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The following discussion should be read considering those disclosures and together with the Consolidated Financial Statements and the notes thereto.
−Removed: We are North America’s leading provider of comprehensive waste management environmental services, providing services throughout the United States (“U.S.”) and Canada.
+Added: 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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In order to make disposal more practical for larger urban markets, where the distance to landfills is typically farther, we manage transfer stations that consolidate, compact and transport waste efficiently and economically.
−Removed: We also use waste to create energy, recovering the gas produced naturally as waste
−Removed: decomposes in landfills and using the gas in generators to make electricity or natural gas.
+Added: Through our subsidiaries, including our Waste Management Renewable Energy (“WM Renewable Energy”) business, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S.
+Added: 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.
−Removed: 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.
−Removed: 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 Annual Report on Form 10-K.
−Removed: For further discussion see section “ Regulation – Emerging Trends in Policy and Regulation – Climate and Sustainability ” in Item 1.
−Removed: In 2021, our senior management began evaluating, overseeing and managing the financial performance of our Solid Waste operations through two operating segments.
+Added: Our senior management evaluates, oversees and manages the financial performance of our Solid Waste operations through two operating segments.
Our East Tier primarily consists of geographic areas located in the Eastern U.S., the Great Lakes region and substantially all of Canada.
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Each of our Solid Waste operating segments provides integrated environmental services, including collection, transfer, recycling, and disposal.
−Removed: The Company finalized the assessment of our segments during the fourth quarter of 2021.
−Removed: The East and West Tiers are presented in this report and constitute our existing Solid Waste business.
Our Solid Waste operating revenues are primarily generated from fees charged for our collection, transfer, disposal, and recycling and resource recovery services, and from sales of commodities by our recycling and landfill gas-to-energy operations.
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Revenues from our landfill operations consist of tipping fees, which are generally based on the type and weight or volume of waste being disposed of at our disposal facilities.
−Removed: Fees charged at transfer stations are generally based on the weight or volume of waste deposited, taking into account our cost of loading, transporting and disposing of the solid waste at a disposal site.
+Added: Fees charged at transfer stations are generally based on the weight or volume of waste deposited, considering our cost of loading, transporting and disposing of the solid waste at a disposal site.
Recycling revenues generally consist of tipping fees and the sale of recycling commodities to third parties.
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We also provide additional services that are not managed through our Solid Waste business, described under Results of Operations below.
−Removed: Acquisition of Advanced Disposal Services, Inc.
−Removed: (“Advanced Disposal”)
−Removed: On October 30, 2020, we completed our acquisition of all outstanding shares of Advanced Disposal for $30.30 per share in cash, pursuant to an Agreement and Plan of Merger dated April 14, 2019, as amended on June 24, 2020.
−Removed: Total enterprise value of the acquisition was $4.6 billion when including approximately $1.8 billion of Advanced Disposal’s net debt.
−Removed: This acquisition grew our footprint and allows us to provide differentiated, sustainable waste management and recycling services to approximately three million new commercial, industrial and residential customers primarily located in the Eastern half of the U.S.
−Removed: The acquisition was funded using a $3.0 billion, 364-day, U.S.
−Removed: revolving credit facility (“364-day revolving credit facility”) and our commercial paper program.
−Removed: In November 2020, we issued $2.5 billion of senior notes and used a portion of the proceeds to repay all outstanding borrowings under the 364-day revolving credit facility at which time it was terminated.
−Removed: As a result of the acquisition we recorded $4.1 billion of net assets including $2.5 billion of goodwill as of December 31, 2020.
−Removed: Post-closing adjustments to our purchase price allocation were not material.
−Removed: In connection with our acquisition of Advanced Disposal, we and Advanced Disposal entered into an agreement that provided for GFL Environmental to acquire a combination of assets from us and Advanced Disposal to address divestitures required by the U.S.
−Removed: Department of Justice.
−Removed: Immediately following the acquisition, the divestiture transactions were consummated and the Company subsequently received cash proceeds from the sale of $856 million.
−Removed: See Note 11 and 17 to the Consolidated Financial Statements for more information.
−Removed: For the year ended December 31, 2021, we incurred $51 million of integration related costs, and for the year ended December 31, 2020, we incurred $156 million of acquisition and integration related costs, which were primarily classified as “Selling, general and administrative expenses”.
−Removed: The post-closing operating results of Advanced Disposal have been included in our consolidated financial statements, within our existing reportable segments.
−Removed: Post-closing through December 31, 2020, Advanced Disposal recognized $205 million, $142 million and $60 million of revenue, operating expenses and selling, general and administrative expenses, respectively, which are included in our Consolidated Statement of Operations.
−Removed: During 2021, we made significant progress on our integration of Advanced Disposal.
−Removed: The focus of these efforts has been to ensure that we continue to provide uninterrupted service to our customers through the integration of certain customer facing and back office digital platforms.
−Removed: COVID-19 Update
−Removed: Throughout the COVID-19 pandemic, the Company has proactively taken steps to put our employees’ and customers’ needs first and we continue to work with the appropriate regulatory agencies to ensure we can provide our essential services safely and efficiently.
−Removed: We continue to operate with a focus on protecting the health and safety of our employees and maintaining business continuity for our customers.
−Removed: These efforts, combined with our disciplined execution in our daily operations, have positioned the Company to prudently manage the challenges presented by COVID-19.
−Removed: The impacts of COVID-19 on the global economy increased rapidly during the second quarter of 2020, affecting our business in most geographies and across a variety of our customer types.
−Removed: Over the last year, our volumes have been recovering from the sharp decline experienced in April 2020 as a result of COVID-19.
−Removed: The pace of recovery in our volumes accelerated in the second quarter of 2021, and continued in the back-half of 2021 with minimal impact from the resurgence in transmission of recent COVID-19 virus variants as communities and businesses remained open.
−Removed: The portions of our business that had the most pronounced decreases in volume due to the pandemic were our industrial and commercial collection businesses and construction and demolition and special waste volumes at our landfills.
−Removed: As we completed 2021, volumes in each of these lines of business were either on par with pre-pandemic levels or have now surpassed 2019 volumes.
−Removed: We continue to be optimistic about our volume recovery and overall economic recovery from the impacts of the COVID-19 pandemic.
−Removed: However, uncertainty remains with respect to various factors that influence the pace of economic recovery and the potential for future resurgence in transmission of COVID-19 and related business closures due to virus variants or otherwise.
−Removed: Such conditions could adversely impact our volumes and costs in the future.
Business Environment
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This includes expanding traditional recycling services, increasing organics collection and processing, and expanding our renewable energy projects to meet the evolving needs of our diverse customer base.
−Removed: As the leading waste management environmental services provider in North America, we are taking big, bold steps in an effort to catalyze positive change – change that will impact our Company as well as the communities we serve.
−Removed: 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.
+Added: As North America’s leading provider of comprehensive environmental solutions, we are taking big, bold steps to catalyze positive change – change that will impact our Company as well as the communities we serve.
+Added: Consistent with our Company’s long-standing commitment to sustainability and environmental stewardship, we published our 2022 Sustainability Report providing details on our Environmental, Social and Governance (“ESG”) performance and outlining new 2030 goals.
+Added: The Sustainability Report conveys the strong linkage between the Company’s ESG goals and our growth strategy, inclusive of the planned expansion of the Company’s recycling and renewable energy businesses.
+Added: 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 Annual Report on Form 10 K.
+Added: For further discussion see Item1.
+Added: Business – Regulation – Recent Developments and Focus Areas in Policy and Regulation .
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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These factors generally correlate to volumes of waste generated and impact our revenue.
−Removed: Negative economic conditions, including the impact of COVID-19, can and have caused customers to reduce their service needs.
−Removed: Such negative economic conditions, in addition to competitor actions, can and have made it more challenging to implement our pricing strategy and negotiate, renew or expand service contracts with acceptable margins.
+Added: Negative economic conditions and other macroeconomic trends can and have caused customers to reduce their service needs.
+Added: Such negative economic conditions, in addition to competitor actions, can impact our strategy to negotiate, renew, or expand service contracts and grow our business.
We also encounter competition for acquisitions and growth opportunities.
−Removed: General economic factors
−Removed: and the market for consumer goods, in addition to regulatory developments, can also significantly impact commodity prices for the recyclable materials we sell.
−Removed: Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and a heightened pace of inflation.
−Removed: Volume changes can fluctuate dramatically by line of business and volume changes in higher margin businesses, such as what we saw with COVID-19, can impact key financial metrics.
+Added: General economic factors and the market for consumer goods, in addition to regulatory developments, can also significantly impact commodity prices for the recyclable materials we sell.
+Added: Significant components of our operating expenses vary directly as we experience changes in revenue due to volume and a heightened pace of
+Added: Volume changes can fluctuate significantly by line of business and volume changes in higher margin businesses, such as what we saw with COVID-19, can impact key financial metrics.
We must dynamically manage our cost structure in response to volume changes and cost inflation.
We believe the Company’s industry-leading asset network and strategic focus on investing in our people and our digital platform will give the Company the necessary tools to address the evolving challenges impacting the Company and our industry.
−Removed: In line with our commitment to continuous improvement and a differentiated customer experience, we remain focused on our customer service digitalization initiative to change the way we interact with our customers.
−Removed: Enhancements made through this initiative are intended to seamlessly and digitally connect all the Company’s functions required to service our customers in order to provide the best experience and service.
−Removed: Additionally, in early 2022, we substantially implemented our new enterprise resource planning system which will drive operational and service excellence by empowering our people through a modern, simplified and connected employee experience.
−Removed: Certain macroeconomic pressures and market disruption, driven in part by the COVID-19 pandemic, intensified during the second half of 2021 and are continuing.
−Removed: 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 servicing customers.
−Removed: The COVID-19 pandemic and the constrained labor market have also contributed to significant global supply chain disruption and inflationary pressure for the goods and services we purchase, with a particular impact on our repair and maintenance costs.
+Added: In line with our commitment to continuous improvement and a differentiated customer experience, we remain focused on our automation and optimization investments to enhance our operational efficiency and change the way we interact with our customers.
+Added: Enhancements made through these initiatives are intended to seamlessly and digitally connect all the Company’s functions required to service our customers in order to provide the best experience and service.
+Added: In late 2021, we began to execute on the next phase of this technology enablement strategy to automate and optimize certain elements of our service delivery model.
+Added: This next phase will prioritize reduced labor dependency on certain high-turnover jobs, particularly in customer experience, recycling and residential collection.
+Added: 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.
+Added: Additionally, in 2022, we implemented a new general ledger accounting system, complementary finance enterprise resource planning system and a human capital management system, which will drive operational and service excellence by empowering our people through a modern, simplified and connected employee experience.
+Added: Macroeconomic pressures, including inflation and rising interest rates, and market disruption, resulting in labor market, supply chain and transportation constraints are continuing.
+Added: Significant global supply chain disruption and the heightened pace of inflation have reduced availability and increased costs for the goods and services we purchase, with a particular impact on our repair and maintenance costs.
Supply chain constraints have also caused delayed delivery of fleet, steel containers and other purchases.
Aspects of our business rely on third-party transportation providers, and such services have become more limited and expensive.
−Removed: Additionally, we are currently experiencing margin pressures from commodity-driven business impacts, particularly from recycling brokerage rebates and higher fuel prices.
−Removed: The extent and duration of the impact of these labor market, supply chain and transportation challenges are subject to numerous factors, including the continuing impact of the COVID-19 pandemic;
+Added: While demand for recyclables generally continues to trend upwards, during the second half of 2022, we saw significant declines in commodity prices for recycled materials, and we expect continued significant headwinds from commodity prices for recycled material into 2023, resulting from the slowdown in the global economy, which reduced retail demand and the corresponding need for cardboard packaging to ship retail goods.
+Added: We are also currently experiencing margin pressures from other commodity-driven business impacts, particularly from higher fuel prices.
+Added: The constrained labor market has resulted in increased costs for wage adjustments, overtime hours and training new hires.
+Added: Geopolitical conflict and the resulting international response, including Russia’s invasion of Ukraine, have also exacerbated market disruption, leading to volatility in commodity prices, impacts on the availability and cost of energy, and vendor and supplier disruptions across the global supply chain.
+Added: The extent and duration of the impact of these labor market, supply chain, transportation and recycling challenges are subject to numerous external factors beyond our control, including broader macroeconomic conditions;
+Added: recessionary fears and/or an economic recession;
size, location, and qualifications of the labor pool;
−Removed: behavioral changes;
wage and price structures;
−Removed: adoption of new or revised regulations, including vaccine mandates;
−Removed: and broader macroeconomic conditions.
−Removed: As costs increase, we focus on our strategic pricing efforts, as well as operating efficiencies and cost controls, to maintain and grow our earnings and cash flow.
−Removed: With increased pressure from the strong economic recovery, particularly on labor, we remain focused on putting our people first to ensure that they are well positioned to diligently and safely execute our daily operations.
+Added: adoption of new or revised regulations;
+Added: future resurgence of COVID-19 or other pandemic conditions and restrictions;
+Added: geopolitical conflicts and responses and supply and demand for recycled materials.
+Added: As we experience inflationary cost pressures, we focus on our strategic pricing efforts, as well as operating efficiencies and cost controls, to maintain and grow our earnings and cash flow.
+Added: With these macroeconomic pressures, we remain focused on putting our people first to ensure that they are well positioned to execute our daily operations diligently and safely.
We are encouraged by our results in 2022 and remain focused on delivering outstanding customer service, managing our variable costs with changing volumes and investing in technology that will enhance our customers’ experience and reduce our cost to serve.
+Added: Acquisition of Advanced Disposal Services, Inc.
+Added: (“Advanced Disposal”)
+Added: On October 30, 2020, we completed our acquisition of all outstanding shares of Advanced Disposal for $30.30 per share in cash, pursuant to an Agreement and Plan of Merger dated April 14, 2019, as amended on June 24, 2020.
+Added: Total enterprise value of the acquisition was $4.6 billion when including approximately $1.8 billion of Advanced Disposal’s net debt.
+Added: This acquisition grew our footprint and allows us to provide differentiated, sustainable waste management and recycling services to approximately three million new commercial, industrial and residential customers primarily located in the Eastern half of the U.S.
