment, and community, which align with eight of the United Nations Sustainable Development Goals.

We encounter intense competition from governmental, quasi-governmental and private service providers based on pricing, and to a much lesser extent, the nature of service offerings, particularly in the residential line of business.

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This next phase will prioritize reduced labor dependency on certain high-turnover jobs, particularly in customer experience, recycling and residential collection.

Additionally, in early 2022, we implemented our new enterprise resource planning system which will contribute to operational and service excellence by empowering our people through a modern, simplified and connected finance and accounting platform.

Certain macroeconomic pressures and market disruption, driven in part by the COVID-19 pandemic and other external events and conditions, intensified during the second half of 2021 and have continued through the first quarter of 2022.

We continue to make these investments to further digitalize our customer self-service and implement technologies to further enhance the safety, reliability and efficiency of our collection operations.

Additionally, in early 2022, we implemented our new enterprise resource planning system that will contribute to operational and service excellence by empowering our people through a modern, simplified and connected finance and accounting platform.

The constrained labor market has resulted in increased costs for wage adjustments, overtime hours and training new hires to address frontline employee turnover, increased volume, and operational challenges.

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Aspects of our business rely on third-party transportation providers, and such services have become more limited and expensive.

Additionally, we are currently experiencing margin pressures from commodity-driven business impacts, particularly from recycling brokerage rebates and higher fuel prices.

Additionally, we are currently experiencing margin pressures from commodity-driven business impacts, particularly from higher fuel prices and recycling brokerage rebates.

The extent and duration of the impact of these labor market, supply chain and transportation challenges are subject to numerous external factors beyond our control, including broader macroeconomic conditions;

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Current Quarter Financial Results

During the first quarter of 2022, we delivered strong revenue and income from operations as we continued to experience higher yield and volume recovery at our landfills and in our commercial collection business.

However, our first quarter of 2022 income from operations was impacted by constraints on labor availability and inflationary cost pressures.

During the second quarter of 2022, we delivered strong revenue, income from operations and operating cash flows as we continued to experience yield and volume improvement in our commercial and industrial collection businesses and at our landfills.

We remain diligent in the execution of our disciplined pricing programs to effectively overcome inflationary

cost pressures, and we remain focused on driving operating efficiencies and reducing discretionary spend.

We continue to invest in our people through market wage adjustments, investments in our digital platform and training for new team members.

In addition, we are focused on executing on our disciplined pricing programs in the face of these additional labor cost and inflationary pressures.

We also made significant investments in recycling automation technology and customer service digitalization to further support our continued focus on optimizing operational efficiency as well as achieving improved labor productivity for all lines of business.

During the first quarter of 2022, we allocated $418 million of available cash to capital expenditures and $525 million to our shareholders through dividends and common stock repurchases.

Key elements of our financial results for the first quarter include:

We also continue to make investments in recycling automation technology and customer service digitalization to enhance our operational efficiency and improve labor productivity for all lines of business.

During the second quarter of 2022, we allocated $550 million of available cash to capital expenditures, both as a continuing investment in our traditional solid waste business and to support growth in our sustainability asset network.

We also allocated $539 million to our shareholders through dividends and common stock repurchases.

Key elements of our financial results for the second quarter include:

● Revenues of $5,027 million, compared with $4,476 million in the prior year period, an increase of $551 million, or 12.3%.

The increase is primarily attributable to (i) higher yield in our collection and disposal lines of business;

(ii) strong volume growth and (iii) increases in the market prices for recycling commodities we sell;

(ii) increases from our fuel surcharge program;

(iii) increases in the market prices for recycling commodities we sell and (iv) volume growth;

● Operating expenses of $3,142 million, or 62.5% of revenues, compared with $2,736 million, or 61.1% of revenues, in the prior year period.

The $389 million increase is primarily attributable to (i) commodity-driven business impacts, particularly from recycling brokerage rebates and higher fuel prices, which also impacted our operating expense as a percentage of revenue;

(ii) inflationary cost pressures;

(iii) labor cost pressure from frontline employee wage adjustments, increased hiring driving up training costs and higher overtime due to driver shortages and volume growth;

(iv) volume growth, particularly for our commercial collection business;

and (v) higher risk management costs;

The $406 million increase is primarily attributable to (i) commodity-driven business impacts, particularly from higher fuel prices and recycling brokerage rebates, which also significantly impacted our operating expense as a percentage of revenue;

(ii) inflationary cost pressures and (iii) labor cost pressure from frontline employee wage adjustments, increased hiring driving up training costs and higher overtime due to driver shortages and volume growth;

● Selling, general and administrative expenses were $487 million, or 9.7% of revenues, compared with $445 million, or 9.9% of revenues, in the prior year period.

The $33 million increase is primarily attributable to strategic investments in our digital platform and sustainability initiatives and increased labor costs primarily due to merit increases;

The $42 million increase is primarily attributable to (i) labor costs from higher incentive compensation and merit increases;

(ii) strategic investments in our digital platform and sustainability initiatives and related supporting technology and (iii) an increase in provision for bad debts driven by higher revenues;

● Income from operations was $890 million, or 17.7% of revenues, compared with $791 million, or 17.7% of revenues, in the prior year period.

The improved earnings in the current quarter are driven by strong operating results in our collection and disposal business and improved profitability in our recycling business.

The increase in income from operations was partially offset by (i) inflationary cost pressures;

(ii) labor cost pressure from frontline employee wage adjustments, increased hiring driving up training costs and higher overtime due to driver shortages and volume growth and (iii) strategic investments in our digital platform and sustainability initiatives;

The increase in the current quarter was driven by strong revenue growth allowing us to overcome cost pressures from the inflationary cost environment;

● Net income attributable to Waste Management, Inc.

was $587 million, or $1.41 per diluted share, compared with $351 million, or $0.83 per diluted share, in the prior year period.

