# Casella Waste Systems Inc: Form 10-Q for the period ended Sep 30, 2024

- Company: [Casella Waste Systems Inc](/companies/cwst.md) (CIK 911177)
- Form: 10-Q
- Filed: 2024-10-31
- Accepted by EDGAR: Oct 31, 2024, 20:31 ET
- Period: 2024-09-30
- Accession: 0000911177-24-000090
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/911177/000091117724000090/cwst-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/911177/000091117724000090/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $411.6m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $1.13bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $267.1m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $741.7m | us-gaap:CostOfGoodsAndServicesSold |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | $24.4m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | $54.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $15.7m | us-gaap:InterestExpenseNonoperating |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $47.0m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $4.7m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $6.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | $5.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | $8.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.10 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.15 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | $0.10 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | $0.15 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 58,921,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 58,415,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | $171.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $126.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $519.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $743.1m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $3.12bn | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $291.3m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2024-09-30 | $1.53bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 65,886 characters.

The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included under Item 1. “*Financial Statements”*. In addition, reference should be made to our audited consolidated financial statements and notes thereto and related “*Management’s Discussion and Analysis of Financial Condition and Results of Operations”* appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“fiscal year 2023”) filed with the Securities and Exchange Commission on February 16, 2024 (“2023 Form 10-K”).

This Quarterly Report on Form 10-Q and, in particular, this “*Management’s Discussion and Analysis of Financial Condition and Results of Operations”*, may contain or incorporate a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, including statements regarding:

- our ability to consummate acquisitions, integrate acquired businesses and operations and achieve the expected benefits, including the expected annualized revenues from such acquired businesses and operations;
- our ability to achieve the key strategies of our long-term strategic plan;
- the projected development of additional disposal capacity or expectations regarding permits for existing capacity;
- the outcome of any legal or regulatory matter;
- expected liquidity and financing plans;
- expected future revenues, operations, expenditures and cash needs;
- whether our pricing programs and operational initiatives will outpace higher operating and construction costs from inflation and regulatory changes;
- fluctuations in recycling commodity pricing, increases in landfill tipping fees and fuel costs and general economic and weather conditions;
- projected future obligations related to final capping, closure and post-closure costs of our existing landfills and any disposal facilities which we may own or operate in the future;
- our ability to use our net operating losses and tax positions;
- our ability to service our debt obligations;
- the recoverability or impairment of any of our assets or goodwill;
- estimates of the potential markets for our products and services, including the anticipated drivers for future growth;
- sales and marketing plans or price and volume assumptions;
- potential business combinations or divestitures;
- projected improvements to our infrastructure and the impact of such improvements on our business and operations; and
- general economic factors, such as ongoing or potential geopolitical conflict, pandemics, recessions, or similar national or global events, and general macroeconomic conditions, including, among other things, consumer confidence, global supply chain disruptions, inflation, labor supply, fuel prices, interest rates and access to capital markets that generally are not within our control, and our exposure to credit and counterparty risk.

In addition, any statements contained in or incorporated by reference into this report that are not statements of historical fact should be considered forward-looking statements. You can identify these forward-looking statements by the use of the words “believes”, “expects”, “anticipates”, “plans”, “may”, “will”, “would”, “intends”, “estimates” and other similar expressions, whether in the negative or affirmative. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate, as well as management’s beliefs and assumptions, and should be read in conjunction with our consolidated financial statements and notes thereto. These forward-looking statements are not guarantees of future performance, circumstances or events. The occurrence of the events described and the achievement of the expected results depends on many events, some or all of which are not predictable or within our control. Actual results may differ materially from those set forth in the forward-looking statements.

There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. These risks and uncertainties include, without limitation, those detailed in Item 1A. “*Risk Factors”* in our 2023 Form 10-K and those included under Part II. Item 1A. “*Risk Factors”* of this Quarterly Report on Form 10-Q.

There may be additional risks that we are not presently aware of or that we currently believe are immaterial, which could have an adverse impact on our business. We explicitly disclaim any obligation to update any forward-looking statements whether as the result of new information, future events or otherwise, except as otherwise required by law.

### Company Overview

Casella Waste Systems, Inc., a Delaware corporation, and its wholly-owned subsidiaries (collectively, “we”, “us” or “our”), is a regional, vertically integrated solid waste services company. We provide resource management expertise and services to residential, commercial, municipal, institutional and industrial customers, primarily in the areas of solid waste collection and disposal, transfer, recycling and organics services.

We provide integrated solid waste services in ten states: Vermont, New Hampshire, New York, Massachusetts, Connecticut, Maine, Pennsylvania, Delaware, New Jersey and Maryland, with our headquarters located in Rutland, Vermont. We manage our solid waste operations on a geographic basis through regional operating segments, the Eastern, Western and Mid-Atlantic regions, each of which provides a comprehensive range of non-hazardous solid waste services. We manage our resource renewal operations through the Resource Solutions operating segment, which leverages our core competencies in materials processing, industrial recycling, organics and resource management service offerings to deliver a comprehensive solution for our larger commercial, municipal, institutional and industrial customers that have more diverse waste and recycling needs. Legal, tax, information technology, human resources, certain finance and accounting and other administrative functions are included in our Corporate Entities segment.

As of October 15, 2024, we owned and/or operated 70 solid waste collection operations, 71 transfer stations, 28 recycling facilities, eight Subtitle D landfills, three landfill gas-to-energy facilities and one landfill permitted to accept construction and demolition (“C&D”) materials. We also housed two landfill gas-to-energy facilities, which are owned and operated by third parties, at landfills we owned and/or operated.

### Results of Operations

### Recent Events

#### Acquisitions

Subsequent to September 30, 2024, we completed the purchase of all the equity interests of Royal Carting and Welsh Sanitation and related real estate assets. This acquisition includes collection and transfer operations in the middle and lower Hudson Valley regions of New York as well as western Connecticut.

### Revenues

We manage our solid waste operations, which include a full range of solid waste services, on a geographic basis through regional operating segments, which we designate as the Eastern, Western and Mid-Atlantic regions. Revenues associated with our solid waste operations are derived mainly from fees charged to customers for solid waste collection and disposal services, including landfill, transfer station and transportation services, landfill gas-to-energy services, and processing services in the eastern United States. We derive a substantial portion of our collection revenues from commercial, industrial and municipal services that are generally performed under service agreements or pursuant to contracts with municipalities. The majority of our residential collection services are performed on a subscription basis with individual property owners or occupants. Landfill and transfer customers are charged a tipping fee on a per ton basis for disposing of their solid waste at our disposal facilities and transfer stations. We also generate and sell electricity at certain of our landfill facilities. We manage our resource renewal operations through the Resource Solutions operating segment, which includes processing services and non-processing services, which we refer to as our National Accounts business. Revenues from processing services are derived from customers in the form of processing fees, tipping fees, commodity sales, primarily comprised of newspaper, corrugated containers, plastics, ferrous and aluminum, and organic materials such as our earthlife® soils products including fertilizers, composts and mulches. Revenues from our National Accounts business are derived from brokerage services and overall resource management services providing a wide range of environmental services and resource management solutions to large and complex organizations, as well as traditional collection, disposal and recycling services provided to large account multi-site customers.