+Added: In connection with our acquisition of Advanced Disposal, we and Advanced Disposal entered into an agreement that provided for GFL Environmental to acquire a combination of assets from us and Advanced Disposal
+Added: to address divestitures required by the U.S.
+Added: Department of Justice.
+Added: Immediately following the acquisition, the divestiture transactions were consummated and the Company subsequently received cash proceeds from the sale of $856 million.
+Added: For the year ended December 31, 2022 and 2021, we incurred integration related costs of $10 million and $51 million, respectively, and for the year ended December 31, 2020, we incurred acquisition and integration related costs of $156 million, which were primarily classified as “Selling, general and administrative expenses”.
+Added: The post-closing operating results of Advanced Disposal have been included in our consolidated financial statements, within our existing reportable segments.
+Added: Post-closing through December 31, 2020, Advanced Disposal recognized $205 million, $142 million and $60 million of revenue, operating expenses and selling, general and administrative expenses, respectively, which are included in our Consolidated Statement of Operations.
+Added: For more information related to our acquisitions, see Notes 11 and 17 to the Consolidated Financial Statements and the Summary of Cash Flow Activity section below.
+Added: COVID-19 Impact
+Added: The impacts of COVID-19 on the global economy increased rapidly during the second quarter of 2020, affecting our business in most geographies and across a variety of our customer types.
+Added: Over the past two years, our volumes have recovered, largely exceeding volumes from the pre-pandemic levels in 2019.
+Added: While we continue to be optimistic about North America’s overall economic recovery from the impacts of the COVID-19 pandemic.
+Added: A significant future resurgence in transmission of COVID-19, a significant new virus variant, or other pandemic conditions that result in business closures and social restrictions could adversely impact our volumes and costs in the future.
Current Year Financial Results
−Removed: During 2021, we delivered strong revenue and income from operations as we continued to experience higher yield and volume recovery in our landfill, commercial and industrial collection businesses and benefited from the acquisition of Advanced Disposal.
−Removed: However, our income from operations was impacted by constraints on labor availability and inflationary cost pressures, primarily in the second half of 2021.
−Removed: We continue to invest in our people through market wage adjustments, investments in our digital platform and training for new team members.
−Removed: In addition, we are focused on executing on our disciplined pricing programs to drive margin growth in the face of these additional labor cost and inflationary pressures.
−Removed: 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.
+Added: During 2022, we continued to advance our strategic priorities—enhancing employee engagement, improving our operations through the use of technology and automation, and investing in growth through our recycling and renewable energy businesses.
+Added: This strategic focus, combined with strong operational execution resulted in increased revenue, income from operations and income from operations margin driven primarily by both yield and volume growth in our collection and disposal business.
+Added: We were able to achieve these results despite high inflationary cost pressures.
+Added: We remain diligent in offering a competitively profitable service that meets the needs of our customers and are focused on driving operating efficiencies and reducing discretionary spend.
+Added: We continue to invest in our people through market wage adjustments, investments in our digital platform and training for our team members.
+Added: Despite the significant downturn in commodity prices for recyclable materials in the second half of the year, we remain committed to our investment in recycling automation, which reduces costs and increases throughput, positioning us to overcome commodity price headwinds and deliver a differentiated service.
+Added: We also continue to make investments in automation and optimization to enhance our operational efficiency and improve labor productivity for all lines of business.
During 2022, the Company allocated $2,587 million of available cash to capital expenditures.
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● Revenues of $19,698 million for 2022 compared with $17,931 million in 2021, an increase of $1,767 million, or 9.9%.
−Removed: The increase is primarily attributable to (i) the acquisition of Advanced Disposal;
−Removed: (ii) record-high increases in the market prices for recycling commodities we sell;
−Removed: (iii) higher yield in our collection and disposal lines of business and (iv) strong volume growth;
+Added: The increase is primarily attributable to (i) higher yield in our collection and disposal lines of business;
+Added: (ii) increases from our fuel surcharge program and (iii) higher volume in our collection and disposal lines of business;
● Operating expenses of $12,294 million in 2022, or 62.4% of revenues, compared with $11,111 million, or 62.0% of revenues, in 2021.
−Removed: The $1,770 million increase is primarily attributable to (i) increased volumes from the acquisition of Advanced Disposal;
−Removed: (ii) commodity-driven business impacts, particularly from recycling brokerage rebates and higher fuel prices, which also meaningfully impacted our operating expense as a percentage of revenue;
−Removed: (iii) volume recovery from earlier pandemic lows;
−Removed: (iv) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth and (v) inflationary cost pressures, primarily in the second half of 2021;
+Added: The $1,183 million increase is primarily attributable to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs;
+Added: (ii) commodity-driven business impacts from higher fuel prices and recycling and (iii) labor cost increases from frontline employee wage adjustments;
● Selling, general and administrative expenses of $1,938 million in 2022, or 9.8% of revenues, compared with $1,864 million, or 10.4% of revenues, in 2021.
−Removed: The $136 million increase is primarily attributable to (i) higher incentive compensation costs;
−Removed: (ii) strategic investments in our digital platform and (iii) increased labor, support and integration costs following our acquisition of Advanced Disposal.
−Removed: These cost increases are partially offset by (i) lower consulting, advisory and legal fees associated with our completion of the Advanced Disposal acquisition in 2020 and (ii) a decrease in our provision for bad debts as collections returned to pre-pandemic levels;
+Added: The $74 million increase is primarily attributable to (i) higher costs associated with our strategic investments in our digital platform and sustainability initiatives;
+Added: (ii) increased labor costs primarily from higher annual incentive compensation costs and merit increases;
+Added: (iii) increased
+Added: business travel and entertainment expense and (iv) an increase in provision for bad debts;
+Added: partially offset by (i) lower long-term incentive compensation costs;
+Added: (ii) market adjustments for deferred compensation plans related to investment performance and (iii) lower litigation costs;
● Income from operations of $3,365 million, or 17.1% of revenues, in 2022 compared with $2,965 million, or 16.5% of revenues, in 2021.
−Removed: The improved earnings in the current year are driven by (i) strong operating results in our collection and disposal business;
−Removed: (ii) improved profitability in our recycling business;
−Removed: (iii) lower transaction-related costs following our 2020 acquisition of Advanced Disposal and (iv) improved profitability in our WM Renewable Energy business.
−Removed: The increase in income from operations was partially offset by (i) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth;
−Removed: (ii) inflationary cost pressures and (iii) increased depreciation and amortization from our acquisition of Advanced Disposal and increased landfill amortization from higher volumes and revisions in landfill estimates.
−Removed: During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation and amortization of acquired assets;
+Added: The increase in the current year was primarily driven by revenue growth in our collection and disposal lines of business driven by both yield and volume, partially offset by (i) inflationary cost pressures;
+Added: (ii) labor cost increases from frontline employee wage adjustments;
+Added: (iii) non-cash asset impairments;
+Added: and (iv) reduced profitability in our recycling business;
● Net income attributable to Waste Management, Inc.
−Removed: was $1,816 million, or $4.29 per diluted share, compared with $1,496 million, or $3.52 per diluted share, in the prior year period.
−Removed: The increase in income from operations discussed above, in addition to lower interest expense, drove an increase in net income which was partially offset by a loss on early extinguishment of debt;
−Removed: ● Net cash provided by operating activities was $4,338 million in 2021, compared with $3,403 million in 2020 with the improvement driven by (i) an increase in earnings;
−Removed: (ii) our acquisition of Advanced Disposal;
−Removed: (iii) lower interest payments;
−Removed: (iv) lower income taxes paid in the current year and (v) favorable changes in our working capital, net of effects of acquisitions and divestitures;
+Added: was $2,238 million, or $5.39 per diluted share, compared with $1,816 million, or $4.29 per diluted share, in 2021.
+Added: The increase in income from operations, as discussed above, in addition to a net loss on early extinguishment of debt of $220 million in 2021 that did not repeat in 2022, drove an increase in net income;
+Added: ● Net cash provided by operating activities was $4,536 million in 2022, compared with $4,338 million in 2021.
+Added: The increase in net cash provided by operating activities was driven by (i) an increase in earnings and (ii) lower interest payments during 2022.
+Added: These results were partially offset by higher income tax payments in 2022 primarily as a result of higher pre-tax earnings and a deposit of approximately $103 million that was made to the Internal Revenue Service (“IRS”) related to a disputed tax matter.
+Added: The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund.
+Added: See Note 8 to the Consolidated Financial Statements for further discussion;
● Free cash flow was $1,976 million in 2022, compared with $2,530 million in 2021.
−Removed: The decrease in free cash flow is primarily attributable to higher proceeds from divestitures in 2020 primarily related to assets required to be sold by the U.S.
−Removed: Department of Justice in connection with our acquisition of Advanced Disposal, partially offset by an increase in net cash provided by operating activities discussed above.
+Added: The decrease in free cash flow is primarily attributable to (i) an increase in capital spending, primarily driven by our intentional investment in sustainability growth projects as well as timing differences in our fixed asset purchases to support our ongoing operations and (ii) higher income tax payments in 2022.
+Added: This decrease was partially offset by increased earnings in 2022.
Free cash flow is a non-GAAP measure of liquidity.
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Our Solid Waste operating revenues are primarily generated from fees charged for our collection, transfer, disposal, and recycling and resource recovery services, and from sales of commodities by our recycling and landfill gas-to-energy operations.
−Removed: 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.
+Added: 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 Services (“SES”) businesses, which include landfill gas-to-energy services, environmental solutions services and recycling brokerage services.
+Added: We also offer
+Added: certain other expanded service offerings and solutions.
The mix of operating revenues from our major lines of business for the year ended December 31 are as follows (in millions):
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Intercompany (b)
−Removed: (a) The “Other” line of business includes (i) certain services provided by our WMSBS business;
−Removed: (ii) our landfill gas-to-energy operations managed by our WM Renewable Energy business;
−Removed: (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.
−Removed: 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.
+Added: The “Other” line of business includes (i) certain services provided by our WMSBS business;
+Added: (ii) certain services within our sustainability business including our landfill gas to energy operations managed by our WM Renewable Energy business and (iii) certain other expanded service offerings and solutions and reflects the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.
Revenue attributable to collection, landfill, transfer and recycling services provided by our “Other” businesses has been reflected as a component of the relevant line of business for purposes of presentation in this table.
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Recycling (c)
−Removed: Fuel surcharges and other (d)
−Removed: Total average yield (e)
+Added: Fuel surcharges and other
+Added: Total average yield (d)
Internal revenue growth
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(c) Includes combined impact of commodity price variability and changes in fees.
−Removed: (d) Beginning in 2021, includes changes in our revenue attributable to our WM Renewable Energy business from yield, which is included in Fuel Surcharges and Other, and Volume.
−Removed: (e) The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company.
+Added: (d) The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company.
The following provides further details about our period-to-period change in revenues:
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Total collection and disposal
−Removed: Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate.
−Removed: We experienced strong average yield growth in our collection line of business of 4.2% in 2021, up from 2.5% in 2020, showing our focus on our pricing efforts in this inflationary environment.
+Added: Our overall strategic pricing efforts are focused on recovering our higher cost to service our customers that we experience in our business by increasing our average unit rate.
+Added: We experienced strong average yield growth in our collection line of business of 8.2% in 2022, up from 4.2% in 2021, illustrating our focus on our pricing efforts in this inflationary environment.
We are driving improvements in our residential line of business, aligning the price charged for services we provide to our customers with the costs to provide the services, resulting in increased average yield in 2022 of 6.1%, up from 4.5% in 2021.
−Removed: We are also continuing to see growth in our landfill and transfer businesses with our municipal solid waste business experiencing 3.2% average yield growth for 2021 compared to 2.3% in 2020.
−Removed: 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 those contracts during this period of rapid inflation.
−Removed: 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.
−Removed: As we enter 2022, many of these contract lookback provisions will begin to capture the recent inflationary cost increases.
−Removed: Recycling — Recycling revenue increased $537 million and $75 million in 2021 and 2020, respectively, as compared with the prior year periods primarily from higher market prices for recycling commodities.
−Removed: Average market prices for recycling commodities at the Company’s facilities were approximately 115% and 19% higher in 2021 and 2020, respectively, when compared with the prior year periods.
−Removed: Market prices began to increase in 2020 from the unprecedented lows experienced in 2019, largely due to COVID-19 related decreases in the supply of recycled materials.
−Removed: Demand for recycled materials strengthened in the back-half of 2020 and continued in 2021, outpacing supply, driven by the growth in e-commerce, businesses re-opening, and manufacturers committing to use more recycled content in their packaging.
−Removed: We have also maintained our focus on converting to a fee-based pricing model that ensures fees paid by customers address the cost of processing materials and the impact on our cost structure of managing contamination in the recycling stream.
−Removed: Fuel Surcharges and Other — These fees, which include our fuel surcharge program, yield from our WM Renewable Energy business and other mandated fees, increased $240 million in 2021, as compared with 2020, and decreased $151 million in 2020 as compared with 2019.
+Added: We are also continuing to see growth in our disposal business with our municipal solid waste business experiencing average yield of 6.2% in 2022, up from 3.2% in 2021.
+Added: Recycling — Recycling revenues attributable to yield increased $19 million and $537 million in 2022 and 2021, respectively, as compared with the prior year periods, primarily from higher market prices for recycling commodities in 2021 and the first half of 2022, before the significant downturn in the second half of 2022.
+Added: Demand for recycled materials strengthened through 2021 and into early 2022, primarily driven by the growth in e-commerce, businesses re-opening, and manufacturers committing to use more recycled content in their packaging.
+Added: In 2022, we experienced all-time high recycling commodity pricing in the first half of the year to be followed by historically low pricing through the second half of the year, resulting from the slowdown in the global economy, which reduced retail demand and the corresponding need for cardboard packaging to ship retail goods.
+Added: We expect significant commodity price headwinds to continue into 2023.
+Added: Average market prices for recycling commodities at the Company’s facilities were approximately 10% lower and 115% higher in 2022 and 2021, respectively, when compared with the prior year periods.
