Casella Waste Systems Inc: Form 10-Q for the period ended Sep 30, 2025

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, 2024 (“fiscal year 2024”) filed with the Securities and Exchange Commission on February 18, 2025 (“2024 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 Securities Exchange Act of 1934, as amended, including statements regarding:

• our ability to consummate business acquisitions or divestitures, 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;
• severe weather conditions, which could impair our financial results by causing increased costs, loss of revenue, reduced operational efficiency or disruptions to our operations;
• 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;
• 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, tariffs, fluctuations in recycling commodity pricing, 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 2024 Form 10-K.

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 three 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, 2025, we owned and/or operated 81 solid waste collection operations, 71 transfer stations, 32 recycling facilities, eight Subtitle D landfills, two 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

Revenues

We manage our solid waste operations, which include a full range of solid waste services, on a geographic basis through three regional operating segments, which we designate as the Eastern, Western and Mid-Atlantic regions. In the nine months ended September 30, 2025, we moved certain operations between our regional operating segments, including a landfill that we own from the Western region to the Mid-Atlantic region and a collection and transfer station operation from our Western region to our Eastern region. Throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” certain prior period amounts have been reclassified between regional operating segments to conform to the current period presentation. For additional information, see Note 13, Segment Reporting to our consolidated financial statements included under Part I. Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q.

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 services provided by 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:

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:

The most significant items impacting the changes in our solid waste revenues during the three and nine months ended September 30, 2025 as compared to the prior year periods are summarized below:

• Price increased solid waste revenues both quarterly and year-to-date, including higher collection pricing of $11.8 million quarterly, or 4.7% as a percentage of collection revenues, and $35.3 million year-to-date, or 5.1% as a percentage of collection revenues, and higher disposal pricing of $3.1 million quarterly, or 4.6% as a percentage of disposal revenues, and $9.6 million year-to-date, or 5.3% as a percentage of disposal revenues, associated with our landfills and transfer stations.
• Volume decreased solid waste revenues quarterly, driven by lower collection volumes of $(0.3) million quarterly, or (0.1)% as a percentage of collection revenues, and decreased solid waste revenues year-to-date, driven by lower collection volumes of $(6.6) million year-to-date, or (1.0)% as a percentage of collection revenues, and lower disposal volumes of $(0.7) million year-to-date, or (0.4)% as a percentage of disposal revenues. The year-to-date decrease in disposal volumes is associated with lower transfer station and transportation volumes, partially offset by higher landfill volumes.
• Acquisitions increased solid waste revenues due to the partial year impact of our acquisition of eight businesses in the nine months ended September 30, 2025, as well as the rollover impact of eight acquisitions completed in fiscal year 2024.

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):

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):

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, 2025 as compared to the prior year periods are summarized below:

• Direct costs increased in aggregate dollars primarily due to acquisitions and higher third-party disposal rates.
• Direct labor costs increased primarily due to acquisitions and higher wage and benefit rates.
• Direct operational costs increased in aggregate dollars primarily due to (i) acquisitions, (ii) higher year-to-date accruals related to insurance claims, which were lower on a quarterly basis, and legal penalties associated with leachate management at a landfill we own in our Eastern region, (iii) higher accretion expense associated with changes in the timing and cost estimates of our capping, closure and post-closure obligations, (iv) higher landfill operating lease amortization as well as host community fees and royalties related to higher landfill tonnages at a landfill we lease in our Western region, and (v) general cost inflation; partially offset by lower leachate disposal costs. See Note 8, Commitments and Contingencies 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 the legal penalties accrual.
• Fuel costs increased in aggregate dollars due to acquisitions, partially offset by lower average diesel fuel prices year-to-date. 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, and (iii) increased costs of repairs performed by third parties.
• Other operational costs increased in aggregate dollars 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):

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, 2025 as compared to the prior year periods, primarily due to (i) acquisition activity, including increased labor costs, consulting fees and other costs to support our growth and acquisition strategy, (ii) escalation of salary, wage, and benefit costs, (iii) higher accruals related to incentive compensation, and (iv) higher costs associated with information technology; partially offset by a decreased provision for expected credit losses, primarily in our Mid-Atlantic region related to improved aging of our accounts receivable, and lower year-to-date legal expense associated with employee separation.