The table below shows revenues attributable to services provided (dollars in millions and as a percentage of total revenues) for the following periods:

|  | Three Months Ended September 30, 2024 |  | 2023 |  | $ Change 2024 | Nine Months Ended September 30, | 2023 |  |  | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Collection | $252.6 | 61.4% | $206.1 | 58.4% | $46.5 | $687.9 | 60.9% | $495.9 | 54.8% | $192.0 |
| Disposal | 67.5 | 16.4% | 66.3 | 18.8% | 1.2 | 182.7 | 16.2% | 181.4 | 20.0% | 1.3 |
| Landfill gas-to-energy | 1.7 | 0.4% | 1.8 | 0.5% | (0.1) | 6.1 | 0.5% | 5.0 | 0.6% | 1.1 |
| Processing | 3.4 | 0.8% | 3.0 | 0.9% | 0.4 | 8.3 | 0.7% | 7.4 | 0.8% | 0.9 |
| Solid waste operations | 325.2 | 79.0% | 277.2 | 78.6% | 48.0 | 885.0 | 78.3% | 689.7 | 76.2% | 195.3 |
| Processing | 34.9 | 8.5% | 27.8 | 7.9% | 7.1 | 98.0 | 8.7% | 76.0 | 8.4% | 22.0 |
| National Accounts | 51.5 | 12.5% | 47.7 | 13.5% | 3.8 | 146.8 | 13.0% | 139.3 | 15.4% | 7.5 |
| Resource Solutions operations | 86.4 | 21.0% | 75.5 | 21.4% | 10.9 | 244.8 | 21.7% | 215.3 | 23.8% | 29.5 |
| Total revenues | $411.6 | 100.0% | $352.7 | 100.0% | $58.9 | $1,129.8 | 100.0% | $905.0 | 100.0% | $224.8 |

#### Solid waste revenues

A summary of the period-to-period changes in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:

|  | Period-to-Period Change for the Three Months Ended September 30, 2024 vs. 2023 Amount | % Growth | Period-to-Period Change for the Nine Months Ended September 30, 2024 vs. 2023 Amount | % Growth |
| --- | ---: | ---: | ---: | ---: |
| Price | $15.2 | 5.5% | $38.3 | 5.6% |
| Volume | (2.8) | (1.0)% | (12.2) | (1.8)% |
| Surcharges and other fees | (0.5) | (0.2)% | (1.2) | (0.2)% |
| Commodity price and volume | — | —% | 1.6 | 0.2% |
| Acquisitions | 36.1 | 13.0% | 168.8 | 24.5% |
| Solid waste revenues | $48.0 | 17.3% | $195.3 | 28.3% |

The most significant items impacting the change in our solid waste revenues during the three and nine months ended September 30, 2024 as compared to the prior year periods are summarized below:

- Price increased solid waste revenues both quarterly and year-to-date due to (i) favorable collection pricing of $12.6 million, or 6.1% as a percentage of collection operations quarterly, and $30.6 million, or 6.2% as a percentage of collection operations year-to-date, and (ii) favorable disposal pricing of $2.6 million, or 3.8% as a percentage of disposal operations quarterly, and $7.7 million, or 4.2% as a percentage of disposal operations year-to-date, driven by our landfill and transfer station operations.
- Volume decreased solid waste revenues both quarterly and year-to-date due to (i) lower disposal volumes of $(1.3) million, or (2.0)% as a percentage of disposal operations quarterly, and $(7.3) million, or (4.1)% as a percentage of disposal operations year-to-date, primarily from lower landfill volumes and to a lesser extent year-to-date transportation volumes, partially offset by higher transfer station volumes, in addition to (ii) lower collection volumes of $(1.5) million, or (0.7)% as a percentage of collection operations quarterly, and $(4.9) million, or (1.0)% as a percentage of collection operations year-to-date.
- Acquisitions increased solid waste revenues both quarterly and year-to-date due to activity in line with our growth strategy associated with the timing and acquisition of five business in the nine months ended September 30, 2024, and the rollover impact of seven acquisitions completed in fiscal year 2023, including the acquisition of solid waste collection, transfer and recycling operations in Pennsylvania, Maryland and Delaware, which are the basis of one of our regional operating segments, the Mid-Atlantic region (the “GFL Acquisition”).

#### Resource Solutions revenues

See “*Segment Reporting”* below for discussion over the period-to-period changes in Resource Solutions revenues.

### Operating Expenses

A summary of cost of operations, general and administration expense, and depreciation and amortization expense is as follows (dollars in millions and as a percentage of total revenues):

|  | Three Months Ended September 30, 2024 |  | 2023 |  | $ Change 2024 | Nine Months Ended September 30, | 2023 |  |  | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of operations | $267.1 | 64.9% | $226.3 | 64.2% | $40.8 | $741.7 | 65.6% | $592.9 | 65.5% | $148.8 |
| General and administration | $47.0 | 11.4% | $41.2 | 11.7% | $5.8 | $138.5 | 12.3% | $112.7 | 12.5% | $25.8 |
| Depreciation and amortization | $59.2 | 14.4% | $47.7 | 13.5% | $11.5 | $168.5 | 14.9% | $116.1 | 12.8% | $52.4 |

#### Cost of Operations

Cost of operations includes: (i) direct costs, which consist of the costs of purchased materials and third-party transportation and disposal costs, including third-party tipping fees; (ii) direct labor costs, which include salaries, wages, incentive compensation and related benefit costs such as health and welfare benefits and workers compensation; (iii) direct operational costs, which include landfill operating costs such as accretion expense related to final capping, closure and post-closure obligations, leachate treatment and disposal costs and depletion of landfill operating lease obligations, vehicle insurance costs, host community fees and royalties; (iv) fuel costs used by our vehicles and in conducting our operations; (v) maintenance and repair costs relating to our vehicles, equipment and containers; and (vi) other operational costs including facility costs.

A summary of the major components of our cost of operations is as follows (dollars in millions and as a percentage of total revenues):

|  | Three Months Ended September 30, 2024 |  | 2023 |  | $ Change 2024 | Nine Months Ended September 30, | 2023 |  |  | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Direct costs | $96.1 | 23.3% | $86.7 | 24.6% | $9.4 | $262.7 | 23.3% | $225.5 | 24.9% | $37.2 |
| Direct labor costs | 63.1 | 15.3% | 49.3 | 14.0% | 13.8 | 169.6 | 15.0% | 123.3 | 13.6% | 46.3 |
| Direct operational costs | 29.1 | 7.1% | 25.1 | 7.1% | 4.0 | 84.1 | 7.4% | 71.1 | 7.9% | 13.0 |
| Fuel costs | 14.4 | 3.5% | 13.6 | 3.9% | 0.8 | 41.2 | 3.7% | 34.0 | 3.8% | 7.2 |
| Maintenance and repair costs | 33.8 | 8.3% | 27.1 | 7.7% | 6.7 | 96.2 | 8.4% | 72.6 | 8.0% | 23.6 |
| Other operational costs | 30.6 | 7.4% | 24.5 | 6.9% | 6.1 | 87.9 | 7.8% | 66.4 | 7.3% | 21.5 |
|  | $267.1 | 64.9% | $226.3 | 64.2% | $40.8 | $741.7 | 65.6% | $592.9 | 65.5% | $148.8 |

These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies.

The most significant items impacting the changes in our cost of operations during the three and nine months ended September 30, 2024 as compared to the prior year periods are summarized below:

- Direct costs increased in aggregate dollars primarily due to (i) acquisitions and (ii) higher third-party disposal rates reflecting cost inflation; partially offset in year-to-date dollars, and more than offset as a percentage of revenues, by lower hauling and transportation costs in our Resource Solutions segment primarily related to municipal biosolid volumes in our National Accounts business.
- Direct labor costs increased primarily due to (i) acquisitions and (ii) higher wages and benefit costs reflecting cost inflation; partially offset by improved routing efficiencies.
- Direct operational costs increased in aggregate dollars primarily due to (i) acquisitions, (ii) higher leachate disposal costs, (iii) higher short term rental expense driven by delays in the delivery of fleet vehicles as well as needs from entering new municipal contracts, (iv) higher accretion expense associated with changes in the timing and cost estimates of our closure, post-closure, and capping obligations, (v) higher accruals related to insurance claims quarterly and (vi) general cost inflation.
- Fuel costs increased in aggregate dollars due to acquisitions, partially offset primarily by lower diesel fuel prices. See Item 3. “*Quantitative and Qualitative Disclosures about Market Risk”* of this Quarterly Report on Form 10-Q for additional information regarding our fuel costs.
- Maintenance and repair costs increased due to (i) acquisitions, (ii) higher personnel and parts costs reflecting cost inflation, and (iii) higher vehicle maintenance costs driven by delays in the delivery of fleet replacements.
- Other operational costs increased due to (i) acquisitions, (ii) higher spending associated with supporting acquisition-related growth, and (iii) general cost inflation.