+Added: Revenue decline from lower commodity pricing was offset by higher pricing in our recycling brokerage business as well as our continued focus on a fee-based pricing model that ensures fees paid by customers cover the cost of processing materials and the impact on our cost structure of managing contamination in the recycling stream.
+Added: 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 $474 million and $240 million in 2022 and 2021, respectively, as compared to 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.
−Removed: Market prices for diesel fuel were almost 30% higher in 2021, when compared with 2020, as diesel fuel prices began to increase towards the end of 2020 and continued to increase throughout 2021.
−Removed: Consistent with the general downturn in oil and gas markets in 2020, market prices for diesel fuel were approximately 16% lower in 2020, as compared to 2019.
−Removed: Additionally, we transitioned certain customers’ pricing away from a fuel surcharge in 2020, reflecting the cost of fuel in the base rates we charge for our services, which further contributed to the decline in 2020 as compared with 2019.
−Removed: Revenue from our WM Renewable Energy business increased in 2021, as compared to 2020, primarily driven by the increase in value for renewable fuel standard credits.
−Removed: 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.
+Added: Market prices for diesel fuel were over 50% and 30% higher in 2022 and 2021, as compared to the prior year periods.
+Added: Revenue from yield growth in our WM Renewable Energy business increased $48 million and $85 million in 2022 and 2021, respectively, as compared to the prior year period, primarily driven by increases in the value for electricity and
+Added: renewable natural gas credits.
+Added: 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 periods presented.
−Removed: Our revenues from volume (excluding volumes from acquisitions and divestitures) increased $435 million, or 2.8%, in 2021, as compared with 2020, and decreased $692 million, or 4.5%, in 2020, as compared with 2019.
−Removed: Over the last year, our volumes have been recovering from the sharp decline experienced in April 2020 as a result of COVID-19.
−Removed: The pace of recovery in our volumes accelerated in the second quarter of 2021 and continued in the back-half of 2021 with minimal impact from the resurgence in transmission of recent COVID-19 virus variants as communities and businesses remained open.
+Added: Our revenues from volume (excluding volumes from acquisitions and divestitures) increased $233 million, or 1.3%, and $435 million, or 2.8%, in 2022 and 2021, respectively, as compared with the prior year periods.
+Added: Our collection and disposal business volumes grew 1.8% and 3.0% in 2022 and 2021, respectively.
+Added: Our 2022 volume growth has moderated when compared to the accelerated volume recovery from COVID-related impacts experienced in 2021.
+Added: Special waste volumes at our landfills have been the most significant driver of volume growth, primarily due to an increase in event-driven projects.
+Added: In addition, our WMSBS business volumes grew as a result of our continued focus on a differentiated service model for national accounts customers.
+Added: Our volumes have been impacted by our intentional efforts to reduce unprofitable residential and industrial collection volumes.
+Added: We experienced higher volume growth in 2021 relative to the sharp decline experienced in April 2020 as a result of COVID-related impacts.
+Added: The pace of recovery in our volumes accelerated in the second quarter of 2021 and continued in the second half of 2021 with minimal impact from periodic resurgences in transmission of COVID-19 virus variants as communities and businesses have remained open.
The portions of our business that had the most pronounced decreases in volume due to the pandemic were our industrial and commercial collection businesses and our landfill volumes.
−Removed: As we completed 2021, volumes in each of these lines of business were either on par with pre-pandemic levels or have now surpassed 2019 volumes.
−Removed: We continue to be optimistic about volume recovery and overall economic recovery from the impacts of the COVID-19 pandemic.
−Removed: However, uncertainty remains with respect to various factors that influence the pace of economic recovery and the potential for future resurgence in transmission of COVID-19 and related business closures due to virus variants or otherwise.
−Removed: Such conditions could adversely impact our volumes in the future.
−Removed: In addition, our WMSBS business volume grew from our continued focus on a differentiated service model for national accounts customers.
Acquisitions and Divestitures
−Removed: Acquisitions and divestitures resulted in a net increase in revenues of $983 million, or 6.5%, and $240 million, or 1.6%, in 2021 and 2020, respectively, as compared with the prior year periods, primarily due to our acquisition of Advanced Disposal.
+Added: Acquisitions and divestitures resulted in a net increase in revenues of $47 million, or 0.3%, and $983 million, or 6.5%, in 2022 and 2021, respectively, as compared with the prior year periods, with the increase in 2021 primarily due to our acquisition of Advanced Disposal.
Operating Expenses
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Risk management
−Removed: Our operating expenses for 2021 increased, as compared with 2020, primarily due to (i) increased volumes from the acquisition of Advanced Disposal;
+Added: Our operating expenses in 2022 increased, as compared with 2021, primarily due to (i) inflationary cost pressures, particularly for maintenance and repairs and subcontractor costs;
+Added: (ii) commodity-driven business impacts from higher fuel prices and recycling and (iii) labor cost pressure from frontline employee wage adjustments.
+Added: We also continue to focus on operating efficiency and efforts to control costs.
+Added: Our operating expenses in 2021 increased, as compared with 2020, primarily due to (i) increased volumes from the acquisition of Advanced Disposal;
(ii) commodity-driven business impacts, particularly from recycling brokerage rebates and higher fuel prices;
−Removed: (iii) volume recovery from earlier pandemic lows;
+Added: (iii) volume recovery from earlier pandemic-driven lows;
(iv) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth and (v) inflationary cost pressures, primarily in the second half of 2021.
These impacts were partially offset by our continued focus on operating efficiency and efforts to control costs as volumes grow.
−Removed: Our operating expenses for 2020 decreased, as compared with 2019, primarily due to decreases in our landfill and industrial and commercial collection volumes and our proactive steps to manage our variable costs in response to the volume declines resulting from COVID-19 impacts.
−Removed: The revenue declines due to the COVID-19 pandemic had a greater impact on our higher margin lines of business and negatively impacted operating costs as a percentage of revenues.
−Removed: In addition, our operating expenses as a percentage of revenues was impacted by our acquisition of Advanced Disposal as the acquired business’s operating cost structure was higher than ours and we incurred certain one-time, upfront costs.
Significant items affecting the comparison of operating expenses between reported periods include:
−Removed: Labor and Related Benefits — The increase in labor and related benefits costs in 2021, as compared with 2020, was largely driven by (i) increased labor and related benefits costs related to our acquisition of Advanced Disposal;
+Added: Labor and Related Benefits — The increase in labor and related benefits costs in 2022, as compared with 2021,was largely driven by (i) proactive market wage adjustments to hire and retain talent;
+Added: (ii) annual merit and annual incentive compensation cost increases 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.
+Added: The increase in labor and related benefits costs in 2021, as compared with 2020, was largely driven by (i) increased labor and related benefits costs related to our acquisition of Advanced Disposal;
(ii) merit and proactive market wage adjustments to hire and retain talent;
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(iv) higher annual incentive compensation and (v) increases in health and welfare costs attributable to medical care activity generally returning to pre-pandemic levels.
−Removed: The decrease in labor and related benefits costs in 2020, as compared with 2019, was largely driven by decreases in volume in our industrial and commercial collection businesses.
−Removed: Our proactive steps positioned us to optimize our route structure to respond to lower industrial and commercial collection volumes.
−Removed: Additionally, the decrease was attributable to (i) improved efficiency;
−Removed: (ii) lower headcount due to employee attrition coupled with proactive steps to defer hiring due to COVID-19 driven uncertainty and (iii) lower annual incentive compensation.
−Removed: These decreases were offset, in part, by annual merit increases and the addition of employees as a result of our acquisition of Advanced Disposal.
−Removed: Transfer and Disposal Costs — The increase in transfer and disposal costs in 2021, as compared with 2020, was largely driven by increased volume, which includes the volumes from our acquisition of Advanced Disposal and inflationary cost increases from our third-party haulers.
−Removed: The decrease in transfer and disposal costs in 2020, as compared with 2019, was largely driven by volume declines in our industrial and commercial collection businesses as a result of COVID-19 offset, in part, by additional disposal costs attributable to our acquisition of Advanced Disposal.
−Removed: Maintenance and Repairs — The increase in maintenance and repairs costs in 2021, as compared with 2020, was largely driven by (i) our acquisition of Advanced Disposal, including intentional investments to bring the acquired fleet to
−Removed: our standards;
−Removed: (ii) inflationary cost increases for parts, supplies and third-party services;
+Added: Transfer and Disposal Costs — The increase in transfer and disposal costs in 2022, as compared with 2021, was largely driven by inflationary cost increases, which includes increased disposal fees at third-party sites and higher fuel from our third-party haulers offset, in part, by decreases in residential collection and transfer volume.
+Added: The increase in transfer and disposal costs in 2021, as compared with 2020, was largely driven by increased volume, which includes the volumes from our acquisition of Advanced Disposal and inflationary cost increases from our third-party haulers.
+Added: Maintenance and Repairs — The increase in maintenance and repairs costs in 2022, as compared with 2021,was largely driven by (i) inflationary cost increases for parts, supplies and third-party services;
+Added: (ii) additional fleet maintenance driven by supply chain constraints, which have delayed deliveries of new trucks;
+Added: (iii) labor cost increases for our technicians, including higher overtime;
+Added: (iv) increased building maintenance costs including improvements to facilities and (v) an increase in container repairs driven by delays in delivery of steel containers due to supply chain constraints.
+Added: The increase in maintenance and repairs costs in 2021, as compared with 2020, was largely driven by (i) our acquisition of Advanced Disposal, including intentional investments to bring the acquired fleet to our standards;
+Added: (ii) inflationary cost
+Added: increases for parts, supplies and third-party services;
(iii) additional fleet maintenance driven by commercial and industrial collection volume increases;
−Removed: (iv) labor cost pressure from our technicians, including higher overtime from labor shortages;
+Added: (iv) labor cost increases for our technicians, including higher overtime from labor shortages;
(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 and (vi) increased building maintenance costs including improvements to facilities.
−Removed: The decrease in maintenance and repairs costs in 2020, as compared with 2019, was largely driven by proactive steps to optimize routes and reduce overtime hours to address the volume declines discussed above.
−Removed: Additionally, the 2019 period was also impacted by a $16 million non-cash charge to write-off certain equipment costs related to our Other segment.
−Removed: This decline in costs was partially offset by intentional investments in the acquired Advanced Disposal fleet and inflationary cost pressures for both our Company and third-party services due to demand for skilled technician labor as well as for parts and supplies.
−Removed: Subcontractor Costs — The increase in subcontractor costs in 2021, as compared with 2020, was largely driven by (i) inflationary cost increases from third-party haulers and higher volumes;
−Removed: (ii) an increase in volumes in our WMSBS business, which relies more extensively on subcontracted hauling than our collection and disposal business and (iii) the acquisition of Advanced Disposal.
−Removed: The decrease in subcontractor costs in 2020, as compared with 2019, was largely due to COVID-19 driven volume declines in our industrial collection business and projects ending or scaling down during 2020 in our EES business.
−Removed: The decrease was offset, in part, by an increase in business activity in our WMSBS business.
−Removed: Cost of Goods Sold — The increase in cost of goods sold in 2021, as compared with 2020, was primarily driven by increases in market prices for recycling commodities of approximately 115% and to a lesser extent, higher recycling volumes.
−Removed: Costs in 2020 were flat when compared with 2019 in spite of an increase in commodity prices, largely due to lower recycling volumes as a result of COVID-19.
−Removed: Additionally, a higher percentage of our overall recycled commodity sales in 2020 were targeted at domestic markets, resulting in lower freight costs.
−Removed: Fuel — The increase in fuel costs in 2021, as compared with 2020, was primarily due to (i) increases of almost 30% in market prices for diesel fuel;
+Added: Subcontractor Costs — The increase in subcontractor costs in 2022, as compared with 2021,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.
+Added: The increase in subcontractor costs in 2021, as compared with 2020, was largely driven by (i) inflationary cost increases from third-party haulers and higher volumes;
+Added: (ii) an increase in volumes in our WMSBS business and (iii) the acquisition of Advanced Disposal.
+Added: Cost of Goods Sold — The increase in cost of goods sold in 2022, as compared with 2021, was primarily driven by all-time high recycling commodity pricing in the first half of the year offset, in part, by the historically low pricing through the second half of the year.
+Added: The increase in cost of goods sold in 2021, as compared with 2020, was primarily driven by increases in market prices for recycling commodities of approximately 115% and to a lesser extent, higher recycling volumes.
+Added: Fuel — The increase in fuel costs in 2022, as compared with 2021, was primarily due to increases in market diesel and natural gas fuel prices as compared to the prior year.
+Added: The increase in fuel costs in 2021, as compared with 2020, was primarily due to (i) increases in market diesel and natural gas fuel prices;
(ii) the acquisition of Advanced Disposal and (iii) volume increases in our commercial and industrial collection businesses.
−Removed: The decrease in fuel costs in 2020, as compared with 2019, was primarily due to (i) a decline of approximately 15% in market prices for diesel fuel;
−Removed: (ii) lower costs resulting from the continued conversion of our fleet to natural gas vehicles and (iii) volume declines.
−Removed: The decreases were offset, in part, by (i) lower federal alternative fuel credits and (ii) additional costs attributable to our acquisition of Advanced Disposal.
−Removed: Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes in 2021, as compared with 2020, was primarily driven by (i) landfill volume increases;
+Added: Disposal and Franchise Fees and Taxes — The increase in disposal and franchise fees and taxes in 2022, as compared with 2021, was primarily driven by higher franchise fees, driven by an increase in landfill volumes, paid to certain municipalities where we operate and overall rate increases in our fees and taxes paid on our disposal volumes.
+Added: The increase in disposal and franchise fees and taxes in 2021, as compared with 2020, was primarily driven by (i) landfill volume increases;
(ii) disposal rate increases at certain landfills and (iii) additional costs attributable to our acquisition of Advanced Disposal.
−Removed: The decrease in disposal and franchise fees and taxes in 2020, as compared with 2019, was primarily related to lower landfill volumes, largely driven by the impact of COVID-19.
−Removed: The decreases were offset, in part, by additional costs attributable to our acquisition of Advanced Disposal.
−Removed: Landfill Operating Costs — The increase in landfill operating costs in 2021, as compared with 2020, was primarily due to volume increases, which includes our acquisition of Advanced Disposal and increased testing and monitoring costs.