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:

Depreciation and amortization expense increased in the three and nine months ended September 30, 2025 as compared to the prior year periods, primarily due to (i) acquisitions, including the impact of amortization of acquired intangibles, (ii) investment in property and equipment in our existing operations, and (iii) higher landfill amortization expense related to higher landfill volumes in our Western and Mid-Atlantic regions, and changes in cost and other assumptions.

Expense from Acquisition Activities

In the three and nine months ended September 30, 2025, we recorded charges of $4.6 million and $16.6 million, respectively, and in the three and nine months ended September 30, 2024, we recorded charges of $5.5 million and $18.3 million, respectively, comprised primarily of legal, consulting, rebranding, information technology 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 our acquisition of the equity interests of four wholly-owned subsidiaries of GFL Environmental Inc. 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 Southbridge Landfill and later closed it in November 2018 when it reached its final capacity. In 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 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.

Other Expenses

Interest Expense, net

Our interest expense, net decreased $(0.5) million and $(1.6) million in the three and nine months ended September 30, 2025, respectively, as compared to the prior year periods primarily due to lower average interest rates, partially offset by higher average debt balances.

Provision for Income Taxes

Our provision for income taxes increased $1.3 million and decreased $(2.4) million in the three and nine months ended September 30, 2025, respectively, from the prior year periods. The provision of $4.3 million for the nine months ended September 30, 2025 included $1.1 million of current income tax expense and $3.2 million of deferred income tax expense. For the nine months ended September 30, 2024, the provision of $6.7 million included $3.3 million of current income tax expense and $3.4 million of deferred income tax expense. The 29.1% effective rate for the nine months ended September 30, 2025 was computed based on the statutory rate of 21% adjusted primarily for state taxes, non-deductible 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 was lower than the 43.5% effective rate for the nine months ended September 30, 2024, primarily due to differences in the valuation allowance of net operating losses, state income taxes and other discrete items.

On July 4, 2025, H.R.1 – One Big Beautiful Bill Act (The “OBBB Act”) was enacted. The OBBB Act addresses a wide range of changes including reinstating 100% bonus depreciation eligible for qualified assets. The OBBB Act also restores the EBITDA-based computation of interest expense limitations under Section 163(j) of the Internal Revenue Code among other income tax items; any interest expense limited may be carried forward indefinitely and utilized in later years subject to the interest limitation. We are still evaluating the impacts of the Bill, both federal and state.

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. Depending on bonus depreciation and other elections made on our 2024 federal tax return when filed, we project to carry no pre-2018 net operating losses into 2025. Federal net operating losses generated after 2017, totaling $83.2 million carried forward to 2025, will be carried forward indefinitely, but generally may only offset up to 80% of taxable income earned in a tax year.

Segment Reporting

As noted above, certain prior period amounts have been reclassified between regional operating segments to conform to the current period presentation reflecting the movement of certain operations between our regional operating segments. See Note 13, Segment Reporting to our consolidated financial statements included under Part I. Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q.

Revenues

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

Operating Income (Loss)

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

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:

Solid waste revenues increased in the three and nine months ended September 30, 2025 as compared to the prior year periods, primarily driven by (i) the contribution from acquisitions, (ii) higher collection pricing of $3.7 million quarterly, or 4.4% as a percentage of collection revenues, and $11.7 million year-to-date, or 4.9% as a percentage of collection revenues, and (iii) higher disposal pricing of $1.2 million quarterly, or 4.0% as a percentage of disposal revenues, and $3.2 million year-to-date, or 3.8% as a percentage of disposal revenues; partially offset by (a) lower disposal volumes of $(0.5) million quarterly, or (1.7)% as a percentage of disposal revenues, and $(4.2) million year-to-date, or (5.1)% as a percentage of disposal revenues, driven by transfer stations, as well as (b) lower collection volumes of $(0.6) million year-to-date, or (0.3)% as a percentage of collection revenues.