#### General and Administration

General and administration expense includes: (i) labor costs, which consist of salaries, wages, incentive compensation and related benefit costs such as health and welfare benefits and workers compensation costs related to management, clerical and administrative functions; (ii) professional service fees; (iii) provision for expected credit losses; and (iv) other overhead costs including those associated with marketing, sales and community relations efforts.

A summary of the major components of our general and administration expense is as follows (dollars in millions and as a percentage of total revenues):

|  | Three Months Ended September 30, 2024 |  | 2023 |  | $ Change 2024 | Nine Months Ended September 30, | 2023 |  |  | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Labor costs | $30.2 | 7.3% | $26.8 | 7.6% | $3.4 | $89.5 | 7.9% | $74.1 | 8.2% | $15.4 |
| Professional fees | 2.6 | 0.6% | 2.2 | 0.6% | 0.4 | 10.6 | 0.9% | 6.9 | 0.8% | 3.7 |
| Provision for expected credit losses | 1.4 | 0.3% | 0.7 | 0.2% | 0.7 | 1.4 | 0.1% | 1.7 | 0.2% | (0.3) |
| Other | 12.8 | 3.2% | 11.5 | 3.3% | 1.3 | 37.0 | 3.4% | 30.0 | 3.3% | 7.0 |
|  | $47.0 | 11.4% | $41.2 | 11.7% | $5.8 | $138.5 | 12.3% | $112.7 | 12.5% | $25.8 |

These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies.

General and administration expense increased in aggregate dollars in the three and nine months ended September 30, 2024 as compared to the prior year periods, primarily due to (i) acquisition activity, including increased labor costs, professional fees and other costs to support our growth and acquisition strategy, (ii) escalation of salary, wage, incentive compensation and benefit costs, (iii) year-to-date legal expenses associated with employee separation, (iv) higher accruals related to insurance claims quarterly, (v) an increased provision for expected credit losses quarterly in our Mid-Atlantic region due to the aging of receivables and (vi) general cost inflation.

#### Depreciation and Amortization

Depreciation and amortization expense includes: (i) depreciation of property and equipment (including assets recorded for finance leases) on a straight-line basis over the estimated useful lives of the assets; (ii) amortization of landfill costs (including those costs incurred and all estimated future costs for landfill development and construction, along with asset retirement costs arising from closure and post-closure obligations) on a units-of-consumption method as landfill airspace is consumed over the total estimated remaining capacity of a site, which includes both permitted capacity and unpermitted expansion capacity that meets certain criteria for amortization purposes, and amortization of landfill asset retirement costs arising from final capping obligations on a units-of-consumption method as airspace is consumed over the estimated capacity associated with each final capping event; and (iii) amortization of intangible assets with a definite life, based on the economic benefit provided, or using the sum of years digits or straight-line methods over the definitive terms of the related agreements.

A summary of the components of depreciation and amortization expense (dollars in millions and as a percentage of total revenues) is as follows:

|  | Three Months Ended September 30, 2024 |  | 2023 |  | $ Change 2024 | Nine Months Ended September 30, | 2023 |  |  | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Depreciation expense | $33.4 | 8.1% | $27.5 | 7.8% | $5.9 | $97.2 | 8.6% | $68.8 | 7.6% | $28.4 |
| Landfill amortization expense | 11.7 | 2.8% | 10.1 | 2.9% | 1.6 | 32.5 | 2.9% | 28.9 | 3.2% | 3.6 |
| Other amortization expense | 14.1 | 3.5% | 10.1 | 2.8% | 4.0 | 38.8 | 3.4% | 18.4 | 2.0% | 20.4 |
|  | $59.2 | 14.4% | $47.7 | 13.5% | $11.5 | $168.5 | 14.9% | $116.1 | 12.8% | $52.4 |

Depreciation and amortization expense increased in the three and nine months ended September 30, 2024 as compared to the prior year periods, primarily due to (i) acquisitions, including the impact of accelerated amortization schedules of certain intangibles, (ii) investment in property and equipment in our existing operations, and (iii) higher landfill amortization expense related to changes in cost and other assumptions from the prior year periods, more than offsetting lower landfill volumes.

#### Expense from Acquisition Activities

In the three and nine months ended September 30, 2024, we recorded charges of $5.5 million and $18.3 million, respectively, and in the three and nine months ended September 30, 2023, we recorded charges of $3.3 million and $9.8 million, respectively, comprised primarily of legal, consulting, rebranding and other costs associated with the due diligence, acquisition and integration of acquired businesses. The nine months ended September 30, 2024 included a charge for an increase in the reserve against accounts receivable of the businesses acquired in the GFL Acquisition as a result of our inability to pursue collections during the transition services period with the seller, resulting in accounts receivable aged beyond what is typical in our business.

#### Southbridge Landfill Closure Charge

In the fiscal year ended December 31, 2017, we initiated a plan to cease operations of the Town of Southbridge, Massachusetts landfill (“Southbridge Landfill”) and later closed it in November 2018 when it reached its final capacity. In both the three and nine months ended September 30, 2024, we recorded a non-cash charge of $8.5 million, which is associated with our receipt of a final closure permit (the “Closure Permit”) from the Massachusetts Department of Environmental Protection related to the Southbridge Landfill. Pursuant to the terms of the Closure Permit, we are required to meet certain general permit conditions and certain specific permit conditions (collectively, the “Conditions”), including environmental monitoring, third party inspections, inspection of the final cover, leachate sampling, post-closure monitoring, and other post-closure requirements. We have revised the accrued post-closure liability for the Southbridge Landfill to reflect the estimated cost of satisfying the expanded Conditions as currently specified in the Closure Permit.

In the three and nine months ended September 30, 2023, we recorded charges of $0.1 million and $0.3 million, respectively, associated with legal and other transaction costs associated with various matters as part of the Southbridge Landfill closure.

#### Legal Settlement

In the nine months ended September 30, 2023, we recorded a charge of $6.2 million due to reaching an agreement at a mediation held on June 20, 2023 with the collective class members of a class action lawsuit relating to certain claims under the Fair Labor Standards Act of 1938 ("FLSA") as well as state wage and hours laws. The settlement agreement, which received court approval, was executed on July 24, 2023 and subsequently paid in the nine months ended September 30, 2024.

### Other Expenses

#### Interest Expense, net

Our interest expense, net increased $4.1 million in the three months ended September 30, 2024 as compared to the prior year period primarily due to the prior year period having higher average cash balances due to the timing of financing activities completed in the nine months ended September 30, 2023 resulting in higher interest income in the three months ended September 30, 2023.

Our interest expense, net increased $16.2 million year-to-date as compared to the prior year period primarily due to: (i) entering into a $430.0 million aggregate principal amount term loan A facility to fund the GFL Acquisition in June 2023, (ii) higher average interest rates year-to-date, and (iii) the issuance of $35.0 million aggregate principal amount of New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2020R-2 in August 2023.

#### Loss from Termination of Bridge Financing

In the nine months ended September 30, 2023, we wrote-off the unamortized debt issuance costs and recognized a loss from termination of bridge financing upon the extinguishment of both a secured bridge financing agreement in connection with the GFL Acquisition of $3.7 million, and an unsecured bridge financing agreement in connection with the acquisition of collection, transfer and recycling operations in the greater Albany, New York Area (dba Twin Bridges) (the “Twin Bridges Acquisition”) of $4.5 million.