The increase in income from operations discussed above, in addition to lower interest expense, drove an increase in net income.

The year-over-year increase in net income was impacted by an increase in income tax expense;

● Net cash provided by operating activities was $1,258 million compared with $1,120 million in the prior year period, with the increase related to (i) the increase in earnings attributable to our collection and disposal and recycling lines of business and (ii) lower interest payments due to the timing of certain interest payments and refinancing activities in 2021 that reduced our overall interest rate;

With the increase in income from operations, as discussed above, there was also an increase in our income tax expense impacting our net income.

Additionally, the Company incurred a $220 million loss on early extinguishment of debt in the prior year period;

● Net cash provided by operating activities was $1,047 million compared with $1,043 million in the prior year period.

Our net cash provided by operating activities was relatively flat when compared to the prior year period, primarily due to the effect of increased tax payments and the timing of receivable collections in the current year;

● Free cash flow was $503 million compared with $649 million in the prior year period.

The decrease in free cash flow is primarily attributable to an increase in capital spending, primarily driven by timing differences in our fixed asset purchases, as well as our intentional investment in sustainability and growth in recycling and renewable energy projects, partially offset by an increase in net cash provided by operating activities, as discussed above.

Free cash flow is a non-GAAP measure of liquidity.

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We evaluate, oversee and manage the financial performance of our Solid Waste business subsidiaries through our East and West Tiers.

We also provide additional services that are not managed through our Solid Waste business, including both our Strategic Business Solutions (“WMSBS”) and Energy and Environmental Services (“EES”) businesses, recycling brokerage services, landfill gas-to-energy services and certain other expanded service offerings and solutions.

The mix of operating revenues from our major lines of business for the three months ended March 31 are as follows (in millions):

We also provide additional services that are not managed through our Solid Waste business, including both our Strategic Business Solutions (“WMSBS”) and Sustainability and Environmental Solutions (“SES”) businesses,

recycling brokerage services, landfill gas-to-energy services and certain other expanded service offerings and solutions.

The mix of operating revenues from our major lines of business is reflected in the table below (in millions):

Three Months Ended

Six Months Ended

Other collection

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(ii) our landfill gas to energy operations managed by our WM Renewable Energy business;

(iii) certain services within our EES business, including our construction and remediation services and our services associated with the disposal of fly ash and (iv) certain other expanded service offerings and solutions.

(iii) certain services within our SES business, including our construction and remediation services and our services associated with the disposal of fly ash and (iv) certain other expanded service offerings and solutions.

In addition, our “Other” line of business reflects the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.

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(b) Intercompany revenues between lines of business are eliminated in the Condensed Consolidated Financial Statements included within this report.

The following table provides details associated with the period-to-period change in revenues and average yield (dollars in millions):

The following table provides details associated with the period-to-period changes in revenues and average yield (dollars in millions):

Period-to-Period Change for the

Three Months Ended

March 31, 2022 vs.

June 30, 2022 vs.

Period-to-Period Change for the

Six Months Ended

June 30, 2022 vs.

Collection and disposal

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Period-to-Period Change for the

Three Months Ended

March 31, 2022 vs.

Six Months Ended

June 30, 2022 vs.

Total collection

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Our overall strategic pricing efforts are focused on recovering inflationary cost increases we experience in our business by increasing our average unit rate.

We experienced strong average yield growth in our collection line of business of 6.7% for the first quarter of 2022 showing our focus on our pricing efforts in this inflationary environment.

We are also continuing to see growth in our landfill and transfer businesses with our municipal solid waste business experiencing 5.1% average yield growth for the first quarter of 2022.

Recycling — Increases in the market prices for recycling commodities resulted in revenue growth of $116 million for the first quarter of 2022, as compared with the prior year period.

During the first quarter of 2022, average market prices for recycling commodities at the Company’s facilities were 60% higher compared to the prior year period.

Strong demand for recycled materials strengthened through 2021, continuing into 2022, driven by the strength in e-commerce and manufacturers committing to use more recycled content in their packaging.

We continue to experience strong average yield growth in our collection line of business of 7.8% and 7.3% for the three and six months ended June 30, 2022, respectively, as compared with the prior year periods, illustrating our focus on our pricing efforts in this inflationary environment.

We are also continuing to see growth in our landfill business with our municipal solid waste business experiencing 5.8% and 5.9% average yield growth for the three and six months ended June 30, 2022, respectively, as compared with the prior year periods.

Recycling — Recycling revenue increased $96 million and $212 million for the three and six months ended June 30, 2022, respectively, as compared with the prior year periods, primarily from higher market prices for recycling commodities.

Strong demand for recycled materials strengthened through 2021, continuing into the first half of 2022, driven by e-commerce retailers and manufacturers committing to use more recycled content in their packaging.

During the three and six months ended June 30, 2022, average market prices for recycling commodities at the Company’s facilities were approximately 30% and 40% higher, respectively, as compared to the prior year periods.

The year-over-year favorable trend moderated in the second quarter of 2022 as compared with the first quarter of 2022.

We currently expect the year-over-year pricing comparison to be slightly lower for the remainder of 2022 due to the strong pricing we experienced in the second half of 2021 when we saw demand for recycled materials outpacing supply.

Fuel Surcharges and Other — These fees, which include (i) our fuel surcharge program;

(ii) yield from our WM Renewable Energy business and (iii) other mandated fees, increased $90 million for the first quarter of 2022, as compared with the prior year period.