−Removed: These increases were partially offset by (i) lower leachate management costs, primarily due to the cessation of certain transportation costs in our East Tier segment and (ii) changes in the measurement of our environmental remediation obligations and recovery assets in 2021 and 2020.
+Added: Landfill Operating Costs — Our landfill operating costs increased in 2022, as compared with 2021, primarily due to increases in methane and leachate management costs and other site maintenance costs, in part due to inflation.
+Added: The increase in landfill operating costs in 2021, as compared with 2020, was primarily due to volume increases, including from our acquisition of Advanced Disposal and increased testing and monitoring costs.
+Added: These increases were partially offset by (i) lower leachate management costs, primarily due to the cessation of certain transportation costs in our East Tier segment and (ii) changes in the measurement of our environmental remediation obligations and recovery assets.
+Added: The increases in both 2022 and 2021 were offset, in part, by changes in the measurement of our environmental remediation obligations and recovery assets in each year.
Our measurement of these balances includes application of a risk-free discount rate, which is based on the rate for U.S.
Treasury bonds.
−Removed: In 2021, there was an increase in the discount rate, which resulted in a reduction in the net liability balance and a credit to expense.
+Added: The discount rate increased, which resulted in a reduction in the net liability balance and a credit to expense, in both 2021 and 2022 with more significant impact in 2022.
Conversely, in 2020, there was a decrease in the discount rate, which resulted in an increase in the net liability balance and a charge to expense.
−Removed: The increase in landfill operating costs in 2020, as compared with 2019, was primarily due to higher leachate management costs compared to the prior year and additional costs attributable to our acquisition of Advanced Disposal.
−Removed: This increase was offset, in part, by decreases attributable to lower volumes at our landfills.
−Removed: Risk Management — The increase in risk management costs in 2021, as compared with 2020, was primarily due to our acquisition of Advanced Disposal and overall economic recovery, increasing business activity and claim volumes and related costs.
−Removed: Risk management costs were relatively flat in 2020, as compared with 2019.
−Removed: Other — Other operating cost increases in 2021, as compared with 2020, were due to our acquisition of Advanced Disposal and increased equipment rental costs attributable, in part, to increased volumes and supply chain constraints slowing normal course fleet and equipment orders.
+Added: Risk Management — Risk management costs increased slightly in 2022, as compared with 2021, primarily due to inflation in premiums.
+Added: The increase in risk management costs in 2021, as compared with 2020, was primarily due to our acquisition of Advanced Disposal and overall economic recovery from COVID-driven impacts, increasing business activity and claim volumes and related costs.
+Added: Other — Other operating cost increases in 2022, as compared with 2021, were primarily due to (i) inflationary cost pressures;
+Added: (ii) higher equipment rental costs attributable, in part, to supply chain constraints slowing normal course fleet and equipment orders;
+Added: (iii) higher utility costs at our facilities and (iv) an increase in business travel in 2022.
+Added: Additionally, a favorable litigation settlement in 2021 impacted the comparison.
+Added: Other operating cost increases in 2021, as compared with 2020, were due to our acquisition of Advanced Disposal and increased equipment rental costs attributable, in part, to increased volumes and supply chain constraints slowing normal course fleet and equipment orders.
Additionally, during the second half of 2021, additional volumes and inflationary cost pressures drove an increase in various costs.
−Removed: Partially offsetting these was a favorable litigation settlement in 2021.
+Added: offsetting these was a favorable litigation settlement in 2021.
Additionally, net gains on sales of certain assets during each year impacted the comparability of the reported periods
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Provision for bad debts
−Removed: Selling, general and administrative expenses for 2021, as compared with 2020, increased primarily due to (i) higher incentive compensation costs;
−Removed: (ii) strategic investments in our digital platform, including planned investments in a new enterprise resource planning system and investments in customer service digitalization and (iii) increased labor, support and integration costs following our acquisition of Advanced Disposal.
−Removed: Partially offsetting these increases are lower consulting, advisory and legal fees from the 2020 acquisition of Advanced Disposal and improvements in our provision for bad debts as collections returned to pre-pandemic levels.
−Removed: 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 periods.
−Removed: Selling, general and administrative expenses for 2020, as compared with 2019, increased due to (i) incremental costs of approximately $150 million incurred in connection with the acquisition and integration of Advanced Disposal;
−Removed: (ii) strategic investments in our digital platform and (iii) an increase in the provision for bad debts due to negative impacts on customer receipts experienced as a result of the COVID-19 pandemic.
−Removed: In addition to the cost increases, selling, general and administrative expenses as a percent of revenue increased in 2020 due to the decline in volume-related revenues.
+Added: Selling, general and administrative expenses in 2022, as compared with 2021, increased primarily due to (i) strategic investments in our digital platform, including those that support our ongoing sustainability initiatives;
+Added: (ii) higher annual incentive compensation costs and merit increases for our employees;
+Added: (iii) increased business travel and entertainment expense and (iv) an increase in provision for bad debts, partially offset by (i) lower long-term incentive compensation costs;
+Added: (ii) market adjustments for deferred compensation plans related to investment performance and (iii) lower litigation costs.
+Added: Selling, general and administrative expenses in 2021, as compared with 2020, increased primarily due to (i) higher incentive compensation costs;
+Added: (ii) strategic investments in our digital platform and (iii) increased labor, support and integration costs following our acquisition of Advanced Disposal.
+Added: Partially offsetting these increases are lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in 2020 and improvements in our provision for bad debts as collections returned to pre-pandemic levels.
+Added: Although our costs increased in 2022 and 2021, the significant revenue increases positioned us to reduce our overall selling, general and administrative expenses as a percentage of revenues when compared with each of the prior year periods.
Significant items affecting the comparison of our selling, general and administrative expenses between reported periods include:
−Removed: Labor and Related Benefits — The increase in labor and related benefits costs for 2021, as compared with 2020, was primarily due to (i) higher incentive compensation costs;
+Added: Labor and Related Benefits — The decrease in labor and related benefits costs in 2022, as compared with 2021, was primarily due to (i) lower long-term incentive compensation costs;
+Added: (ii) reductions in contract labor and (iii) market adjustments for deferred compensation plans related to investment performance, partially offset by higher annual incentive compensation and annual merit increases for our employees.
+Added: The increase in labor and related benefits costs in 2021, as compared with 2020, was primarily due to (i) higher incentive compensation costs;
(ii) additional headcount, including from our acquisition of Advanced Disposal;
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(iv) costs associated with our strategic investments in our digital platform and (v) increases in health and welfare costs attributable to medical care activities generally returning to pre-pandemic levels from the lower level experienced during 2020.
−Removed: The increase in labor and related benefits costs in 2020, as compared with 2019, was largely due to (i) costs incurred in connection with our acquisition of Advanced Disposal, including severance costs and additional headcount;
−Removed: (ii) annual merit increases and (iii) costs associated with
−Removed: our strategic investments in our digital platform.
−Removed: These cost increases were offset, in part, by (i) lower annual incentive compensation costs and (ii) proactive steps undertaken to defer hiring and reduce labor related costs.
−Removed: Professional Fees — Professional fees decreased for 2021, as compared with 2020, primarily due to lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in 2020, partially offset by increased strategic investments in our digital platform and integration costs related to our acquisition of Advanced Disposal.
−Removed: The increases in professional fees in 2020, as compared with 2019, were primarily driven by consulting, advisory and legal fees incurred in connection with our acquisition and integration of Advanced Disposal and strategic investments in our digital platform.
−Removed: Provision for Bad Debts — The decrease in provision for bad debts for 2021, as compared with 2020, was primarily due to an overall improvement in customer account collections and decreased collection risk with certain customers.
−Removed: The increase in the provision for bad debts in 2020, as compared with 2019, was primarily due to increased collection risk associated with certain customers as a result of the COVID-19 pandemic.
−Removed: Other — The increase in other expenses for 2021, as compared with 2020, was primarily driven by costs associated with our acquisition of Advanced Disposal and increased technology infrastructure costs to support our strategic investments in our digital platform.
−Removed: The decrease in other expenses in 2020, as compared with 2019, was primarily due to lower litigation costs and proactive measures taken to reduce discretionary costs, such as travel and entertainment, company-wide.
−Removed: These cost decreases were offset, in part, by increased technology infrastructure costs in 2020 to support strategic investments in our digital platform.
−Removed: We also incurred one-time technology costs in 2020 to transition employees to work-from-home in response to the COVID-19 pandemic.
−Removed: Depreciation and Amortization Expenses
−Removed: The following table summarizes the components of our depreciation and amortization expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
+Added: Professional Fees — The increase in professional fees in 2022, as compared with 2021, was primarily driven by strategic investments in our digital platform, including those that support our ongoing sustainability initiatives, partially
+Added: offset by lower acquisition and integration costs.
+Added: Professional fees decreased in 2021, as compared with 2020, primarily due to lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in 2020, partially offset by increased strategic investments in our digital platform and integration costs related to our acquisition of Advanced Disposal.
+Added: Provision for Bad Debts — The increase in provision for bad debts in 2022, as compared with 2021, is primarily related to (i) increased revenue;
+Added: (ii) increased collection risk with certain customers and (iii) favorable adjustments to our reserves taken in 2021 as a result of improvement in customer account collections.
+Added: The decrease in provision for bad debts in 2021, as compared with 2020, was primarily due to an overall improvement in customer account collections and decreased collection risk with certain customers.
+Added: Other — The increase in other expenses in 2022, as compared with 2021, was primarily driven by costs associated with technology infrastructure to support our strategic investments in our digital platform and an increase in business travel and entertainment expense, partially offset by lower litigation costs.
+Added: The increase in other expenses in 2021, as compared with 2020, was primarily driven by costs associated with our acquisition of Advanced Disposal and increased technology infrastructure costs to support our strategic investments in our digital platform.
+Added: Depreciation, Depletion and Amortization Expenses
+Added: The following table summarizes the components of our depreciation, depletion and amortization expenses for the year ended December 31 (dollars in millions and as a percentage of revenues):
Depreciation of tangible property and equipment
−Removed: Amortization of landfill airspace
+Added: Depletion of landfill airspace
Amortization of intangible assets
+Added: The increase in depreciation of tangible property and equipment in 2022, as compared with 2021, was primarily driven by investments in capital assets, including containers to service our customers and strategic investments in our digital platform.
+Added: The increase in depletion of landfill airspace in 2022, as compared with 2021, was primarily driven by changes in depletion rates from revisions in landfill cost estimates and increased volumes at our landfills, partially offset by a prior year charge due to management’s decision to close a landfill in our West Tier segment earlier than expected, resulting in the acceleration of the timing of capping, closure, and post-closure activities.
+Added: The decrease in amortization of intangible assets in 2022, as compared with 2021, was primarily driven by the amortization of acquired intangible assets from the acquisition of Advanced Disposal.
The increase in depreciation of tangible property and equipment in 2021, as compared with 2020, was related to our acquisition of Advanced Disposal and investments in capital assets, including our fleet, heavy equipment at our landfills and containers to service our customers.
−Removed: The increase in amortization of landfill airspace in 2021, as compared with 2020, was driven by (i) changes in amortization rates driven by revisions in landfill estimates, which includes changes in the anticipated timing of capping, closure and post-closure activities;
−Removed: (ii) our acquisition of Advanced Disposal and (iii) landfill volume increases from the economic recovery.
+Added: The increase in depletion of landfill airspace in 2021, as compared with 2020, was driven by (i) changes in depletion rates driven by revisions in landfill estimates, including a $15 million charge due to management’s decision to close a landfill in our West Tier segment earlier than expected;
+Added: (ii) our acquisition of Advanced Disposal and (iii) landfill volume increases associated with the economic recovery from COVID-driven impacts.
Additionally, 2020 benefited from a decrease in the inflation rate used to estimate capping, closure, and post-closure asset retirement obligations.
The increase in amortization of intangible assets in 2021, as compared with 2020, was primarily driven by the amortization of acquired intangible assets related to the acquisition of Advanced Disposal.
−Removed: The increase in depreciation of tangible property and equipment in 2020, as compared with 2019, was primarily related to (i) investments in capital assets, including our fleet and facilities and (ii) additional depreciation attributable to our acquisition of Advanced Disposal.
−Removed: The decrease in amortization of landfill airspace in 2020, as compared with 2019, was driven by (i) lower volumes at our landfills, primarily as a result of the COVID-19 pandemic, and (ii) a decrease in the inflation rate used to estimate capping, closure and post-closure asset retirement obligations from 2.5% to 2.25% at December 31, 2020.
−Removed: These decreases were offset, in part, by charges to reflect changes in estimated landfill construction costs and our acquisition of Advanced Disposal.
−Removed: Our amortization of intangible assets was flat in 2020, as compared with 2019.
−Removed: The increased expense for intangible assets acquired as part of the acquisition of Advanced Disposal was offset, primarily by decreases for certain customer list assets reaching the end of their lives.
Restructuring
During the year ended December 31, 2021, we recognized $8 million of restructuring charges primarily related to our acquisition of Advanced Disposal.
−Removed: During the year ended December 31, 2020, we recognized $9 million of restructuring charges primarily related to modifying our field sales and customer services structures to better support our investment in customer service digitalization, which is discussed above.
+Added: During the year ended December 31, 2020, we recognized $9 million of restructuring
+Added: charges primarily related to modifying our field sales and customer services structures to better support our strategic investments in our digital platform.
(Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net
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Asset impairments
−Removed: During the year ended December 31, 2021, we recognized net gains of $16 million primarily consisting of (i) a $35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations in our East Tier segment and (ii) an $8 million gain from divestitures of certain ancillary operations in our Other segment.
+Added: For the year ended December 31, 2022, we recognized $62 million of net charges consisting of (i) $50 million of asset impairment charges primarily related to management’s decision to close two landfills within our East Tier segment and (ii) a $17 million charge pertaining to reserves for loss contingencies 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 10 to the Consolidated Financial Statements.
+Added: These losses were partially offset by a $5 million gain from the divestiture of a solid waste business in our West Tier segment.