#### Provision for Income Taxes

Our provision for income taxes decreased $(1.4) million and decreased $(2.1) million in the three and nine months ended September 30, 2024, respectively, from the prior year periods. The 43.5% effective rate for the nine months ended September 30, 2024 was computed based on the statutory rate of 21% adjusted primarily for state taxes, nondeductible officer compensation, and an increase in the effective state rate due to tax losses in certain states requiring a valuation allowance; partially offset by tax deductible equity compensation in excess of book expense. This effective rate exceeded the 24.4% effective rate for the nine months ended September 30, 2023 primarily due to the current period rate having lower tax deductible equity compensation in excess of book expense and an increase in the effective state rate for tax losses in certain states requiring valuation losses. The substantial increase in the effective tax rate from the nine months ended September 30, 2023 to the nine months ended September 30th, 2024 is due to the permanent items being more impactful as a result of the decrease in pre-tax income for such periods.

The projected effective rate excluding discrete items for the fiscal year ending December 31, 2024 is 41.5%, whereas such rate for fiscal year 2023 was 31.0%. The projected effective rate excluding discrete items is computed based on the statutory rate of 21%. The discrete items for the nine months ended September 30, 2024 increased the rate by 2.0%, whereas the discrete items for the nine months ended September 30th, 2023 decreased the rate by (2.9%).

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJ Act”) was enacted. The TCJ Act significantly changed U.S. corporate income tax laws by, among other things, changing carryforward rules for net operating losses. Our $7.2 million in federal net operating loss carryforwards generated as of the end of 2017 continue to be carried forward for 20 years and are expected to be available to fully offset taxable income earned in 2024 and future years. Federal net operating losses generated after 2017, totaling $150.3 million carried forward to 2024, will be carried forward indefinitely, but generally may only offset up to 80% of taxable income earned in a tax year.

In addition, the TCJ Act added limitations on the deductibility of interest expense and potentially could limit the deductibility of some of our interest expense. Any interest expense limited may be carried forward indefinitely and utilized in later years subject to the interest limitation.

### Segment Reporting

### Revenues

A summary of revenues by reportable operating segment (in millions) follows:

|  | Three Months Ended September 30, 2024 | 2023 | $ Change 2024 | Nine Months Ended September 30, 2023 |  | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Eastern | $110.4 | $97.5 | $12.9 | $310.9 | $274.7 | $36.2 |
| Western | 150.8 | 136.0 | 14.8 | 426.1 | 371.3 | 54.8 |
| Mid-Atlantic (1) | 64.0 | 43.7 | 20.3 | 148.0 | 43.7 | 104.3 |
| Resource Solutions | 86.4 | 75.5 | 10.9 | 244.8 | 215.3 | 29.5 |
| Total revenues | $411.6 | $352.7 | $58.9 | $1,129.8 | $905.0 | $224.8 |

(1) Operations under the Mid-Atlantic region commenced July 1, 2023.

### Operating Income (Loss)

A summary of operating income (loss) by operating segment (in millions) follows:

|  | Three Months Ended September 30, 2024 | 2023 | $ Change 2024 | Nine Months Ended September 30, 2023 |  | $ Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Eastern | $5.6 | $11.2 | $(5.6) | $19.8 | $20.8 | $(1.0) |
| Western | 19.7 | 20.5 | (0.8) | 46.3 | 51.9 | (5.6) |
| Mid-Atlantic (1) | (5.1) | (0.7) | (4.4) | (17.0) | (0.7) | (16.3) |
| Resource Solutions | 5.5 | 4.1 | 1.4 | 11.2 | 2.9 | 8.3 |
| Corporate Entities | (1.3) | (0.9) | (0.4) | (6.1) | (7.8) | 1.7 |
| Operating income | $24.4 | $34.2 | $(9.8) | $54.2 | $67.1 | $(12.9) |

(1) Operations under the Mid-Atlantic region commenced July 1, 2023.

### Eastern Region

A summary of the period-to-period changes in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:

|  | Period-to-Period Change for the Three Months Ended September 30, 2024 vs. 2023 Amount | % Growth | Period-to-Period Change for the Nine Months Ended September 30, 2024 vs. 2023 Amount | % Growth |
| --- | ---: | ---: | ---: | ---: |
| Price | $6.5 | 6.7% | $16.6 | 6.0% |
| Volume | 1.8 | 1.8% | 3.9 | 1.4% |
| Surcharges and other fees | (0.7) | (0.7)% | (4.2) | (1.5)% |
| Commodity price and volume | 0.1 | 0.1% | 0.7 | 0.3% |
| Acquisitions | 5.2 | 5.3% | 19.2 | 7.0% |
| Solid waste revenues | $12.9 | 13.2% | $36.2 | 13.2% |

Solid waste revenues increased in the three and nine months ended September 30, 2024 as compared to the prior year periods, primarily driven by (i) the contribution from acquisitions, (ii) favorable collection pricing of $5.6 million, or 8.1% as a percentage of collection operations quarterly, and $14.0 million, or 7.2% as a percentage of collection operations year-to-date, (iii) favorable disposal pricing of $0.9 million, or 3.8% as a percentage of disposal operations quarterly, and $2.6 million, or 3.5% as a percentage of disposal operations year-to-date, and (iv) higher disposal volume of $2.0 million, or 7.7% as a percentage of disposal operations quarterly, and $4.6 million, or 6.2% as a percentage of disposal operations year-to-date; partially offset by (a) lower surcharges and fees both quarterly and year-to-date due to lower energy and environmental fee (“E&E Fee(s)”) revenues associated with our fuel cost recovery program related to lower diesel fuel prices and lower sustainability recycling adjustment fee (“SRA Fee(s)”) revenues from higher recycled commodity prices as compared to the prior year periods, partly counteracted by an increase in the environmental component of the E&E Fee to help offset environmental, regulatory and other operating costs, as well as (b) lower collection volume of $(0.2) million, or (0.2)% as a percentage of collection operations quarterly, and $(0.7) million, or (0.4)% as a percentage of collection operations year-to-date.

See Item 3. “*Quantitative and Qualitative Disclosures about Market Risk”* included in this Quarterly Report on Form 10-Q for additional information regarding our SRA Fees and the energy component of our E&E Fees.

Operating income decreased in the three and nine months ended September 30, 2024 by $(5.6) million and $(1.0) million, respectively, as compared to the prior year periods. The period-over-period decreases were driven by (i) the charge related to the Southbridge Landfill, (ii) higher costs associated with operating and supporting acquired businesses, (iii) increased depreciation expense due to acquisitions and investment in property and equipment, (iv) general cost inflation, including for disposal, labor, and maintenance costs, (v) higher leachate disposal costs, (vi) higher accretion and landfill amortization expense associated with changes in the timing and cost estimates of our closure, post-closure, and capping obligations, (vii) higher accruals related to insurance claims quarterly and (viii) the allocation of higher corporate costs; partially offset by (a) revenue growth, described above, (b) higher intercompany related operating income, (c) lower costs due to improved routing efficiencies and (d) a charge for the FLSA-related legal settlement recorded during the nine months ended September 30, 2023. See further discussion about the charge related to the Southbridge Landfill above in “*Operating Expenses”.*

### Western Region

A summary of the period-to-period changes in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:

|  | Period-to-Period Change for the Three Months Ended September 30, 2024 vs. 2023 Amount | % Growth | Period-to-Period Change for the Nine Months Ended September 30, 2024 vs. 2023 Amount | % Growth |
| --- | ---: | ---: | ---: | ---: |
| Price | $7.4 | 5.5% | $20.5 | 5.5% |
| Volume | (3.9) | (2.9)% | (15.3) | (4.1)% |
| Surcharges and other fees | (0.8) | (0.6)% | (3.8) | (1.0)% |
| Commodity price and volume | (0.1) | (0.1)% | 0.9 | 0.2% |
| Acquisitions | 12.2 | 8.9% | 52.5 | 14.2% |
| Solid waste revenues | $14.8 | 10.8% | $54.8 | 14.8% |