Operating income increased in the three and nine months ended September 30, 2025 by $8.6 million and $10.4 million, respectively, as compared to the prior year periods. The period-over-period increases were driven by (i) revenue growth, described above, (ii) the three and nine months ended September 30, 2024 including a charge related to the Southbridge Landfill, (iii) lower leachate disposal costs, and (iv) lower accruals related to incentive compensation; partially offset by (a) higher costs associated with operating and supporting acquired businesses, including the impact of amortization of acquired intangibles, (b) higher accretion and landfill amortization expense associated with changes in the timing and cost estimates of our closure, post-closure, and capping obligations, (c) higher year-to-date accruals related to insurance claims, which were lower quarterly, and legal penalties associated with leachate management at a landfill we own, (d) higher expense from acquisition activities, (e) increased depreciation expense due to acquisitions and investment in property and equipment, (f) lower contributions related to intercompany subcontracting with our National Accounts business, and (g) general cost inflation, including for disposal, labor, and maintenance costs.

See Note 8, Commitments and Contingencies 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 the legal penalties accrual. See further discussion about the expense from acquisition activities and 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:

Solid waste revenues increased in the three and nine months ended September 30, 2025 as compared to the prior year periods due to the impact from (i) the contribution from acquisitions, (ii) higher collection pricing of $6.4 million quarterly, or 6.1% as a percentage of collection revenues, and $18.4 million year-to-date, or 6.1% as a percentage of collection revenues, (iii) higher disposal pricing of $1.9 million quarterly, or 5.1% as a percentage of disposal revenues, and $6.4 million year-to-date, or 6.6% as a percentage of disposal revenues, (iv) higher transfer station and lower landfill and transportation volumes resulting in lower overall disposal volumes of $(0.6) million, or (1.5)% as a percentage of disposal revenues quarterly, and higher disposal volumes of $1.7 million, or 1.8% as a percentage of disposal revenues year-to-date, (v) lower collection volume of $(0.6) million quarterly, or (0.6)% as a percentage of collection revenues, and $(2.3) million year-to-date, or (0.8)% as a percentage of collection revenues.

Operating income increased in the three and nine months ended September 30, 2025 by $4.0 million and $10.6 million, respectively, as compared to the prior year periods. The period-over-period increases were due to (i) revenue growth, described above, (ii) higher contributions related to intercompany subcontracting with our National Accounts business, (iii) lower leachate disposal costs, (iv) lower expense from acquisition activities, and (v) lower equipment rental costs; partially offset by (a) higher directs costs associated with increased transfer station volumes, (b) higher costs associated with operating and supporting acquired businesses, including the impact of amortization of acquired intangibles, (c) higher accretion and landfill amortization expense associated with changes in the timing and cost estimates of our closure, post-closure, and capping obligations, and higher landfill volumes, (d) increased host community fees and royalties, (e) higher accruals related to insurance claims, (f) increased depreciation expense due to acquisitions and investment in property and equipment, and (g) general cost inflation, including for disposal, labor, and maintenance costs.

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 and as percentage growth of solid waste revenues) follows:

Solid waste revenues increased in the three and nine months ended September 30, 2025 as compared to the prior year periods, due to the impact from (i) the contribution from acquisitions, (ii) higher collection pricing of $1.7 million quarterly, or 2.7% as a percentage of collection revenues, and $5.2 million year-to-date, or 3.6% as a percentage of collection revenues, (iii) higher surcharges and other fees due to higher revenues associated with legacy fuel cost recovery programs from acquired businesses, (iv) higher disposal volumes of $1.1 million quarterly and $1.8 million year-to-date, related primarily to landfill operations, and (v) higher collection volumes of $0.3 million quarterly, or 0.4% as a percentage of collection revenues, and lower collection volumes of $(3.7) million year-to-date, or (2.5)% as a percentage of collection revenues.