+Added: For the year ended December 31, 2021, we recognized net gains of $16 million primarily consisting of (i) a $35 million pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations in our East Tier segment and (ii) an $8 million gain from divestitures of certain ancillary operations in our Other segment.
These gains were partially offset by (i) a $20 million charge pertaining to reserves for loss contingencies in our Corporate and Other segment and (ii) $8 million of asset impairment charges primarily related to our WM Renewable Energy business within our Other segment.
−Removed: During the year ended December 31, 2020, we recognized $35 million of net charges primarily related to (i) a $33 million net gain associated with net asset divestitures executed to address requirements of the U.S.
+Added: For the year ended December 31, 2020, we recognized $35 million of net charges primarily related to (i) a $33 million net gain associated with net asset divestitures executed to address requirements of the U.S.
Department of Justice in connection with our acquisition of Advanced Disposal, primarily within our West Tier segment;
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(iii) a $20 million non-cash impairment charge in our East Tier segment due to management’s decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted airspace and (iv) $7 million of net charges primarily related to non-cash impairments of certain assets within our WM Renewable Energy business in our Other segment.
−Removed: During the year ended December 31, 2019, we recognized asset impairments of $42 million, related to (i) $27 million of goodwill impairment charges within our Other segment, of which $17 million related to our EES business, and $10 million related to our LampTracker ® reporting unit and (ii) $15 million of asset impairment charges primarily related to certain solid waste operations in our West Tier segment.
See Note 2 to the Consolidated Financial Statements for additional information related to the accounting policy and analysis involved in identifying and calculating impairments.
Income from Operations
−Removed: The following table summarizes income from operations for the year ended December 31 and has been updated to reflect our realigned segments which are discussed further in Note 19 to the Consolidated Financial Statements (dollars in millions):
+Added: The following table summarizes income from operations for the year ended December 31 (dollars in millions):
Corporate and Other (b)
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* Percentage change does not provide a meaningful comparison.
−Removed: (a) “Other” includes (i) elements of our WMSBS business;
−Removed: (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;
−Removed: (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;
−Removed: (iv) our recycling brokerage services and (v) certain other expanded service offerings and solutions.
−Removed: In addition, our “Other” segment reflects the results of non-operating entities that provide financial assurance and self-insurance support for our Solid Waste business, net of intercompany activity.
+Added: (a) “Other” includes (i) elements of our WMSBS business that are not included in the operations of our reportable segments;
+Added: (ii) elements of our sustainability business that includes landfill gas-to-energy operations managed by our WM Renewable Energy business, our SES business and recycling brokerage services and not included in the operations of our reportable segments;
+Added: (iii) certain other expanded service offerings and solutions and (iv) 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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Income from operations for “Corporate and Other” also includes costs associated with our long-term incentive program.
−Removed: (c) In the fourth quarter of 2021, we discontinued certain allocations from our Corporate and Other segment to our Solid Waste operating segments and Other segment.
−Removed: Reclassifications have been made to our prior period information for comparability purposes.
Solid Waste — The most significant items affecting the results of operations of our Solid Waste business during the three years ended December 31, 2022 are summarized below:
−Removed: ● Income from operations in our Solid Waste business increased for 2021, as compared with 2020, primarily due to (i) revenue growth in our collection and disposal businesses driven by both yield and volume, as well as the acquisition of Advanced Disposal;
−Removed: (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 and (iii) changes from divestitures, asset impairments and unusual items discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net .
+Added: ● Income from operations in our Solid Waste business increased in 2022, as compared with 2021, primarily due to revenue growth in our collection and disposal businesses driven by both yield and volume.
+Added: This increase was partially offset by (i) inflationary cost pressures;
+Added: (ii) labor cost increases from frontline employee wage adjustments;
+Added: (iii) divestitures, asset impairments and unusual items discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net ;
+Added: that impacted our East Tier results and (iv) reduced profitability in our recycling business from the decline in recycling commodity prices and lower volumes.
+Added: ● Income from operations in our Solid Waste business increased in 2021, as compared with 2020, primarily due to (i) revenue growth in our collection and disposal businesses driven by both yield and volume, as well as the acquisition of Advanced Disposal;
+Added: (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 and (iii) changes from divestitures, asset impairments and unusual items discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net that impacted both Tiers’ results.
These increases were partially offset by (i) labor cost pressure from frontline employee wage adjustments, increased turnover driving up training costs and higher overtime due to driver shortages and volume growth;
−Removed: (ii) increased landfill amortization from higher volumes and revisions in landfill estimates, including the anticipated timing of capping, closure and post-closure activities at certain landfills and adjustments in 2020 to the inflation rate used to estimate capping, closure, and post-closure asset retirement obligations that benefitted costs in 2020 and (iii) inflationary cost pressures.
−Removed: During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation and amortization of acquired assets.
−Removed: ● Income from operations for 2020 decreased, as compared with 2019, for the Solid Waste business due to the overall negative impact of the COVID-19 pandemic resulting in revenue declines from lower volumes and higher
−Removed: depreciation expense which was primarily related to investments in capital assets, including our fleet and facilities.
−Removed: The declines were partially offset by (i) higher yield in our collection and disposal businesses;
−Removed: (ii) the benefit of resumed fees and price increases;
−Removed: (iii) lower operating costs directly related to our proactive steps taken to manage our variable costs in the lower volume environment and (iv) a net divestiture gain of $33 million associated with the sale of net assets to GFL Environmental, primarily within our West Tier segment.
−Removed: Additionally, income from operations for our West Tier segment was impacted by $41 million of non-cash asset impairment charges primarily related to two landfills and an oil field waste injection facility.
−Removed: Income from operations for our East Tier segment was impacted by a $20 million non-cash impairment charge related to management’s decision to close a landfill once its constructed airspace is filled and abandon any remaining permitted airspace.
−Removed: Furthermore, in 2019, our West Tier segment benefited from the clean-up efforts of natural disasters primarily in California and similar efforts did not recur in 2020.
−Removed: Other — The increase in income from operations for 2021, as compared with 2020, was primarily driven by increased market values for renewable energy credits generated by our WM Renewable Energy business.
−Removed: Income from operations for the Other segment for 2020, as compared with 2019, was favorably impacted primarily by (i) volume increases in our WM Renewable Energy business as a result of a new renewable energy facility coming online;
−Removed: (ii) our WMSBS business as a result of newly executed national account contracts and (iii) our recycling brokerage business.
+Added: (ii) increased landfill depletion from higher volumes and revisions in landfill estimates, including the anticipated timing of capping, closure and post-closure activities at certain landfills and adjustments in 2020 to the inflation rate used to estimate capping, closure, and post-closure asset retirement obligations that benefitted costs in 2020 and (iii) inflationary cost pressures.
+Added: During 2021, the positive earnings contributions from Advanced Disposal were offset by elevated depreciation, depletion and amortization of acquired assets.
+Added: Other — The decrease in income from operations in 2022, as compared with 2021, was due to the recognition of acquisition and integration-related costs, as well as, a prior year gain from divestitures of certain ancillary operations in our Other segment, discussed above in (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net , partially offset by improved profitability in our SES and WMSBS businesses.
+Added: The increase in income from operations for 2021, as compared to 2020, was primarily driven by increased market values for renewable energy credits generated by our WM Renewable Energy business.
Corporate and Other — The most significant items affecting the results of operations for Corporate and Other during the three years ended December 31, 2022 are summarized below:
+Added: ● These costs increased in 2022, as compared with 2021, primarily due to strategic investments in our digital platform and sustainability initiatives, partially offset by lower acquisition and integration related costs.
● These costs increased in 2021, as compared with 2020, due to (i) higher incentive compensation costs;
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These increases were partially offset by lower consulting, advisory and legal fees following the completion of our acquisition of Advanced Disposal in the fourth quarter of 2020 and changes in the measurement of our environmental remediation obligations and recovery assets in both 2020 and 2021.
−Removed: ● The costs increased in 2020, as compared with 2019, due to (i) higher consulting, advisory and legal fees associated with our acquisition and integration of Advanced Disposal;
−Removed: (ii) strategic investments in our digital platform;
−Removed: (iii) incremental costs associated with the COVID-19 pandemic and (iv) higher long-term incentive compensation costs.
−Removed: These increased expenses were offset, in part, by (i) lower annual incentive compensation costs and (ii) lower litigation reserves.
Interest Expense, Net
Our interest expense, net was $378 million, $365 million and $425 million in 2022, 2021 and 2020, respectively.
+Added: The increase in interest expense, net for 2022 was primarily related to borrowings incurred under our $1.0 billion two-year, U.S.
+Added: term credit agreement (“Term Loan”) and increases in interest rates on our floating-rate debt, including commercial paper and variable-rate tax-exempt bonds.
+Added: Partially offsetting these increases were benefits from higher capitalized interest and increases in interest income as a result of higher cash and cash equivalent balances.
The decrease in interest expense, net for 2021 was primarily due to certain refinancing activities, as discussed further below, including (i) the redemption of $3.0 billion of senior notes in July 2020 and the issuance of $2.5 billion of senior notes in November 2020 at lower rates and (ii) 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.
The decreases were partially offset by decreases in interest income as a result of lower cash and cash equivalents balances in 2021.
−Removed: The increase in interest expense, net for 2020 was primarily attributable to decreases in interest income resulting from lower cash and cash equivalents balances, due to the redemption of $3.0 billion of senior notes with a special mandatory redemption feature (the “SMR Notes”) in July 2020 as discussed below in Loss on Early Extinguishment of Debt, Net .
−Removed: Partially offsetting the decreases in interest income were favorable impacts due to a lower interest rate on our commercial paper borrowings as a result of the favorable interest rate environment in 2020 compared to 2019.
+Added: See Note 6 to the Consolidated Financial Statements for more information related to our debt balances.
Loss on Early Extinguishment of Debt, Net
−Removed: In May 2021, WMI issued $950 million of senior notes, which are discussed further below in Summary of Cash and Cash Equivalents, Restricted Trust and Escrow Accounts and Debt Obligations .
+Added: In May 2021, WMI issued $950 million of senior notes.
Concurrently, 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.
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See Note 6 to the Consolidated Financial Statements for more information related to these transactions.
−Removed: In July 2020, we recognized a $52 million loss on early extinguishment of debt in our Consolidated Statement of Operations related to the mandatory redemption of the SMR Notes.
+Added: In July 2020, we recognized a $52 million loss on early extinguishment of debt in our Consolidated Statement of Operations related to the mandatory redemption of $3.0 billion of senior notes with a special mandatory redemption feature (the “SMR Notes”).
The loss includes $30 million of premiums paid and $22 million of unamortized discounts and debt issuance costs.
Pursuant to the terms of the SMR Notes, we were required to redeem all of such outstanding notes paying debt holders 101% of the aggregate principal amounts of such notes, plus accrued but unpaid interest, as a result of the Advanced Disposal acquisition not being completed by July 14, 2020.
−Removed: Accordingly, the redemption was completed on July 20, 2020 using available cash on hand and, to a lesser extent, commercial paper borrowings.
+Added: Accordingly, the redemption was completed on
+Added: July 20, 2020 using available cash on hand and, to a lesser extent, commercial paper borrowings.
The cash paid included the $3.0 billion principal amount of debt redeemed, $30 million of related premiums and $8 million of accrued interest.
−Removed: During the fourth quarter of 2020, we repaid the outstanding borrowings under our 364-day revolving credit facility and contemporaneously terminated the facility, at which time we recognized a $2 million loss on early extinguishment of debt in our Consolidated Statement of Operations related to unamortized debt issuance costs.
−Removed: At the time of acquisition, Advanced Disposal had outstanding $425 million of 5.625% senior notes due November 2024.
+Added: During the fourth quarter of 2020, we repaid the outstanding borrowings under a 364-day revolving credit facility and contemporaneously terminated the facility, at which time we recognized a $2 million loss on early extinguishment of debt in our Consolidated Statement of Operations related to unamortized debt issuance costs.
+Added: Additionally, at the time of acquisition, Advanced Disposal had outstanding $425 million of 5.625% senior notes due November 2024.
In November 2020, we redeemed the notes pursuant to an optional redemption feature upon which we recognized a $1 million gain on early extinguishment of debt in our Consolidated Statement of Operations due to the difference in carrying value and redemption price.
−Removed: In May 2019, WMI issued $4.0 billion of senior notes, including $3.0 billion of SMR Notes.
−Removed: We used $344 million of the proceeds from this offering to retire $257 million principal amount of certain high-coupon senior notes.
−Removed: The cash paid to retire the high-coupon senior notes also included $84 million of related premiums, which are classified as loss on early extinguishment of debt in our Consolidated Statement of Operations, and $3 million of accrued interest.
−Removed: In the third quarter of 2019, we elected to refund and reissue $99 million of tax-exempt bonds, which resulted in the recognition of a $1 million loss on early extinguishment of debt in our Consolidated Statement of Operations.
Equity in Net Losses of Unconsolidated Entities
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We generate tax benefits, including tax credits, from the losses incurred from these investments, which are discussed further in Notes 8 and 18 to the Consolidated Financial Statements.
−Removed: In 2020, the entity that held and managed our ownership interest in the refined coal facility sold a majority of its assets resulting in a $7 million non-cash impairment charge at that time.
−Removed: Additionally, the 2019 period includes losses associated with our investment in a refined coal facility.
−Removed: We recognized other, net income of $5 million in 2021 and 2020, compared to other, net expense of $50 million in 2019.
−Removed: In 2019, we recognized a $52 million non-cash impairment charge related to our minority-owned investment in a waste conversion technology business.
−Removed: We wrote down our investment to its estimated fair value as the result of recent third-party investor’s transactions in these securities.
−Removed: The fair value of our investment was not readily determinable;
−Removed: thus, we determined the fair value utilizing a combination of quoted price inputs for the equity in our investment (Level 2) and certain management assumptions pertaining to investment value (Level 3).
+Added: We also held a residual financial interest in an entity that owned a refined coal facility that qualified for federal tax credits.
+Added: In 2020, the entity sold the majority of its assets resulting in a $7 million non-cash impairment charge at that time.