(ii) yield from our WM Renewable Energy business and (iii) other mandated fees, increased $153 million and $243 million for the three and six months ended June 30, 2022, respectively, as compared with the prior year periods.

Fuel surcharge revenues are based on and fluctuate in response to changes in the national average prices for diesel fuel, and also vary with changes in our volume-based revenue activity.

Market prices for diesel fuel were almost 50% higher for the first quarter of 2022, as compared with the prior year period, as diesel fuel prices have continued to meaningfully increase.

Revenue from our WM Renewable Energy business increased for the first quarter of 2022, as compared with the prior year period, primarily driven by the 55% increase in value for renewable fuel standard credits.

The other fees are primarily related to fees and taxes assessed by various state, county and municipal government agencies at our landfills and transfer stations.

These amounts have not significantly impacted the change in revenue for the first quarter of 2022, as compared with the prior year period.

Our revenues from volume (excluding volumes from acquisitions and divestitures) increased $148 million, or 3.6%, for the first quarter of 2022, as compared with the prior year period.

Our collection and disposal business volumes grew 4.2% in the first quarter of 2022, as compared with the prior year period, but were partially offset by lower volumes in our WM Renewable Energy and recycling businesses.

The pace of recovery in our volumes continued during the first quarter of 2022 following the growth we saw in 2021.

Volume at our landfills and our commercial collection business were the most significant drivers of volume growth primarily due to the negative impact of COVID-19 in the prior year as well as the economic recovery in the current business environment.

In addition, our WMSBS business volume grew as a result of our continued focus on a differentiated service model for national accounts customers.

Revenue from our fuel surcharge program increased $129 million and $201 million for the three and six months ended June 30, 2022, respectively, as compared with the prior year periods.

Market prices for diesel fuel increased approximately 70% and 60% for the three and six months ended June 30, 2022, respectively, as compared with the prior year periods.

Revenue from yield growth in our WM Renewable Energy business increased $22 million and $38 million for the three and six months ended June 30, 2022, respectively, as compared with the prior year periods.

This increase was primarily driven by increases in the value for electricity, renewable natural gas and environmental credits.

The mandated fees are primarily related to fees and taxes assessed by various state, county and municipal government agencies at our landfills and transfer stations.

These amounts have not significantly impacted the change in revenue for the three and six months ended June 30, 2022, as compared with the prior year periods.

Our revenues from volumes (excluding volumes from acquisitions and divestitures) increased $73 million, or 1.6%, and $217 million, or 2.5%, for the three and six months ended June 30, 2022, respectively, as compared with the prior year periods.

Our collection and disposal business volumes grew 2.3% and 3.2% for the three and six months ended June 30, 2022, respectively, as compared with the prior year periods.

Recovery in our volumes from COVID-related impacts continued during the second quarter of 2022, although the pace has moderated somewhat, as volume recoveries accelerated in the prior year period.

Special waste volumes at our landfills and our commercial collection business have been the most significant drivers of volume growth during the first half of 2022, primarily due to an increase in event-driven projects and organic revenue growth from improvement in the overall business environment.

In addition, our WMSBS business volumes grew as a result of our continued focus on a differentiated service model for national accounts customers.

Operating Expenses

The following table summarizes the major components of our operating expenses for the three months ended March 31 (in millions of dollars and as a percentage of revenues):

The following table summarizes the major components of our operating expenses (in millions of dollars and as a percentage of revenues):

Three Months Ended

Six Months Ended

Labor and related benefits

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Risk management

Our operating expenses for the first quarter of 2022 increased primarily due to (i) commodity-driven business impacts, particularly from recycling brokerage rebates and higher fuel prices;

(ii) inflationary cost pressures, primarily in maintenance and repairs and subcontractor costs;

(iii) labor cost pressure from frontline employee wage adjustments, increased hiring driving up training costs and higher overtime due to driver shortages and volume growth;

(iv) volume growth, particularly for our commercial collection business;

and (v) higher risk management costs.

These impacts were partially offset by our continued focus on operating efficiency and efforts to control costs as volumes grow.

Our operating expenses increased primarily due to (i) commodity-driven business impacts, particularly from higher fuel prices and recycling brokerage rebates;

These impacts were partially offset by our continued focus on operating efficiency and efforts to control costs.

Significant items affecting the comparison of operating expenses for the reported periods include:

Labor and Related Benefits — The increase in labor and related benefits costs was largely driven by (i) merit and proactive market wage adjustments to hire and retain talent;

(ii) planned headcount growth as volume increases, particularly in our commercial and industrial collection businesses, which when combined with continued driver shortages and turnover in certain markets, increased overtime and training hours and (iii) increases in health and welfare costs attributable to higher benefit costs and increases in medical care activity.

Transfer and Disposal Costs — The increase in transfer and disposal costs was largely driven by inflationary cost increases from our third-party haulers and increased commercial and industrial collection volumes.

(ii) intentional headcount growth as volume increases, particularly in our commercial and industrial collection businesses, which when combined with continued driver shortages and turnover in certain markets increased overtime and training hours and (iii) increases in health and welfare costs attributable to our intentional investment in delivering a leading benefits program for our employees and increases in medical care activity.

Transfer and Disposal Costs — The increase in transfer and disposal costs was largely driven by (i) increased disposal fees at third-party disposal sites;

(ii) inflationary cost increases, which includes higher fuel, from our third-party haulers and (iii) increased commercial and industrial collection volumes.