Operating loss decreased in the three months ended September 30, 2025 by $0.5 million and increased in the nine months ended September 30, 2025 by $(2.0) million, as compared to the prior year periods. The period-over-period changes were due to (i) revenue growth, described above, (ii) higher contributions related to intercompany subcontracting with our National Accounts business, (iii) a decreased provision for expected credit losses related to improved aging of our accounts receivable, and (iv) lower expense from acquisition activities; partially offset quarterly and more than offset year-to-date due to (a) higher costs associated with operating and supporting acquired businesses, including the impact of amortization of acquired intangibles, (b) increased depreciation expense due to acquisitions and investment in property and equipment, (c) higher landfill amortization expense due to higher landfill volumes, (d) general cost inflation, including for disposal, labor, and maintenance costs, and (e) higher accruals related to insurance claims year-to-date.

See further discussion about the expense from acquisition activities above in “Operating Expenses”.

Resource Solutions

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

Resource Solutions revenues increased in the three and nine months ended September 30, 2025 as compared to the prior year periods, primarily driven by (i) higher tipping fees of $5.8 million quarterly, or 20.0% as a percentage of related revenues, and $11.2 million year-to-date, or 13.8% as a percentage of related revenues, primarily related to contract structures that help to offset recycled commodity price movements, (ii) higher National Accounts business volumes related to new business growth of $4.5 million quarterly, or 8.6% as a percentage of National Accounts revenues, and $8.5 million year-to-date, or 5.8% as a percentage of National Accounts revenues, (iii) National Accounts business pricing growth of $2.2 million quarterly, or 4.3% as a percentage of National Accounts revenues, and $7.1 million year-to-date, or 4.8% as a percentage of National Accounts revenues, (iv) higher recycling volumes of $2.3 million quarterly, or 7.8% as a percentage of related revenues, and $5.4 million year-to-date, or 6.6% as a percentage of related revenues, (v) higher other processing price of $0.1 million quarterly, or 2.1% as a percentage of related revenues, and $0.5 million year-to-date, or 3.2% as a percentage of related revenues, and (vi) the contribution from acquisitions; partially offset by (a) lower recycled commodity price of $(9.2) million quarterly, or (31.7)% as a percentage of related revenues, and $(14.7) million year-to-date, or (18.0)% as a percentage of related revenues, (b) lower other processing volumes of $(1.4) million quarterly, or (23.6)% as a percentage of related revenues, and $(0.9) million year-to-date, or (5.2)% as a percentage of related revenues, as well as (c) lower surcharges and other fees revenues year-to-date in our National Accounts business 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.

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

Operating income increased in the three and nine months ended September 30, 2025 by $1.3 million and $2.9 million, respectively, as compared to the prior year periods. The period-over-period increases were due to revenue growth, described above and lower expense from acquisition activities; partially offset by (i) higher costs associated with operating and supporting acquired businesses, including the impact of amortization of acquired 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, and (iv) higher intercompany expenses related to the subcontracting of our National Accounts business.

See further discussion about the expense from acquisition activities above in “Operating Expenses”.

Corporate Entities

Corporate Entities operating loss reflects costs, including legal, tax, information technology, human resources, certain finance and accounting and other administrative functions, depreciation and amortization expense and certain expense from acquisition activities, which are not allocated to our reportable operating segments.

Operating loss increased in the three and nine months ended September 30, 2025 by $(9.4) million and $(24.3) million, respectively, as compared to the prior year periods. The period-over-period increases were due to (i) higher costs associated with supporting acquired businesses, (ii) general cost inflation for salaries, wages, benefits and other overhead costs including those associated with information technology, marketing, sales and community relations efforts, (iii) higher accruals related to incentive compensation, (iv) higher depreciation expense associated with back office financial system infrastructure and (v) higher expense from acquisition activities; partially offset by lower legal expense associated with employee separation and lower accruals related to insurance claims.

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, 2025, we had $673.4 million of available and undrawn capacity under our $700.0 million revolving credit facility (“Revolving Credit Facility”) and $192.7 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 consolidated balance sheets items relevant to our liquidity (in millions) follows:

Current assets, excluding cash, cash equivalents and restricted cash, increased $25.4 million and current liabilities, excluding current maturities of debt, increased $7.5 million in the nine months ended September 30, 2025, resulting in a $17.9 million increase in working capital, net (defined as current assets, excluding cash, cash equivalents and restricted cash minus current liabilities, excluding current maturities of debt), from $(34.7) million as of December 31, 2024 to $(16.8) million as of September 30, 2025.