Income Tax Expense
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The comparability of our income tax expense for the reported periods has been primarily affected by the following:
−Removed: ● Investments Qualifying for Federal Tax Credits — Our low-income housing properties and refined coal facility investments reduced our income tax expense by $74 million, $87 million and $96 million, primarily due to tax credits realized from these investments for the years ended December 31, 2021, 2020 and 2019, respectively.
+Added: ● Investments Qualifying for Federal Tax Credits — Our low-income housing properties investments reduced our income tax expense by $99 million, $74 million and $87 million, primarily due to tax credits realized from these investments for the years ended December 31, 2022, 2021 and 2020, respectively.
See Note 18 to the Consolidated Financial Statements for additional information related to these unconsolidated variable interest entities;
−Removed: ● Other Federal Tax Credits — During 2021, 2020 and 2019, we recognized federal tax credits in addition to the tax credits realized from our investments in low-income housing properties and the refined coal facility, resulting in a reduction in our income tax expense of $5 million, $7 million and $11 million, respectively;
−Removed: ● Equity-Based Compensation — During 2021, 2020 and 2019, we recognized excess tax benefits related to the vesting or exercise of equity-based compensation awards resulting in a reduction in our income tax expense of $18 million, $27 million and $25 million, respectively;
+Added: ● Equity-Based Compensation — During 2022, 2021 and 2020, we recognized a reduction in our income tax expense of $17 million, $18 million and $27 million, respectively, for excess tax benefits related to the vesting or exercise of equity-based compensation awards;
● State Net Operating Losses and Credits — During 2022, 2021 and 2020, we recognized state net operating losses and credits resulting in a reduction in our income tax expense of $8 million, $15 million and $12 million, respectively;
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During the reported periods, we settled various tax audits, which resulted in a reduction in our income tax expense of $6 million, $13 million and $10 million for the years ended December 31, 2022, 2021 and 2020, respectively;
−Removed: ● Adjustments to Accruals and Related Deferred Taxes — Adjustments to our accruals and related deferred taxes primarily due to the filing of our income tax returns, analysis of our deferred tax balances and uncertain tax positions, and changes in state and foreign laws resulted in an increase in our income tax expense of $17 million for the year ended December 31, 2021, and a reduction in our income tax expense of $3 million and $22 million for the years ended December 31, 2020 and 2019, respectively;
+Added: ● Adjustments to Accruals and Related Deferred Taxes — Adjustments to our accruals and related deferred taxes primarily due to the filing of our income tax returns, analysis of our deferred tax balances and uncertain tax positions, and changes in state and foreign laws resulted in an increase in our income tax expense of $1 million and $17 million for the years ended December 31, 2022 and 2021, respectively, and a reduction in our income tax expense of $3 million for the year ended December 31, 2020;
● Tax Implications of Divestitures – During 2021, we recognized a pre-tax gain from the recognition of cumulative translation adjustments on the divestiture of certain non-strategic Canadian operations.
−Removed: This gain was not taxable, which resulted in a reduction in our income tax expense of $8 million;
−Removed: ● Non-Deductible Transaction Costs — During 2020 and 2019, we recognized the detrimental tax impact of $27 million and $10 million, respectively, of non-deductible transaction costs related to our acquisition of Advanced Disposal.
+Added: This gain was not taxable, which benefited our effective income tax rate for the year ended December 31, 2021;
+Added: ● Non-Deductible Transaction Costs — During 2020, we recognized the detrimental tax impact of $27 million of non-deductible transaction costs related to our acquisition of Advanced Disposal.
The tax rules require the capitalization of certain facilitative costs on the acquisition of stock of a company resulting in the applicable costs not being deductible for tax purposes;
−Removed: ● Tax Implications of Impairments — Portions of the impairment charges recognized during 2019 were not deductible for tax purposes resulting in an increase in income tax expense of $15 million.
−Removed: The non-cash impairment charges recognized during 2021 and 2020 were deductible for tax purposes.
−Removed: See Note 11 to the Consolidated Financial Statements for more information related to our impairment charges.
+Added: ● Tax Legislation — The Inflation Reduction Act of 2022 (“IRA”) was signed into law by President Biden on August 16, 2022 and contains a number of tax-related provisions.
+Added: The provisions of the IRA related to alternative fuel tax credits secure approximately $55 million of annual pre-tax benefit (to be recorded as a reduction in our operating expense) from tax credits through 2024, which is in line with the benefit we have realized from our alternative fuel tax credits in prior years.
+Added: Additionally, we will incur an excise tax of 1% for future common stock repurchases, which will be reflected in the cost of purchasing the underlying shares as a component of treasury stock.
+Added: The IRA contains a number of additional provisions related to tax incentives for investments in renewable energy production, carbon capture, and other climate actions, as well as the overall measurement of corporate income taxes.
+Added: Given the complexity and uncertainty around the applicability of the legislation to our specific facts and circumstances, we continue to analyze the IRA provisions to identify and quantify potential opportunities and applicable benefits included in the legislation.
+Added: The current expectation is the minimum corporate tax will not have an impact on the Company.
+Added: With respect to only the investment tax credit aspect of the IRA, we expect the cumulative benefit to be between $250 million and $350 million, a large portion of which is anticipated to be realized in 2025.
+Added: Additionally, the production tax credit incentives for investments in renewable energy and the carbon capture provisions of the IRA will likely result in incremental benefit, although at this time the amount of those benefits have not been quantified.
See Note 8 to the Consolidated Financial Statements for more information related to income taxes.
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Expansion permits granted (b)
−Removed: Amortizable tons received
−Removed: Changes in engineering estimates and other (c)
−Removed: Balance as of end of year (in tons)
−Removed: Balance as of end of year (in cubic yards)
+Added: Depletable tons received
+Added: Changes in engineering estimates and other (c) (d)
+Added: Balance as of end of year (in tons) (e)
+Added: Balance as of end of year (in cubic yards) (e)
(a) Amounts reflected here relate to the combined impacts of (i) new expansions pursued;
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(iii) adjustments for differences between the airspace being pursued and airspace granted and (iv) decreases due to decisions to no longer pursue expansion permits, if any.
−Removed: (b) We received expansion permits at seven of our landfills during 2021 and four of our landfills during 2020, demonstrating our continued success in working with municipalities and regulatory agencies to expand the disposal airspace of our existing landfills.
+Added: (b) We received expansion permits at 12 of our landfills during 2022 and seven of our landfills during 2021, demonstrating our continued success in working with municipalities and regulatory agencies to expand the disposal airspace of our existing landfills.
(c) Changes in engineering estimates can result in changes to the estimated available remaining airspace of a landfill or changes in the utilization of such landfill airspace, affecting the number of tons that can be placed in the future.
−Removed: Estimates of the amount of waste that can be placed in the future are reviewed annually by our engineers and are based on a number of factors, including standard engineering techniques and site-specific factors such as current and projected mix of waste type;
+Added: Estimates of the amount of waste that can be placed in the future are reviewed annually by our engineers and are based on a number of factors, including standard engineering techniques and site-specific factors such as current and
+Added: projected mix of waste type;
initial and projected waste density;
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optimizing the placement of daily cover materials and increasing initial compaction through improved landfill equipment, operations and training.
−Removed: The tons received at our landfills for the year ended December 31 are shown below (tons in thousands):
+Added: (d) In 2022, a change in accounting estimate resulted in an increase of 190 million tons across certain landfills.
+Added: (e) See Note 2 to the Consolidated Financial Statements for discussion of converting remaining cubic yards of airspace to tons of capacity.
+Added: The depletable tons received at our landfills for the year ended December 31 are shown below (tons in thousands):
Solid waste landfills (a)
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(b) In 2022, we (i) executed one new contractual agreement;
−Removed: (ii) divested one landfill;
−Removed: (iii) divested one service agreement;
−Removed: (iv) closed six landfills and (v) closed one landfill operated under contractual agreement.
−Removed: (c) These amounts include 1.6 million tons and 1.7 million tons as of December 31, 2021 and 2020, respectively, that were received at our landfills but were not amortized as they were used for beneficial purposes and generally were redirected from the permitted airspace to other areas of the landfill.
−Removed: Waste types that are frequently identified for beneficial use include green waste for composting and clean dirt for on-site construction projects.
−Removed: As of December 31, 2021, we owned or controlled the management of 230 sites with remedial activities, are in closure or have received a certification of closure from the applicable regulatory agency.
+Added: (ii) reopened one previously closed landfill;
+Added: (iii) developed one new landfill;
+Added: (iv) closed three landfills and (v) closed one landfill operated under contractual agreement.
+Added: (c) December 31, 2021 tons have been restated for comparability purposes by removing 1.6 million tons received at the landfill that were not depleted as they were used for beneficial purposes and generally were redirected from the permitted airspace to other areas of the landfill.
+Added: As of December 31, 2022, we owned or controlled the management of 231 sites with remedial activities, are in closure or have received a certification of closure or post-closure from the applicable regulatory agency.
Based on remaining permitted airspace as of December 31, 2022 and projected annual disposal volume, the weighted average remaining landfill life for all of our owned or operated landfills is approximately 39 years.
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The cost basis of our landfill assets also includes estimates of future costs associated with landfill final capping, closure and post-closure activities, which are discussed further below.
−Removed: The changes to the cost basis of our landfill assets and accumulated landfill airspace amortization for the year ended December 31, 2021 are reflected in the table below (in millions):
+Added: The changes to the cost basis of our landfill assets and accumulated landfill airspace depletion for the year ended December 31, 2022 are reflected in the table below (in millions):
Cost Basis of
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Asset retirement obligations incurred and capitalized
−Removed: Amortization of landfill airspace
+Added: Depletion of landfill airspace
Foreign currency translation
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The specific timing of landfill capital spending is dependent on future events and spending estimates are subject to change due to fluctuations in landfill waste volumes, changes in environmental requirements and other factors impacting landfill operations.
−Removed: As of December 31, 2021, we had 14 landfills which were not accepting waste.
−Removed: During the year ended December 31, 2021, we performed tests of recoverability for five of these landfills with an aggregate net recorded capitalized landfill asset cost of $297 million, for which the undiscounted expected future cash flows resulting from our probability-weighted estimation approach exceeded the carrying values.
−Removed: We did not perform recoverability tests for the remaining nine landfills as the net recorded capitalized landfill asset cost was not material.
Landfill and Environmental Remediation Liabilities — As we accept waste at our landfills, we incur significant asset retirement obligations, which include liabilities associated with landfill final capping, closure and post-closure activities.
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Revisions in estimates and interest rate assumptions (a)
−Removed: Acquisitions, divestitures and other adjustments (b)
+Added: Acquisitions, divestitures and other adjustments
December 31, 2022
−Removed: (a) The amount reported for our landfill liabilities includes an increase of $15 million due to a business decision to accelerate the closure timing of a landfill in our West Tier segment, which resulted in the acceleration of the expected timing of capping, closure and post-closure activities.
−Removed: The remaining increase relates to revisions in estimated costs and timing of capping, closure and post-closure liabilities.
−Removed: (b) The amount reported for our landfill liabilities includes an increase of $13 million related to changes in the fair values assigned to certain acquired Advanced Disposal sites.
+Added: (a) In 2021, the increase in our landfill liabilities for revisions in estimates and interest rate assumptions was $33 million.
+Added: The increase in our landfill liabilities in 2022 is primarily due to inflationary cost pressures that are expected to impact costs over the remaining landfill lives.
Landfill Operating Costs — The following table summarizes our landfill operating costs for the year ended December 31 (in millions):
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Total landfill operating costs
−Removed: Amortization of Landfill Airspace — Amortization of landfill airspace, which is included as a component of depreciation and amortization expenses, includes the following:
−Removed: ● the amortization of landfill capital costs, including (i) costs that have been incurred and capitalized and (ii) estimated future costs for landfill development and construction required to develop our landfills to their remaining permitted and expansion airspace;
−Removed: ● the amortization of asset retirement costs arising from landfill final capping, closure and post-closure obligations, including (i) costs that have been incurred and capitalized and (ii) projected asset retirement costs.
−Removed: Amortization expense is recorded on a units-of-consumption basis, applying cost as a rate per ton.
−Removed: The rate per ton is calculated by dividing each component of the amortizable basis of a landfill (net of accumulated amortization) by the number of tons needed to fill the corresponding asset’s remaining permitted and expansion airspace.
−Removed: Landfill capital costs and closure and post-closure asset retirement costs are generally incurred to support the operation of the landfill over its entire operating life and are, therefore, amortized on a per-ton basis using a landfill’s total permitted and expansion airspace.
−Removed: Final capping asset retirement costs are related to a specific final capping event and are, therefore, amortized on a per-ton basis using each discrete final capping event’s estimated permitted and expansion airspace.
−Removed: Accordingly, each landfill has multiple per-ton amortization rates.
−Removed: The following table presents our landfill airspace amortization expense on a per-ton basis for the year ended December 31:
−Removed: Amortization of landfill airspace (in millions)
+Added: Depletion of Landfill Airspace — Depletion of landfill airspace, which is included as a component of depreciation, depletion and amortization expenses, includes the following:
+Added: ● the depletion of landfill capital costs, including (i) costs that have been incurred and capitalized and (ii) estimated future costs for landfill development and construction required to develop our landfills to their remaining permitted and expansion airspace;
+Added: ● the depletion of asset retirement costs arising from landfill final capping, closure and post-closure obligations, including (i) costs that have been incurred and capitalized and (ii) projected asset retirement costs.
+Added: Depletion expense is recorded on a units-of-consumption basis, applying cost as a rate per ton.
+Added: The rate per ton is calculated by dividing each component of the depletable basis of a landfill (net of accumulated depletion) by the number of tons needed to fill the corresponding asset’s remaining permitted and expansion airspace.
+Added: Landfill capital costs and closure and post-closure asset retirement costs are generally incurred to support the operation of the landfill over its entire operating life and are, therefore, depleted on a per-ton basis using a landfill’s total permitted and expansion airspace.
+Added: Final capping asset retirement costs are related to a specific final capping event and are, therefore, depleted on a per-ton basis using each discrete final capping event’s estimated permitted and expansion airspace.
+Added: Accordingly, each landfill has multiple per-ton depletion rates.