Maintenance and Repairs — The increase in maintenance and repairs costs was largely driven by (i) inflationary cost increases for parts, supplies and third-party services;

(ii) additional fleet maintenance driven by supply chain constraints with delays in receiving new trucks;

(iii) commercial and industrial collection volume increases;

(iv) labor cost pressure from our technicians, including higher overtime from labor shortages and (v) an increase in container repairs driven by volume increases and delays in normal course capital expenditures for steel containers due to both steel costs and supply chain constraints.

Subcontractor Costs — The increase in subcontractor costs was largely driven by (i) inflationary cost increases, particularly related to labor costs, demand implications and fuel costs, from third-party haulers;

(ii) higher disposal volumes at our transfer stations and (iii) an increase in volumes in our WMSBS business, which relies more extensively on subcontracted hauling than our collection and disposal business.

Cost of Goods Sold — The increase in cost of goods sold was primarily driven by an almost 60% increase in recycling commodity prices compared to the prior year period.

Fuel — The increase in fuel was primarily due to increases of almost 50% in market prices for diesel fuel and the cessation of federal natural gas fuel tax credits received in 2021 that have yet to be extended into 2022.

These increases were offset, in part, by a decrease attributable to lower diesel consumption as we expand our compressed natural gas fleet.

Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes was primarily driven by (i) landfill volume increases and (ii) disposal rate increases at third-party disposal sites.

Risk Management — Risk management costs increased primarily due to an increase in claims costs due to unfavorable cost development on a limited population of severe cases and inflation in premiums.

(ii) additional fleet maintenance driven by supply chain constraints which have delayed deliveries of new trucks;

(iii) labor cost increases for our technicians, including higher overtime;

(iv) an increase in container repairs driven by volume increases in our commercial and industrial collection businesses and delays in normal course capital expenditures for steel containers due to both steel costs and supply chain constraints and (v) commercial and industrial collection volume increases.

Subcontractor Costs — The increase in subcontractor costs was largely driven by (i) inflationary cost increases, particularly for fuel and labor costs from third-party haulers and (ii) an increase in volumes in our WMSBS business, which relies more extensively on subcontracted hauling than our collection and disposal business.

Cost of Goods Sold — The increase in cost of goods sold was primarily driven by the approximate 30% and 40% increase in recycling commodity prices during three and six months ended June 30, 2022, respectively, as compared to the prior year periods.

Fuel — The increase in fuel costs was primarily due to increases in market diesel and natural gas fuel prices during the three and six months ended June 30, 2022, respectively, as compared to the prior year periods.

This increase is also due to the cessation of federal natural gas fuel tax credits received in 2021 that have yet to be extended into 2022.

Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes was primarily driven by higher franchise fees paid to certain municipalities where we operate and overall rate increases in our fees and taxes paid on our volumes.

Risk Management — Risk management costs increased for three and six months ended June 30, 2022 as compared with the prior year periods, primarily due to inflation in premiums.

The six months ended June 30, 2022 was also impacted by an increase in claims costs due to unfavorable cost development on a limited population of severe cases during the first quarter of 2022.

Other — Other operating cost increases were primarily due to (i) inflationary cost pressures;

(ii) higher equipment rental costs attributable, in part, to increased volumes and supply chain constraints slowing normal course fleet and equipment orders and (iii) an increase in business travel in 2022.

Additionally, net gains on sales of certain assets in the prior year unfavorably impacted the comparability of the reported periods.

(ii) a favorable litigation settlement in the second quarter of 2021;

(iii) higher equipment rental costs attributable, in part, to increased volumes and supply chain constraints slowing normal course fleet and equipment orders and (iv) an increase in business travel in 2022.

Selling, General and Administrative Expenses

The following table summarizes the major components of our selling, general and administrative expenses for the three months ended March 31 (in millions of dollars and as a percentage of revenues):

The following table summarizes the major components of our selling, general and administrative expenses (in millions of dollars and as a percentage of revenues):

Three Months Ended

Six Months Ended

Labor and related benefits

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Provision for bad debts

Selling, general and administrative expenses have increased primarily due to strategic investments in our digital platform including investments in customer service digitalization, as well as investments in our sustainability initiatives and increased labor costs primarily due to merit increases.

Although our costs increased, the significant revenue increase positioned us to reduce our overall selling, general and administrative expenses as a percentage of revenues when compared with the prior year period.

Selling, general and administrative expenses have increased primarily due to (i) increased labor costs from higher incentive compensation costs and merit increases;

(ii) strategic investments in our digital platform and sustainability initiatives and related supporting technology and (iii) an increase in provision for bad debts.

Although our costs increased, the significant revenue increases in our high-margin businesses, which include our landfill and commercial and industrial collection businesses, positioned us to reduce our overall selling, general and administrative expenses as a percentage of revenues when compared with the prior year periods.

Significant items affecting the comparison of our selling, general and administrative expenses for the reported periods include:

Labor and Related Benefits — The increase in labor and related benefits was primarily due to annual merit increases for our employees and health and welfare costs attributable to higher benefit costs and increased medical activity.

Professional Fees — The increase in professional fees was primarily driven by increased support for the strategic investments in our digital platform and our sustainability initiatives.

Labor and Related Benefits — The increase in labor and related benefits costs was primarily related to (i) higher incentive compensation costs;

(ii) annual merit increases for our employees;

(iii) increases in health and welfare costs attributable to our intentional investment in delivering a leading benefits program for our employees and increases in medical care activity.

These increases are partially offset by a decline in contract labor costs related to the integration of Advanced Disposal Services, Inc.

(“Advanced Disposal”).

Professional Fees — The increase in professional fees was primarily driven by the strategic investments in our digital platform and our sustainability initiatives.

Partially offsetting these increases were lower integration costs related to our acquisition of Advanced Disposal.