Summary of Cash Flow Activity

A summary of cash flows (in millions) follows:

Cash flows from operating activities.

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

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

Net cash provided by operating activities increased $61.6 million in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. This was the result of business growth, including from acquisition activity, and a slight decrease 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, 2025 as compared to the nine months ended September 30, 2024, see “Results of Operations” above.

Cash flows from investing activities.

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

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, 2025, we acquired eight businesses, which included $(217.2) million of cash consideration, and made $(0.3) million in payments on businesses previously acquired, as compared to the nine months ended September 30, 2024 during which we acquired five businesses, which included $(261.2) million of cash consideration, made $(0.9) million in payments on businesses previously acquired and received a $2.9 million working capital settlement on a business previously acquired.

Capital expenditures. Capital expenditures were $(61.4) million higher in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, primarily due to acquisition activity and increased investment in our fleet and facilities; partially offset by lower landfill development spend, including the development of rail side infrastructure at our Subtitle D landfill located in Mount Jewitt, Pennsylvania.

Cash flows from financing activities.

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

Debt activity. Net cash used in financing activities associated with debt activity decreased $37.8 million in the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 primarily due to the timing of financing activities related to our industrial revenue bonds and entering into a second amended and restated credit agreement (the “Credit Agreement”), which amended and restated in its entirety our amended and restated credit agreement (the “Existing Credit Agreement”) in the prior year period, and debt payments, including quarterly debt repayments on the term loan facilities associated with the Existing Credit Agreement in the prior year period. 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 financing activities.

Payment of debt issuance costs. We paid $(2.2) million of debt issuance costs in the nine months ended September 30, 2025 related to financing activities associated with our industrial revenue bonds and $(6.4) million of debt issuance costs in the nine months ended September 30, 2024 related to refinancing activities associated with entering into the Credit Agreement. 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 financing activities.

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.

Outstanding Long-Term Debt

Credit Facility

As of September 30, 2025, we are party to the Credit Agreement, which provides for a $800.0 million aggregate principal amount term loan A facility and a $700.0 million Revolving Credit Facility, with a $155.0 million sublimit for letters of credit (collectively, the “Credit Facility”). 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:

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 0.200% to 0.400% per annum, plus a sustainability adjustment of up to positive or negative 1.0 basis point per annum. The 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 0.250% per annum. Interest under the Credit Agreement is subject to increase by 2.000% per annum during the continuance of a payment default and may be subject to increase by 2.000% 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, 2025, further advances were available under the Revolving Credit Facility in the amount of $673.4 million. The available amount is net of outstanding irrevocable letters of credit totaling $26.6 million, and as of September 30, 2025, 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, 2025, we were in compliance with all financial covenants contained in the Credit Agreement as follows (in millions):

(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 $1,061.5 million as of September 30, 2025, or $1,161.5 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, 2025. 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 (“GAAP”). A reconciliation of net cash provided by operating activities to Consolidated EBITDA is as follows (in millions):

(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, 2025, 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, 2025, we had outstanding $273.5 million aggregate principal amount of tax exempt bonds; $86.9 million aggregate principal amount of finance leases; and $1.1 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 have materially affected, and may continue to materially affect, our operating margins and cash flows. However, 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 this geographic region and other factors affecting the region, such as state and local 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 the region.

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 primarily because the volume of waste relating to C&D activities decreases substantially during the winter months in the northeastern United States.

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.

Critical Accounting Estimates and Assumptions

Our financial statements have been prepared in accordance with GAAP 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 2024 Form 10-K for the fiscal year 2024.

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.

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, 2025, 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 $6.1 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, 2025 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, 2025, our fuel costs were $17.2 million, or 3.6% of revenues, and $48.3 million, or 3.5% of revenues, respectively, as compared to $14.4 million, or 3.5% of revenues, and $41.2 million, or 3.7% of revenues, in the three and nine months ended September 30, 2024, 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, 2025, we were not party to any commodity hedging agreements.

The impact of commodity price risk as of September 30, 2025 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, 2024.

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 (loss) income, net of tax 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, 2025 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, 2024.

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, 2025. 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, 2025, 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, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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, 2024, 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.