35

Solid waste revenues increased in the three and nine months ended September 30, 2024 as compared to the prior year periods, primarily driven by (i) the contribution from acquisitions, (ii) favorable collection pricing of $5.9 million, or 6.3% as a percentage of collection operations quarterly, and $15.4 million, or 6.0% as a percentage of collection operations year-to-date, and (iii) favorable disposal pricing of $1.5 million, or 3.9% as a percentage of disposal operations quarterly, and $5.1 million, or 4.8% as a percentage of disposal operations year-to-date; partially offset by (a) lower disposal volume of $(3.2) million, or (8.1)% as a percentage of disposal operations quarterly, and $(11.8) million, or (11.0)% as a percentage of disposal operations year-to-date, mainly driven by lower landfill C&D and special waste volumes, (b) lower collection volume of $(0.7) million, or (0.7)% as a percentage of collection operations quarterly, and $(3.5) million, or (1.4)% as a percentage of collection operations year-to-date, due to customer churn and (c) lower surcharges and fees both quarterly and year-to-date due to lower E&E Fee revenues associated with our fuel cost recovery program related to lower diesel fuel prices and lower SRA Fee revenues from higher recycled commodity prices as compared to the prior year periods, partly counteracted by an increase in the environmental component of the E&E Fee to help offset environmental, regulatory and other operating costs.

See Item 3. “*Quantitative and Qualitative Disclosures about Market Risk”* included in this Quarterly Report on Form 10-Q for additional information regarding our SRA Fees and the energy component of our E&E Fees.

Operating income declined in the three and nine months ended September 30, 2024 by $(0.8) million and $(5.6) million, respectively, as compared to the prior year periods. The period-over-period declines were due to (i) higher costs associated with operating and supporting acquired businesses, including the impact of accelerated amortization schedules of certain intangibles, (ii) increased depreciation expense due to acquisitions and investment in property and equipment, (iii) general cost inflation, including for disposal, labor, and maintenance costs, (iv) delays in the delivery of fleet vehicles resulting in higher short term rental and vehicle maintenance costs, (v) higher leachate disposal costs, (vi) higher accretion and landfill amortization expense associated with changes in the timing and cost estimates of our closure, post-closure, and capping obligations, (vii) higher accruals related to insurance claims quarterly, (viii) the allocation of higher corporate costs, (ix) higher expense from acquisition activities quarterly, and (x) a gain on resolution of acquisition-related contingent consideration in the nine months ended September 30, 2023 associated with the reversal of a contingency for a transfer station permit expansion that was deemed no longer viable; partially offset by (a) revenue growth, described above, (b) higher intercompany related operating income, (c) a charge for the FLSA-related legal settlement recorded during the nine months ended September 30, 2023, and (d) improved routing efficiencies. See further discussion about the expense from acquisition activities above in “*Operating Expenses”.*

### Mid-Atlantic Region

A summary of the period-to-period changes in solid waste revenues (dollars in millions) follows:

|  | Period-to-Period Change for the Three Months Ended September 30, 2024 vs. 2023 Amount | % Growth | Period-to-Period Change for the Nine Months Ended September 30, 2024 vs. 2023 Amount |
| --- | ---: | ---: | ---: |
| Price | $1.2 | 2.8% | $1.2 |
| Volume | (0.7) | (1.7)% | (0.7) |
| Surcharges and other fees | 1.0 | 2.4% | 6.7 |
| Acquisitions | 18.8 | 42.9% | 97.1 |
| Solid waste revenues (1) | $20.3 | 46.4% | $104.3 |

(1) Our Mid-Atlantic region operating segment, consisting of collection and transfer station operations, commenced on July 1, 2023 following the GFL Acquisition.

The operating losses of $(5.1) million and $(17.0) million in the three and nine months ended September 30, 2024, respectively, were impacted by $3.2 million quarterly and $12.3 million year-to-date of expense from acquisition activities, comprised primarily of integration costs, including rebranding efforts and a charge in the nine months ended September 30, 2024 for an increase in the reserve against accounts receivable of the businesses acquired in the GFL Acquisition as a result of our inability to pursue collections during the transition services period with the seller, resulting in accounts receivable aged beyond what is typical in our business; as well as the impact of accelerated amortization schedules of certain acquired intangibles and an increased provision for expected credit losses quarterly due to the aging of receivables.

The operating losses of $(0.7) million in the three and nine months ended September 30, 2023 were driven primarily by solid waste collection services, as revenues, inclusive of intercompany revenues, more than offset by $30.0 million cost of operations, $3.0 million of general and administration expense, $10.2 million of depreciation and amortization expense and $1.5 million of expense from acquisition activities, comprised primarily of legal, consulting and integration costs pertaining to the GFL Acquisition. See further discussion about the expense from acquisition activities above in “*Operating Expenses”.*

### Resource Solutions

A summary of the period-to-period changes in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:

|  | Period-to-Period Change for the Three Months Ended September 30, 2024 vs. 2023 Amount | % Growth | Period-to-Period Change for the Nine Months Ended September 30, 2024 vs. 2023 Amount | % Growth |
| --- | ---: | ---: | ---: | ---: |
| Price | $2.5 | 3.2% | $11.8 | 5.5% |
| Volume | 7.3 | 9.7% | 10.7 | 5.0% |
| Surcharges and other fees | (0.3) | (0.2)% | (0.6) | (0.3)% |
| Acquisitions | 1.4 | 1.8% | 7.6 | 3.5% |
| Resource Solutions revenues | $10.9 | 14.5% | $29.5 | 13.7% |

Resource Solutions revenues increased in the three and nine months ended September 30, 2024 as compared to the prior year periods, due to the impact from (i) higher recycled commodity pricing of $7.1 million, or 31.2% as a percentage of recycling operations quarterly, and $16.8 million, or 27.7% as a percentage of recycling operations year-to-date, (ii) the contribution from acquisitions, (iii) National Accounts business pricing growth of $0.5 million, or 1.1% as a percentage of National Accounts operations quarterly, and $4.9 million, or 3.5% as a percentage of National Accounts operations year-to-date, (iv) higher recycling volumes of $3.5 million, or 15.5% as a percentage of recycling operations quarterly, and $7.6 million, or 12.7% as a percentage of recycling operations year-to-date, (v) higher other processing price of $0.3 million, or 6.4% as a percentage of other processing operations quarterly, and $1.0 million, or 6.5% as a percentage of other processing operations year-to-date (vi) higher National Accounts business volumes of $3.4 million, or 7.2% as a percentage of National Accounts operations quarterly, and $3.2 million, or 2.3% as a percentage of National Accounts operations year-to-date, (vii) higher other processing volumes of $0.4 million, or 7.0% as a percentage of other processing operations quarterly, and lower other processing volumes of $(0.1) million, or (0.9%) as a percentage of other processing operations year-to-date, (viii) lower tipping fees primarily related to contract structures that work to offset recycled commodity price movements of $(5.4) million, or (24.1)% as a percentage of recycling operations quarterly, and $(10.9) million, or (18.0)% as a percentage of recycling operations year-to-date, and (ix) lower surcharges and other fees associated with our National Accounts business.

Operating income increased in the three and nine months ended September 30, 2024 by $1.4 million and $8.3 million, respectively, as compared to the prior year periods. The period-over-period increases were due to (i) revenue growth, described above, and (ii) lower direct costs associated with hauling and transportation year-to-date relating to municipal biosolid volumes in our National Accounts business; partially offset by (a) higher costs associated with operating and supporting acquired businesses, including the impact of accelerated amortization schedules of certain intangibles, (b) increased depreciation expense due to acquisitions and investment in property and equipment, (c) the allocation of higher corporate costs, (d) general cost inflation, including for disposal, labor, and maintenance costs, and (e) lower intercompany related operating income.