Other — The increase in other expenses was primarily driven by costs associated with increased technology infrastructure costs to support our strategic investments in our digital platform and an increase in business travel in 2022.

Provision for Bad Debts — The increase in provision for bad debts is primarily related to our increased revenue.

Other — The increase in other expenses was primarily driven by costs associated with an increase in technology infrastructure to support our strategic investments in our digital platform and an increase in business travel in 2022.

Depreciation and Amortization Expenses

The following table summarizes the components of our depreciation and amortization expenses for the three months ended March 31 (in millions of dollars and as a percentage of revenues):

The following table summarizes the components of our depreciation and amortization expenses (in millions of dollars and as a percentage of revenues):

Three Months Ended

Six Months Ended

Depreciation of tangible property and equipment

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Amortization of intangible assets

The increase in depreciation of tangible property and equipment during the first quarter of 2022, as compared with the prior year period, was primarily driven by additional depreciation due to investments in capital assets to service our customers, such as containers and heavy equipment for our landfills.

The increase in amortization of landfill airspace during the first quarter of 2022 was driven by landfill volume increases from the economic recovery and changes in amortization rates driven by revisions in landfill estimates, which includes changes in the anticipated timing of capping, closure and post-closure activities.

The decrease in amortization of intangible assets during the during the first quarter of 2022 was primarily driven by the reduction in amortization of acquired intangible assets from the acquisition of Advanced Disposal.

The increase in depreciation of tangible property and equipment was primarily driven by investments in capital assets to service our customers, such as heavy equipment and containers.

The increase in amortization of landfill airspace was driven primarily by landfill volume increases and changes in amortization rates driven by revisions in landfill estimates, which includes changes in the anticipated timing of capping, closure and post-closure activities.

The decrease in amortization of intangible assets was primarily driven by the reduction in amortization of acquired intangible assets from the acquisition of Advanced Disposal.

(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net

During the first quarter of 2022, we recognized a $17 million charge in our Corporate and Other segment to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 6 to the Condensed Consolidating Financial Statements.

During the first quarter of 2021, we recognized net charges of $17 million consisting of (i) a $19 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $6 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment;

which were partially offset by an $8 million gain from divestitures of certain ancillary operations in our Other segment.

For the six months ended June 30, 2022, we recognized a $17 million charge in the first quarter in our Corporate and Other segment to adjust an indirect wholly-owned subsidiary’s estimated potential share of the liability for a proposed environmental remediation plan at a closed site, as discussed in Note 6 to the Condensed Consolidated Financial Statements.

For the six months ended June 30, 2021, we recognized net charges of $17 million in the first quarter consisting of (i) a $19 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $6 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment, which were partially offset by an $8 million gain from divestitures of certain ancillary operations in our Other segment.

Income from Operations

The following table summarizes income from operations for our reportable segments for the three months ended March 31 (dollars in millions):

The following table summarizes income from operations for our reportable segments (dollars in millions):

Three Months Ended

Six Months Ended

Period-to-Period

Corporate and Other (b)

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(ii) elements of our landfill gas-to-energy operations managed by our WM Renewable Energy business and not included in the operations of our reportable segments;

(iii) elements of our third-party subcontract and administration revenues managed by our EES business and not included in the operations of our reportable segments;

(iii) elements of our third-party subcontract and administration revenues managed by our SES business and not included in the operations of our reportable segments;

(iv) our recycling brokerage services;

(v) certain other expanded service offerings and solutions and (vi) the results of

non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.

(v) certain other expanded service offerings and solutions and (vi) the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.

(b) “Corporate and Other” operating results reflect certain costs incurred for various support services that are not allocated to our reportable segments.

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Reclassifications have been made to our prior period information for comparability purposes.

The significant items affecting income from operations for our segments during the first quarter of 2022, as compared with the prior year period, are summarized below:

● Solid Waste — Income from operations in our Solid Waste business increased primarily due to (i) revenue growth in our collection and disposal businesses driven by both yield and volume and (ii) improved profitability in our recycling business from higher market prices for recycling commodities and improved costs at facilities where we have made investments in enhanced technology and equipment.

The significant items affecting income from operations for our segments during the three and six months ended June 30, 2022, as compared with the prior year periods, are summarized below:

● Solid Waste — Income from operations in our Solid Waste business increased primarily due to revenue growth in our collection and disposal businesses driven by both yield and volume.

These increases were partially offset by inflationary cost pressures and labor cost pressure from frontline employee wage adjustments, increased hiring driving up training costs and higher overtime due to driver shortages and volume growth.

● Other — The decrease in income from operations was primarily driven by our self-insurance program.

● Corporate and Other — The decrease in income from operations was primarily driven by (i) increased costs as a result of strategic investments we are making in our digital platform including investments in customer service digitalization, as well as investments in our sustainability initiatives and (ii) increased labor costs primarily due to merit increases.

This decrease in income from operations was partially offset by lower integration costs related to our acquisition of Advanced Disposal.

● Corporate and Other — The decrease in income from operations from our Corporate and Other segment was primarily driven by increased costs for (i) labor, particularly due to higher incentive compensation costs and merit increases;

(ii) strategic investments in our digital platform and (iii) investments in our sustainability initiatives.

The impact of these higher costs was partially offset by lower integration costs related to our acquisition of Advanced Disposal and the impact of adjustments from closure and post-closure activity at our closed landfills in the prior year periods.

Interest Expense, Net

Our interest expense, net was $85 million and $97 million during the three months ended March 31, 2022 and 2021, respectively.