+Added: The following table presents our landfill airspace depletion expense on a per-ton basis for the year ended December 31:
+Added: Depletion of landfill airspace (in millions)
Tons received, net of redirected waste (in millions)
−Removed: Average landfill airspace amortization expense per ton
−Removed: Different per-ton amortization rates are applied at each of our 260 landfills, and per-ton amortization rates vary significantly from one landfill to another due to (i) inconsistencies that often exist in construction costs and provincial, state and local regulatory requirements for landfill development and landfill final capping, closure and post-closure activities and (ii) differences in the cost basis of landfills that we develop versus those that we acquire.
−Removed: Accordingly, our landfill airspace amortization expense measured on a per-ton basis can fluctuate due to changes in the mix of volumes we receive across the Company each year.
+Added: Average landfill airspace depletion expense per ton
+Added: Different per-ton depletion rates are applied at each of our 259 landfills, and per-ton depletion rates vary significantly from one landfill to another due to (i) inconsistencies that often exist in construction costs and provincial, state and local regulatory requirements for landfill development and landfill final capping, closure and post-closure activities and (ii) differences in the cost basis of landfills that we develop versus those that we acquire.
+Added: Accordingly, our landfill airspace depletion expense measured on a per-ton basis can fluctuate due to changes in the mix of volumes we receive across the Company each year.
Liquidity and Capital Resources
−Removed: 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.
+Added: The Company consistently generates annual cash flow from operations that meets and exceeds our working capital needs, allows for payment of our dividends, investment in the business through capital expenditures and tuck-in acquisitions, and funding of strategic sustainability growth 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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Summary of Contractual Obligations
−Removed: The following table summarizes our significant contractual obligations as of December 31, 2021 and the anticipated effect of these obligations on our liquidity in future years (in millions):
+Added: The following table summarizes our significant contractual obligations as of December 31, 2022 (other than recorded obligations related to liabilities associated with environmental remediation costs and non-cancelable operating lease obligations, which are discussed further in Notes 3 and 7 to the Consolidated Financial Statements, respectively) and the anticipated effect of these obligations on our liquidity in future years (in millions):
Recorded Obligations:
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(d) Our unrecorded obligations represent purchase commitments from which we expect to realize an economic benefit in future periods.
−Removed: We have also made certain guarantees that we do not expect to materially affect our current or future financial position, results of operations or liquidity.
+Added: We have also made certain guarantees that we do not expect to materially affect our current or future
+Added: financial position, results of operations or liquidity.
See Note 10 to the Consolidated Financial Statements for discussion of the nature and terms of our unconditional purchase obligations and guarantees.
−Removed: In addition to the above, we also have recorded obligations related to liabilities associated with environmental remediation costs and non-cancelable operating lease obligations, which are discussed further in Notes 3 and 7 to the Consolidated Financial Statements, respectively.
−Removed: Summary of Cash and Cash Equivalents, Restricted Trust and Escrow Accounts and Debt Obligations
−Removed: The following is a summary of our cash and cash equivalents, restricted trust and escrow accounts and debt balances as of December 31 (in millions):
+Added: Summary of Cash and Cash Equivalents, Restricted Funds and Debt Obligations
+Added: The following is a summary of our cash and cash equivalents, restricted funds and debt balances as of December 31 (in millions):
Cash and cash equivalents
−Removed: Restricted trust and escrow accounts:
+Added: Restricted funds:
Insurance reserves
Final capping, closure, post-closure and environmental remediation funds
−Removed: Total restricted trust and escrow accounts (a)
+Added: Total restricted funds (a)
Current portion
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As of December 31, 2022 and 2021, $83 million and $80 million, respectively, of these account balances was included in other current assets in our Consolidated Balance Sheets.
−Removed: Cash and cash equivalents — The decrease in cash and cash equivalents during 2021 is primarily due to the use of available cash to retire certain high-coupon senior notes in May 2021, which is discussed above in Loss on Early Extinguishment of Debt, Net .
Debt — We use long-term borrowings in addition to the cash we generate from operations as part of our overall financial strategy to support and grow our business.
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The components of our borrowings as of December 31, 2022 are described in Note 6 to the Consolidated Financial Statements.
−Removed: As of December 31, 2021, we had $3.1 billion of debt maturing within the next 12 months, including (i) $1.8 billion of short-term borrowings under our commercial paper program (net of related discount on issuance);
+Added: As of December 31, 2022, we had approximately $3.1 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);
(ii) $725 million of tax-exempt bonds with term interest rate periods that expire within the next 12 months, which is prior to their scheduled maturities;
−Removed: (iii) $500 million of 2.90% senior notes that mature in September 2022 and (iv) $170 million of other debt with scheduled maturities within the next 12 months, including $71 million of tax-exempt bonds.
+Added: (iii) $500 million of 2.4% senior notes that mature in May 2023 and (iv) $192 million of other debt with scheduled maturities within the next 12 months, including $65 million of tax-exempt bonds.
As of December 31, 2022, we have classified $2.7 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.
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The remaining $414 million of debt maturing in the next 12 months is classified as current obligations.
−Removed: As of December 31, 2021, 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.
−Removed: The interest rates on our variable rate tax-exempt bonds are reset on a weekly basis through a remarketing process.
−Removed: 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.
−Removed: However, if the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us.
−Removed: 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.
−Removed: 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 Consolidated Balance Sheet as of December 31, 2021.
−Removed: In May 2021, WMI issued $950 million of senior notes consisting of $475 million of 2.00% senior notes due June 1, 2029 and $475 million of 2.95% senior notes due June 15, 2041.
−Removed: The net proceeds from these debt issuances were $942 million, all of which were used along with available cash on hand, to retire $1.3 billion of certain high-coupon senior notes.
−Removed: The cash paid included the principal amount of the debt retired, $211 million of related premiums and other third-party costs, which are classified as loss on early extinguishment of debt in our Consolidated Statement of Operations, and $15 million of accrued interest.
+Added: 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.
+Added: 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.
+Added: In May 2022, we entered into a Term Loan to be used for general corporate purposes and as of December 31, 2022, we had $1.0 billion of outstanding borrowings.
+Added: WM Holdings guarantees all of the obligations under the Term Loan.
See Note 6 to the Consolidated Financial Statements for more information related to the debt transactions.
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(b) As of December 31, 2022, these other letter of credit lines are uncommitted with terms extending through April 2024.
+Added: Amendment and Extension of Revolving Credit Facility
+Added: In May 2022, we amended and restated our $3.5 billion U.S.
+Added: and Canadian revolving credit facility extending the term through May 2027.
+Added: 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.
+Added: 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.
+Added: dollar equivalent of $375 million, with such borrowings to be repaid in Canadian dollars.
+Added: WM Holdings, a wholly-owned subsidiary of WMI, guarantees all the obligations under the $3.5 billion revolving credit facility.
+Added: Refer to Note 6 to the Consolidated Financial Statements for additional information.
Guarantor Financial Information
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Net cash used in investing activities
−Removed: Net cash (used in) provided by financing activities
−Removed: Net Cash Provided by Operating Activities — Our operating cash flows for 2021, as compared with 2020, increased by $935 million primarily as a result of (i) an increase in earnings primarily attributable to our collection, disposal and recycling lines of business;
+Added: Net cash used in financing activities
+Added: Net Cash Provided by Operating Activities — Our operating cash flows for 2022, as compared with 2021, increased by $198 million.
+Added: The increase was largely driven by increased earnings in our collection and disposal and WM Renewable Energy businesses.
+Added: We also experienced lower interest payments due to timing and refinancing activities in 2021 that reduced our overall interest rate.
+Added: Partially offsetting our increase in cash from operating activities were higher income tax payments as a result of higher earnings in 2022 and a deposit of approximately $103 million that was made to the IRS related to a disputed tax matter.
+Added: The Company expects to seek a refund of the entire amount deposited with the IRS and litigate any denial of the claim for refund.
+Added: See Note 8 to the Consolidated Financial Statements for further details.
+Added: Our operating cash flows for 2021, as compared with 2020, increased by $935 million largely as a result of (i) an increase in earnings primarily attributable to our collection, disposal and recycling lines of business;
(ii) our acquisition of Advanced Disposal;
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These favorable impacts were partially offset by the timing of cash tax benefits received in 2020 associated with federal alternative fuel tax credits.
−Removed: Our operating cash flows for 2020, as compared with 2019, decreased by $471 million as a result of (i) higher income tax payments related to a taxable gain on the sale of Advanced Disposal assets to GFL Environmental;
−Removed: (ii) increased interest payments and integration related spending due to our acquisition of Advanced Disposal;
−Removed: (iii) payments associated with investments we made in our digital platform and (iv) to a lesser extent, lower earnings on our traditional Solid Waste business primarily caused by the impact of the COVID-19 pandemic.
−Removed: These results were partially offset by cash benefits in 2020 associated with the 2019 federal alternative fuel credits.
Net Cash Used in Investing Activities — The most significant items affecting the comparison of our investing cash flows for the periods presented are summarized below:
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Substantially all of these acquisitions are related to our Solid Waste business.
−Removed: Our acquisition spending in 2020 and 2019 is primarily attributable to Advanced Disposal and Petro Waste Environmental LP, respectively.
+Added: Our acquisition spending in 2022 was primarily attributable to the purchase of a controlling interest in a business intended to accelerate our film and plastic wrap recycling capabilities.
+Added: Our acquisition spending in 2020 was primarily attributable to Advanced Disposal.
See Note 17 to the Consolidated Financial Statements for additional information.
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● Capital Expenditures — We used $2,587 million, $1,904 million and $1,632 million for capital expenditures in 2022, 2021 and 2020, respectively.
+Added: The increase in 2022 is primarily driven by our intentional investment in growth capital spending on recycling and renewable energy projects, as well as timing differences in our fixed asset purchases to support our ongoing operations.
The increase in 2021 is due in part to intentional steps the Company took to accelerate growth capital spending on recycling and renewable energy projects.
Additionally, in 2020 we took proactive steps to reduce the amount of capital spending required due to the decrease in volumes as a result of COVID-19.
−Removed: 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.
+Added: The Company continues to maintain a disciplined focus on capital management to prioritize investments for expansion, the replacement of aging assets and assets that support our strategy of continuous improvement through efficiency and innovation.
+Added: In addition, we continue to make progress on our planned investments to expand our renewable energy and recycling businesses.
+Added: We expect to spend between $2.0 billion and $2.1 billion on capital expenditures to support our normal course business in 2023.
+Added: Additionally, we expect to spend approximately $1.1 billion on capital expenditures for recycling and renewable energy growth projects in 2023.
● Proceeds from Divestitures — Proceeds from divestitures of businesses and other assets, net of cash divested, were $27 million, $96 million and $885 million in 2022, 2021 and 2020, respectively.
In 2021, our proceeds are primarily the result of the sale of certain non-strategic Canadian operations.
−Removed: In 2020, our proceeds included $856 million related to the sale of assets required to be sold by the U.S.
+Added: In 2020, our proceeds included
+Added: $856 million related to the sale of assets required to be sold by the U.S.
Department of Justice in connection with our acquisition of Advanced Disposal.
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During 2022, 2021 and 2020, we used $23 million, $32 million and $14 million, respectively, of cash from restricted cash and cash equivalents to invest in available-for-sale securities.
+Added: In 2022, we used $67 million to fund secured convertible promissory notes associated with an acquisition and $28 million to make an initial cash payment associated with a low-income housing investment.
Our 2021 cash spend was partially offset by proceeds received from the sale of an equity method investment.
−Removed: We also used $20 million in 2019 to make an initial cash payment associated with a low-income housing investment.
−Removed: In 2019, these items
−Removed: were partially offset by cash proceeds from the redemption of our preferred stock received in conjunction with the 2014 sale of our Puerto Rico operations.
−Removed: Net Cash (Used in) Provided by Financing Activities — The most significant items affecting the comparison of our financing cash flows for the periods presented are summarized below:
−Removed: ● Debt (Repayments) Borrowings — The following summarizes our cash borrowings and repayments of debt for the year ended December 31 (in millions):
+Added: Net Cash Used in Financing Activities — The most significant items affecting the comparison of our financing cash flows for the periods presented are summarized below:
+Added: ● Debt Borrowings (Repayments) — The following summarizes our cash borrowings and repayments of debt for the year ended December 31 (in millions):
Revolving credit facility
1 unchanged sentence
364-day revolving credit facility (b)
−Removed: Canadian senior notes
Tax-exempt bonds
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Tax-exempt bonds
−Removed: Net cash (repayments) borrowings
−Removed: (a) Beginning in 2021, we elected to report these cash flows on a gross basis.
−Removed: Reclassifications have been made to our prior period information for comparability purposes.
−Removed: Borrowings incurred in 2020 were used for the redemption of the SMR Notes and to partially fund our acquisition of Advanced Disposal.
−Removed: Borrowings incurred in 2021 and 2019 were primarily to support acquisitions and for general corporate purposes.
−Removed: (b) In November 2020, we terminated this facility contemporaneously with repayment of all outstanding borrowings with proceeds from our November 2020 senior notes issuance.
−Removed: (c) At the time of acquisition, Advanced Disposal had certain outstanding senior notes which were redeemed in 2020 pursuant to an optional redemption feature as further discussed in Note 17 to the Consolidated Financial Statements.
+Added: Net cash borrowings (repayments)
+Added: (a) Commercial paper borrowings incurred in 2022 and 2021 were primarily to support acquisitions and general corporate purposes.
+Added: Commercial paper borrowings incurred in 2020 were used for the redemption of the SMR Notes and to partially fund our acquisition of Advanced Disposal.
+Added: (b) In November 2020, we terminated our 364-day revolving facility contemporaneously with repayment of all outstanding borrowings with proceeds from our November 2020 senior notes issuance.
+Added: (c) Advanced Disposal had certain outstanding senior notes which were redeemed in 2020 pursuant to an optional redemption feature as further discussed in Note 17 to the Consolidated Financial Statements.
Refer to Note 6 to the Consolidated Financial Statements for additional information related to our debt borrowings and repayments.
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During 2020, we paid premiums of $30 million to redeem $3.0 billion of senior notes that contained a special mandatory redemption feature tied to the timing of the Advanced Disposal acquisition closing.
−Removed: During 2019, we paid premiums of $84 million to retire certain high-coupon senior notes.