### Corporate Entities

Corporate Entities operating loss reflects those costs not allocated to our reportable operating segments, which consists of depreciation and amortization expense and certain expense from acquisition activities. Operating deficit increased $(0.4) million and decreased $1.7 million in the three and nine months ended September 30, 2024, respectively, as compared to the prior year periods, driven primarily by the timing of acquisition activities. See further discussion about the expense from acquisition activities above in “*Operating Expenses”.*

### Liquidity and Capital Resources

We continually monitor our actual and forecasted cash flows, our liquidity, and our capital requirements in order to properly manage our liquidity needs as we move forward based on the capital intensive nature of our business and our growth acquisition strategy. As of September 30, 2024, we had $678.5 million of available and undrawn capacity under our $700.0 million revolving credit facility (“Revolving Credit Facility”) and $519.0 million of cash and cash equivalents to help meet our short-term and long-term liquidity needs. We expect existing cash and cash equivalents combined with available cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future.

Our known current and long-term uses of cash include, among other possible demands: (i) acquisitions, (ii) capital expenditures and leases, (iii) repayments to service debt and other long-term obligations, and (iv) payments for final capping, closure and post-closure asset retirement obligations and environmental remediation liabilities. We have made in the past, and plan to make in the future, acquisitions to expand service areas, densify existing operations, and grow services for our customers. Future acquisitions may include larger acquisitions that may be inside or outside of our existing market, which could require additional financing either in the form of debt or equity.

A summary of cash and cash equivalents, restricted assets and debt balances, excluding any debt issuance costs, (in millions) follows:

|  | September 30, 2024 | December 31, 2023 | $ Change |
| --- | ---: | ---: | ---: |
| Cash and cash equivalents | $519.0 | $220.9 | $298.1 |
| Current assets, excluding cash and cash equivalents | $224.1 | $205.4 | $18.7 |
| Restricted assets | $2.4 | $2.2 | $0.2 |
| Total current liabilities: |  |  |  |
| Current liabilities, excluding current maturities of debt | $252.9 | $243.1 | $9.8 |
| Current maturities of debt | 38.4 | 35.8 | 2.6 |
| Total current liabilities | $291.3 | $278.9 | $12.4 |
| Debt, less current portion, excluding unamortized debt issuance costs | $1,061.3 | $1,018.8 | $42.5 |

Current assets, excluding cash and cash equivalents, increased $18.7 million and current liabilities, excluding current maturities of debt, increased $9.8 in the nine months ended September 30, 2024, resulting in a $8.9 million increase in working capital, net (defined as current assets, excluding cash and cash equivalents, minus current liabilities, excluding current maturities of debt), from $(37.7) million as of December 31, 2023 to $(28.8) million as of September 30, 2024. We strive to minimize net working capital by driving shorter days sales outstanding as compared to days payable outstanding.

### Summary of Cash Flow Activity

Cash and cash equivalents increased $298.1 million in the nine months ended September 30, 2024. A summary of cash flows (in millions) follows:

|  | Nine Months Ended September 30, 2024 | 2023 | $ Change |
| --- | ---: | ---: | ---: |
| Net cash provided by operating activities | $171.6 | $157.8 | $13.8 |
| Net cash used in investing activities | $(384.6) | $(937.2) | $552.6 |
| Net cash provided by financing activities | $511.1 | $930.0 | $(418.9) |

38

#### Cash flows from operating activities.

A summary of operating cash flows (in millions) follows:

|  | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net income | $8.7 | $27.2 |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| Depreciation and amortization | 168.5 | 116.1 |
| Interest accretion on landfill and environmental remediation liabilities | 8.8 | 7.5 |
| Amortization of debt issuance costs | 2.2 | 2.2 |
| Stock-based compensation | 7.4 | 6.7 |
| Operating lease right-of-use assets expense | 13.1 | 11.0 |
| Disposition of assets, other items and charges, net | 12.5 | 0.3 |
| Loss from termination of bridge financing | — | 8.2 |
| Deferred income taxes | 3.4 | 5.2 |
|  | 224.6 | 184.4 |
| Changes in assets and liabilities, net | (53.0) | (26.6) |
| Net cash provided by operating activities | $171.6 | $157.8 |

A summary of the most significant items affecting the change in our operating cash flows follows:

Net cash provided by operating activities increased $13.8 million in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. This was the result of revenue growth driven by acquisition activity, partially offset by higher interest expense and an increase in the unfavorable cash flow impact associated with the changes in our assets and liabilities, net of effects of acquisitions and divestitures. For discussion of our operational performance in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, see “*Results of Operations”* above.

*Cash flows from investing activities.*

A summary of investing cash flows (in millions) follows:

|  | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Acquisitions, net of cash acquired | $(259.2) | $(847.8) |
| Additions to property and equipment | (126.4) | (90.4) |
| Additions to intangible assets | (0.3) | — |
| Proceeds from sale of property and equipment | 1.1 | 1.0 |
| Proceeds from property insurance settlement | 0.2 | — |
| Net cash used in investing activities | $(384.6) | $(937.2) |

A summary of the most significant items affecting the change in our investing cash flows follows:

*Acquisitions, net of cash acquired.* In the nine months ended September 30, 2024, we acquired five businesses for total consideration of $(260.2) million, including $(261.2) million in cash, made $(0.9) million in payments on businesses previously acquired and received a $2.9 million working capital settlement on a business previously acquired, as compared to the nine months ended September 30, 2023 during which we acquired five businesses, including the GFL Acquisition, for total consideration of $845.1 million, including $842.6 million in cash and paid $5.2 million in holdback payments on businesses previously acquired.

*Capital expenditures*. Capital expenditures were $36.0 million higher in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to higher capital spend driven by (i) acquisition activity, (ii) spend related to the retrofitting of our Willimantic, Connecticut materials recovery facility, (iii) landfill development and (iv) the timing of spend and increased investment in our fleet.

*Cash flows from financing activities.*

A summary of financing cash flows (in millions) follows:

|  | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Proceeds from long-term borrowings | $801.8 | $465.0 |
| Principal payments on debt | (780.9) | (18.5) |
| Payments of debt issuance costs | (6.4) | (12.8) |
| Proceeds from the exercise of share based awards | — | 0.1 |
| Proceeds from the public offering of Class A common stock | 496.6 | 496.2 |
| Net cash provided by financing activities | $511.1 | $930.0 |

*Debt activity.* Net cash associated with debt activity decreased $(425.6) million in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. In September 2024, we entered into a second amended and restated credit agreement (“Credit Agreement”), which amended and restated in its entirety our amended and restated credit agreement (“Existing Credit Agreement”). The Credit Agreement provides for a $800.0 million aggregate principal amount term loan A facility (“Term Loan Facility”) and a $700.0 million Revolving Credit Facility, with a $155.0 million sublimit for letters of credit (collectively, the "Credit Facility"). The proceeds of the Credit Facility refinanced our existing $769.3 million aggregate principal amount term loan A facilities under the Existing Credit Agreement, including the $430.0 million aggregate principal amount 2023 term loan A facility we entered into in June 2023.

*Payment of debt issuance costs.* We paid $6.4 million of debt issuance costs in the nine months ended September 30, 2024 primarily related to refinancing activities associated with entering into the Credit Agreement as compared to $12.8 million in the nine months ended September 30, 2023, which included $8.7 million related to bridge financing activities associated with the GFL Acquisition and the Twin Bridges Acquisition.

*Proceeds from the public offering of Class A Common Stock.* In the nine months ended September 30, 2024, we completed a public offering of 5.2 million shares of our Class A common stock at a public offering price of $100.00 per share. After deducting stock issuance costs received as of September 30, 2024, including underwriting discounts, commissions and offering expenses, the offering resulted in net proceeds of $496.6 million. The net proceeds from this offering were used to repay borrowings under our Revolving Credit Facility and are further available to fund acquisition activity and for general corporate purposes.