The decrease is primarily due to the retirement of $1.3 billion of certain high-coupon senior notes and concurrent issuance of $950 million of lower coupon senior notes in May 2021 and, to a lesser extent, the impacts that lower interest rates have had on the cost of certain of our tax-exempt debt.

Our interest expense, net was $93 million and $178 million for the three and six months ended June 30, 2022, respectively, compared to $98 million and $195 million for the three and six months ended June 30, 2021, respectively.

The decrease in the first half of 2022 is primarily due to the retirement of $1.3 billion of certain high-coupon senior notes and concurrent issuance of $950 million of lower coupon senior notes in May 2021 and, to a lesser extent, the impacts that lower interest rates have had on the cost of certain of our tax-exempt debt primarily during the first quarter of 2022.

In the second half of 2022, we expect that interest costs will increase compared to 2021 as a result of incremental debt issued in the second quarter of 2022 and the effect of rising interest rates primarily on borrowings under our commercial paper program and $1.0 billion, two-year, U.S.

term credit agreement (“Term Loan”).

Loss on Early Extinguishment of Debt

The loss on early extinguishment of debt during the three and six months ended June 30, 2022 resulting from the redemption of our $500 million 2.9% senior notes due September 2022 in advance of their maturity was immaterial.

In May 2021, WMI issued $950 million of senior notes.

We used the net proceeds from the newly issued senior notes of $942 million and available cash on hand to retire $1.3 billion of certain high-coupon senior notes through a tender offer.

The loss on early extinguishment of debt for the three and six months ended June 30, 2021 includes $220 million of charges related to the tender offer, including $211 million of premiums and other third-party costs and $9 million primarily related to unamortized discounts and debt issuance costs.

Equity in Net Losses of Unconsolidated Entities

We recognized equity in net losses of unconsolidated entities of $15 million and $9 million during the three months ended March 31, 2022 and 2021, respectively.

We recognized equity in net losses of unconsolidated entities of $17 million and $32 million during the three and six months ended June 30, 2022, respectively, compared to $11 million and $20 million for the three months and six months ended June 30, 2021, respectively.

The losses for each period were primarily related to our noncontrolling interests in entities established to invest in and manage low-income housing properties.

We generate tax benefits, including tax credits, from the losses incurred from these investments which are discussed further in Note 4 to the Condensed Consolidated Financial Statements.

We generate tax benefits, including tax credits, from the losses incurred from these investments which are discussed in Note 4 to the Condensed Consolidated Financial Statements.

Income Tax Expense

Our income tax expense and effective income tax rates were $157 million, or 23.5%, and $124 million, or 22.7%, for the three months ended March 31, 2022 and 2021, respectively.

The increase in our income tax expense and effective income tax rate when comparing the three months ended March 31, 2022 with the prior year period are primarily driven by (i) an increase in pre-tax income in 2022, which decreased the effective tax rate impact of our federal tax credits;

and (ii) unfavorable adjustments to accruals and related deferred taxes, both of which were partially offset by a benefit

from higher federal tax credits as a result of our incremental investment in low-income housing properties.

Our income tax expense was $189 million and $346 million for the three and six months ended June 30, 2022, respectively, compared to $105 million and $229 million for the three and six months ended June 30, 2021, respectively.

Our effective income tax rate was 24.3% and 23.9% for the three and six months ended June 30, 2022, respectively, compared to 22.9% and 22.8% for the three and six months ended June 30, 2021, respectively.

The increase in our income tax expense and effective income tax rate when comparing the three and six months ended June 30, 2022 and 2021 was primarily driven by an increase in pre-tax income in 2022, resulting in a decreased rate benefit from federal income tax credits.

See Note 4 to the Condensed Consolidated Financial Statements for more information related to income taxes.

Liquidity and Capital Resources

The Company consistently generates cash flow from operations that meets and exceeds our working capital needs, payment of our dividends, investment in the business through capital expenditures and tuck-in acquisitions, and funding of strategic growth and sustainability investments.

We continually monitor our actual and forecasted cash flows, our liquidity and our capital resources, enabling us to plan for our present needs and fund unbudgeted business requirements that may arise during the year.

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Long-term portion

(a) As of March 31, 2022 and December 31, 2021, $80 million of these account balances was included in other current assets in our Condensed Consolidated Balance Sheets.

As of March 31, 2022, we had approximately $3.0 billion of debt maturing within the next 12 months, including (i) $1.7 billion of short-term borrowings under our commercial paper program (net of related discount on issuance);

(a) As of June 30, 2022 and December 31, 2021, $80 million of these account balances was included in other current assets in our Condensed Consolidated Balance Sheets.

Cash and cash equivalents — Cash and cash equivalents at June 30, 2022 include proceeds from borrowings under our Term Loan and from the May 2022 issuance of senior notes, which were partially offset by the redemption of our $500 million 2.9% senior notes due September 2022 in advance of their scheduled maturity, discussed further in Note 3 to the Condensed Consolidated Financial Statements.

Debt — As of June 30, 2022, we had approximately $2.4 billion of debt maturing within the next 12 months, including (i) $1.0 billion of short-term borrowings under our commercial paper program (net of related discount on issuance);

(ii) $625 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities;

(iii) $500 million of 2.9% senior notes that mature in September 2022 and (iv) $180 million of other debt with scheduled maturities within the next 12 months, including $71 million of tax-exempt bonds.

As of March 31, 2022, we have classified $2.6 billion of debt maturing in the next 12 months as long-term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S.

(iii) $500 million of 2.4% senior notes that mature in May 2023 and (iv) $226 million of other debt with scheduled maturities within the next 12 months, including $111 million of tax-exempt bonds.