See Loss on Early Extinguishment of Debt, Net for further discussion.
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However, all future dividend declarations are at the discretion of the Board of Directors and depend on various factors, including our net earnings, financial condition, cash required for future business plans, growth and acquisitions and other factors the Board of Directors may deem relevant.
−Removed: ● Exercise of Common Stock Options — The exercise of common stock options generated financing cash inflows of $66 million, $63 million and $67 million during 2021, 2020 and 2019, respectively.
+Added: ● Exercise of Common Stock Options — The exercise of common stock options generated financing cash inflows of $44 million, $66 million and $63 million from the exercise of 675,000, 962,000 and 1,039,000 of employee stock options during 2022, 2021 and 2020, respectively.
Free Cash Flow
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Net cash provided by operating activities
−Removed: Capital expenditures
+Added: Capital expenditures to support the business
+Added: Capital expenditures - sustainability growth investments (a)
+Added: Total Capital expenditures
Proceeds from divestitures of businesses and other assets, net of cash divested
Free cash flow
+Added: (a) These growth investments are intended to further our sustainability leadership position by increasing recycling volumes and growing renewable natural gas generation.
+Added: We expect they will deliver circular solutions for our customers and drive environmental value to the communities we serve.
Critical Accounting Estimates and Assumptions
In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses.
−Removed: We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with precision from available data or simply cannot be calculated.
+Added: We must make these estimates and
+Added: assumptions because certain information that we use is dependent on future events, cannot be calculated with precision from available data or simply cannot be calculated.
In some cases, these estimates are difficult to determine, and we must exercise significant judgment.
−Removed: 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.
+Added: 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.
Each of these items is discussed in additional detail below and in Note 2 to the Consolidated Financial Statements.
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The projection of these landfill costs is dependent, in part, on future events.
−Removed: The remaining amortizable basis of each landfill includes costs to develop a site to its remaining permitted and expansion airspace and includes amounts previously expended and capitalized, net of accumulated airspace amortization, and projections of future purchase and development costs.
+Added: The remaining depletable basis of each landfill includes costs to develop a site to its remaining permitted and expansion airspace and includes amounts previously expended and capitalized, net of accumulated airspace depletion, and projections of future purchase and development costs.
Final Capping Costs — We estimate the cost for each final capping event based on the area to be capped and the capping materials and activities required.
The estimates also consider when these costs are anticipated to be paid and factor in inflation and discount rates.
−Removed: Our engineering personnel allocate landfill final capping costs to specific final capping events and the capping costs are amortized as waste is disposed of at the landfill.
+Added: Our engineering personnel allocate landfill final capping costs to specific final capping events and the capping costs are depleted as waste is disposed of at the landfill.
We review these costs annually, or more often if significant facts change.
Changes in estimates, such as timing or cost of construction, for final capping events immediately impact the required liability and the corresponding asset.
−Removed: When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be amortized immediately through expense.
−Removed: When the change in estimate relates to a final capping event at a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace amortization.
+Added: When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense.
+Added: When the change in estimate relates to a final capping event at a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion.
Closure and Post-Closure Costs — We base our estimates for closure and post-closure costs on our interpretations of permit and regulatory requirements for closure and post-closure monitoring and maintenance.
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Changes in estimates for closure and post-closure events immediately impact the required liability and the corresponding asset.
−Removed: When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be amortized immediately through expense.
−Removed: When the change in estimate relates to a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace amortization.
+Added: When the change in estimate relates to a fully consumed landfill, the adjustment to the asset must be depleted immediately through expense.
+Added: When the change in estimate relates to a landfill with remaining airspace, the adjustment to the asset is recognized in income prospectively as a component of landfill airspace depletion.
Remaining Permitted Airspace — Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills.
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Expansion Airspace — We also include currently unpermitted expansion airspace in our estimate of remaining permitted and expansion airspace in certain circumstances.
−Removed: First, to include airspace associated with an expansion effort, we must generally expect the initial expansion permit application to be submitted within one year and the final expansion permit to be received within five years.
−Removed: Second, we must believe that obtaining the expansion permit is likely, considering the following criteria:
+Added: First, for unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, we must believe that obtaining the expansion permit is likely.
+Added: Second, we must generally expect the initial expansion permit application to be submitted within one year and the final expansion permit to be received within five years, in addition to meeting the following criteria:
● Personnel are actively working on the expansion of an existing landfill, including efforts to obtain land use and local, state or provincial approvals;
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● Financial analysis has been completed based on conceptual design, and the results demonstrate that the expansion meets Company criteria for investment.
−Removed: For unpermitted airspace to be initially included in our estimate of remaining permitted and expansion airspace, the expansion effort must meet all the criteria listed above.
These criteria are evaluated by our field-based engineers, accountants, managers and others to identify potential obstacles to obtaining the permits.
1 unchanged sentence
In these circumstances, continued inclusion must be approved through a landfill-specific review process that includes approval by our Chief Financial Officer on a quarterly basis.
−Removed: When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure and post-closure of the expansion in the amortization basis of the landfill.
+Added: When we include the expansion airspace in our calculations of remaining permitted and expansion airspace, we also include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure and post-closure of the expansion in the depletable basis of the landfill.
Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor (“AUF”) is established to calculate the remaining permitted and expansion capacity in tons.
The AUF is established using the measured density obtained from previous annual surveys and is then adjusted to account for future settlement.
−Removed: The amount of settlement that is forecasted will take into account several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices.
+Added: The amount of settlement that is forecasted will consider several site-specific factors including current and projected mix of waste type, initial and projected waste density, estimated number of years of life remaining, depth of underlying waste, anticipated access to moisture through precipitation or recirculation of landfill leachate and operating practices.
In addition, the initial selection of the AUF is subject to a subsequent multi-level review by our engineering group and the AUF used is reviewed on a periodic basis and revised as necessary.
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After determining the costs and remaining permitted and expansion capacity at each of our landfills, we determine the per ton rates that will be expensed as waste is received and deposited at the landfill by dividing the costs by the corresponding number of tons.
−Removed: We calculate per ton amortization rates for each landfill for assets associated with each final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future.
+Added: We calculate per ton depletion rates for each landfill for assets associated with each final capping event, for assets related to closure and post-closure activities and for all other costs capitalized or to be capitalized in the future.
These rates per ton are updated annually, or more often, as significant facts change.
It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions.
−Removed: To the extent that such estimates, or related assumptions, prove to be significantly different than actual results, lower profitability may be experienced due to higher amortization rates or higher expenses;
−Removed: or higher profitability may result if the opposite occurs.
−Removed: Most significantly, if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required to recognize an asset impairment or incur significantly higher amortization expense.
+Added: To the extent that such estimates, or related assumptions, prove to be significantly different than actual results, lower earnings may be experienced due to higher depletion rates or higher expenses;
+Added: or higher earnings may result if the opposite occurs.
+Added: Most significantly, if it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, we may be required to recognize an asset impairment or incur significantly higher depletion expense.
If at any time management makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately.
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The nature of our operations, particularly with respect to the construction, operation and maintenance of our landfills subjects us to an array of laws and regulations relating to the protection of the environment.
−Removed: Under current laws and regulations, we may have liabilities for environmental damage caused by operations, or for damage caused by conditions that existed before we acquired a site.
−Removed: These liabilities include PRP investigations, settlements, and certain legal and consultant fees, as well as costs directly associated with site investigation and clean up, such as materials, external contractor costs and incremental internal costs directly related to the remedy.
−Removed: We provide for expenses associated with environmental remediation obligations when such amounts are probable and can be reasonably estimated.
−Removed: review and evaluate sites that require remediation and determine our estimated cost for the likely remedy based on a number of estimates and assumptions.
+Added: Under current laws
+Added: and regulations, we may have liabilities for environmental damage caused by our operations, or for damage caused by conditions that existed before we acquired a site.
+Added: In addition to remediation activity required by state or local authorities, such liabilities include potentially responsible party (“PRP”) investigations.
+Added: The costs associated with these liabilities can include settlements, certain legal and consultant fees, as well as incremental internal and external costs directly associated with site investigation and clean up.
Where it is probable that a liability has been incurred, we estimate costs required to remediate sites based on site-specific facts and circumstances.
−Removed: We routinely review and evaluate sites that require remediation, considering whether we were an owner, operator, transporter, or generator at the site, the amount and type of waste hauled to the site and the number of years we were associated with the site.
+Added: We routinely review and evaluate sites that require remediation and determine our estimated cost for the likely remedy based on a number of estimates and assumptions.
Next, we review the same type of information with respect to other named and unnamed PRPs.
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In addition, the majority of assets acquired and liabilities assumed in a business combination are required to be recognized at fair value under the relevant accounting guidance.
+Added: Fair value is computed using several factors, including projected future operating results, economic projections, anticipated future cash flows, comparable marketplace data and the cost of capital.
+Added: There are inherent uncertainties related to these factors and to our judgment in applying them in our analysis.
+Added: However, we believe our methodology for estimating the fair value of our reporting units is reasonable.
Property and Equipment, Including Landfills and Definite-Lived Intangible Assets — We monitor the carrying value of our long-lived assets for potential impairment on an ongoing basis and test the recoverability of such assets generally using significant unobservable (“Level 3”) inputs whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
9 unchanged sentences
In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace, or a landfill may be required to cease accepting waste, prior to receipt of the expansion permit.
−Removed: However, such events occur in the ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because, after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit.
+Added: However, such events occur in the ordinary course of business in the waste industry and do not necessarily result in impairment of our landfill assets because,
+Added: after consideration of all facts, such events may not affect our belief that we will ultimately obtain the expansion permit.
As a result, our tests of recoverability, which generally make use of a probability-weighted cash flow estimation approach, may indicate that no impairment loss should be recorded.
−Removed: Indefinite-Lived Intangible Assets, Including Goodwill — At least annually, and more frequently if warranted, we assess the indefinite-lived intangible assets including the goodwill of our reporting units for impairment using Level 3 inputs.
−Removed: We first perform a qualitative assessment to determine if it was more likely than not that the fair value of a reporting unit was less than its carrying value.
+Added: Indefinite-Lived Intangible Assets, Including Goodwill — At least annually using a measurement date of October 1, and more frequently if warranted, we assess the indefinite-lived intangible assets including the goodwill of our reporting units for impairment using Level 3 inputs.
+Added: We first perform a qualitative assessment to determine if it was more likely than not that the fair value of a reporting unit is less than its carrying value.
If the assessment indicates a possible impairment, we complete a quantitative review, comparing the estimated fair value of a reporting unit to its carrying amount, including goodwill.
An impairment charge is recognized if the asset’s estimated fair value was less than its carrying amount.
−Removed: Fair value is typically estimated using an income approach.
+Added: Fair value is typically estimated using an income approach using Level 3 inputs.
However, when appropriate, we may also use a market approach.
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We believe that this approach may also be appropriate in certain circumstances because it provides a fair value estimate using valuation inputs from entities with operations and economic characteristics comparable to our reporting units.
−Removed: Fair value is computed using several factors, including projected future operating results, economic projections, anticipated future cash flows, comparable marketplace data and the cost of capital.
−Removed: There are inherent uncertainties related to these factors and to our judgment in applying them in our analysis.
−Removed: However, we believe our methodology for estimating the fair value of our reporting units is reasonable.
Acquisitions — In accordance with the purchase method of accounting, the purchase price paid for an acquisition is allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill.
When we are in the process of valuing all of the assets and liabilities acquired in an acquisition, there can be subsequent adjustments to our estimates of fair value and resulting preliminary purchase price allocation.
+Added: Generally, the valuation of our acquired asset and liabilities rely on complex estimates and assumptions.
+Added: Acquisition-date fair value estimates are revised as necessary if, and when, additional information regarding these contingencies becomes available to further define and quantify assets acquired and liabilities assumed.
+Added: Subsequent to finalization of purchase accounting, these revisions are accounted for as adjustments to income from operations.
+Added: All acquisition-related transaction costs are expensed as incurred.
+Added: See Note 17 to the Consolidated Financial Statements for additional information related to our acquisitions, including our 2020 acquisition of Advanced Disposal.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — (Gain) Loss from Divestitures, Asset Impairments and Unusual Items, Net .
−Removed: Off-Balance Sheet Arrangements
−Removed: We have financial interests in unconsolidated variable interest entities as discussed in Note 18 to the Consolidated Financial Statements.
−Removed: Additionally, we are party to guarantee arrangements with unconsolidated entities as discussed in the Guarantees section of Note 10 to the Consolidated Financial Statements.
−Removed: These arrangements have not materially affected our financial position, results of operations or liquidity during the year ended December 31, 2021, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.
−Removed: 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, had a more significant impact on our cost structure and capital expenditures in 2021.
−Removed: Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate.
−Removed: 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.
−Removed: 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.
−Removed: As we enter 2022, many of these contract lookback provisions will begin to capture the recent inflationary cost increases in the price escalation calculation.
−Removed: We are taking proactive steps to recover inflationary cost pressures through the price of our service and by managing our costs through efficiency, labor productivity and investments in technology
−Removed: to automate certain aspects of our business in order to mitigate the inflationary cost pressures we have seen in our business.
+Added: Macroeconomic pressures, including inflation and market disruption resulting in labor, supply chain and transportation constraints are continuing.
+Added: Significant global supply chain disruption and the heightened pace of inflation has reduced availability and increased costs for the goods and services we purchase, with a particular impact on our repair and maintenance costs.
+Added: Supply chain constraints have also caused delayed delivery of fleet, steel containers and other purchases.
+Added: Aspects of our business rely on third-party transportation providers, and such services have become more limited and expensive.
+Added: Our overall strategic pricing efforts are focused on recovering as much of the inflationary cost increases we experience in our business as possible by increasing our average unit rate, but such efforts may not be successful for various reasons including the pace of inflation, operating cost inefficiencies, contractual limitations, and market responses.
+Added: Throughout 2022, many of these contract lookback provisions began to capture the inflationary cost increases experienced since the second half of 2021 in the price escalation calculation;
+Added: however, such timing lag persists and will continue to restrict our ability to address proactively future rapid cost increases for those contracts.
Refer to Item 1A.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.