In the nine months ended September 30, 2023, we completed a public offering of 6.1 million shares of our Class A common stock at a public offering price of $85.50 per share. After deducting stock issuance costs received as of September 30, 2023, including underwriting discounts, commissions and offering expenses, the offering resulted in net proceeds of $496.2 million. The net proceeds from this offering were and are to be used to fund acquisition activity, including the GFL Acquisition and the Twin Bridges Acquisition, to pay certain costs associated with acquisition activities, and to repay borrowings and/or debt securities.

### Outstanding Long-Term Debt

#### Credit Facility

As of September 30, 2024, we are party to the Credit Agreement, which provides for a $800.0 million aggregate principal amount Term Loan Facility and a $700.0 million Revolving Credit Facility, with a $155.0 million sublimit for letters of credit. We have the right to request, at our discretion, an increase in the amount of loans under the Credit Facility by an aggregate amount of $200.0 million, subject to further increase based on the terms and conditions set forth in the Credit Agreement. The Credit Facility has a 5-year term that matures in September 2029. The Credit Facility shall bear interest, at our election, at term secured overnight financing rate (“Term SOFR”) or at a base rate, in each case plus or minus any sustainable rate adjustment of up to positive or negative 4.0 basis points per annum, plus an applicable interest rate margin based upon our consolidated net leverage ratio as follows:

|  | Term SOFR Loans | Base Rate Loans |
| --- | --- | --- |
| Credit Facility | 1.300% to 2.175% | 0.300% to 1.175% |

A commitment fee will be charged on undrawn amounts of our Revolving Credit Facility based upon our consolidated net leverage ratio in the range of 0.20% to 0.40% per annum, plus a sustainability adjustment of up to positive or negative 1.0 basis point per annum. The Amended and Restated Credit Agreement provides that Term SOFR is subject to a zero percent floor. We are also required to pay a fronting fee for each letter of credit of 0.25% per annum. Interest under the Credit Agreement is subject to increase by 2.00% per annum during the continuance of a payment default and may be subject to increase by 2.00% per annum during the continuance of any other event of default. The Credit Facility is guaranteed jointly and severally, fully and unconditionally by all of our significant wholly-owned subsidiaries and secured by substantially all of our assets. As of September 30, 2024, further advances were available under the Revolving Credit Facility in the amount of $678.5 million. The available amount is net of outstanding irrevocable letters of credit totaling $21.5 million, and as of September 30, 2024 no amount had been drawn.

The Credit Agreement requires us to maintain a minimum interest coverage ratio and a maximum consolidated net leverage ratio, to be measured at the end of each fiscal quarter. As of September 30, 2024, we were in compliance with all financial covenants contained in the Credit Agreement as follows (in millions):

| Credit Facility Covenant | Twelve Months Ended September 30, 2024 | Covenant Requirements at September 30, 2024 |
| --- | ---: | ---: |
| Maximum consolidated net leverage ratio (1) | 2.57 | 4.00 |
| Minimum interest coverage ratio | 6.40 | 3.00 |

(1) The maximum consolidated net leverage ratio is calculated as consolidated funded debt, net of up to $100.0 million of unencumbered cash and cash equivalents (calculated at $999.7 million as of September 30, 2024, or $1,099.7 million of consolidated funded debt less $100.0 million total of unencumbered cash and cash equivalents), divided by consolidated EBITDA. Consolidated EBITDA is based on operating results for the twelve months preceding the measurement date of September 30, 2024. Consolidated funded debt, net and consolidated EBITDA as defined by the Credit Agreement (“Consolidated EBITDA”) are non-GAAP financial measures that should not be considered an alternative to any measure of financial performance calculated and presented in accordance with generally accepted accounting principles in the United States. A reconciliation of net cash provided by operating activities to Consolidated EBITDA is as follows (in millions):

|  | Twelve Months Ended September 30, 2024 |
| --- | ---: |
| Net cash provided by operating activities | $246.9 |
| Changes in assets and liabilities, net of effects of acquisitions and divestitures | 46.1 |
| Stock based compensation | (9.8) |
| Operating lease right-of-use assets expense | (7.8) |
| Landfill capping charge - veneer failure | (3.0) |
| Disposition of assets, other items and charges, net | (12.9) |
| Interest expense, less amortization of debt issuance costs | 59.9 |
| Provision for income taxes, net of deferred income taxes | 3.9 |
| Adjustments as allowed by the Credit Agreement (1) | 65.8 |
| Consolidated EBITDA | $389.1 |

(1) Adjustments as allowed by the Credit Agreement includes the estimated annual pro-forma impact of acquisitions on consolidated EBITDA.

In addition to these financial covenants, the Credit Agreement also contains a number of important customary affirmative and negative covenants which restrict, among other things, our ability to sell assets, incur additional debt, create liens, make investments, and pay dividends. As of September 30, 2024, we were in compliance with the covenants contained in the Credit Agreement. We do not believe that these restrictions impact our ability to meet future liquidity needs.

An event of default under any of our debt agreements could permit some of our lenders, including the lenders under the Credit Facility, to declare all amounts borrowed from them to be immediately due and payable, together with accrued and unpaid interest, or, in the case of the Credit Facility, terminate the commitment to make further credit extensions thereunder, which could, in turn, trigger cross-defaults under other debt obligations. If we were unable to repay debt to our lenders or were otherwise in default under any provision governing our outstanding debt obligations, our secured lenders could proceed against us and against the collateral securing that debt.

Based on the seasonality of our business, operating results in the late fall, winter and early spring months are generally lower than the remainder of our fiscal year. Given the cash flow impact that this seasonality, the capital intensive nature of our business and the timing of debt payments has on our business, we typically incur higher debt borrowings in order to meet our liquidity needs during these times. Consequently, our availability and performance against our financial covenants may tighten during these times as well.

#### Tax-Exempt Financings and Other Debt

As of September 30, 2024, we had outstanding $232.0 million aggregate principal amount of tax exempt bonds; $66.2 million aggregate principal amount of finance leases; and $1.5 million aggregate principal amount of notes payable.

See Note 7, *Debt* to our consolidated financial statements included in Part I. Item 1. “*Financial Statements”* of this Quarterly Report on Form 10-Q for further disclosure regarding debt.

### Inflation

Inflationary increases in costs, including current cost inflation associated primarily with labor, certain other cost categories and capital items, have materially affected, and may continue to materially affect, our operating margins and cash flows. While inflation negatively impacted operating results and margins during the three and nine months ended September 30, 2024 and 2023, we believe that our flexible pricing structures and cost recovery fees are allowing us to recover and will continue to allow us to recover certain inflationary costs from our customer base. Consistent with industry practice, most of our contracts and service agreements provide for a pass-through of certain costs to our customers, including increases in landfill tipping fees and in most cases fuel costs, intended to mitigate the impact of inflation on our operating results. We have also implemented a number of operating efficiency programs that seek to improve productivity and reduce our service costs, and our fuel cost recovery programs, primarily the energy component of our E&E Fee, which is designed to recover escalating fuel price fluctuations above a periodically reset floor. Despite these programs, competitive factors may require us to absorb at least a portion of these cost increases. Additionally, management’s estimates associated with inflation have had, and will continue to have, an impact on our accounting for landfill and environmental remediation liabilities.

See Item 3. “*Quantitative and Qualitative Disclosures about Market Risk”* included in this Quarterly Report on Form 10-Q for additional information regarding our fuel cost recovery programs.

### Regional Economic Conditions

Our business is primarily located in the eastern United States. Therefore, our business, financial condition and results of operations are susceptible to downturns in the general economy in these geographic regions and other factors affecting these regions, such as state regulations, labor availability and severe weather conditions. We are unable to forecast or determine the timing and/or the future impact of a sustained economic slowdown or other factors affecting these regions.