As of June 30, 2022, we have classified $2.1 billion of debt maturing in the next 12 months as long term because we have the intent and ability to refinance these borrowings on a long-term basis as supported by the forecasted available capacity under our $3.5 billion long-term U.S.

and Canadian revolving credit facility (“$3.5 billion revolving credit facility”).

The remaining $231 million of debt maturing in the next 12 months is classified as current obligations.

As of March 31, 2022, we also had $54 million of variable-rate tax-exempt bonds with long-term scheduled maturities supported by letters of credit under our $3.5 billion revolving credit facility.

Additionally, as of June 30, 2022, we also had $54 million of variable-rate tax-exempt bonds with long-term scheduled maturities supported by letters of credit under our $3.5 billion revolving credit facility.

The interest rates on our variable-rate tax-exempt bonds reset on a weekly basis through a remarketing process.

All recent tax-exempt bond remarketings have successfully placed Company bonds with investors at market-driven rates and we currently expect future remarketings to be successful.

All recent tax-exempt bond

remarketings have successfully placed Company bonds with investors at market-driven rates and we currently expect future remarketings to be successful.

However, if the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us.

In the event of a failed remarketing, we have the availability under our $3.5 billion revolving credit facility to fund these bonds until they are remarketed successfully.

Accordingly, we have classified the $54 million of variable-rate tax-exempt bonds with maturities of more than one year as long-term in our Condensed Consolidated Balance Sheet as of March 31, 2022.

Accordingly, we have classified the $54 million of variable-rate tax-exempt bonds with maturities of more than one year as long-term in our Condensed Consolidated Balance Sheet.

In May 2022, WMI issued $1.0 billion of 4.15% senior notes due April 15, 2032, the net proceeds of which were $992 million.

We used the net proceeds to redeem our $500 million of 2.9% senior notes due September 2022 in advance of their scheduled maturity, to repay a portion of outstanding borrowings under our commercial paper program and for general corporate purposes.

In May 2022, we entered into a Term Loan to be used for general corporate purposes and as of June 30, 2022, we had $1.0 billion of outstanding borrowings.

WM Holdings guarantees all of the obligations under the Term Loan.

Amendment and Extension of Revolving Credit Facility

In May 2022, we amended and restated our $3.5 billion U.S.

and Canadian revolving credit facility extending the term through May 2027.

The agreement includes a $1.0 billion accordion feature that may be used to increase total capacity in future periods, and we have the option to request up to two one-year extensions.

Waste Management of Canada Corporation and WM Quebec Inc., each an indirect wholly-owned subsidiary of WMI, are borrowers under the $3.5 billion revolving credit facility, and the agreement permits borrowing in Canadian dollars up to the U.S.

dollar equivalent of $375 million, with such borrowings to be repaid in Canadian dollars.

WM Holdings, a wholly-owned subsidiary of WMI, guarantees all the obligations under the $3.5 billion revolving credit facility.

Refer to Note 3 to the Condensed Consolidated Financial Statements for additional information.

Guarantor Financial Information

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In lieu of providing separate financial statements for the subsidiary issuer and guarantor (WMI and WM Holdings), we have presented the accompanying supplemental summarized combined balance sheet and income statement information for WMI and WM Holdings on a combined basis after elimination of intercompany transactions between WMI and WM Holdings and amounts related to investments in any subsidiary that is a non-guarantor (in millions):

March 31, 2022

December 31, 2021

Balance Sheet Information:

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Other noncurrent liabilities

The previously reported balance of Advances due to affiliates as of December 31, 2021 was understated and has been corrected in our current year presentation above.

Three Months Ended

March 31, 2022

(a) The amount reported as Advances due to affiliates as of December 31, 2021 was understated in our Annual Report on Form 10-K for the year ended December 31, 2021 and subsequently corrected in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

Six Months Ended

June 30, 2022

Income Statement Information:

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Summary of Cash Flow Activity

The following is a summary of our cash flows for the three months ended March 31 (in millions):

The following is a summary of our cash flows for the six months ended June 30 (in millions):

Six Months Ended

Net cash provided by operating activities

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Net cash used in financing activities

Net Cash Provided by Operating Activities — Our operating cash flows increased by $138 million for the three months ended March 31, 2022, as compared with the prior year period, as a result of an increase in earnings attributable to our collection and disposal and recycling lines of business, as well as lower interest payments due to the timing of certain interest payments and refinancing activities in 2021 that reduced our overall interest rate, partially offset by higher annual incentive compensation payments in the current year.

Net Cash Used in Investing Activities — The most significant items included in our investing cash flows for the three months ended March 31, 2022 and 2021 are summarized below:

● Capital Expenditures — We used $418 million and $270 million for capital expenditures during the three months ended March 31, 2022 and 2021, respectively.

The increase in capital spending is primarily driven by timing differences in our fixed asset purchases, as well as our intentional investment in sustainability and growth in recycling and renewable energy projects.

Net Cash Provided by Operating Activities — Our operating cash flows increased by $142 million as compared with the prior year period, as a result of an increase in earnings attributable to our collection and disposal, recycling and WM Renewable Energy lines of business, as well as lower interest payments due to the timing of certain interest payments and refinancing activities in 2021 that reduced our overall interest rate, partially offset by higher income tax payments and higher annual incentive compensation payments in the current year period.

Net Cash Used in Investing Activities — The most significant items included in our investing cash flows for the six months ended June 30, 2022 and 2021 are summarized below:

● Capital Expenditures — We used $968 million and $666 million for capital expenditures during the six months ended June 30, 2022 and 2021, respectively.

The increase in capital spending is primarily driven by timing differences in our fixed asset purchases, as well as our intentional investment in sustainability growth projects.