### Seasonality and Severe Weather

Our revenues historically have been higher in the late spring, summer and early fall months. This seasonality reflects lower volumes of waste in the late fall, winter and early spring months because the volume of waste relating to C&D activities decreases substantially during the winter months in the northeastern United States.

Because certain of our operating and fixed costs remain constant throughout the fiscal year, operating income is therefore impacted by a similar seasonality. Our operations can be adversely affected by periods of inclement or severe weather, which may increase with the physical impacts of climate change and could increase our operating costs associated with the collection and disposal of waste, delay the collection and disposal of waste, reduce the volume of waste delivered to our disposal sites, increase the volume of waste collected under our existing contracts (without corresponding compensation), decrease the throughput and operating efficiency of our materials recycling facilities, or delay construction or expansion of our landfill sites and other facilities. Our operations can also be favorably affected by severe weather, which could increase the volume of waste in situations where we are able to charge for our additional services provided.

Our processing line-of-business in the Resource Solutions operating segment typically experiences increased volumes of fibers from November through mid-January due to increased retail activity during the holiday season.

### Critical Accounting Estimates and Assumptions

Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States and necessarily include certain estimates and judgments made by management. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Our critical accounting estimates are more fully discussed in Item 7. “*Management's Discussion and Analysis of Financial Condition and Results of Operations”* of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

### New Accounting Pronouncements

For a description of the new accounting standards that may affect us, see Note 2, *Accounting Changes* to our consolidated financial statements included under Part I. Item 1. “*Financial Statements”* of this Quarterly Report on Form 10-Q.

## Market risk

As filed, 5,940 characters.

In the normal course of business we are exposed to market risks, including changes in diesel fuel prices, interest rates and certain commodity prices. We have a variety of strategies to mitigate these market risks, including those discussed below.

### Fuel Price Risk

The price and supply of fuel are unpredictable and fluctuate based on events beyond our control, including among others, geopolitical developments, supply and demand for oil and gas, actions by the Organization of the Petroleum Exporting Countries and other oil and gas producers, war and unrest in oil producing countries and regional production patterns. Fuel is needed to run our fleet of trucks, equipment and other aspects of our operations, and price escalations for fuel increase our operating expenses. We have fuel cost recovery programs, primarily the energy component of our energy and environmental fee (“E&E Fee(s)”), which is designed to offset some or all of the impact of diesel fuel price increases above a periodically reset floor and contemplates a minimum customer participation level to cover changes in our fuel costs. The energy component of the E&E Fee floats on a monthly basis based upon changes in a published diesel fuel price index and is tied to a price escalation index with a look-back provision, which results in a timing lag in our ability to match the changes in the fuel cost component of the fee to diesel fuel price fluctuations during periods of rapid price changes. In certain circumstances, a substantial rise or drop in fuel costs could materially affect our revenue and costs of operations. However, a substantial rise or drop in fuel costs should not have a material impact on our results of operations. In addition, we are susceptible to increases in fuel surcharges from our vendors.

Based on our consumption levels in the last twelve months ended September 30, 2024, combined with our expected fuel consumption related to recently closed acquisitions, and after considering physically settled fuel contracts, we believe a $0.40 cent per gallon change in the price of diesel fuel would change our direct fuel costs by approximately $6.3 million per year. Offsetting these changes in direct fuel expense would be changes in the energy component of the E&E Fees charged to our customers. Based on participation rates as of September 30, 2024 and considering recently closed acquisitions, we believe a $0.40 cent per gallon change in the price of diesel fuel would change the energy component of the E&E Fee by approximately $5.6 million per year. In addition to direct fuel costs related to our consumption levels, we are also subject to fuel surcharge expense from third party transportation providers. Other operational costs and capital expenditures may also be impacted by fuel prices.

In the three and nine months ended September 30, 2024, our fuel costs were $14.4 million, or 3.5% of revenue, and $41.2 million, or 3.7% of revenue, respectively, as compared to $13.6 million, or 3.9% of revenue, and $34.0 million, or 3.8% of revenue, in the three and nine months ended September 30, 2023, respectively.

### Commodity Price Risk

We market a variety of materials, including fibers such as old corrugated cardboard and old newsprint, plastics, glass, ferrous and aluminum metals. We may use a number of strategies to mitigate impacts from these recycled material commodity price fluctuations including: (1) charging collection customers a floating sustainability recycling adjustment fee to reduce recycling commodity risks; (2) providing in-bound material recovery facilities (“MRF”) customers with a revenue share or indexed materials purchases in higher commodity price markets, or charging these same customers a processing cost or tipping fee per ton in lower commodity price markets; (3) selling recycled commodities to out-bound MRF customers through floor price or fixed price agreements; or (4) entering into fixed price contracts or hedges that mitigate the variability in cash flows generated from the sales of recycled paper at floating prices. Although we have introduced these risk mitigation programs to help offset volatility in commodity prices and to offset higher labor or capital costs to meet more stringent contamination standards, we cannot provide assurance that we can use these programs with our customers in all circumstances or that they will mitigate these risks in an evolving recycling environment. We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. As of September 30, 2024, we were not party to any commodity hedging agreements.

The impact of commodity price risk as of September 30, 2024 does not differ materially from that discussed in Item 7A. “*Quantitative and Qualitative Disclosures About Market Risk”* of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

### Interest Rate Risk

Our strategy to reduce exposure to interest rate risk involves entering into interest rate derivative agreements to hedge against adverse movements in interest rates related to the variable rate portion of our long-term debt. We have designated these derivative instruments as highly effective cash flow hedges, and therefore the change in fair value is recorded in our stockholders’ equity as a component of accumulated other comprehensive income and included in interest expense at the same time as interest expense is affected by the hedged transactions. Differences paid or received over the life of the agreements are recorded as additions to or reductions of interest expense on the underlying debt and included in cash flows from operating activities.

The impact of interest rate risk as of September 30, 2024 does not differ materially from that discussed in Item 7A. “*Quantitative and Qualitative Disclosures About Market Risk”* of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

## Controls and procedures

As filed, 2,106 characters.

*Evaluation of disclosure controls and procedures*. Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

*Changes in internal controls over financial reporting.* No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,344 characters.

Our business is subject to a number of risks, including those identified in Item 1A. “*Risk Factors”* of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and the updated risk factor set forth below, that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. We may disclose additional changes to our risk factors or disclose additional factors from time to time in our future filings with the Securities and Exchange Commission.

***The increasing focus on PFAS and other emerging contaminants may lead to increased compliance and remediation costs and litigation risks, which could adversely impact our financial condition and results of operations.***

The regulatory environment for per - and polyfluoroalkyl substances (commonly referred to as “ PFAS”) is rapidly evolving, with increasing demands for enhanced environmental monitoring programs and advanced treatment technologies to mitigate PFAS contamination. Risks to the Company related to PFAS include regulatory risks, including the recent designation by the United States Environmental Protection Agency (“EPA”) of PFAS as hazardous substances, which could create Superfund liabilities under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended for all downstream recipients of PFAS, including passive receivers such as our landfills and transporters of biosolids, the establishment of federal and state drinking water standards and surface water criteria which set low thresholds for impacts to drinking water and surface water, the risk that states in which we operate will require stringent monitoring of PFAS at our landfills, the risk of material increases in landfill leachate treatment costs due to mandatory pre-treatment or otherwise, the risk that existing remedial sites will become more complex and that closed landfills will be under enhanced regulatory scrutiny, the risk that biosolids management will be impacted by restrictions on end uses and the risk that that pre-existing land application sites will be determined to contain PFAS. Any such liability is likely to be uninsurable, with no coverage likely under our pollution or product liability policies.

Filed Oct 31, 2024.
Source: SEC EDGAR, the filing index for accession 0000911177-24-000090. Last ingested by Listed: Oct 24, 2026, 15:00 ET. No prices; not investment advice.