The Company continues to maintain a disciplined focus on capital management to prioritize investments in the long-term growth of our business and for the replacement of aging assets.

● Other, Net — The year-over-year changes in other investing activities were primarily driven by changes in our investment portfolio associated with a wholly-owned insurance captive.

During the three months ended March 31, 2022 and 2021, we used $97 million and $73 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities.

● Other, Net — During the six months ended June 30, 2022 and 2021, we used $60 million and $56 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities within our investment portfolio associated with a wholly-owned insurance captive.

Additionally, we used $28 million in 2022 to make an initial cash payment associated with a new low-income housing investment.

Net Cash Used in Financing Activities — The most significant items affecting the comparison of our financing cash flows for the three months ended March 31, 2022 and 2021 are summarized below:

● Debt Repayments and Borrowings — The following summarizes our cash borrowings and repayments of debt for the three months ended March 31 (in millions):

Commercial paper (a)

Net Cash Used in Financing Activities — The most significant items affecting the comparison of our financing cash flows for the six months ended June 30, 2022 and 2021 are summarized below:

● Debt Borrowings (Repayments) — The following summarizes our cash borrowings and repayments of debt for the six months ended June 30 (in millions):

Commercial paper

Tax-exempt bonds

Net cash repayments

(a) Beginning in the second quarter of 2021, we elected to report these cash flows on a gross basis.

Reclassifications have been made to our prior period information for comparability purposes.

Commercial paper

Tax-exempt bonds

Net cash borrowings (repayments)

Refer to Note 3 to the Condensed Consolidated Financial Statements for additional information related to our debt borrowings and repayments.

● Common Stock Repurchase Program — During each of the three months ended March 31, 2022 and 2021, we used $250 million to repurchase shares of our common stock under accelerated share repurchase agreements.

● Premiums and Other Paid on Early Extinguishment of Debt — During the six months ended June 30, 2021, we paid premiums and other third-party costs of $211 million to retire certain high-coupon senior notes.

● Common Stock Repurchase Program — During the six months ended June 30, 2022, we repurchased $524 million of our common stock, consisting of $500 million pursuant to two accelerated share repurchase (“ASR”) agreements and $24 million repurchased in open market transactions, of which $4 million was paid in July 2022.

See Note 10 to the Condensed Consolidated Financial Statements for additional information.

During the six months ended June 30, 2021, we repurchased $500 million of our common stock pursuant to two ASR agreements.

● Cash Dividends — For the periods presented, all dividends have been declared by our Board of Directors.

We paid cash dividends of $275 million and $247 million during the three months ended March 31, 2022 and 2021, respectively.

We paid cash dividends of $544 million and $489 million during the six months ended June 30, 2022 and 2021, respectively.

The increase in dividend payments is primarily due to our quarterly per share dividend increasing from $0.575 in 2021 to $0.65 in 2022.

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We believe free cash flow gives investors useful insight into how we view our liquidity, but the use of free cash flow as a liquidity measure has material limitations because it excludes certain expenditures that are required or that we have committed to, such as declared dividend payments and debt service requirements.

Our calculation of free cash flow and reconciliation to net cash provided by operating activities for the three months ended March 31 is shown in the table below (in millions), and may not be calculated the same as similarly-titled measures presented by other companies:

Our calculation of free cash flow and reconciliation to net cash provided by operating activities is shown in the table below (in millions), and may not be calculated the same as similarly-titled measures presented by other companies:

Three Months Ended

Six Months Ended

Net cash provided by operating activities

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Free cash flow

These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas generation and we expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve.

(a) These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas generation.

We expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve.

Critical Accounting Estimates and Assumptions

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In some cases, these estimates are difficult to determine and we must exercise significant judgment.

In preparing our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, long-lived assets and intangible asset impairments and the fair value of assets and liabilities acquired in business combinations, as described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.

In preparing our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, long-lived asset impairments, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations, as described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.

Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.

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While weather-related and other event-driven special projects can boost revenues through additional work for a limited time, due to significant start-up costs and other factors, such revenue can generate earnings at comparatively lower margins.

Accelerated and pronounced economic pressures, particularly related to inflationary cost pressures on labor and the goods and services we rely upon to deliver service to our customers, have continued to have a significant impact on our cost structure and capital expenditures in the first quarter of 2022.

We are taking proactive steps to recover and/or mitigate inflationary cost pressures through our overall strategic pricing efforts and by managing our costs through efficiency, labor productivity and investments in technology to automate certain aspects of our business.

A significant portion of our revenue is tied to a price escalation index with a lookback provision, which has resulted in a timing lag in our ability to recover increased costs under these contracts during this period of rapid inflation.

Separately, for many of our customers

we provide services under multi-year contracts that can restrict our ability to increase prices and the timing of such increases.

A significant portion of our

revenue is tied to a price escalation index with a lookback provision, which has resulted in a timing lag in our ability to recover increased costs under these contracts during this period of rapid inflation.

Separately, for many of our customers we provide services under multi-year contracts that can restrict our ability to increase prices and the timing of such increases.

As we entered 2022, many of these contract lookback provisions began to capture the inflationary cost increases experienced in the second half of 2021 in the price escalation calculation;

however, due to the continued rapid pace of inflation as well as the relatively low inflationary cost environment of the first half of 2021, such timing lag persists.

however, due to continued inflation as well as the relatively low inflationary cost environment of the first half of 2021, such timing lag persists.

Quantitative and Qualitative Disclosures About Market Risk.

Information about market risks as of June 30, 2022 does not materially differ from that discussed under Item 3 in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis