UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, ~~2020~~2021
	Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

Commission file number 1-34370

WASTE CONNECTIONS, INC.

(Exact name of registrant as specified in its charter)

Ontario, Canada

(State or other jurisdiction of incorporation or organization)

98-1202763

(I.R.S. Employer Identification No.)

~~610 Applewood Crescent, 2~~^nd ~~Floor~~6220 Hwy 7, Suite 600

~~Vaughan~~Woodbridge

Ontario ~~L4K 0E3~~L4H 4G3

Canada

(Address of principal executive offices)

(905) 532-7510

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	WCN	New York Stock Exchange (“NYSE”) Toronto Stock Exchange (“TSX”)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes þ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


þ Large Accelerated Filer	◻ Accelerated Filer	◻ Non-accelerated Filer	☐ Smaller Reporting Company	☐ Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common shares:

As of April ~~30, 2020: 262,891,992~~16, 2021: 261,684,677 common shares

Table of Contents

WASTE CONNECTIONS, INC.

FORM 10-Q

TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION (unaudited)
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Net Income	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3529
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5550
Item 4.	Controls and Procedures	5752
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	58
~~Item 1A.~~	~~Risk Factors~~	5853
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7353
Item 6.	Exhibits	7454
Signatures		7555

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands of U.S. dollars, except share and per share amounts)


	March 31,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
ASSETS
Current assets:
Cash and equivalents	$	1,195,279	$	326,738	$	743,464	$	617,294
Accounts receivable, net of allowance for credit losses of $15,172 and $16,432 at March 31, 2020 and December 31, 2019, respectively		624,389		662,808
Accounts receivable, net of allowance for credit losses of $18,970 and $19,380 at March 31, 2021 and December 31, 2020, respectively						608,758		630,264
Prepaid expenses and other current assets		142,553		141,052		151,769		160,714
Total current assets		1,962,221		1,130,598		1,503,991		1,408,272

Restricted cash		88,927		96,483		105,689		97,095
Restricted investments		45,856		51,179		56,620		57,516
Property and equipment, net		5,415,989		5,516,347		5,232,682		5,284,506
Operating lease right-of-use assets		176,772		183,220		174,635		170,923
Goodwill		5,385,841		5,510,851		5,754,101		5,726,650
Intangible assets, net		1,120,197		1,163,063		1,125,894		1,155,079
Other assets, net		83,608		85,954		89,317		92,323
Total assets	$	14,279,411	$	13,737,695	$	14,042,929	$	13,992,364
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	398,523	$	436,970	$	280,025	$	290,820
Book overdraft		12,105		15,954		234		17,079
Deferred revenue						243,712		233,596
Accrued liabilities		297,266		280,808		399,470		404,923
Current portion of operating lease liabilities		29,741		29,929		35,699		30,671
Current portion of contingent consideration		37,549		26,659		42,360		43,297
Deferred revenue		210,668		216,443
Current portion of long-term debt and notes payable		4,318		465		105,386		8,268
Total current liabilities		990,170		1,007,228		1,106,886		1,028,654

Long-term portion of debt and notes payable		5,160,735		4,353,782		4,613,602		4,708,678
Long-term portion of operating lease liabilities		153,640		160,033		146,018		147,223
Long-term portion of contingent consideration		30,050		42,825		24,618		28,439
Deferred income taxes		817,331		818,622		776,498		760,044
Other long-term liabilities		440,399		416,851		433,434		455,888
Total liabilities		7,592,325		6,799,341		7,101,056		7,128,926

Commitments and contingencies (Note 18)
Commitments and contingencies (Note 17)

Equity:
Common shares: 262,878,701 shares issued and 262,804,517 shares outstanding at March 31, 2020; 263,699,675 shares issued and 263,618,161 shares outstanding at December 31, 2019		4,030,368		4,135,343
Common shares: 262,564,371 shares issued and 262,491,505 shares outstanding at March 31, 2021; 262,899,174 shares issued and 262,824,990 shares outstanding at December 31, 2020						3,964,500		4,030,368
Additional paid-in capital		141,438		154,917		161,638		170,555
Accumulated other comprehensive loss		(238,652)		(10,963)
Treasury shares: 74,184 and 81,514 shares at March 31, 2020 and December 31, 2019, respectively		—		—
Accumulated other comprehensive income (loss)						46,171		(651)
Treasury shares: 72,866 and 74,184 shares at March 31, 2021 and December 31, 2020, respectively						—		—
Retained earnings		2,749,224		2,654,207		2,765,401		2,659,001
Total Waste Connections’ equity		6,682,378		6,933,504		6,937,710		6,859,273
Noncontrolling interest in subsidiaries		4,708		4,850		4,163		4,165
Total equity		6,687,086		6,938,354		6,941,873		6,863,438
	$	14,279,411	$	13,737,695	$	14,042,929	$	13,992,364

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

Table of Contents

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited)

(In thousands of U.S. dollars, except share and per share amounts)


	Three Months Ended March 31,				Three Months Ended March 31,
	2020		2019		2021		2020
Revenues	$	1,352,404	$	1,244,637	$	1,395,942	$	1,352,404
Operating expenses:
Cost of operations		815,424		733,690		825,920		815,424
Selling, general and administrative		136,052		132,586		141,422		136,052
Depreciation		150,821		146,847		157,402		150,821
Amortization of intangibles		31,638		30,542		32,192		31,638
Impairments and other operating items		1,506		16,112		634		1,506
Operating income		216,963		184,860		238,372		216,963

Interest expense		(37,990)		(37,287)		(42,425)		(37,990)
Interest income		2,175		3,311		1,103		2,175
Other income (expense), net		(9,521)		2,661		3,548		(9,521)
Income before income tax provision		171,627		153,545		200,598		171,627

Income tax provision		(28,734)		(27,968)		(40,291)		(28,734)
Net income		142,893		125,577		160,307		142,893
Plus: Net loss attributable to noncontrolling interests		142		45		2		142
Net income attributable to Waste Connections	$	143,035	$	125,622	$	160,309	$	143,035

Earnings per common share attributable to Waste Connections’ common shareholders:
Basic	$	0.54	$	0.48	$	0.61	$	0.54
Diluted	$	0.54	$	0.48	$	0.61	$	0.54

Shares used in the per share calculations:
Basic		263,790,364		263,603,418		262,697,487		263,790,364
Diluted		264,353,158		264,336,930		263,156,655		264,353,158

Cash dividends per common share	$	0.185	$	0.160	$	0.205	$	0.185

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

Table of Contents

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands of U.S. dollars)


	Three Months Ended March 31,				Three Months Ended March 31,
	2020		2019		2021		2020
Net income	$	142,893	$	125,577	$	160,307	$	142,893

Other comprehensive income (loss), before tax:
Interest rate swap amounts reclassified into interest expense		(440)		(2,472)		4,796		(440)
Changes in fair value of interest rate swaps		(58,026)		(15,721)		20,739		(58,026)
Foreign currency translation adjustment		(184,717)		42,180		28,054		(184,717)
Other comprehensive income (loss), before tax		(243,183)		23,987		53,589		(243,183)
Income tax benefit related to items of other comprehensive income (loss)		15,494		4,821
Income tax (expense) benefit related to items of other comprehensive income (loss)						(6,767)		15,494
Other comprehensive income (loss), net of tax		(227,689)		28,808		46,822		(227,689)
Comprehensive income (loss)		(84,796)		154,385		207,129		(84,796)
Plus: Comprehensive loss attributable to noncontrolling interests		142		45		2		142
Comprehensive income (loss) attributable to Waste Connections	$	(84,654)	$	154,430	$	207,131	$	(84,654)

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

Table of Contents

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands of U.S. dollars, except share amounts)


	WASTE CONNECTIONS' EQUITY																WASTE CONNECTIONS' EQUITY
						ACCUMULATED																ACCUMULATED
				ADDITIONAL		OTHER														ADDITIONAL		OTHER
	COMMON SHARES			PAID-IN		COMPREHENSIVE		TREASURY SHARES			RETAINED		NONCONTROLLING				COMMON SHARES			PAID-IN		COMPREHENSIVE		TREASURY SHARES			RETAINED		NONCONTROLLING
	SHARES	AMOUNT		CAPITAL		LOSS		SHARES	AMOUNT		EARNINGS		INTERESTS		TOTAL		SHARES	AMOUNT		CAPITAL		LOSS		SHARES	AMOUNT		EARNINGS		INTERESTS		TOTAL
Balances at December 31, 2019	263,618,161	$	4,135,343	$	154,917	$	(10,963)	81,514	$	—	$	2,654,207	$	4,850	$	6,938,354
Balances at December 31, 2020																	262,824,990	$	4,030,368	$	170,555	$	(651)	74,184	$	—	$	2,659,001	$	4,165	$	6,863,438
Sale of common shares held in trust	7,330		679		—		—	(7,330)		—		—		—		679	1,318		131		—		—	(1,318)		—		—		—		131
Vesting of restricted share units	366,603		—		—		—	—		—		—		—		—	340,529		—		—		—	—		—		—		—		—
Vesting of performance-based restricted share units	281,186		—		—		—	—		—		—		—		—	154,251		—		—		—	—		—		—		—		—
Restricted share units released from deferred compensation plan	20,229		—		—		—	—		—		—		—		—	19,150		—		—		—	—		—		—		—		—
Fair value adjustment for common shares in deferred compensation plan exchanged for other investment options	—		—		(533)		—	—		—		—		—		(533)
Tax withholdings related to net share settlements of equity-based compensation	(226,766)		—		(23,090)		—	—		—		—		—		(23,090)	(186,039)		—		(18,490)		—	—		—		—		—		(18,490)
Equity-based compensation	—		—		10,144		—	—		—		—		—		10,144	—		—		9,573		—	—		—		—		—		9,573
Exercise of warrants	9,751		—		—		—	—		—		—		—		—	3,490		—		—		—	—		—		—		—		—
Repurchase of common shares	(1,271,977)		(105,654)		—		—	—		—		—		—		(105,654)	(666,184)		(65,999)		—		—	—		—		—		—		(65,999)
Cash dividends on common shares	—		—		—		—	—		—		(48,018)		—		(48,018)	—		—		—		—	—		—		(53,909)		—		(53,909)
Amounts reclassified into earnings, net of taxes	—		—		—		(323)	—		—		—		—		(323)	—		—		—		3,525	—		—		—		—		3,525
Changes in fair value of cash flow hedges, net of taxes	—		—		—		(42,649)	—		—		—		—		(42,649)	—		—		—		15,243	—		—		—		—		15,243
Foreign currency translation adjustment	—		—		—		(184,717)	—		—		—		—		(184,717)	—		—		—		28,054	—		—		—		—		28,054
Net income (loss)	—		—		—		—	—		—		143,035		(142)		142,893	—		—		—		—	—		—		160,309		(2)		160,307
Balances at March 31, 2020	262,804,517	$	4,030,368	$	141,438	$	(238,652)	74,184	$	—	$	2,749,224	$	4,708	$	6,687,086
Balances at March 31, 2021																	262,491,505	$	3,964,500	$	161,638	$	46,171	72,866	$	—	$	2,765,401	$	4,163	$	6,941,873

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

Table of Contents

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In thousands of U.S. dollars, except share amounts)

WASTE CONNECTIONS' EQUITY

ACCUMULATED

ADDITIONAL

OTHER

COMMON SHARES

PAID-IN

COMPREHENSIVE

TREASURY SHARES

RETAINED

NONCONTROLLING


SHARES

AMOUNT

CAPITAL

INCOME (LOSS)

SHARES

AMOUNT

EARNINGS

INTERESTS

TOTAL
Balances at December 31, 2018

263,141,413

$
4,131,307

$
133,577

$
(74,786)

129,889

$
—

$
2,264,510

$
5,580

$
6,460,188
Sale of common shares held in trust

43,637

3,610

—

—

(43,637)

—

—

—

3,610
Vesting of restricted share units

400,555

—

—

—

—

—

—

—

—
Vesting of performance-based restricted share units

180,258

—

—

—

—

—

—

—

—
Restricted share units released from deferred compensation plan

15,371

—

—

—

—

—

—

—

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

(202,679)

—

(16,973)

—

—

—

—

—

(16,973)
Equity-based compensation

—

—

11,626

—

—

—

—

—

11,626
Exercise of warrants

8,690

—

—

—

—

—

—

—

—
Cash dividends on common shares

—

—

—

—

—

—

(42,084)

—

(42,084)
Amounts reclassified into earnings, net of taxes

—

—

—

(1,817)

—

—

—

—

(1,817)
Changes in fair value of cash flow hedges, net of taxes

—

—

—

(11,555)

—

—

—

—

(11,555)
Foreign currency translation adjustment

—

—

—

42,180

—

—

—

—

42,180
Cumulative effect adjustment from adoption of new accounting pronouncement

—

—

—

—

—

—

(2,078)

—

(2,078)
Net income (loss)

—

—

—

—

—

—

125,622

(45)

125,577
Balances at March 31, 2019

263,587,245

$
4,134,917

$
128,230

$
(45,978)

86,252

$
—

$
2,345,970

$
5,535

$
6,568,674


	WASTE CONNECTIONS' EQUITY
						ACCUMULATED
				ADDITIONAL		OTHER
	COMMON SHARES			PAID-IN		COMPREHENSIVE		TREASURY SHARES			RETAINED		NONCONTROLLING
	SHARES	AMOUNT		CAPITAL		INCOME (LOSS)		SHARES	AMOUNT		EARNINGS		INTERESTS		TOTAL
Balances at December 31, 2019	263,618,161	$	4,135,343	$	154,917	$	(10,963)	81,514	$	—	$	2,654,207	$	4,850	$	6,938,354
Sale of common shares held in trust	7,330		679		—		—	(7,330)		—		—		—		679
Vesting of restricted share units	366,603		—		—		—	—		—		—		—		—
Vesting of performance-based restricted share units	281,186		—		—		—	—		—		—		—		—
Restricted share units released from deferred compensation plan	20,229		—		—		—	—		—		—		—		—
Fair value adjustment for common shares in deferred compensation plan exchanged for other investment options	—		—		(533)		—	—		—		—		—		(533)
Tax withholdings related to net share settlements of equity-based compensation	(226,766)		—		(23,090)		—	—		—		—		—		(23,090)
Equity-based compensation	—		—		10,144		—	—		—		—		—		10,144
Exercise of warrants	9,751		—		—		—	—		—		—		—		—
Repurchase of common shares	(1,271,977)		(105,654)		—		—	—		—		—		—		(105,654)
Cash dividends on common shares	—		—		—		—	—		—		(48,018)		—		(48,018)
Amounts reclassified into earnings, net of taxes	—		—		—		(323)	—		—		—		—		(323)
Changes in fair value of cash flow hedges, net of taxes	—		—		—		(42,649)	—		—		—		—		(42,649)
Foreign currency translation adjustment	—		—		—		(184,717)	—		—		—		—		(184,717)
Net income (loss)	—		—		—		—	—		—		143,035		(142)		142,893
Balances at March 31, 2020	262,804,517	$	4,030,368	$	141,438	$	(238,652)	74,184	$	—	$	2,749,224	$	4,708	$	6,687,086

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

Table of Contents

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands of U.S. dollars)


	Three Months Ended March 31,				Three Months Ended March 31,
	2020		2019		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	142,893	$	125,577	$	160,307	$	142,893
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on disposal of assets and impairments		135		16,372		401		135
Depreciation		150,821		146,847		157,402		150,821
Amortization of intangibles		31,638		30,542		32,192		31,638
Amortization of leases		5,353		7,214
Deferred income taxes, net of acquisitions		23,259		10,126		8,379		23,259
Amortization of debt issuance costs		3,420		1,148		1,359		3,420
Share-based compensation		13,046		15,168		10,307		13,046
Interest accretion		4,352		3,972		4,204		4,352
Payment of contingent consideration recorded in earnings						(520)		—
Adjustments to contingent consideration		—		1,466		89		—
Other		2,308		(145)		(796)		2,308
Net change in operating assets and liabilities, net of acquisitions		(7,639)		5,485		27,072		(2,286)
Net cash provided by operating activities		369,586		363,772		400,396		369,586

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired		(5,943)		(14,920)		(8,545)		(5,943)
Capital expenditures for property and equipment		(137,781)		(114,238)		(96,793)		(137,781)
Proceeds from disposal of assets		3,499		639		2,080		3,499
Change in restricted investments, net of interest income		4,348		—
Other		2,251		473		2,705		6,599
Net cash used in investing activities		(133,626)		(128,046)		(100,553)		(133,626)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt		1,790,625		55,354		—		1,790,625
Principal payments on notes payable and long-term debt		(970,393)		(52,051)		(5,559)		(970,393)
Payment of contingent consideration recorded at acquisition date		(1,976)		(275)		(4,807)		(1,976)
Change in book overdraft		(3,848)		(2,784)		(16,849)		(3,848)
Payments for repurchase of common shares		(105,654)		—		(65,999)		(105,654)
Payments for cash dividends		(48,018)		(42,084)		(53,909)		(48,018)
Tax withholdings related to net share settlements of equity-based compensation		(23,090)		(16,973)		(18,490)		(23,090)
Debt issuance costs		(10,936)		—		—		(10,936)
Proceeds from sale of common shares held in trust		679		3,610		131		679
Net cash provided by (used in) financing activities		627,389		(55,203)		(165,482)		627,389

Effect of exchange rate changes on cash, cash equivalents and restricted cash		(2,364)		193		403		(2,364)

Net increase in cash, cash equivalents and restricted cash		860,985		180,716		134,764		860,985
Cash, cash equivalents and restricted cash at beginning of period		423,221		403,966		714,389		423,221
Cash, cash equivalents and restricted cash at end of period	$	1,284,206	$	584,682	$	849,153	$	1,284,206

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

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(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

1.BASIS OF PRESENTATION AND SUMMARY

The accompanying condensed consolidated financial statements relate to Waste Connections, Inc. and its subsidiaries (the “Company”) for the three month periods ended March 31, ~~2020~~2021 and ~~2019.~~2020. In the opinion of management, the accompanying balance sheets and related interim statements of net income, comprehensive income (loss), cash flows and equity include all adjustments, consisting only of normal recurring items, necessary for their fair statement in conformity with U.S. generally accepted accounting principles (“GAAP”). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Examples include accounting for landfills, self-insurance accruals, income taxes, allocation of acquisition purchase price, contingent consideration accruals and asset impairments. An additional area that involves estimation is when the Company estimates the amount of potential exposure it may have with respect to litigation, claims and assessments in accordance with the accounting guidance on contingencies. Actual results for all estimates could differ materially from the estimates and assumptions that the Company uses in the preparation of its condensed consolidated financial statements.

The challenges posed by the pandemic of coronavirus disease 2019 (“COVID-19”) on the global economy persisted through the first quarter of 2021 and continue to impact the demand for the Company’s services to varying degrees and in varying ways across the U.S. and Canada and across a variety of lines of business, including commercial collection and solid waste and non-hazardous oil and natural gas exploration and production (“E&P”) waste treatment, recovery and disposal services. In response to the COVID-19 pandemic, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. In some markets where a portion of these measures have been curtailed, the impact on demand for the Company’s services has decreased as activity levels have increased. The impact of the COVID-19 pandemic on the Company’s business, results of operations, financial condition and cash flows in future periods will depend largely on future developments, including the duration and spread of the outbreak in the U.S. and Canada, the rate of vaccinations, the severity of COVID-19 variants, the actions to contain such coronavirus variants, and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and cannot be predicted at this time.

Interim results are not necessarily indicative of results for a full year. These interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

2.REPORTING CURRENCY

The functional currency of the Company, as the parent corporate entity, and its operating subsidiaries in the United States, is the U.S. dollar. The functional currency of the Company’s Canadian operations is the Canadian dollar. The reporting currency of the Company is the U.S. dollar. The Company’s consolidated Canadian dollar financial position is translated to U.S. dollars by applying the foreign currency exchange rate in effect at the consolidated balance sheet date. The Company’s consolidated Canadian dollar results of operations and cash flows are translated to U.S. dollars by applying the average foreign currency exchange rate in effect during the reporting period. The resulting translation adjustments are included in other comprehensive income or loss. Gains and losses from foreign currency transactions are included in earnings for the period.

3.~~NEW ACCOUNTING STANDARDS~~

~~Accounting Standards Adopted~~

~~Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments~~. In June 2016, the Financial Accounting Standards Board, (“FASB”) issued guidance which introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade ~~receivables~~, which will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. The standard became effective for public business entities that are U.S. Securities and Exchange Commission (“SEC”) filers for annual periods beginning after December 15, 2019 and interim periods within those years. The Company adopted the new standard on January 1, 2020. The adoption of the new standard did not have a material impact on the Company’s condensed consolidated financial statements as current processes for estimating expected credit losses for trade receivables align with the expected credit loss model. See Note 6 for additional information and disclosures related to the adoption of this new standard.

~~Accounting Standards Pending Adoption~~

~~Income Taxes – Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued guidance that simplifies the accounting for income taxes as part of its overall initiative to reduce complexity in applying accounting~~

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

3.NEW ACCOUNTING STANDARDS

Accounting Standards Adopted

Income Taxes – Simplifying the Accounting for Income Taxes. In December 2019, the Financial Accounting Standards Board (“FASB”) issued guidance that simplifies the accounting for income taxes as part of its overall initiative to reduce complexity in applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. The amendments include removal of certain exceptions to the general principles of income taxes, and simplification in several other areas such as accounting for a franchise tax that is partially based on income. The standard ~~will be~~is effective for public business entities that are ~~SEC~~U.S. Securities and Exchange Commission (“SEC”) filers for annual periods beginning after December 15, 2020, and interim periods within those reporting periods. ~~Early adoption is permitted.~~ The Company ~~has not yet assessed~~adopted the ~~potential impact~~new standard as of ~~implementing~~January 1, 2021. The adoption of this new ~~guidance~~standard did not have a material impact on ~~its condensed~~the Company’s consolidated financial ~~statements~~.statements.

Accounting Standards Pending Adoption

Reference Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In March 2020, the FASB issued guidance to provide temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). One-week and two-month U.S. dollar LIBOR settings as well as all non-U.S. dollar LIBOR settings will stop being published on December 31, 2021, while the remaining U.S. dollar LIBOR settings will be discontinued on June 30, 2023. Under the new guidance, entities can elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Under the guidance, entities can also elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met.

The guidance is effective upon issuance. The guidance on contract modifications is applied prospectively from ~~any date beginning~~ March 12, 2020. It may also be applied to modifications of existing contracts made earlier in the interim period that includes the effective date. The guidance on hedging is applied to eligible hedging relationships existing as of the beginning of the interim period that includes the effective date and to new eligible hedging relationships entered into after the beginning of that interim period. The relief is temporary and generally cannot be applied to contract modifications that occur after December 31, 2022 or hedging relationships entered into or evaluated after that date. However, certain optional expedients can be applied to hedging relationships evaluated in periods after December 31, 2022. The Company is currently assessing the potential impact of implementing this new guidance on its ~~condensed~~ consolidated financial statements.

4.~~IMPAIRMENTS OF PROPERTY, EQUIPMENT, GOODWILL AND INTANGIBLE ASSETS~~

~~Property, equipment and finite-lived intangible assets are carried on~~To the extent that the transition away from the use of LIBOR might affect the Company’s consolidated financial statements based on their cost less accumulated depreciation or amortization. Finite-lived intangible assets consist of long-term franchise agreements, contracts, customer lists, permitsability to maintain cash ‎flow hedge accounting as described in Note 11, the relief is expected to permit the Company to maintain that cash flow ‎hedge accounting.

SEC amends MD&A and other ~~agreements.~~Regulation S-K disclosure requirements. In November 2020, the SEC adopted amendments to Regulation S-K to eliminate certain disclosure requirements and to revise several others to make the disclosures provided in management’s discussion and analysis more useful for investors. Key changes included: (1) enhancements and clarification of the disclosure requirements for liquidity and capital resources; (2) elimination of five years of Selected Financial Data; (3) replacement of the current requirement for two years of quarterly tabular disclosure with a principles-based requirement to provide information only when there are material retrospective changes; (4) codification of prior SEC guidance on critical accounting estimates; (5) elimination of the tabular disclosure of contractual obligations; and (6) conforming amendments for foreign private issuers. The ~~recoverability of these assets is tested whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.~~

~~Typical indicators that an asset may be impaired include, but are not limited~~amended rules were posted to the ~~following:~~

●

~~a significant adverse change in legal factors or in the business climate;~~

●

~~an adverse action or assessment by a regulator;~~

●

~~a more likely than not expectation that a segment or a significant portion thereof will be sold;~~

●

~~the testing for recoverability of a significant asset group within a segment; or~~

●

~~current period or expected future operating cash flow losses.~~

If any of these or other indicators occur, a test of recoverability is performed by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. If the carrying value is in excess of the undiscounted expected future cash flows, impairment is measured by comparing the fair value of the asset to its carrying value. Fair value is determined by an internally developed discounted projected cash flow analysis of the asset. Cash flow projections are sometimes based on a group of assets, rather than a single asset. If cash flows cannot be separately and independentlyFederal

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

~~identified for a single asset,~~Register on January 11, 2021 and became effective February 10, 2021. Registrants are required to comply with the ~~Company will determine whether~~new rules beginning with the first fiscal year ending on or after August 9, 2021. Registrants may early adopt the amended rules at any time after the effective date (on an ~~impairment has occurred for~~item-by-item basis), as long as they provide the ~~group of assets for which the projected cash flows can be identified. If the fair value of~~disclosure responsive to an ~~asset is determined to be less than the carrying amount of the asset or asset group, an impairment~~amended item in the amount of the difference is recorded in the period that the impairment indicator occurs. Several impairment indicators are beyond the Company’s control, and whether or not they will occur cannot be predicted with any certainty. Estimating future cash flows requires significant judgment and projections may vary from cash flows eventually realized. There are other considerations for impairments of landfills, as described below.its entirety.

There are certain indicators listed above that require significant judgment and understanding of the waste industry when applied to landfill development or expansion projects. A regulator or court may deny or overturn a landfill development or landfill expansion permit application before the development or expansion permit is ultimately granted. Management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace. Therefore, certain events could occur in the ordinary course of business and not necessarily be considered indicators of impairment due4.RECLASSIFICATION

As disclosed within Note 10 to the ~~unique nature of the waste industry.~~

Goodwill and indefinite-lived intangible assets are tested for impairment on at least an annual basis in the fourth quarter of the year. In addition, the Company evaluates its reporting units for impairment if events or circumstances similar to the indicators listed above change between annual tests indicating a possible impairment.

~~The Company estimates the fair value of each of its reporting units, which consist of its 5 geographic solid waste operating segments and its E&P~~financial statements, segment using discounted cash flow analyses. The Company compares the fair value of each reporting unit with the carrying value of the net assets assigned to each reporting unit. If the fair value of a reporting unit is greater than the carrying value of the net assets, including goodwill, assigned to the reporting unit, then no impairment results. If the fair value is less than its carrying value, an impairment charge is recorded for the amount by which the carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. In testing indefinite-lived intangible assets for impairment, the Company compares the estimated fair value of each indefinite-lived intangible asset to its carrying value. If the fair value of the indefinite-lived intangible asset is less than its carrying value, an impairment charge would be recorded to earningsinformation reported in the Company’s ~~Condensed Consolidated Statements of Net Income.~~

The Company determines the fair value of each of its 5 geographic solid waste operating segments and each indefinite-lived intangible asset within those segments using discounted cash flow analyses, which require significant assumptions and estimates about the future operations of each reporting unit and the future discrete cash flows relatedprior year has been reclassified to each indefinite-lived intangible asset. Significant judgments inherent in these analyses include the determination of appropriate discount rates, the amount and timing of expected future cash flows and growth rates.

The demand for the Company’s E&P waste services depends on the continued demand for, and production of, oil and natural gas. Crude oil and natural gas prices historically have been volatile. More recently, the value of crude oil has declined precipitously and currently remains at historic low levels. To the extent that oil prices remain depressed, this could lead to declines in the level of production activity and demand for the Company’s E&P waste services. To the extent that the outlook for future oil prices and resulting demand for the Company’s E&P waste services does not show improvement, this could result in the recognition of impairment charges on its intangible assets and property and equipment associated with the E&P segment. At March 31, 2020, the Company’s E&P segment had $832,739 of property and equipment and $59,600 of non-goodwill intangible assets. The Company’s operations in the Williston Basin have experienced a higher proportion of decline in demand dueconform to the higher cost of exploration and production in that area. At March 31, 2020, the E&P segment’s operations in the Williston Basin had $376,122 of property equipment and $2,430 of non-goodwill intangible assets. The Company estimates that any future impairment charge associated with its Williston Basin operations could result in a write down of approximately 90% to 95% of the carrying value on the property and equipment and intangible assets.2021 presentation.

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~~WASTE CONNECTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)~~

5.REVENUE

The Company’s operations primarily consist of providing non-hazardous waste collection, transfer, disposal and recycling services, ~~non-hazardous exploration and production (“~~E~~&P”) waste treatment, recovery and disposal~~&P services, and intermodal services. The following table disaggregates the Company’s revenues by service line for the periods indicated:


		Three Months Ended March 31,				Three Months Ended March 31,
	2020		2019		2021		2020
Commercial	$	416,507	$	381,509	$	426,395	$	416,507
Residential		365,731		322,404		400,819		365,731
Industrial and construction roll off		206,771		187,440		209,258		206,771
Total collection		989,009		891,353		1,036,472		989,009
Landfill		266,218		244,601		271,936		266,218
Transfer		180,765		161,191		189,323		180,765
Recycling		18,108		19,804		32,448		18,108
E&P		65,377		66,830		28,012		65,377
Intermodal and other		30,018		32,837		35,634		30,018
Intercompany		(197,091)		(171,979)		(197,883)		(197,091)
Total	$	1,352,404	$	1,244,637	$	1,395,942	$	1,352,404

The factors that impact the timing and amount of revenue recognized for each service line may vary based on the nature of the service performed. Generally, the Company recognizes revenue at the time it performs a service. In the event that the Company bills for services in advance of performance, it recognizes deferred revenue for the amount billed and subsequently recognizes revenue at the time the service is provided. Substantially all of the deferred revenue recorded as of December 31, ~~2019~~2020 was recognized as revenue during the three months ended March 31, ~~2020~~2021 when the service was performed.

See Note 1110 for additional information regarding revenue by reportable segment.

Contract Acquisition Costs

The incremental direct costs of obtaining a contract, which consist of sales incentives, are recognized as Other assets in the Company’s Condensed Consolidated Balance Sheet, and are amortized to Selling, general and administrative expense over the estimated life of the relevant customer relationship, which ranges from one to five years. The Company recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity would have recognized is one year or less. The Company had ~~$19,135~~$18,954 and ~~$16,846~~$19,669 of deferred sales incentives at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

6.~~ACCOUNTS RECEIVABLE~~

Accounts receivable are recorded when billed or accrued and represent claims against third parties that will be settled in cash. The carrying value of the Company’s receivables, net of the allowance for credit losses, represents their estimated net realizable value.

109

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(Unaudited)

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6.ACCOUNTS RECEIVABLE

The allowance for credit losses is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics. The Company monitors the collectability of its trade receivables as one overall pool asdue to all trade receivables ~~have~~having similar risk characteristics. The Company estimates its allowance for credit losses based on historical collection trends, the age of outstanding receivables, geographical location of the customer, existing economic conditions and reasonable forecasts. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past-due receivable balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amount due.

~~The following is a rollforward of the Company’s allowance for credit losses from January 1, 2020 to March 31, 2020:~~


			Three Months Ended March 31,
			2021		2020
Beginning balance	$	16,432	$	19,380	$	16,432
Current period provision for expected credit losses		2,027		1,915		2,027
Write-offs charged against the allowance		(5,063)		(3,501)		(5,063)
Recoveries collected		1,932		1,153		1,932
Impact of changes in foreign currency		(156)		23		(156)
Ending balance	$	15,172	$	18,970	$	15,172

7.LANDFILL ACCOUNTING

At March 31, ~~2020,~~2021, the Company’s landfills consisted of 82 owned landfills, 65 landfills operated under life-of-site operating agreements, 4 landfills operated under limited-term operating agreements and 1 development stage landfill. The Company’s landfills had site costs with a net book value of ~~$2,930,197~~$2,625,877 at March 31, ~~2020.~~2021. For the Company’s landfills operated under limited-term operating agreements and life-of-site operating agreements, the owner of the property (generally a municipality) usually owns the permit and the Company operates the landfill for a contracted term. Where the contracted term is not the life of the landfill, the property owner is generally responsible for final capping, closure and post-closure obligations. The Company is responsible for all final capping, closure and post-closure liabilities at the landfills it operates under life-of-site operating agreements.

The Company’s internal and third-party engineers perform surveys at least annually to estimate the remaining disposal capacity at its landfills. Many of the Company’s existing landfills have the potential for expanded disposal capacity beyond the amount currently permitted. The Company’s landfill depletion rates are based on the remaining disposal capacity, considering both permitted and probable expansion airspace, at the landfills it owns and landfills it operates, but does not own, under life-of-site agreements. The Company’s landfill depletion rate is based on the term of the operating agreement at its operated landfill that has capitalized expenditures. Expansion airspace consists of additional disposal capacity being pursued through means of an expansion that has not yet been permitted. Expansion airspace that meets certain criteria is included in the estimate of total landfill airspace.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Based on remaining permitted capacity as of March 31, ~~2020,~~2021, and projected annual disposal volumes, the average remaining landfill life for the Company’s owned landfills and landfills operated under life-of-site operating agreements is estimated to be approximately 28 years. As of March 31, ~~2020,~~2021, the Company is seeking to expand permitted capacity at 69 of its owned landfills and 3 landfills that it operates under life-of-site operating agreements, and considers the achievement of these expansions to be probable. Although the Company cannot be certain that all future expansions will be permitted as designed, the average remaining life, when considering remaining permitted capacity, probable expansion capacity and projected annual disposal volume, of the Company’s owned landfills and landfills operated under life-of-site operating agreements is approximately 31 years. The estimated remaining lives of the Company’s owned landfills and landfills operated under life-of-site operating agreements range from 1 to 283 years, with approximately 90% of the projected annual disposal volume from landfills with remaining lives ~~ranging from approximately 1 to 204~~of less than 70 years.

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~~WASTE CONNECTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)~~

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company expensed ~~$48,737~~$46,137 and ~~$48,580,~~$48,737, respectively, or an average of ~~$4.49~~$4.53 and ~~$4.74~~$4.49 per ton consumed, respectively, related to landfill depletion at owned landfills and landfills operated under life-of-site agreements.

The Company reserves for estimated final capping, closure and post-closure maintenance obligations at the landfills it owns and landfills it operates under life-of-site operating agreements. The Company calculates the net present value of its final capping, closure and post-closure liabilities by estimating the total obligation in current dollars, inflating the obligation based upon the expected date of the expenditure and discounting the inflated total to its present value using a credit-adjusted risk-free rate. Any changes in expectations that result in an upward revision to the estimated undiscounted cash flows are treated as a new liability and are inflated and discounted at rates reflecting current market conditions. Any changes in expectations that result in a downward revision (or no revision) to the estimated undiscounted cash flows result in a liability that is inflated and discounted at rates reflecting the market conditions at the time the cash flows were originally estimated. This policy results in the Company’s final capping, closure and post-closure liabilities being recorded in “layers.” The Company’s discount rate assumption for purposes of computing ~~2020~~2021 and ~~2019~~2020 “layers” for final capping, closure and post-closure obligations was 3.25% and 4.75% ~~for both years,~~, respectively, which reflects the Company’s long-term credit adjusted risk free ~~rate.~~rate as of the end of 2020 and 2019. The Company’s inflation rate assumption is ~~2.5%~~2.25% and 2.50% for the years ending December 31, 2021 and 2020, ~~and 2019.~~respectively. The resulting final capping, closure and post-closure obligations are recorded on the ~~condensed consolidated balance sheet~~Condensed Consolidated Balance Sheet along with an offsetting addition to site costs which is amortized to depletion expense as the remaining landfill airspace is consumed. Interest is accreted on the recorded liability using the corresponding discount rate. During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company expensed ~~$3,849~~$3,655 and ~~$3,434~~$3,849, respectively, or an average of $0.36 and ~~$0.34~~$0.36 per ton consumed, respectively, related to final capping, closure and post-closure accretion expense.

The following is a reconciliation of the Company’s final capping, closure and post-closure liability balance from December 31, ~~2019~~2020 to March 31, ~~2020:~~2021:


Final capping, closure and post-closure liability at December 31, 2019	$	291,474
Final capping, closure and post-closure liability at December 31, 2020			$	301,896
Liability adjustments		(9,904)		(7,134)
Accretion expense associated with landfill obligations		3,849		3,655
Closure payments		(507)		(3,237)
Foreign currency translation adjustment		(3,585)		562
Final capping, closure and post-closure liability at March 31, 2020	$	281,327
Final capping, closure and post-closure liability at March 31, 2021			$	295,742

Liability adjustments of ~~$9,904~~$7,134 for the three months ended March 31, ~~2020,~~2021, represent non-cash changes to final capping, closure and post-closure liabilities and are recorded on the Condensed Consolidated Balance Sheets along with an offsetting addition to site costs, which is amortized to depletion expense as the remaining landfill airspace is consumed. The final capping, closure and post-closure liability is included in Other long-term liabilities in the Condensed

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(Unaudited)

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

At March 31, ~~2020~~2021 and December 31, ~~2019, $16,842~~2020, $14,134 and ~~$12,324,~~$12,533, respectively, of the Company’s restricted cash balance and ~~$43,253~~$53,924 and ~~$48,590,~~$54,833, respectively, of the Company’s restricted investments balance was for purposes of securing its performance of future final capping, closure and post-closure obligations.

8.~~ACQUISITIONS~~INTANGIBLE ASSETS, NET

~~The Company acquired 1 immaterial non-hazardous solid waste collection business during~~Intangible assets, exclusive of goodwill, consisted of the ~~three months ended~~following at March 31, ~~2020. The total acquisition-related costs incurred during~~2021:


	Gross				Accumulated		Net
	Carrying		Accumulated		Impairment		Carrying
	Amount		Amortization		Loss		Amount
Finite-lived intangible assets:
Long-term franchise agreements and contracts	$	601,120	$	(245,880)	$	—	$	355,240
Customer lists		638,674		(400,314)		—		238,360
Permits and other		379,785		(83,178)		—		296,607
		1,619,579		(729,372)		—		890,207
Indefinite-lived intangible assets:
Solid waste collection and transportation permits		172,056		—		—		172,056
Material recycling facility permits		42,283		—		—		42,283
E&P facility permits		59,855		—		(38,507)		21,348
		274,194		—		(38,507)		235,687
Intangible assets, exclusive of goodwill	$	1,893,773	$	(729,372)	$	(38,507)	$	1,125,894

Intangible assets, exclusive of goodwill, consisted of the ~~three months ended March~~following at December 31, ~~2020 for this~~2020:


	Gross				Accumulated		Net
	Carrying		Accumulated		Impairment		Carrying
	Amount		Amortization		Loss		Amount
Finite-lived intangible assets:
Long-term franchise agreements and contracts	$	600,674	$	(234,972)	$	—	$	365,702
Customer lists		636,035		(382,020)		—		254,015
Permits and other		378,952		(79,277)		—		299,675
		1,615,661		(696,269)		—		919,392
Indefinite-lived intangible assets:
Solid waste collection and transportation permits		172,056		—		—		172,056
Material recycling facility permits		42,283		—		—		42,283
E&P facility permits		59,855		—		(38,507)		21,348
		274,194		—		(38,507)		235,687
Intangible assets, exclusive of goodwill	$	1,889,855	$	(696,269)	$	(38,507)	$	1,155,079

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

~~acquisition were $1,146. These expenses are included in Selling, general and administrative expenses in~~Estimated future amortization expense for the ~~Company’s Condensed Consolidated Statements of Net Income.~~

The Company acquired 3 individually immaterial non-hazardous solid waste collection and transfer businesses during the three months ended March 31, 2019. The total acquisition-related costs incurred during the three months ended March 31, 2019 for these acquisitions were $837. These expenses are included in Selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Net Income.

The results of operations of the acquired businesses have been included in the Company’s Condensed Consolidated Financial Statements from their respective acquisition dates. The Company expects these acquired businesses to contribute towards the achievement of the Company’s strategy to expand through acquisitions. Goodwill acquired is attributable to the synergies and ancillary growth opportunities expected to arise after the Company’s acquisition of these businesses.

~~Goodwill acquired during the three months ended March 31, 2020 and 2019, totaling $3,482 and $4,446, respectively, is expected to be deductible for tax purposes.~~

The fair value of acquired working capital related to 4 individually immaterial acquisitions completed during the twelve months ended March 31, 2020, is provisional pending receipt of information from the acquirees to support the fair value of the assets acquired and liabilities assumed. Any adjustments recordednext five years relating to ~~finalizing the working capital for these 4 acquisitions are not expected to be material to the Company’s financial position.~~finite-lived intangible assets is as follows:


For the year ending December 31, 2021	$	126,891
For the year ending December 31, 2022	$	108,169
For the year ending December 31, 2023	$	92,115
For the year ending December 31, 2024	$	79,163
For the year ending December 31, 2025	$	66,880

9.~~INTANGIBLE ASSETS, NET~~LONG-TERM DEBT

~~Intangible assets, exclusive~~The following table presents the Company’s long-term debt as of ~~goodwill, consisted of the following at~~ March 31, 2021 and December 31, 2020:

Gross



Accumulated

Net

Carrying

Accumulated

Impairment

Carrying

Amount

Amortization

Loss

Amount
Finite-lived intangible assets:








Long-term franchise agreements and contracts

$
542,673

$
(199,100)

$
—

$
343,573
Customer lists

581,514

(321,578)

—

259,936
Permits and other

360,454

(65,988)

—

294,466

1,484,641

(586,666)

—

897,975
Indefinite-lived intangible assets:








Solid waste collection and transportation permits

158,591

—

—

158,591
Material recycling facility permits

42,283

—

—

42,283
E&P facility permits

59,855

—

(38,507)

21,348

260,729

—

(38,507)

222,222
Intangible assets, exclusive of goodwill

$
1,745,370

$
(586,666)

$
(38,507)

$
1,120,197


	March 31,		December 31,
	2021		2020
Revolver under Credit Agreement, bearing interest ranging from 1.31% to 1.61% ^(a)	$	203,976	$	203,927
Term loan under Credit Agreement, bearing interest at 1.31% ^(a)		650,000		650,000
4.64% Senior Notes due 2021 ^(b)		100,000		100,000
2.39% Senior Notes due 2021 ^(c)		150,000		150,000
3.09% Senior Notes due 2022		125,000		125,000
2.75% Senior Notes due 2023		200,000		200,000
3.24% Senior Notes due 2024		150,000		150,000
3.41% Senior Notes due 2025		375,000		375,000
3.03% Senior Notes due 2026		400,000		400,000
3.49% Senior Notes due 2027		250,000		250,000
4.25% Senior Notes due 2028		500,000		500,000
3.50% Senior Notes due 2029		500,000		500,000
2.60% Senior Notes due 2030		600,000		600,000
3.05% Senior Notes due 2050		500,000		500,000
Notes payable to sellers and other third parties, bearing interest ranging from 2.42% to 10.35%, principal and interest payments due periodically with due dates ranging from 2028 to 2036 ^(a)		38,008		43,131
Finance leases, bearing interest at 1.89% with a lease expiration date of 2026 ^(a)		9,822		3,754
		4,751,806		4,750,812
Less – current portion		(105,386)		(8,268)
Less – unamortized debt discount and issuance costs		(32,818)		(33,866)
	$	4,613,602	$	4,708,678

____________________

(a)	Interest rates represent the interest rates in effect at March 31, 2021.

(b)	The Company redeemed the 4.64% Senior Notes due 2021 (the “2021 Senior Notes”) on April 1, 2021.

(c)	The Company has recorded the 2.39% Senior Notes due 2021 (the “New 2021 Senior Notes”) in long-term debt in the table above as the Company has the intent and ability to redeem the New 2021 Senior Notes on June 1, 2021 using borrowings under the Credit Agreement.

The weighted-average amortization period of long-term franchise agreements and contracts acquired during the three months ended March 31, 2020 was 2.5 years. The weighted-average amortization period of customer lists acquired during the three months ended March 31, 2020 was 11.0 years.

Table of Contents

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

~~Intangible assets, exclusive of goodwill, consisted of the following at December 31, 2019:~~

Gross



Accumulated

Net

Carrying

Accumulated

Impairment

Carrying

Amount

Amortization

Loss

Amount
Finite-lived intangible assets:








Long-term franchise agreements and contracts

$
550,340

$
(192,462)

$
—

$
357,878
Customer lists

587,562

(308,427)

—

279,135
Permits and other

367,127

(63,299)

—

303,828

1,505,029

(564,188)

—

940,841
Indefinite-lived intangible assets:








Solid waste collection and transportation permits

158,591

—

—

158,591
Material recycling facility permits

42,283

—

—

42,283
E&P facility permits

59,855

—

(38,507)

21,348

260,729

—

(38,507)

222,222
Intangible assets, exclusive of goodwill

$
1,765,758

$
(564,188)

$
(38,507)

$
1,163,063

~~Estimated future amortization expense for the next five years relating to finite-lived intangible assets is as follows:~~

For the year ending December 31, 2020

$
125,910
For the year ending December 31, 2021

$
109,183
For the year ending December 31, 2022

$
94,080
For the year ending December 31, 2023

$
79,600
For the year ending December 31, 2024

$
68,241

~~Table of Contents~~

~~WASTE CONNECTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)~~

~~10.~~~~LONG-TERM DEBT~~

~~The following table presents the Company’s long-term debt as of March 31, 2020 and December 31, 2019:~~

March 31,

December 31,

2020

2019
Revolver under Credit Agreement, bearing interest ranging from 2.09% to 2.33% ^(a)

$
692,623

$
916,247
Term loan under Credit Agreement, bearing interest at 2.09% ^(a)

650,000

700,000
4.64% Senior Notes due 2021

100,000

100,000
2.39% Senior Notes due 2021

150,000

150,000
3.09% Senior Notes due 2022

125,000

125,000
2.75% Senior Notes due 2023

200,000

200,000
3.24% Senior Notes due 2024

150,000

150,000
3.41% Senior Notes due 2025

375,000

375,000
3.03% Senior Notes due 2026

400,000

400,000
3.49% Senior Notes due 2027

250,000

250,000
4.25% Senior Notes due 2028

500,000

500,000
3.50% Senior Notes due 2029

500,000

500,000
2.60% Senior Notes due 2030

600,000

—
3.05% Senior Notes due 2050

500,000

—
Notes payable to sellers and other third parties, bearing interest ranging from 2.75% to 10.35%, principal and interest payments due periodically with due dates ranging from 2021 to 2036 ^(a)

9,271

9,638

5,201,894

4,375,885
Less – current portion

(4,318)

(465)
Less – unamortized debt discount and issuance costs

(36,841)

(21,638)

$
5,160,735

$
4,353,782

~~____________________~~

~~(a)~~

~~Interest rates represent the interest rates incurred at March 31, 2020.~~

~~Senior Notes due 2030 and 2050~~

On January 23, 2020, the Company completed an underwritten public offering of $600,000 aggregate principal amount of 2.60% Senior Notes due 2030 (the “2030 Senior Notes”). The 2030 Senior Notes were issued under the Indenture, dated as of November 16, 2018 (the “Base Indenture”), by and between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the Third Supplemental Indenture, dated as of January 23, 2020. The Company is amortizing $5,435 of debt issuance costs through the maturity date.

The Company will pay interest on the 2030 Senior Notes semi-annually in arrears and the 2030 Senior Notes will mature on February 1, 2030. The 2030 Senior Notes are senior unsecured obligations, ranking equally in right of payment to the Company’s other existing and future unsubordinated debt and senior to any of the Company’s future subordinated debt. The 2030 Senior Notes are not guaranteed by any of the Company’s subsidiaries.

The Company may redeem some or all of the 2030 Senior Notes at its option prior to November 1, 2029 (three months before the maturity date) at any time and from time to time at a redemption price equal to the greater of 100% of the principal amount of the 2030 Senior Notes redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest on the 2030 Senior Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Commencing on November 1, 2029 (three months before the maturity date), the Company may redeem

~~Table of Contents~~

~~WASTE CONNECTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)~~

some or all of the 2030 Senior Notes, at any time and from time to time, at a redemption price equal to the principal amount of the 2030 Senior Notes being redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

On March 13, 2020, the Company completed an underwritten public offering of $500,000 aggregate principal amount of 3.05% Senior Notes due 2050 (the “2050 Senior Notes”). The 2050 Senior Notes were issued under the Base Indenture, as supplemented by the Fourth Supplemental Indenture, dated as of March 13, 2020 (the Base Indenture as so supplemented, the “Indenture”). The Company is amortizing a $7,375 debt discount and $5,502 of debt issuance costs through the maturity date.

The Company will pay interest on the 2050 Senior Notes semi-annually in arrears and the 2050 Senior Notes will mature on April 1, 2050. The 2050 Senior Notes are senior unsecured obligations, ranking equally in right of payment to the Company’s other existing and future unsubordinated debt and senior to any of the Company’s future subordinated debt. The 2050 Senior Notes are not guaranteed by any of the Company’s subsidiaries.

The Company may redeem some or all of the 2050 Senior Notes at its option prior to October 1, 2049 (six months before the maturity date) at any time and from time to time at a redemption price equal to the greater of 100% of the principal amount of the 2050 Senior Notes redeemed, or the sum of the present values of the remaining scheduled payments of principal and interest on the 2050 Senior Notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Commencing on October 1, 2049 (six months before the maturity date), the Company may redeem some or all of the 2050 Senior Notes, at any time and from time to time, at a redemption price equal to the principal amount of the 2050 Senior Notes being redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

Under certain circumstances, the Company may become obligated to pay additional amounts (the “Additional Amounts”) with respect to the 2030 and/or 2050 Senior Notes, or the Notes, to ensure that the net amounts received by each holder of the Notes will not be less than the amount such holder would have received if withholding taxes or deductions were not incurred on a payment under or with respect to the Notes. If such payment of Additional Amounts is a result of a change in the laws or regulations, including a change in any official position, the introduction of an official position or a holding by a court of competent jurisdiction, of any jurisdiction from or through which payment is made by or on behalf of the Notes having power to tax, and the Company cannot avoid such payments of Additional Amounts through reasonable measures, then the Company may redeem the 2030 and/or 2050 Senior Notes then outstanding at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).

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

The covenants in the Indenture include limitations on liens, sale-leaseback transactions and mergers and sales of all or substantially all of the Company’s assets. The Indenture also includes customary events of default with respect to the Notes. As of March 31, 2020, the Company was in compliance with all applicable covenants in the Indenture.

Upon an event of default, the principal of and accrued and unpaid interest on all the Notes may be declared to be due and payable by the Trustee or the holders of not less than 25% in principal amount of the outstanding 2030 and/or 2050 Senior Notes. Upon such a declaration, such principal and accrued interest on all of the 2030 and/or 2050 Senior Notes will be due and payable immediately. In the case of an event of default resulting from certain events of bankruptcy, insolvency or reorganization, the principal (or such specified amount) of and accrued and unpaid interest, if any, on all outstanding 2030 and/or 2050 Senior Notes will become and be immediately due and payable without any declaration or

~~Table of Contents~~

~~WASTE CONNECTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)~~

~~other act on the part of the Trustee or any holder of the Notes.~~ ~~Under certain circumstances, the holders of a majority in principal amount of the outstanding Notes may rescind any such acceleration with respect to the Notes and its consequences.~~

Credit Agreement

Details of the Credit Agreement are as follows:


	March 31,			December 31,			March 31,			December 31,
	2020			2019			2021			2020
Revolver under Credit Agreement
Available	$	762,561		$	538,642		$	1,240,137		$	1,238,937
Letters of credit outstanding	$	107,316		$	107,611		$	118,387		$	119,636
Total amount drawn, as follows:	$	692,623		$	916,247		$	203,976		$	203,927
Amount drawn - U.S. LIBOR rate loan	$	675,000		$	897,000		$	200,000		$	200,000
Interest rate applicable - U.S. LIBOR rate loan		2.09	%		2.90	%		1.31	%		1.35	%
Amount drawn – Canadian bankers’ acceptance	$	17,623		$	19,247		$	3,976		$	3,927
Interest rate applicable – Canadian bankers’ acceptance		2.33	%		3.18	%		1.61	%		1.66	%
Commitment – rate applicable		0.12	%		0.12	%		0.15	%		0.15	%
Term loan under Credit Agreement
Amount drawn – U.S. based LIBOR loan	$	650,000		$	700,000		$	650,000		$	650,000
Interest rate applicable – U.S. based LIBOR loan		2.09	%		2.90	%		1.31	%		1.35	%

In addition to the $118,387 of letters of credit at March 31, 2021 issued under the Credit Agreement, the Company has issued letters of credit totaling $6,796 under facilities other than the Credit Agreement.

~~11.~~10.SEGMENT REPORTING

The Company’s revenues are generated from the collection, transfer, recycling and disposal of non-hazardous solid waste and the treatment, recovery and disposal of non-hazardous E&P waste. No single contract or customer accounted for more than 10% of the Company’s total revenues at the consolidated or reportable segment level during the periods presented.

~~The~~Prior to July 2020, the Company ~~manages~~managed its operations through 5 geographic solid waste operating segments and its E&P segment, which ~~includes~~were also its reportable segments. As of July 2020, the ~~majority of~~Company’s Chief Operating Decision Maker determined that the Company’s E&P ~~waste treatment~~ and ~~disposal operations. The~~Southern operating segments met all the aggregation criteria and eliminated the E&P segment by combining all operations of the E&P segment into the Southern segment. After giving effect to this combination, the Company’s reportable segments consist of its 5 geographic ~~solid waste~~ operating segments and ~~its~~no longer include a separate E&P ~~segment comprise the Company’s reportable segments.~~segment. Each operating segment is responsible for managing several vertically integrated operations, which are comprised of districts. The segment information presented herein reflects the realignment of these districts. Segment results for the 2020 periods reflected in this report have been reclassified to reflect the realignment of the Company’s reportable segments for comparison with the same period in 2021.

~~The~~Under the current orientation, the Company’s Southern segment services customers located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Dakota, southern Oklahoma, western Tennessee, Texas, Wyoming and along the Gulf of Mexico; the Company’s Eastern segment services customers located in Delaware, northern Illinois, Kentucky, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, eastern Tennessee, Vermont, Virginia and Wisconsin; ~~the Company’s Southern segment services customers located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, southern Oklahoma, western Tennessee and Texas;~~ the Company’s Western segment services customers located in Alaska, California, Idaho, Montana, Nevada, Oregon, Washington and western Wyoming; the Company’s Central segment services customers located in Arizona, Colorado, southern Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Oklahoma, South Dakota, western Texas, Utah and eastern Wyoming; and the Company’s Canada segment services customers located in the state of Michigan and in the provinces of Alberta, British Columbia, Manitoba, Ontario, Québec and Saskatchewan. The E&P segment services E&P customers located in Louisiana, New Mexico, North Dakota, Oklahoma, Texas, Wyoming and along the Gulf of Mexico.

1714

Table of Contents

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

segment services customers located in the state of Michigan and in the provinces of Alberta, British Columbia, Manitoba, Ontario, Québec and Saskatchewan.

The Company’s Chief Operating Decision Maker evaluates operating segment profitability and determines resource allocations based on several factors, of which the primary financial measure is segment EBITDA. The Company defines segment EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and other operating items, and other income (expense). Segment EBITDA is not a measure of operating income, operating performance or liquidity under GAAP and may not be comparable to similarly titled measures reported by other companies. The Company’s management uses segment EBITDA in the evaluation of segment operating performance as it is a profit measure that is generally within the control of the operating segments. A reconciliation of segment EBITDA to Income before income tax provision is included at the end of this Note ~~11.~~10.

Summarized financial information concerning the Company’s reportable segments for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, is shown in the following tables:


Three Months Ended			Intercompany		Reported		Segment				Intercompany		Reported		Segment
March 31, 2020	Revenue		Revenue^(b)		Revenue		EBITDA^(c)
March 31, 2021									Revenue		Revenue^(b)		Revenue		EBITDA^(c)
Southern									$	382,687	$	(44,526)	$	338,161	$	93,424
Eastern	$	397,000	$	(64,798)	$	332,202	$	84,662		398,830		(62,369)		336,461		89,121
Southern		351,502		(42,115)		309,387		74,517
Western		305,436		(33,455)		271,981		81,029		332,820		(35,816)		297,004		93,825
Central		237,570		(29,028)		208,542		73,151		267,702		(32,316)		235,386		79,040
Canada		193,107		(22,684)		170,423		59,398		211,786		(22,856)		188,930		73,940
E&P		64,880		(5,011)		59,869		31,802
Corporate^(a)		—		—		—		(3,631)		—		—		—		(750)
	$	1,549,495	$	(197,091)	$	1,352,404	$	400,928	$	1,593,825	$	(197,883)	$	1,395,942	$	428,600


Three Months Ended			Intercompany		Reported		Segment				Intercompany		Reported		Segment
March 31, 2019	Revenue		Revenue^(b)		Revenue		EBITDA^(c)
March 31, 2020									Revenue		Revenue^(b)		Revenue		EBITDA^(c)
Southern									$	416,382	$	(47,126)	$	369,256	$	106,319
Eastern	$	346,846	$	(54,019)	$	292,827	$	76,957		397,000		(64,798)		332,202		84,662
Southern		324,482		(37,153)		287,329		74,377
Western		286,175		(31,196)		254,979		77,005		305,436		(33,455)		271,981		81,029
Central		202,792		(24,915)		177,877		63,027		237,570		(29,028)		208,542		73,151
Canada		190,286		(21,939)		168,347		59,244		193,107		(22,684)		170,423		59,398
E&P		66,035		(2,757)		63,278		31,609
Corporate^(a)		—		—		—		(3,858)		—		—		—		(3,631)
	$	1,416,616	$	(171,979)	$	1,244,637	$	378,361	$	1,549,495	$	(197,091)	$	1,352,404	$	400,928

____________________

(a)

The majority of Corporate ~~functions include accounting, legal, tax, treasury, information technology, risk management, human resources, training, direct~~expenses are allocated to the 5 operating segments. Direct acquisition expenses, expenses associated with common shares held in the deferred compensation plan exchanged for other ~~administrative functions~~investment options and share-based compensation expenses associated with Progressive Waste share-based grants outstanding at June 1, 2016 that were continued by the ~~Company. Amounts reflected~~Company are ~~net of allocations~~not allocated to the 65 operating ~~segments.~~segments and comprise the net EBITDA of the Company’s Corporate segment for the periods presented.

(b)

Intercompany revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments. Transactions within and between segments are generally made on a basis intended to reflect the market value of the service.

(c)

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

1815

Table of Contents

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Total assets for each of the Company’s reportable segments at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, were as follows:


	March 31,		December 31,		March 31,		December 31,
	2020		2019		2021		2020
Southern					$	3,373,593	$	3,402,081
Eastern	$	3,060,723	$	3,099,283		3,094,800		3,134,462
Southern		2,971,182		2,990,247
Western		1,712,098		1,718,015		1,859,205		1,861,079
Central		1,875,151		1,885,468		2,144,461		2,160,246
Canada		2,265,718		2,490,291		2,552,952		2,544,379
E&P		950,019		962,202
Corporate		1,444,520		592,189		1,017,918		890,117
Total Assets	$	14,279,411	$	13,737,695	$	14,042,929	$	13,992,364

The following tables show changes in goodwill during the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, by reportable segment:


	Eastern		Southern		Western		Central		Canada		E&P		Total		Southern		Eastern		Western		Central		Canada		Total
Balance as of December 31, 2019	$	1,331,180	$	1,528,225	$	400,037	$	729,470	$	1,521,939	$	—	$	5,510,851
Balance as of December 31, 2020															$	1,532,215	$	1,374,577	$	442,862	$	824,204	$	1,552,792	$	5,726,650
Goodwill acquired		—		—		—		3,741		—		—		3,741		—		—		2,289		—		—		2,289
Goodwill acquisition adjustments		(524)		195		70		—		—		—		(259)		(4)		1,408		—		4,385		(2)		5,787
Impact of changes in foreign currency		—		—		—		—		(128,492)		—		(128,492)		—		—		—		—		19,375		19,375
Balance as of March 31, 2020	$	1,330,656	$	1,528,420	$	400,107	$	733,211	$	1,393,447	$	—	$	5,385,841
Balance as of March 31, 2021															$	1,532,211	$	1,375,985	$	445,151	$	828,589	$	1,572,165	$	5,754,101


	Eastern		Southern		Western		Central		Canada		E&P		Total		Southern		Eastern		Western		Central		Canada		Total
Balance as of December 31, 2018	$	1,126,486	$	1,517,610	$	398,174	$	540,435	$	1,448,980	$	—	$	5,031,685
Balance as of December 31, 2019															$	1,528,225	$	1,331,180	$	400,037	$	729,470	$	1,521,939	$	5,510,851
Goodwill acquired		—		—		918		3,702		—		—		4,620		—		—		—		3,741		—		3,741
Goodwill acquisition adjustments		(83)		(88)		—		—		(3)		—		(174)		195		(524)		70		—		—		(259)
Goodwill divested		—		(845)		—		—		—		—		(845)
Impact of changes in foreign currency		—		—		—		—		30,244		—		30,244		—		—		—		—		(128,492)		(128,492)
Balance as of March 31, 2019	$	1,126,403	$	1,516,677	$	399,092	$	544,137	$	1,479,221	$	—	$	5,065,530
Balance as of March 31, 2020															$	1,528,420	$	1,330,656	$	400,107	$	733,211	$	1,393,447	$	5,385,841

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


	Three Months Ended
	March 31,
	2021		2020
Southern segment EBITDA	$	93,424	$	106,319
Eastern segment EBITDA		89,121		84,662
Western segment EBITDA		93,825		81,029
Central segment EBITDA		79,040		73,151
Canada segment EBITDA		73,940		59,398
Subtotal reportable segments		429,350		404,559
Unallocated corporate overhead		(750)		(3,631)
Depreciation		(157,402)		(150,821)
Amortization of intangibles		(32,192)		(31,638)
Impairments and other operating items		(634)		(1,506)
Interest expense		(42,425)		(37,990)
Interest income		1,103		2,175
Other income (expense), net		3,548		(9,521)
Income before income tax provision	$	200,598	$	171,627

1916

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WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Three Months Ended

March 31,

2020

2019
Eastern segment EBITDA

$
84,662

$
76,957
Southern segment EBITDA

74,517

74,377
Western segment EBITDA

81,029

77,005
Central segment EBITDA

73,151

63,027
Canada segment EBITDA

59,398

59,244
E&P segment EBITDA

31,802

31,609
Subtotal reportable segments

404,559

382,219
Unallocated corporate overhead

(3,631)

(3,858)
Depreciation

(150,821)

(146,847)
Amortization of intangibles

(31,638)

(30,542)
Impairments and other operating items

(1,506)

(16,112)
Interest expense

(37,990)

(37,287)
Interest income

2,175

3,311
Other income (expense), net

(9,521)

2,661
Income before income tax provision

$
171,627

$
153,545

~~12.~~11.DERIVATIVE FINANCIAL INSTRUMENTS

The Company recognizes all derivatives on the Condensed Consolidated Balance Sheets at fair value. All of the Company’s derivatives have been designated as cash flow hedges; therefore, the gain or loss on the derivatives will be recognized in accumulated other comprehensive income (loss) (“AOCIL”) and reclassified into earnings in the same period during which the hedged transaction affects earnings and is presented in the same income statement line item as the earnings effect of the hedged item. The Company classifies cash inflows and outflows from derivatives within operating activities on the Condensed Consolidated Statements of Cash Flows.

One of the Company’s objectives for utilizing derivative instruments is to reduce its exposure to fluctuations in cash flows due to changes in the variable interest rates of certain borrowings under the Credit Agreement. The Company’s strategy to achieve that objective involves entering into interest rate swaps. The interest rate swaps outstanding at March 31, ~~2020~~2021 were specifically designated to the Credit Agreement and accounted for as cash flow hedges.

~~Table of Contents~~

~~WASTE CONNECTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)~~

At March 31, ~~2020,~~2021, the Company’s derivative instruments included 146 interest rate swap agreements as follows:


			Fixed		Variable					Fixed		Variable
	Notional		Interest		Interest Rate			Notional		Interest		Interest Rate
Date Entered	Amount		Rate Paid*		Received	Effective Date	Expiration Date	Amount		Rate Paid*		Received	Effective Date	Expiration Date
May 2014	$	50,000	2.344	%	1-month LIBOR	October 2015	October 2020
May 2014	$	25,000	2.326	%	1-month LIBOR	October 2015	October 2020
May 2014	$	50,000	2.350	%	1-month LIBOR	October 2015	October 2020
May 2014	$	50,000	2.350	%	1-month LIBOR	October 2015	October 2020
June 2016	$	150,000	0.950	%	1-month LIBOR	January 2018	January 2021
June 2016	$	150,000	0.950	%	1-month LIBOR	January 2018	January 2021
July 2016	$	50,000	0.900	%	1-month LIBOR	January 2018	January 2021
July 2016	$	50,000	0.890	%	1-month LIBOR	January 2018	January 2021
August 2017	$	100,000	1.900	%	1-month LIBOR	July 2019	July 2022	$	100,000	1.900	%	1-month LIBOR	July 2019	July 2022
August 2017	$	200,000	2.200	%	1-month LIBOR	October 2020	October 2025	$	200,000	2.200	%	1-month LIBOR	October 2020	October 2025
August 2017	$	150,000	1.950	%	1-month LIBOR	February 2020	February 2023	$	150,000	1.950	%	1-month LIBOR	February 2020	February 2023
June 2018	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025
June 2018	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025
December 2018	$	200,000	2.850	%	1-month LIBOR	July 2022	July 2027	$	200,000	2.850	%	1-month LIBOR	July 2022	July 2027

____________________

* Plus applicable margin.

The fair values of derivative instruments designated as cash flow hedges as of March 31, 2021, were as follows:


Derivatives Designated as Cash	Asset Derivatives			Liability Derivatives
Flow Hedges	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate swaps	Prepaid expenses and other current assets	$	—	Accrued liabilities^(a)	$	(19,778)
				Other long-term liabilities		(49,376)
Total derivatives designated as cash flow hedges		$	—		$	(69,154)

____________________

(a)Represents the estimated amount of the existing unrealized losses on interest rate swaps as of March 31, 2021 (based on the interest rate yield curve at that date), included in AOCIL expected to be reclassified into pre-tax earnings within the next 12 months. The actual amounts reclassified into earnings are dependent on future movements in interest rates.

The fair values of derivative instruments designated as cash flow hedges as of December 31, 2020, were as follows:


Derivatives Designated as Cash	Asset Derivatives			Liability Derivatives
Flow Hedges	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate swaps	Prepaid expenses and other current assets^(a)	$	—	Accrued liabilities^(a)	$	~~(14,730)~~(20,023)
				Other long-term liabilities		~~(83,539)~~(74,666)
Total derivatives designated as cash flow hedges		$	—		$	~~(98,269)~~(94,689)

~~____________________~~

~~(a)~~Represents the estimated amount of the existing unrealized losses, respectively, on interest rate swaps as of March 31, 2020 (based on the interest rate yield curve at that date), included in AOCIL expected to be reclassified into pre-tax earnings within the next 12 months. The actual amounts reclassified into earnings are dependent on future movements in interest rates.

~~The fair values of derivative instruments designated as cash flow hedges as of December 31, 2019, were as follows:~~

Derivatives Designated as Cash

Asset Derivatives

Liability Derivatives
Flow Hedges

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value
Interest rate swaps

Prepaid expenses and other current assets

$
2,845

Accrued liabilities

$
(3,680)

Other long-term liabilities

(38,967)
Total derivatives designated as cash flow hedges

$
2,845

$
(42,647)

2117

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WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The following table summarizes the impact of the Company’s cash flow hedges on the results of operations, comprehensive income (loss) and AOCIL for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:

Derivatives

Statement of

Amount of (Gain) or Loss Reclassified

Statement of

Amount of (Gain) or Loss Reclassified

Designated as Cash

Amount of Gain or (Loss) Recognized

Net Income

from AOCIL into Earnings,

Amount of Gain or (Loss) Recognized

Net Income

from AOCIL into Earnings,

Flow Hedges

as AOCIL on Derivatives, Net of Tax ^(a)

Classification

Net of Tax ^(b)

as AOCIL on Derivatives, Net of Tax ^(a)

Classification

Net of Tax ^(b)

Three Months Ended

March 31,

2020

2019

2020

2019

2021

2020

2021

2020

Interest rate swaps

(42,649)

(11,555)

Interest expense

(323)

(1,817)

15,243

(42,649)

Interest expense

3,525

(323)

____________________

(a)In accordance with the derivatives and hedging guidance, the changes in fair values of interest rate swaps have been recorded in equity as a component of AOCIL. As the critical terms of the interest rate swaps match the underlying debt being hedged, all unrealized changes in fair value are recorded in AOCIL.

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

See Note 1615 for further discussion on the impact of the Company’s hedge accounting to its consolidated comprehensive income (loss) and AOCIL.

~~13.~~12.FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist primarily of cash and equivalents, trade receivables, restricted cash and investments, trade payables, debt instruments, contingent consideration obligations and interest rate swaps. As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the carrying values of cash and equivalents, trade receivables, restricted cash and investments, trade payables and contingent consideration are considered to be representative of their respective fair values. The carrying values of the Company’s debt instruments, excluding certain notes as listed in the table below, approximate their fair values as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, based on current borrowing rates, current remaining average life to maturity and borrower credit quality for similar types of borrowing arrangements, and are classified as Level 2 within the fair value hierarchy. The carrying values and fair values of the Company’s debt instruments where the carrying values do not approximate their fair values as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, are as follows:


	Carrying Value at				*Fair Value at**				Carrying Value at				*Fair Value at**
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2020		2019		2020		2019		2021		2020		2021		2020
4.64% Senior Notes due 2021	$	100,000	$	100,000	$	102,092	$	102,654	$	100,000	$	100,000	$	100,010	$	100,850
2.39% Senior Notes due 2021	$	150,000	$	150,000	$	149,765	$	149,823	$	150,000	$	150,000	$	150,363	$	150,695
3.09% Senior Notes due 2022	$	125,000	$	125,000	$	126,360	$	126,884	$	125,000	$	125,000	$	128,420	$	128,482
2.75% Senior Notes due 2023	$	200,000	$	200,000	$	200,282	$	201,121	$	200,000	$	200,000	$	206,447	$	206,204
3.24% Senior Notes due 2024	$	150,000	$	150,000	$	152,850	$	153,804	$	150,000	$	150,000	$	157,859	$	158,140
3.41% Senior Notes due 2025	$	375,000	$	375,000	$	386,130	$	389,127	$	375,000	$	375,000	$	398,579	$	403,025
3.03% Senior Notes due 2026	$	400,000	$	400,000	$	403,469	$	406,768	$	400,000	$	400,000	$	416,544	$	424,874
3.49% Senior Notes due 2027	$	250,000	$	250,000	$	256,987	$	259,789	$	250,000	$	250,000	$	264,697	$	271,198
4.25% Senior Notes due 2028	$	500,000	$	500,000	$	540,550	$	562,050	$	500,000	$	500,000	$	563,500	$	597,050
3.50% Senior Notes due 2029	$	500,000	$	500,000	$	512,450	$	533,500	$	500,000	$	500,000	$	536,050	$	570,450
2.60% Senior Notes due 2030	$	600,000	$	—	$	574,980	$	—	$	600,000	$	600,000	$	603,240	$	644,520
3.05% Senior Notes due 2050	$	500,000	$	—	$	437,700	$	—	$	500,000	$	500,000	$	471,600	$	540,050

____________________

*Senior Notes are classified as Level 2 within the fair value hierarchy. Fair value ~~is based on quotes~~inputs include third-party calculations of ~~bonds~~the market interest rate of notes with similar ratings in similar ~~industries.~~industries over the remaining note terms.

2218

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WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

For details on the fair value of the Company’s interest rate swaps, restricted cash and investments and contingent consideration, refer to Note ~~15.~~14.

~~14.~~13.NET INCOME PER SHARE INFORMATION

The following table sets forth the calculation of the numerator and denominator used in the computation of basic and diluted net income per common share attributable to the Company’s shareholders for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


	Three Months Ended
	March 31,				Three Months Ended
	2020		2019		2021		2020
Numerator:
Net income attributable to Waste Connections for basic and diluted earnings per share	$	143,035	$	125,622	$	160,309	$	143,035
Denominator:
Basic shares outstanding		263,790,364		263,603,418		262,697,487		263,790,364
Dilutive effect of equity-based awards		562,794		733,512		459,168		562,794
Diluted shares outstanding		264,353,158		264,336,930		263,156,655		264,353,158

~~15.~~14.FAIR VALUE MEASUREMENTS

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis in periods subsequent to their initial measurement. These tiers include: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3, defined as unobservable inputs that are not corroborated by market data.

The Company’s financial assets and liabilities recorded at fair value on a recurring basis include derivative instruments and restricted cash and investments. At March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company’s derivative instruments included pay-fixed, receive-variable interest rate swaps. The Company’s interest rate swaps are recorded at their estimated fair values based on quotes received from financial institutions that trade these contracts. The Company verifies the reasonableness of these quotes using similar quotes from another financial institution as of each date for which financial statements are prepared. For the Company’s interest rate swaps, the Company also considers the Company’s creditworthiness in its determination of the fair value measurement of these instruments in a net liability position and the counterparties’ creditworthiness in its determination of the fair value measurement of these instruments in a net asset position. The Company’s restricted cash and investments are valued at quoted market prices in active markets for similar assets, which the Company receives from the financial institutions that hold such investments on its behalf. The Company’s restricted cash and investments measured at fair value are invested primarily in money market accounts, bank time deposits, U.S. government and agency securities and Canadian bankers’ acceptance notes.

2319

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WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

The Company’s assets and liabilities measured at fair value on a recurring basis at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, were as follows:


	Fair Value Measurement at March 31, 2020 Using								Fair Value Measurement at March 31, 2021 Using
			Quoted Prices in		Significant						Quoted Prices in		Significant
			Active Markets		Other		Significant				Active Markets		Other		Significant
			for Identical		Observable		Unobservable				for Identical		Observable		Unobservable
			Assets		Inputs		Inputs				Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
Interest rate swap derivative instruments – net liability position	$	(98,269)	$	—	$	(98,269)	$	—	$	(69,154)	$	—	$	(69,154)	$	—
Restricted cash and investments	$	134,934	$	—	$	134,934	$	—	$	162,847	$	—	$	162,847	$	—
Contingent consideration	$	(67,599)	$	—	$	—	$	(67,599)	$	(66,978)	$	—	$	—	$	(66,978)


	Fair Value Measurement at December 31, 2019 Using								Fair Value Measurement at December 31, 2020 Using
			Quoted Prices in		Significant						Quoted Prices in		Significant
			Active Markets		Other		Significant				Active Markets		Other		Significant
			for Identical		Observable		Unobservable				for Identical		Observable		Unobservable
			Assets		Inputs		Inputs				Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
Interest rate swap derivative instruments – net liability position	$	(39,802)	$	—	$	(39,802)	$	—	$	(94,689)	$	—	$	(94,689)	$	—
Restricted cash and investments	$	147,318	$	—	$	147,318	$	—	$	155,176	$	—	$	155,176	$	—
Contingent consideration	$	(69,484)	$	—	$	—	$	(69,484)	$	(71,736)	$	—	$	—	$	(71,736)

The following table summarizes the changes in the fair value for Level 3 liabilities related to contingent consideration for the three months ended March 31, ~~2020~~2021 and ~~2019:~~2020:


	Three Months Ended March 31,				Three Months Ended March 31,
	2020		2019		2021		2020
Beginning balance	$	69,484	$	54,615	$	71,736	$	69,484
Payment of contingent consideration recorded at acquisition date		(1,976)		(275)		(4,807)		(1,976)
Payment of contingent consideration recorded in earnings						(520)		—
Adjustments to contingent consideration		—		1,466		89		—
Interest accretion expense		416		455		495		416
Foreign currency translation adjustment		(325)		75		(15)		(325)
Ending balance	$	67,599	$	56,336	$	66,978	$	67,599

~~16.~~~~OTHER COMPREHENSIVE INCOME (LOSS)~~

Other comprehensive income (loss) includes changes in the fair value of interest rate swaps that qualify for hedge accounting. The components of other comprehensive income (loss) and related tax effects for the three months ended March 31, 2020 and 2019 are as follows:

Three Months Ended March 31, 2020


Gross

Tax Effect

Net of Tax
Interest rate swap amounts reclassified into interest expense

$
(440)

$
117

$
(323)
Changes in fair value of interest rate swaps

(58,026)

15,377

(42,649)
Foreign currency translation adjustment

(184,717)

—

(184,717)

$
(243,183)

$
15,494

$
(227,689)

2420

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WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Three Months Ended March 31, 2019


Gross

Tax Effect

Net of Tax
Interest rate swap amounts reclassified into interest expense

$
(2,472)

$
655

$
(1,817)
Changes in fair value of interest rate swaps

(15,721)

4,166

(11,555)
Foreign currency translation adjustment

42,180

—

42,180

$
23,987

$
4,821

$
28,808

15.OTHER COMPREHENSIVE INCOME (LOSS)


	Three Months Ended March 31, 2021
	Gross		Tax Effect		Net of Tax
Interest rate swap amounts reclassified into interest expense	$	4,796	$	(1,271)	$	3,525
Changes in fair value of interest rate swaps		20,739		(5,496)		15,243
Foreign currency translation adjustment		28,054		—		28,054
	$	53,589	$	(6,767)	$	46,822


	Three Months Ended March 31, 2020
	Gross		Tax Effect		Net of Tax
Interest rate swap amounts reclassified into interest expense	$	(440)	$	117	$	(323)
Changes in fair value of interest rate swaps		(58,026)		15,377		(42,649)
Foreign currency translation adjustment		(184,717)		—		(184,717)
	$	(243,183)	$	15,494	$	(227,689)

A rollforward of the amounts included in AOCIL, net of taxes, for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, is as follows:


			Foreign		Accumulated				Foreign		Accumulated
			Currency		Other				Currency		Other
	Interest		Translation		Comprehensive		Interest		Translation		Comprehensive
	Rate Swaps		Adjustment		Income (Loss)		Rate Swaps		Adjustment		Income (Loss)
Balance at December 31, 2019	$	(29,255)	$	18,292	$	(10,963)
Balance at December 31, 2020							$	(69,596)	$	68,945	$	(651)
Amounts reclassified into earnings		(323)		—		(323)		3,525		—		3,525
Changes in fair value		(42,649)		—		(42,649)		15,243		—		15,243
Foreign currency translation adjustment		—		(184,717)		(184,717)		—		28,054		28,054
Balance at March 31, 2020	$	(72,227)	$	(166,425)	$	(238,652)
Balance at March 31, 2021							$	(50,828)	$	96,999	$	46,171


			Foreign		Accumulated				Foreign		Accumulated
			Currency		Other				Currency		Other
	Interest		Translation		Comprehensive		Interest		Translation		Comprehensive
	Rate Swaps		Adjustment		Income (Loss)		Rate Swaps		Adjustment		Income (Loss)
Balance at December 31, 2018	$	8,892	$	(83,678)	$	(74,786)
Balance at December 31, 2019							$	(29,255)	$	18,292	$	(10,963)
Amounts reclassified into earnings		(1,817)		—		(1,817)		(323)		—		(323)
Changes in fair value		(11,555)		—		(11,555)		(42,649)		—		(42,649)
Foreign currency translation adjustment		—		42,180		42,180		—		(184,717)		(184,717)
Balance at March 31, 2019	$	(4,480)	$	(41,498)	$	(45,978)
Balance at March 31, 2020							$	(72,227)	$	(166,425)	$	(238,652)

See Note 1211 for further discussion on the Company’s derivative instruments.

~~17.~~~~SHAREHOLDERS’ EQUITY~~

~~Share-Based Compensation~~

~~Restricted Share Units~~

~~A summary of activity related to restricted share units (“RSUs”) during the three-month period ended March 31, 2020, is presented below:~~


		~~Unvested Shares~~
~~Outstanding at December 31, 2019~~		~~861,012~~
~~Granted~~		~~326,045~~
~~Forfeited~~		~~(15,787)~~
~~Vested and issued~~		~~(366,603)~~
~~Outstanding at March 31, 2020~~		~~804,667~~

2521

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WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

16.SHAREHOLDERS’ EQUITY

Share-Based Compensation

Restricted Share Units

A summary of activity related to restricted share units (“RSUs”) during the three-month period ended March 31, 2021, is presented below:


		Unvested Shares
Outstanding at December 31, 2020		772,625
Granted		447,301
Forfeited		(13,569)
Vested and issued		(340,529)
Outstanding at March 31, 2021		865,828

The weighted average grant-date fair value per share for the common shares underlying the RSUs granted during the three-month period ended March 31, ~~2020~~2021 was ~~$101.80.~~$97.56.

Recipients of the Company’s RSUs who participate in the Company’s Nonqualified Deferred Compensation Plan may have elected in years prior to 2015 to defer some or all of their RSUs as they vest until a specified date or dates they choose. At the end of the deferral periods, unless a qualified participant makes certain other elections, the Company issues to recipients who deferred their RSUs common shares of the Company underlying the deferred RSUs. At March 31, ~~2020~~2021 and ~~2019,~~2020, the Company had ~~190,201~~158,610 and ~~249,003~~190,201 vested deferred RSUs outstanding, respectively.

Performance-Based Restricted Share Units

A summary of activity related to performance-based restricted share units (“PSUs”) during the three-month period ended March 31, ~~2020,~~2021, is presented below:


		Unvested Shares
Outstanding at December 31, ~~2019~~2020		~~504,484~~434,558
Granted		~~211,987~~116,784
Forfeited		~~(727)~~(5,048)
Vested and issued		~~(281,186)~~(154,251)
Outstanding at March 31, ~~2020~~2021		~~434,558~~392,043

During the three months ended March 31, ~~2020,~~2021, the Company’s Compensation Committee granted PSUs with three-year performance-based metrics that the Company must meet before those awards may be earned, and the performance period for those grants ends on December 31, 2022. During the same period, the Company’s Compensation Committee also granted PSUs with a one-year performance-based metric that the Company must meet before those awards may be earned, with the awards then subject to time-based vesting for the remaining three years of their four-year vesting period.2023. The Compensation Committee will determine the achievement of performance results and corresponding vesting of PSUs for each performance period. The weighted average grant-date fair value per share for the common shares underlying all PSUs granted during the three-month period ended March 31, ~~2020~~2021 was ~~$87.19.~~$96.99.

Table of Contents

WASTE CONNECTIONS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)

Deferred Share Units

A summary of activity related to deferred share units (“DSUs”) during the three-month period ended March 31, ~~2020,~~2021, is presented below:


		Vested Shares
Outstanding at December 31, ~~2019~~2020		~~18,970~~21,586
Granted		~~2,616~~2,856
Outstanding at March 31, ~~2020~~2021		~~21,586~~24,442

The DSUs consist of a combination of DSU grants outstanding under the Progressive Waste share-based compensation plans that were continued by the Company following the Progressive Waste acquisition and DSUs granted by the Company since the Progressive Waste acquisition. The weighted average grant-date fair value per share for the common shares underlying the DSUs granted during the three-month period ended March 31, ~~2020~~2021 was ~~$103.81.~~$99.80.

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Other Restricted Share Units

RSU grants outstanding under the Progressive Waste share-based compensation plans were continued by the Company following the Progressive Waste acquisition and allow for the issuance of shares or cash settlement to employees upon vesting. A summary of activity related to Progressive Waste RSUs during the three-month period ended March 31, ~~2020,~~2021, is presented below:


Outstanding at December 31, ~~2019~~2020		~~73,884~~66,554
Cash settled		~~(7,330)~~(1,318)
Outstanding at March 31, ~~2020~~2021		~~66,554~~65,236

NaN RSUs under the Progressive Waste share-based compensation plans were granted subsequent to June 1, 2016. All remaining RSUs were vested as of March 31, 2019.

Share Based Options

Share based options outstanding under the Progressive Waste share-based compensation plans were continued by the Company following the Progressive Waste acquisition and allow for the issuance of shares or cash settlement to employees upon vesting. A summary of activity related to Progressive Waste share based options during the three-month period ended March 31, ~~2020,~~2021, is presented below:


Outstanding at December 31, ~~2019~~2020		~~126,161~~51,200
Cash settled		~~(62,191)~~(3,131)
Outstanding at March 31, ~~2020~~2021		~~63,970~~48,069

NaN share based options under the Progressive Waste share-based compensation plans were granted subsequent to June 1, 2016. All outstanding share based options were vested as of December 31, 2017.

Employee Share Purchase Plan

On May 15, 2020, the Company’s shareholders approved the 2020 Employee Share Purchase Plan (the “ESPP”). Under the ESPP, qualified employees may elect to have payroll deductions withheld from their eligible compensation on

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each payroll date in amounts equal to or greater than 1 percent (1%) but not in excess of 10 percent (10%) of eligible compensation in order to purchase the Company’s common shares under certain terms and subject to certain restrictions set forth in the ESPP. The exercise price is equal to 95% of the closing price of the Company’s common shares on the last day of the relevant offering period, subject to certain restrictions. The maximum number of shares that may be issued under the ESPP is 1,000,000. As of March 31, 2021, NaN of the Company’s common shares have been purchased under the ESPP.

Normal Course Issuer Bid

On July ~~25, 2019,~~23, 2020, the Board of Directors of the Company approved, subject to receipt of regulatory approvals, the annual renewal of the Company’s normal course issuer bid (the “NCIB”) to purchase up to ~~13,184,474~~13,144,773 of the Company’s common shares during the period of August ~~8, 2019~~10, 2020 to August ~~7, 2020~~9, 2021 or until such earlier time as the NCIB is completed or terminated at the option of the Company. The renewal followed the conclusion of the Company’s NCIB that expired August 7, ~~2019.~~2020. The Company received Toronto Stock Exchange (the “TSX”) approval for its annual renewal of the NCIB on August ~~2, 2019.~~5, 2020. Under the NCIB, the Company may make share repurchases only in the open market, including on the New York Stock Exchange (the “NYSE”), the TSX, and/or alternative Canadian trading systems, at the prevailing market price at the time of the transaction.

In accordance with TSX rules, any daily repurchases made through the TSX and alternative Canadian trading systems is limited to a maximum of ~~79,933~~112,638 common shares, which represents 25% of the average daily trading volume on the TSX of ~~319,734~~450,555 common shares for the period from February 1, ~~2019~~2020 to July 31, ~~2019.~~2020. The TSX rules also allow the Company to purchase, once a week, a block of common shares not owned by any insiders, which may exceed such daily limit. The maximum number of shares that can be purchased per day on the NYSE will be 25% of the average daily trading volume for the four calendar weeks preceding the date of purchase, subject to certain exceptions for block purchases.

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The timing and amounts of any repurchases pursuant to the NCIB will depend on many factors, including the Company’s capital structure, the market price of the common shares and overall market conditions. All common shares purchased under the NCIB shall be immediately cancelled following their repurchase.

For the three months ended March 31, 2021, the Company repurchased 666,184 common shares pursuant to the NCIB at an aggregate cost of $65,999. During the three months ended March 31, 2020, the Company repurchased 1,271,977 common shares pursuant to the NCIB at an aggregate cost of $105,654. ~~During the three months ended March 31, 2019, the Company did not repurchase~~ ~~any~~ ~~common shares pursuant to the NCIB.~~ As of March 31, ~~2020,~~2021, the remaining maximum number of shares available for repurchase under the current NCIB was ~~11,912,497.~~12,478,589.

Cash Dividend

In October ~~2019,~~2020, the Company announced that its Board of Directors increased its regular quarterly cash dividend by ~~$0.025,~~$0.02, from ~~$0.16~~$0.185 to ~~$0.185~~$0.205 per Company common share. Cash dividends of ~~$48,018~~$53,909 and ~~$42,084~~$48,018 were paid during the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

~~18.~~17.COMMITMENTS AND CONTINGENCIES

In the normal course of its business and as a result of the extensive governmental regulation of the solid waste and E&P waste industries, the Company is subject to various judicial and administrative proceedings involving Canadian regulatory authorities as well as U.S. federal, state and local agencies. In these proceedings, an agency may subpoena the Company for records, or seek to impose fines on the Company or revoke or deny renewal of an authorization held by the Company, including an operating permit. From time to time, the Company may also be subject to actions brought by special interest or other groups, adjacent landowners or residents in connection with the permitting and licensing of

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landfills, transfer stations, and E&P waste treatment, recovery and disposal operations, or alleging environmental damage or violations of the permits and licenses pursuant to which the Company operates. The Company uses $1,000 as a threshold (up from the previously required threshold of $300) for disclosing environmental matters involving potential monetary sanctions.

In addition, the Company is a party to various claims and suits pending for alleged damages to persons and property, alleged violations of certain laws and alleged liabilities arising out of matters occurring during the normal operation of the Company’s business. Except as noted in the matters described below, as of March 31, ~~2020,~~2021, there is no current proceeding or litigation involving the Company or its property that the Company believes could have a material adverse effect on its business, financial condition, results of operations or cash flows.

Lower Duwamish Waterway Superfund Site Allocation Process

In November 2012, the Company’s subsidiary, Northwest Container Services, Inc. (“NWCS”), was named by the U.S. Environmental Protection Agency, Region 10 (the “EPA”) as a potentially responsible party (“PRP”), along with more than 100 others, under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or the “Superfund” law) with respect to the Lower Duwamish Waterway Superfund Site (the “LDW Site”). Listed on the National Priorities List in 2001, the LDW Site is a five-mile stretch of the Duwamish River flowing into Elliott Bay in Seattle, Washington. A group of PRPs known as the Lower Duwamish Working Group (“LDWG”) and consisting of the City of Seattle, King County, the Port of Seattle, and Boeing Company conducted a Remedial Investigation/Feasibility Study for the LDW Site. On December 2, 2014, the EPA issued its Record of Decision (the “ROD”) describing the selected clean-up remedy, and therein estimated that clean-up costs (in present value dollars as of November 2014) would total approximately $342,000. However, it is possible that additional costs could be incurred based upon various factors. The EPA estimates that it will take seven years to implement the clean-up. The ROD also requires ten years of monitoring following the clean-up, and provides that if clean-up goals have not been met by the end of this period, then additional clean-up activities, at additional cost, may be required at that time. Implementation of the clean-up will not begin until after the ongoing Early Action Area (“EAA”) clean-ups have been completed. Typically, costs for monitoring may be in

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addition to those expended for the clean-up. While three of the EAA clean-ups have been completed to date, some work remains to be done on three other EAAs. Implementation of the clean-up also must await additional baseline sampling throughout the LDW Site and the preparation of a remedial design for performing the clean-up. On April 27, 2016, the LDWG entered into a third amendment of its Administrative Order on Consent with the EPA (the “AOC 3”) in which it agreed to perform the additional baseline sediment sampling and certain technical studies needed to prepare the actual remedial design. The LDWG and the EPA entered into a fourth amendment to the AOC in July 2018 primarily addressing development of a proposed remedy for the upper reach of the LDW Site, river mile 3 to river mile 5. At the April 24, 2019 stakeholders meeting the LDWG projected completion of the remedial design for the upper reach could be completed by August 2024. In late September 2020, the EPA informed attorneys for several PRPs that the work may be completed by late 2023 or early 2024.

On August 16, 2016, the EPA sent individual letters to each of the PRPs for the LDW Site, including NWCS, stating that it ~~expects~~expected to initiate negotiations with all PRPs in early 2018 relating to a Remedial Design/Remedial Action (“RD/RA”) Consent Decree. An RD/RA Consent Decree provides for the cleanup of the entire site and is often referred to as a “global settlement.” In August 2014, NWCS entered into an Alternative Dispute Resolution Memorandum of Agreement with several dozen other PRPs and a neutral allocator to conduct a confidential and non-binding allocation of certain past response costs allegedly incurred at the LDW Site as well as the anticipated future response costs associated with the clean-up. ~~The pre-remedial design work under the AOC 3 was not expected to conclude until the end of 2019, and in~~In March 2017, the PRPs provided the EPA with notice that the allocation was not scheduled to conclude until mid-2019. Later extensions pushed the allocation conclusion date first to early 2020 and ~~the EPA was informed of that schedule. The allocation participants voted in June 2019 to extend the final allocation report deadline~~then to July 2020. The EPA ~~has been~~was informed of ~~that change. In January 2020, the allocator informed the parties~~those changes. The allocator’s most recent projection is that the preliminary allocation report may be issued by the end of April 2021. The final allocation report will be ~~delayed and he recently advised~~ issued only after the allocator considers comments of

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the parties ~~that he hoped to issue the report by the end of May 2020. If~~on the preliminary ~~report is issued in May, the final report would likely be issued in October 2020.~~report. In ~~June 2017, attorneys for~~September 2020, the EPA informed attorneys for several PRPs that the EPA ~~expected~~intends to ~~begin RD/RA~~initiate settlement negotiations in ~~the late summer or early fall of 2018. Those negotiations have not been scheduled~~2021, and ~~there is no recent indication from~~ the EPA ~~regarding when they will begin.~~was informed of the delay in the issuance of the preliminary allocation report. More recently, the EPA indicated that settlement negotiations would begin in 2022. NWCS is defending itself vigorously in this confidential allocation process. At this point, the Company is not able to determine the likelihood of the allocation process being completed as intended by the participating PRPs, its specific allocation, or the likelihood of the parties then negotiating a global settlement with the EPA. Thus, NWCS cannot reasonably determine the likelihood of any outcome in this matter, including its potential liability.

On February 11, 2016, NWCS received a letter (the “Letter”) from the United States Department of Commerce, National Oceanic and Atmospheric Administration (“NOAA”), describing certain investigatory activities conducted by the Elliott Bay Trustee Council (the “Council”). The Council consists of all of the natural resources trustees for the LDW Site as well as two nearby Superfund sites, the Harbor Island site and the Lockheed West site. The members of the Council include the United States, on behalf of the U.S. National Oceanic and Atmospheric Administration and the U.S. Department of the Interior, the Washington State Department of Ecology, and the Suquamish and Muckleshoot Indian Tribes (together, the “Trustees”). The Letter appears to allege that NWCS may be a potentially liable party that allegedly contributed to the release of hazardous substances that have injured natural resources at the LDW Site. Damages to natural resources are in addition to clean-up costs. The Letter, versions of which NWCS believes were sent to all or a group of the PRPs for the LDW Site, also notified its recipients of their opportunity to participate in the Trustees’ development of an Assessment Plan and the performance of a Natural Resources Damages Assessment (“NRDA”) in accordance with the Assessment Plan for both the LDW Site and the east and west waterways of the Harbor Island site. NWCS timely responded with correspondence to the NOAA Office of General Counsel, in which it declined the invitation at that time. NWCS does not know how other PRPs responded to the Letter, and has not received any further communication from NOAA or the Trustees. The Trustees have not responded to NWCS’ letter. The Trustees released their Assessment Plan in March 2019. The Assessment Plan does not set forth a timeline for implementation. At this point, the Company is not able to determine the likelihood or amount of an assessment of natural resource damages against NWCS in connection with this matter.

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Los Angeles County, California Landfill Expansion Litigation

Chiquita Canyon, LLC Lawsuit Against Los Angeles County

In October 2004, the Company’s subsidiary, Chiquita Canyon, LLC (“CCL”), then under prior ownership, filed an application (the “Application”) with the County of Los Angeles (the “County”) Department of Regional Planning (“DRP”) for a conditional use permit (the “CUP”) to authorize the continued operation and expansion of the Chiquita Canyon Landfill (the “Landfill”). The Landfill has operated since 1972, and as a regional landfill, accepted ~~approximately~~over 2 million tons of materials for disposal and beneficial use in ~~2018.~~2020. The Application requested expansion of the existing waste footprint on CCL’s contiguous property, an increase in maximum elevation, creation of a new entrance and new support facilities, construction of a facility for the County or another third-party operator to host household hazardous waste collection events, designation of an area for mixed organics/composting, and other modifications.

After many years of reviews and delays, upon the recommendation of County staff, the County’s Regional Planning Commission (the “Commission”) approved the Application on April 19, 2017, but imposed operating conditions, fees and exactions that substantially reduce the historical landfill operations and represent a large increase in aggregate taxes and fees. CCL objected to many of the requirements imposed by the Commission. Current estimates for new costs imposed on CCL under the CUP are in excess of $300,000.

CCL appealed the Commission’s decision to the County Board of Supervisors, but the appeal was not successful. At a subsequent hearing, on July 25, 2017, the Board of Supervisors approved the CUP. On October 20, 2017, CCL filed in

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the Superior Court of California, County of Los Angeles a verified petition for writ of mandate and complaint against the County and the County Board of Supervisors captioned Chiquita Canyon, LLC v. County of Los Angeles, No. BS171262 (Los Angeles Co. Super Ct.) (the “Complaint”). The Complaint challenges the terms of the CUP in 13 counts generally alleging that the County violated multiple California and federal statutes and California and federal constitutional protections. CCL seeks the following relief: (a) an injunction and writ of mandate against certain of the CUP’s operational restrictions, taxes and fees, (b) a declaration that the challenged conditions are unconstitutional and in violation of state and federal statutes, (c) reimbursement for any such illegal fees paid under protest, (d) damages, (e) an award of just compensation for a taking, (f) attorney fees, and (g) all other appropriate legal and equitable relief.

~~Responding to a procedural suggestion from~~Extensive motions practice and an interlocutory appeal occurred in 2018 and 2019 over the Court, CCL filed its First Amended Complaint on March 23, 2018. After full briefing, the hearing on the demurrer took place on July 17, 2018. The Superior Court sustained the demurrer and granted the motion to strike. The effectpermissible scope of ~~the Court’s rulings was to bar CCL from proceeding with its challenges to 14 of the 29 CUP conditions at issue in the litigation, including 13 operational conditions and~~ CCL’s challenge to the ~~$11,600 B&T Fee discussed below.~~CUP, specifically 13 operational conditions in the CUP. The Superior Court granted CCL leave to amend its Complaint if CCL chose to pay the $11,600 B&T fee to allow a challenge to the B&T fee to proceed under the Mitigation Fee Act. CCL paid the $11,600 B&T fee on August 10, 2018 and filed its Second Amended Complaint on August 16, 2018, reflecting that the B&T fee had been paid under protest and allowing the challenges to the B&T fee to go forward.

On September 14, 2018, CCL sought discretionary review by the California Court of Appeal of the Superior Court’s July 17, 2018 decision barring the challenge to 13 operational conditions. The Court of Appeal agreed to hearruled in CCL’s appeal and on February 25, 2019, the Court of Appeal issued its decision, reversing the trial court orders that granted the County’s motion to strike and demurrer. The Court of Appeal ruled that CCL had adequately pled a claim that the County was equitably estopped from contending that CCL had forfeited its rights to challenge the legality of the 13 operational conditions. CCL’s Complaint sets forth that CCL relied on representations made by the County in 2017 that CCL could reserve its legal rights to challenge the CUP in a separate reservation of rights letter rather than the affidavit of acceptance of the CUP that the County compelled Chiquita to file.

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At a trial setting conference on May 28, 2019, the equitable estoppel issues in this case were discussed and the Superior Court continued the June 18, 2019 trial date to April 23, 2020. The Superior Court also set an evidentiary hearing on the equitable estoppel issues for November 12, 2019. Discovery occurred on these issues in July through September 2019. Following full briefing and oral argument on November 12, 2019, the Superior Court issued its decisionfavor on November 13, 2019, finding that the County was estopped from contending that CCL has waived its rights to challenge the legality of the 13 operational conditions. The County sought interlocutory review of the Superior Court’s decision in the Court of Appeal, which denied the County’s petition on February 7, 2020. ~~Trial was suspended by a March 23,~~

Following full briefing and oral argument on June 22, 2020 ~~order by~~on six of CCL’s causes of action, the Superior Court issued its decision on July 2, 2020, granting CCL’s petition for writ of mandate in ~~response~~part and denying it in part. CCL prevailed with respect to 12 of the challenged conditions, many of which imposed new fees and exactions on the Landfill. Before entry of final judgment, the Superior Court will hear CCL’s remaining causes of action. A cause of action for a taking under the Fifth Amendment of the U.S. Constitution is the subject of a pending motion for leave to amend the Complaint. Once the Superior Court has entered final judgment, CCL and the County will be permitted to appeal any adverse ruling to the ~~COVID-19 outbreak~~California Court of Appeal. After entry of final judgment and resolution of any appeals, the Superior Court will issue a ~~new trial date has been scheduled for June 22, 2020.~~writ directing the County Board of Supervisors to set aside its decision on the permit with respect to 12 of the challenged conditions. The Board will be allowed to make additional findings to support four of those conditions and reconsider its permit decision in light of the Superior Court’s writ. CCL will continue to vigorously prosecute the lawsuit. However, at this point, the Company is not able to determine the likelihood of any outcome in this matter.

CEQA Lawsuit Against Los Angeles County Challenging Environmental Review for Landfill Expansion

A separate lawsuit involving CCL and the Landfill was filed on August 24, 2017 by community activists alleging that the environmental review underlying the CUP was inadequate under state law. The Val Verde Civic Association, Citizens for Chiquita Canyon Landfill Compliance, and the Santa Clarita Organization for Planning and the Environment filed a petition for writ of mandate in the Superior Court of California, County of Los Angeles against the County, naming CCL as the real party in interest. The lawsuit seeks to overturn the County’s approval of the CUP for the expansion of the Landfill and the certification of the final Environmental Impact Report, arguing that the report violates the California Environmental Quality Act. Pursuant to Condition No. 6 of the CUP, which requires CCL to defend, indemnify, and hold harmless the County, its agents, officers, and employees from any claim or proceeding against the County brought by any third party to attack, set aside, void, or annul the CUP approval, CCL ~~has~~ agreed to reimburse the County for its legal costs associated with defense of the lawsuit. As the real party in interest, CCL has a right to notice and an opportunity to be heard in opposition to the petition for writ of mandate. ~~The petitioners~~Initial briefs were filed ~~their Opening Brief with the court on September 27, 2018. CCL filed its Opposition Brief with the court on November 28,~~in 2018 and ~~the petitioners filed their Reply Brief on December 20, 2018. A trial date had been scheduled for February 8, 2019, but on February 6, 2019, the court reassigned the case to~~ a ~~different judge and vacated the trial date. A new~~ trial date was ~~scheduled for~~set in February 2019, which was later rescheduled and held in August ~~23,~~ 2019. ~~At the conclusion of oral argument on August 23, 2019, the court asked the parties to return on September 13, 2019 for further oral argument on the odor mitigation issue.~~ The court issued a final ruling on October 10, 2019 and a final judgment on December 4, 2019, denying the writ petition in full. ~~On December 6, 2019, one of the petitioners,~~One petitioner, Santa Clarita Organization for Planning and the Environment, appealed the judgment. All interested parties filed their briefs by July 1, 2020 and the County did not file an ~~appeal~~opposition brief. No amicus or “friend of the court” briefs were filed, so the case was fully briefed on July 1, 2020. The court heard oral argument on November 18, 2020. The court issued its opinion on February 10, 2021, upholding the trial court’s ~~October 10, 2019 ruling.~~ruling in full and rejecting the petitioner’s appeal. On ~~December 9, 2019,~~February 25, 2021, the ~~same petitioner~~Petitioner filed ~~an appeal of~~a petition for a rehearing, which the court’s December 4, 2019 judgment. The appellant filed its Opening Brief on March 2, 2020. Both the County’s and CCL’s Opposition Briefs were originally due to the court on March 30, 2020. However, the Second District Court of Appeal ~~issued orders~~denied on ~~March 23~~February 26, 2021. The Petitioner did not file a petition for

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review to the California Supreme Court and ~~April 15, 2020, extending~~ the time ~~to do any act required or permitted under the California Rules~~for seeking review has expired. The Court of ~~Court by an additional 30 days each due to the COVID-19 outbreak. Under the current order,~~Appeal decision upholding the County’s Environmental Impact Report and ~~CCL’s Opposition Briefs are due to~~approval of the ~~court on May 29, 2020.~~CUP in full is now final.

December 11, 2017 Notice of Violation Regarding Certain CUP Conditions.

The County, through its DRP, issued a Notice of Violation, dated December 11, 2017 (the “NOV”), alleging that CCL violated certain conditions of the CUP, including Condition 79(B)(6) of the CUP by failing to pay an $11,600 Bridge & Thoroughfare Fee (“B&T Fee”) that was purportedly due on July 25, 2017. The alleged B&T fee was ostensibly to fund the construction of transportation infrastructure in the area of the Landfill. At the time the NOV was issued, CCL had already contested the legality of the B&T fee in the October 20, 2017 Complaint filed against the County in Los Angeles County Superior ~~Court.~~Court, described above under paragraph A (the “CUP lawsuit”).

On January 12, 2018, CCL filed an appeal of the alleged violations in the NOV. Subsequently, CCL filed additional legal arguments and exhibits contesting the NOV. On March 6, 2018, a DRP employee designated as hearing officer

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sustained the NOV, including the $11,600 B&T fee, and imposed an administrative penalty in the amount of $83 and a noncompliance fee of $0.75. A written decision memorializing the hearing officer’s findings and order ~~dated~~was issued on July 10, ~~2018, was received by CCL on July 12,~~ 2018. On April 13, 2018, CCL filed in the Superior Court of California, County of Los Angeles a Petition for Writ of Administrative Mandamus against the County seeking to overturn the decision sustaining the NOV, contending that the NOV and decision are not supported by the facts or law. On June 22, 2018, Chiquita filed a Motion for Stay seeking to halt enforcement of the B&T fee and penalty and the accrual of any further penalties pending the resolution of the Petition for Writ of Mandamus. The motion was heard and denied by the Court on July 17, ~~2018. As explained above,~~2018, the Court granted CCL leave to pay the $11,600 B&T fee and to amend its Complaint in the CUP lawsuit to reflect the payment under protest, allowing the challenge to the B&T fee under the Mitigation Fee Act to ~~proceed.~~proceed in the CUP lawsuit. CCL paid the B&T fee under protest on August 10, 2018, and also paid on that date the administrative penalty of $83 and a noncompliance fee of $0.75. ~~As directed by the Court, CCL amended its Complaint in a Second Amended Complaint filed in the CUP action on August 16, 2018.~~ The Court indicated that the NOV case would ~~likely~~ be ~~tried in conjunction~~coordinated with the CUP lawsuit. The NOV case has been continued multiple times as the CUP lawsuit was adjudicated; it is now set for ~~June 18, 2019,~~trial on September 14, 2021. The Superior Court’s July 2, 2020 decision in the CUP lawsuit upheld the B&T fee against a Mitigation Fee Act challenge, and addressed two other conditions that were also the ~~cases would be coordinated. At the May 28, 2019 trial setting conference referenced above where the trial~~subject of the ~~CUP case was set for April 23, 2020,~~NOV, which may impact the ~~Superior Court set the trial for~~scope of the B&T fee/NOV ~~case for June 25, 2020. However, following the rescheduling of the trial date for the CUP case, the Superior Court agreed to continue the trial date for the B&T fee/NOV case to October 20, 2020.~~case. CCL will continue to vigorously prosecute the lawsuit. However, at this point, the Company is not able to determine the likelihood of any outcome in this matter.

~~Town of Colonie, New York Landfill Expansion Litigation~~18.SUBSEQUENT EVENT

On April 16, 2014, the Town of Colonie (the “Town”) filed an application (the “Application”) with the New York State Department of Environmental Conservation (“DEC”) to modify the Town’s then-current Solid Waste Management Facility Permit and for other related permits to authorize the development and operation of Area 7 of the Town of Colonie Landfill (the “Landfill”), which is located in Albany County, New York. DEC issued the requested permits on April 5, 2018 (the “Permits”). The Company’s subsidiary, Capital Region Landfills, Inc. (“CRL”), has been the sole operator of the Landfill since September 2011 pursuant to an operating agreement between CRL and the Town.

On May 7, 2018, the Town of Halfmoon, New York, and five of its residents, commenced an Article 78 special proceeding in the Supreme Court of the State of New York, Saratoga County, against DEC, the Town, CRL, and the Company (the “Halfmoon Proceeding”). On that same date, the Town of Waterford, New York, and eleven of its residents, also commenced an Article 78 special proceeding in the Supreme Court of the State of New York, Saratoga County, against the same respondents (the “Waterford Proceeding”). On June 4, 2018, the Town and CRL filed Verified Answers, including motions to dismiss the petitions, and the Company separately moved to dismiss the petitions. The Waterford Petitioners stipulated to removing the Company as a respondent when they filed an Amended Verified Petition on June 15, 2018. The Halfmoon Petitioners served an Amended Verified Petition on July 5, 2018, retaining all originally named parties, including the Company.

The Petitioners alleged that, in granting the Permits, DEC failed to comply with the procedural and substantive requirements of New York’s Environmental Conservation Law and State Environmental Quality Review Act, and their implementing regulations. The Petitioners asked the court to: annul the Permits and invalidate DEC’s Findings Statement, enjoin the Town and CRL from taking any action authorized by the Permits, require an issues conference and possibly an adjudicatory hearing before DEC can re-consider the Town’s permit application; remand all regulatory issues to a DEC Administrative Law Judge; and award costs and disbursements. The Waterford Petitioners also requested reasonable attorneys’ fees.

On July 13, 2018, the Honorable Ann C. Crowell granted a venue change motion filed by DEC, and ordered that the Halfmoon Proceeding and the Waterford Proceeding be transferred to the Supreme Court, Albany County. CRL’s opposition submissions, including its responsive pleadings, Memorandum of Law, and supporting Affidavits, were filed

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)~~

~~and served on or before July 25, 2018. On August~~ 28, 2018, the Towns of Waterford and Halfmoon filed a motion seeking an order preliminarily enjoining during the pendency of the proceedings all activities relating to the expansion of the Landfill which are authorized by the Permits. On September 18, 2018, CRL and the Company filed and served Memoranda of Law in opposition to the preliminary injunction motion, with supporting Affidavits, and, on September 24, 2018, the Towns of Waterford and Halfmoon filed a Reply Memorandum of Law in further support of their injunctive motion. The Honorable Debra J. Young denied the Petitioners’ motion for preliminary injunction on November 30, 2018.

On January 23, 2019, the court held that the Petitioners lacked standing to maintain the proceedings and dismissed both the Waterford and Halfmoon Amended Verified Petitions in their entirety. In late February and early March 2019, the Waterford and Halfmoon Petitioners filed notices of appeal to the Appellate Division, Third Department, of both Judge Crowell’s decision to transfer the proceedings to Albany County and of Judge Young’s dismissal of the Amended Verified Petitions.

On March 7, 2019, the Waterford Petitioners moved, with consent of the Halfmoon Petitioners, to consolidate the appeals. Respondents opposed the consolidation motion to the extent that it may result in inequitable briefing under the Appellate Division rules. On April 4, 2019, the Appellate Division, Third Department granted the consolidation motion “to the extent that the appeals shall be heard together and may be perfected upon a joint record on appeal.”

On April 26, 2019, the Waterford Petitioners filed a motion with the Appellate Division, Third Department, seeking an order preliminarily enjoining construction activities or the acceptance of waste at the Landfill. The Company, CRL, and the Town of Colonie opposed the motion, which was summarily denied by the Third Department, Appellate Division on June 20, 2019.

On June 25, 2019, the Waterford Petitioners filed their appellate brief and the joint record on appeal. The Halfmoon Petitioners filed their appellate brief on August 21, 2019. The Company, CRL, and the Town filed their joint appellee brief and supplemental appendix on November 20, 2019. On February 24, 2020, after receiving multiple filing extensions, DEC filed its appellee brief and supplemental appendix. The Waterford and Halfmoon Petitioners filed their reply briefs on March 10, 2020 and March 13, 2020, respectively. As such, the appeals are fully briefed.

The Appellate Division, Third Department originally scheduled the appeals to be argued during the court’s May 2020 term. On April 8, 2020, the Third Department adjourned the appeals (and all other appeals scheduled for the May 2020 term) as a result of the COVID-19 outbreak, and informed the parties that the appeals would be scheduled during a future, unspecified, appellate term.

~~19.~~~~SUBSEQUENT EVENTS~~

~~On April 23, 2020,~~2021, the Company announced that its Board of Directors approved a regular quarterly cash dividend of ~~$0.185~~$0.205 per Company common share. The dividend will be paid on May ~~19, 2020,~~26, 2021, to shareholders of record on the close of business on May ~~5, 2020.~~

~~On April 30, 2020, the Company repaid $500,000 on its revolver under its Credit Agreement with available cash on hand in conjunction with its monthly loan borrowing and repayment activities.~~

The U.S. Department of Treasury finalized regulations on April 7, 2020 under Internal Revenue Code section 267A related to the deductibility of certain related-party payments. With these regulations becoming finalized, the Company expects that certain related-party payments taken into account for purposes of preparing the Company’s 2019 Condensed Consolidated Financial Statements, which were issued prior to these section 267A regulations being finalized, will not be deductible on the Company’s 2019 income tax returns which will be filed later this year. Although the determination of

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~~WASTE CONNECTIONS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~(DOLLAR AMOUNTS IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE, PER TON AND PER GALLON AMOUNTS)~~

the ultimate tax liability resulting from these related-party payments no longer being deductible on the Company’s 2019 income tax returns remains under review, the Company estimates an additional income tax expense will result of approximately $27,400. Since the regulations were finalized after the Company’s first quarter, the additional tax expense related to 2019 resulting from the final regulations will be included in the Company’s quarterly reporting period ending June 30, 2020.

The challenges posed by the COVID-19 outbreak on the global economy increased significantly as the first quarter progressed, impacting the demand for Waste Connections’ services in varying ways across the U.S. and Canada and across a variety of lines of business, including commercial collection and solid waste and E&P waste disposal. In response to COVID-19, national and local governments around the world have instituted certain measures, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing. The ultimate impact of the COVID-19 outbreak on our business, results of operations, financial condition and cash flows will depend largely on future developments, including the duration and spread of the outbreak in the U.S. and Canada, its severity, the actions to contain the novel coronavirus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and cannot be predicted at this time.12, 2021.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

~~Please~~The following discussion should be read in conjunction with our ~~discussion~~Condensed Consolidated Financial Statements and the related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We make statements in this Quarterly Report on Form 10-Q that are forward-looking in nature. These include:

●

Statements regarding our landfills, including capacity, duration, special projects, demand for and pricing of recyclables, landfill alternatives and related capital expenditures;

●

Discussion of competition, loss of contracts, price increases and additional exclusive and/or long-term collection service arrangements;

●

Forecasts of cash flows necessary for operations and free cash flow to reduce leverage as well as our ability to draw on our credit facility and access the capital markets to refinance or expand;

●

Statements regarding our ability to access capital resources or credit markets at all or on favorable terms;

●

Plans for, and the amounts of, certain capital expenditures for our existing and newly acquired properties and equipment;

●

Statements regarding fuel, oil and natural gas demand, prices, and price volatility;

●

Assessments of regulatory developments and potential changes in environmental, health, safety and tax laws and regulations; and

●

Other statements on a variety of topics such as the COVID-19 pandemic, credit risk of customers, seasonality, labor/pension costs and labor union activity, operational and safety risks, acquisitions, litigation results, goodwill impairments, insurance costs and cybersecurity threats.

These statements can be ‎identified by the use of forward-looking ~~statements~~terminology such as “believes,” “expects,” “intends,” “may,” “might,” “will,” ‎‎“could,” “should” or “anticipates,” or the negative thereof or comparable terminology, or by discussions of strategy.

Our ‎business and ~~our restated~~operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ ‎materially from those projected by any forward-looking statements. Factors that could cause actual results to differ ‎from those projected include, but are not limited to, risk factors detailed from time to time in ~~Part II, Item 1A, beginning~~our filings with the SEC and the securities commissions or similar regulatory authorities in Canada.

There may be additional risks of which we are not presently aware or that we currently believe are immaterial that ‎could have an adverse impact on ~~page 58 of this report, together with this MD&A. They include additional information about trends, uncertainties and risks to~~ our business. We make no commitment to revise or update any forward-looking ‎statements to reflect events or circumstances that may change, unless required under applicable securities laws.

OVERVIEW OF OUR BUSINESS

We are an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, along with recycling and ~~recycling services~~resource recovery, in mostly exclusive and secondary markets across 43 states in the U.S. and six provinces in Canada. ~~Through our R360 Environmental Solutions subsidiary, we are~~Waste Connections also ~~a leading provider of~~provides non-hazardous ~~exploration and production, or E&P,~~oilfield waste treatment, recovery and disposal services in several ofbasins across the ~~most active natural resource producing areas in the~~ U.S. ~~We also provide~~, as well as intermodal services for the ~~rail haul~~ movement of cargo and solid waste containers in the Pacific ~~Northwest through a network~~Northwest.

Table of ~~intermodal facilities.~~Contents

We generally seek to avoid highly competitive, large urban markets and instead target markets where we can attain high market share either through exclusive contracts, vertical integration or asset positioning. In markets where waste collection services are provided under exclusive arrangements, or where waste disposal is municipally owned or funded or available at multiple municipal sources, we believe that controlling the waste stream by providing collection services under exclusive arrangements is often more important to our growth and profitability than owning or operating landfills. We also target niche markets, like E&P waste treatment and disposal services.

As of March 31, ~~2020,~~2021, we served residential, commercial, industrial and E&P customers in 4243 states in the U.S. and six provinces in Canada: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming, and the provinces of Alberta, British Columbia, Manitoba, Ontario, Québec and Saskatchewan.

The solid waste industry is local and highly competitive in nature, requiring substantial labor and capital resources. ~~The participants~~We compete for collection accounts primarily on the basis of price and, to a lesser extent, the quality of service, and compete for landfill business on the basis of tipping fees, geographic location and quality of operations. The solid waste industry has been consolidating and continues to consolidate as a result of a number of factors, including the increasing costs and complexity associated with waste management operations and regulatory compliance. Many small independent operators and municipalities lack the capital resources, management, operating skills and technical expertise necessary to operate effectively in such an environment. The consolidation trend has caused solid waste companies to operate larger landfills that have complementary collection routes that can use company-owned disposal capacity. Controlling the point of transfer from haulers to landfills has become increasingly important as landfills continue to close and disposal capacity moves farther from the collection markets it serves.

Generally, the most profitable operators within the solid waste industry are those companies that are vertically integrated or enter into long-term collection contracts. A vertically integrated operator will benefit from: (1) the internalization of waste, which is bringing waste to a company-owned landfill; (2) the ability to charge third-party haulers tipping fees either at landfills or at transfer stations; and (3) the efficiencies gained by being able to aggregate and process waste at a transfer station prior to landfilling.

The E&P waste services industry is regional in nature and is also highly fragmented, with acquisition opportunities available in several active natural resource basins. Competition for E&P waste comes primarily from smaller regional companies that utilize a variety of disposal methods and generally serve specific geographic markets, and other solid waste companies. In addition, customers in many markets have the option of using internal disposal methods or outsourcing to another third-party disposal company. The principal competitive factors in this business include: gaining customer approval of treatment and disposal facilities; location of facilities in relation to customer activity; reputation; reliability of

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~~services; track record of environmental compliance; ability to accept multiple waste types at a single facility; and price. The~~ demand for our E&P waste services depends on the continued demand for, and production of, oil and natural gas. Crude oil and natural gas prices historically have been volatile. ~~More recently,~~Macroeconomic and geopolitical conditions, including a significant decline in oil prices driven by both surplus production and supply, as well as the ~~value~~decrease in demand caused by factors including the COVID-19 pandemic, have resulted in decreased levels of oil and natural gas exploration and production activity and a corresponding decrease in demand for our E&P waste services. Additionally, across the industry there is uncertainty regarding future demand for oil and related services, as noted by several energy companies, many of whom are customers of our E&P operations. These companies have written down the values of their oil and gas assets in anticipation of the potential for the decarbonization of their energy product mix given an increased global focus on reducing greenhouse gases and addressing climate change. Such uncertainty regarding global demand has had a significant impact on the investment and operating plans of our E&P waste customers in the basins where we operate. If the prices of crude oil ~~has declined precipitously~~ and ~~currently remains at historic low levels. To the extent that oil prices remain depressed, this~~natural gas substantially decline, it could lead to declines in the level of production activity and demand for our E&P waste ~~services. To the extent that the outlook for future oil prices and resulting demand for our E&P waste~~ services, ~~does not show improvement, this~~which could result in the recognition of impairment charges on our intangible assets and property and equipment associated with our E&P segment. At March 31, 2020, our E&P segment had $832.7 million of property and equipment and $59.6 million of non-goodwill intangible assets. Our operations in the Williston Basin have experienced a higher proportion of decline in demand due to the higher cost of exploration and production in that area. At March 31, 2020, our E&P segment’s operations in the Williston Basin had $376.1 million of property equipment and $2.4 million of non-goodwill intangible assets. We estimate that any future impairment charge associated with our Williston Basin operations could result in a write down of approximately 90% to 95% of the carrying value on the property and equipment and intangible assets.operations.

THE COVID-19 PANDEMIC’S IMPACT ~~OF COVID-19~~ ON OUR RESULTS OF ~~OPERATIONS~~OPERATION

~~During~~March 11, 2021 marked the ~~first quarter of 2020, the coronavirus disease 2019 (“COVID-19”) emerged across North America. According to media reports, the first cases~~one year anniversary of COVID-19 ~~were identified in the United States on January 20, 2020 in Washington State and in Canada on January 27, 2020 in the Province of Ontario. The World Health Organization~~being declared ~~COVID-19~~ a global pandemic ~~on March 11, 2020.~~

by the World Health Organization. The COVID-19 outbreak did not significantly impact our financial results for the quarter ended March 31, 2020. However, the outbreak did begin to cause adverse impacts on our business during March 2020, when we experienced decreasing revenuesrelated economic disruptions largely associated with closures or restrictions put into effect following the onset of the COVID-19 pandemic resulted in declines ~~primarily~~ in solid waste commercial collection, transfer station and landfill volumes, ~~as a result of COVID-19 economic disruptions. In addition,~~ and ~~to a lesser extent,~~roll off activity. Throughout the remaining fiscal year 2020, solid waste ~~roll off~~ revenue ~~was impacted~~and reported volumes largely reflected the pace and shape of the closures and subsequent reopening activity, with the timing and magnitude of recovery varying by market. Reported solid waste volumes in ~~some markets, and year-over-year revenue reductions in our E&P segment resulting primarily from the drop~~2020 turned slightly negative in the ~~value of crude oil due to increased global supplies may also be related to COVID-19. In late February we formed a task force to commence preparedness~~first quarter, were most negative in the event the scope of the COVID-19 outbreak expanded. Protecting the health, safety and welfare of our employees was and remains our first priority, which led to our introduction of various health and safety protocols in early March, including the distribution of safety and preparedness updates, revised policies on employee time off, leaves of absence and short-term disability, modifications to our operations to minimize community spread of COVID-19, and enhanced resources to enable remote working, communications and digital connectivity to help non-frontline employees work from home more efficiently.

In recognition of the Company’s status as an essential services provider, and to reduce employee concerns regarding income, healthcare and family obligations, we implemented a supplemental pay bonus for frontline employees representing 80% of our workforce, emergency wages for employees out-of-work due to COVID-19 and extended benefits coverage in markets where reductions in customer activity have impacted employee hours. In addition, we expanded our Employee Relief Fund and initiated the Waste Connections Scholarship Program to help employee children achieve their vocational, technical and university education goals. These actions increased our cost of operations nominally in the quarter and will further impact the second quarter, ~~of 2020. We also implemented a number of measures to reduce our operating costs~~ and ~~preserve cash, which included hiring limitations, wage freezes for all managers and region and corporate personnel, restrictions on travel, group meetings and other discretionary spending, and~~showed sequential improvement during the ~~suspension~~second half of the ~~Company’s 401(k) match effective June 1. In addition, we began and intend to continue deferring qualified U.S. payroll and other tax payments as permitted by~~year, finishing the Coronavirus Aid, Relief, and Economic Security Act, which the U.S. government enacted on March 27, 2020. To the extent available, we may utilize similar programs being offered by the federal and provincial governments in Canada. With respect to our liquidity and capital resources, as of March 31, 2020, the Company had $1.2 billion of cash and equivalents and $762.6 million of remaining borrowing capacity under our Credit Agreement, which matures in March 2023. We have since paid down $500 million on the Credit Agreement in conjunction with our monthly loan borrowing and repayment activities and had over $1.2 billion in remaining borrowing capacity as of May 1, 2020 on the revolver under our Credit Agreement. We also reduced our projected capital expenditures for 2020 by approximately $110 million, which we believe, in addition to the cost cutting measures described above, will help offset a portion of the impact associated with the COVID-19-related decreases primarily in commercial collection activity and landfill volumes.year

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~~Based~~at negative 3.1% in the fourth quarter. In the first quarter of 2021, the final period to include comparisons to pre-COVID-19 activity levels on ~~improving weekly operating data, we believe that our April results may reflect the depth of COVID-19-related financial impacts to our business. Our data indicates that the pace of declines in~~a year over year basis, solid waste volumes were down 3.2%, reflecting the strong start to 2020 prior to the onset of the pandemic, compounded by the impact of an extra day in ~~our most affected~~the quarter in 2020 due to leap year, as well as extreme winter weather in many markets ~~peaked~~during February 2021. Solid waste volumes increased 2.6% in ~~late-March~~March 2021 compared to March 2020.

The COVID-19 pandemic also contributed to the decline in demand for and ~~slowed considerably during April. In late April, we saw mid~~the value of crude oil, which impacted E&P drilling activity and resulted in lower E&P waste revenue, with the quarterly run rate decreasing from approximately $60 million in the first quarter of 2020 to ~~high single digit percentage upticks off~~approximately $25 million by the second half of ~~weekly lows in our solid waste landfill volumes~~2020.

Since the onset of the COVID-19 pandemic, protecting the health, welfare and ~~roll-off activity, with over 70% of locations showing improvement. Additionally, about 12%~~safety of our ~~solid waste commercial customers~~employees has been our top priority. Recognizing the potential for financial hardship and 9%other challenges, we looked to provide a safety net for our employees on issues of ~~associated revenue~~income and family health. To that end, in ~~competitive markets~~2020, we ~~track that had suspended or reduced service due~~incurred over $35 million in incremental COVID-19-related costs, primarily supplemental pay for frontline employees. As we continue to support our employees and their families, such costs are expected to continue in 2021, albeit to a lesser extent than in the prior year, as employee COVID-19 ~~have since reached out for either a resumption of service or an increase in frequency. Notwithstanding the trends we experienced in April or any other single month, the ultimate extent of the~~cases and related impacts are similarly abating.

The impact of the COVID-19 ~~outbreak~~pandemic on our business, results of operations, financial condition and cash flows in future periods will depend largely on future developments, including the duration and spread of the outbreak in the U.S. and Canada, ~~its~~the rate of vaccinations, the severity of COVID-19 variants, the actions to contain ~~the novel~~such coronavirus ~~or treat its impact,~~variants, and how quickly and to what extent normal economic and operating conditions can ~~resume, all of which are uncertain and cannot be predicted.~~resume.

CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the condensed consolidated financial statements. As described by the SEC, critical accounting estimates and assumptions are those that may be material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change, and that have a material impact on the financial condition or operating performance of a company. Such critical accounting estimates and assumptions are applicable to our reportable segments. Refer to our most recent Annual Report on Form 10-K for a complete description of our critical accounting estimates and assumptions.

NEW ACCOUNTING PRONOUNCEMENTS

For a description of the new accounting standards that affect us, see Note 3 to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, ~~2020~~2021 AND ~~2019~~2020

The following table sets forth items in our Condensed Consolidated Statements of Net Income in thousands of U.S. dollars and as a percentage of revenues for the periods indicated.

Three Months Ended March 31,


2020

2019

Revenues

$
1,352,404

100.0
%
$
1,244,637

100.0
%
Cost of operations

815,424

60.3

733,690

59.0

Selling, general and administrative

136,052

10.1

132,586

10.7

Depreciation

150,821

11.2

146,847

11.8

Amortization of intangibles

31,638

2.3

30,542

2.4

Impairments and other operating items

1,506

0.1

16,112

1.3

Operating income

216,963

16.0

184,860

14.8

Interest expense

(37,990)

(2.8)

(37,287)

(3.0)

Interest income

2,175

0.2

3,311

0.3

Other income (expense), net

(9,521)

(0.7)

2,661

0.2

Income tax provision

(28,734)

(2.1)

(27,968)

(2.2)

Net income

142,893

10.6

125,577

10.1

Net loss attributable to noncontrolling interests

142

0.0

45

0.0

Net income attributable to Waste Connections

$
143,035

10.6
%
$
125,622

10.1
%


	Three Months Ended March 31,
	2021				2020
Revenues	$	1,395,942	100.0	%	$	1,352,404	100.0	%
Cost of operations		825,920	59.2			815,424	60.3
Selling, general and administrative		141,422	10.1			136,052	10.1
Depreciation		157,402	11.3			150,821	11.2
Amortization of intangibles		32,192	2.3			31,638	2.3
Impairments and other operating items		634	0.0			1,506	0.1
Operating income		238,372	17.1			216,963	16.0

Interest expense		(42,425)	(3.0)			(37,990)	(2.8)
Interest income		1,103	0.1			2,175	0.2
Other income (expense), net		3,548	0.2			(9,521)	(0.7)
Income tax provision		(40,291)	(2.8)			(28,734)	(2.1)
Net income		160,307	11.6			142,893	10.6
Net loss attributable to noncontrolling interests		2	0.0			142	0.0
Net income attributable to Waste Connections	$	160,309	11.6	%	$	143,035	10.6	%

Revenues. Total revenues increased ~~$107.8~~$43.5 million, or ~~8.7%~~3.2%, to $1.396 billion for the three months ended March 31, 2021, from $1.352 billion for the three months ended March 31, ~~2020, from $1.245 billion for the three months ended March 31, 2019.~~ 2020.

~~During the three months ended March 31, 2020, incremental revenue from acquisitions~~Acquisitions closed ~~during, or~~ subsequent to the three months ended March 31, ~~2019,~~2020 increased revenues by ~~approximately $64.1 million.~~ $43.7 million for the three months ended March 31, 2021.

Operations that were divested subsequent to March 31, ~~2019~~2020 decreased revenues by ~~approximately $4.5~~$3.2 million for the three months ended March 31, ~~2020.~~2021.

During the three months ended March 31, ~~2020,~~2021, the net increase in prices charged to our customers at our existing operations was ~~$64.5~~$52.2 million, consisting of ~~$63.0~~$55.9 million of core price increases, ~~and $1.5 million from surcharges.~~partially offset by a decrease in surcharges of $3.7 million.

During the three months ended March 31, ~~2020,~~2021, volume decreases in our existing business decreased solid waste revenues by ~~$4.0 million. We estimate that the impact of~~$40.5 million, due primarily to one ~~additional~~less business day in 2021 resulting from leap year occurring in the ~~three months ended March 31, 2020 increased solid waste revenues by approximately $7.0 million. Additionally, we estimate that~~prior year period and the ~~impact of~~ economic disruptions resulting from the COVID-19 ~~during~~pandemic that began in March 2020 and has continued through the ~~three months ended March 31, 2020 reduced~~first quarter of 2021. With the exception of our ~~solid waste volumes by approximately $12.0 million, primarily~~Western segment, the majority of our markets experienced declines in commercial collection, roll off collection, transfer station ~~disposal~~ and landfill ~~municipal solid waste~~volumes, with our Northeastern U.S. and Canada markets the most severely impacted. These declines were partially offset by shelter at home requirements generating additional residential collection volumes and our Western segment’s transfer station and landfill operations recognizing increased volumes from third party collection providers disposing of increased residential collection volumes at our disposal ~~in each of our solid waste segments.~~

The economic disruptions resulting from COVID-19 that began in March 2020 and increased in the second quarter of 2020 are expected to result in continued reductions of solid waste volume during the remainder of 2020.locations.

E&P revenues at facilities owned ~~and fully-operated~~ during the three months ended March 31, 2021 and 2020 ~~and 2019~~ decreased ~~by $3.9~~$34.7 million. ~~This decrease in revenues was due primarily to a year over year decrease~~Decreases in the ~~Williston Basin and Eagle Ford Basin, partially offset by higher activity in the Permian Basin and the Gulf of Mexico. Overall~~ demand for ~~E&P waste services and related drilling and production activity levels were impacted by~~crude oil as a result of economic disruptions from the COVID-19 pandemic resulted in a drop in the value of crude oil, due to the increased supply of oil resulting from Saudi Arabia and Russia abandoning production quotas and increasing production levels that was exacerbated by the impact of COVID-19. We estimate that the reduction in oil prices that began in March 2020 resulting from these developments caused a decreasedecreases in drilling and production activity ~~reducing the~~levels and decreases in overall demand for our E&P waste ~~services in certain basins in which we operate and contributing to an approximate $2.0 million decrease in our E&P revenues.~~services.

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~~A decrease~~An increase in the average Canadian dollar to U.S. dollar currency exchange rate resulted in ~~a decrease~~an increase in revenues of ~~$1.7~~$10.3 million for the three months ended March 31, ~~2020.~~2021. The average Canadian dollar to U.S. dollar exchange rates on our Canadian revenues were ~~0.7447~~0.7898 and ~~0.7523~~0.7447 in the three months ended March 31, 2021 and 2020, ~~and 2019,~~ respectively.

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Revenues from sales of recyclable commodities at facilities owned during the three months ended March 31, 2021 and 2020 ~~and 2019 decreased $4.4~~increased $11.3 million due primarily to ~~decreased~~higher prices for old corrugated cardboard and other ~~fiber~~paper products and higher volumes collected from residential recycling customers, partially offset by decreased collected commercial recycling volumes caused by economic disruptions resulting from ~~a reduction in overseas demand.~~ the COVID-19 pandemic.

Other revenues ~~decreased~~increased by ~~$2.3~~$4.4 million during the three months ended March 31, ~~2020,~~2021, due primarily to a ~~reduction in intermodal cargo volumes and a reduction in the~~$6.0 million increase resulting from higher prices for renewable energy credits associated with the generation of landfill gas at our Canada ~~segment.~~ segment and a $0.5 million increase in other non-core revenue sources, partially offset by a $2.1 million decrease in intermodal revenues due primarily to customer losses resulting in a reduction in intermodal cargo volumes.

Cost of Operations. Total cost of operations increased ~~$81.7~~$10.5 million, or ~~11.1%~~1.3%, to $825.9 million for the three months ended March 31, 2021, from $815.4 million for the three months ended March 31, ~~2020, from $733.7 million for the three months ended March 31, 2019.~~2020. The increase was primarily the result of ~~$39.9~~$24.1 million of additional operating costs from acquisitions closed ~~during, or~~ subsequent to the three months ended March 31, ~~2019~~2020 and an increase in operating costs at our existing operations of $47.4 million, assuming foreign currency parity, partially offset by a decrease in operating costs of $4.8 million at operations divested during, or subsequent to, the three months ended March 31, 2019 and a decrease of $0.8$5.6 million resulting from ~~a decrease~~an increase in the average foreign currency exchange rate in effect during the comparable reporting ~~periods.~~

~~The increase~~periods, partially offset by a decrease in operating costs at our existing operations of ~~$47.4~~$17.2 million, assuming foreign currency parity, and a decrease in operating costs of $2.0 million at operations divested subsequent to the three months ended March 31, 2020.

The decrease in operating costs, assuming foreign currency parity, at our existing operations for the three months ended March 31, 2021, included the following declines totaling $19.6 million attributable to solid waste and E&P volume losses resulting from the impact of the COVID-19 pandemic: a decrease in direct labor expenses at our Southern and Eastern segments and our E&P operations of $5.8 million due to headcount reductions, a decrease in third-party disposal expenses at our Eastern, Southern, Central and Canada segments of $4.5 million, a decrease in equipment and facility maintenance and repair expenses at our Eastern segment and E&P operations of $3.6 million, a decrease in diesel fuel expense of $2.7 million, a decrease in subcontracted E&P operating expenses of $2.1 million and a decrease in expenses for processing recyclable commodities at our Eastern segment of $0.9 million due to a decrease in commercial recycling volumes collected.

The remaining increase in operating costs, assuming foreign currency parity, at our existing operations of $2.4 million for the three months ended March 31, ~~2020, assuming foreign currency parity, was comprised~~2021 consisted of an increase in employee medical benefits expenses of $3.6 million due to an increase in medical visits, an increase in labor expenses of ~~$17.8~~$3.1 million at our Western and Central segments due primarily to employee pay ~~rate~~ increases ~~and an additional calendar and business day~~exceeding the benefit in the current year period of one less calendar and business day due to leap year as well as supplemental pay, emergency wages and other COVID-19-related employee costs, an increase in expenses for auto and workers’ compensation claims of $10.1 million due primarily to higher claims severity in the current year period and non-recurring adjustments recorded in the prior year period to decrease projected losses on outstanding claims, an increase in truck, container, equipment and facility maintenance and repair expenses of $9.3 million due to parts and service rate increases and variability impacting the timing of major repairs, an increase in third party disposal expenses of $3.9 million due primarily to disposal rate increases and roll off collection volume increases in certain markets, an increase in third-party trucking and transportation expenses in our solid waste markets of $3.3 million due primarily to increased landfill special waste volumes we received requiring outsourced transportation expenses and increased rates charged by third parties to provide trucking and transportation services, an increase in taxes on revenues of $3.2 million due primarily to increased revenues in our solid waste markets, an increase of $1.2 million resulting from higher costs per ton charged by third party processors of recyclable commodities, an increase in leachate disposal expenses of $1.1 million due to precipitation generating higher leachate volumes, an increase in property tax expenses of $1.1 million due primarily to changes in property valuation assessments and nonrecurring property tax credits recordedoccurring in the prior year period, an increase in ~~landfill monitoring, environmental compliance and daily cover expenses~~subcontracted hauling services at our solid waste operations of ~~$1.0~~$2.4 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in cash incentive compensation to non-management personnel of $2.2 million to recognize the services they are providing during the COVID-19 pandemic as essential workers, an increase in third party disposal expenses in our Western segment of $1.7 million due primarily to increased ~~compliance requirements under our landfill operating permits~~residential collection volumes requiring disposal at third party facilities and ~~$0.7~~$1.0 million of other net expense increases, partially offset by a decrease in ~~insurance premiums~~expenses for auto and workers’ compensation claims of ~~$2.2~~$8.0 million due primarily to higher claims severity in the prior year ~~amount including~~period and adjustments recorded in the ~~impact of additional expenses resulting from premium audits,~~current year period to decrease projected losses on outstanding claims originally recorded prior to 2021, a decrease in ~~third party trucking and transportation~~intermodal rail expenses ~~in our E&P segment~~ of ~~$1.7~~$1.8 million due to ~~changes~~customer losses resulting in ~~customer mix~~a reduction in cargo volume, a decrease in leachate disposal expenses of $1.0 million due to increased on-site treatment of leachate and the ~~Williston Basin that resulted~~prior year period incurring higher costs to dispose of leachate in ~~us reducing the scope of these services~~newly constructed landfill cells and a decrease in ~~compressed natural gas expense~~expenses for processing recyclable commodities in our Western segment of ~~$1.4~~$0.8 million due ~~primarily~~ to ~~the recognition~~increased recyclable commodity values resulting in ~~2020 of tax credits associated with the purchase of compressed natural gas.~~price reductions charged by third-party recycling processors.

Cost of operations as a percentage of revenues ~~increased 1.3~~decreased 1.1 percentage points to 59.2% for the three months ended March 31, 2021, from 60.3% for the three months ended March 31, ~~2020, from 59.0% for the three months ended March 31, 2019.~~2020. The ~~increase~~decrease as a percentage of revenues consisted of a 0.7 percentage point ~~increase~~decrease from ~~an increase~~a reduction in expenses for auto and workers’ compensation claims, a ~~0.5~~0.3 percentage point ~~increase~~decrease from the impact of an additional calendar and business day in the current year period due to leap year, a 0.4 percentage point increase from higher labor expenses, a 0.4 percentage point increase from higherlower maintenance and repair expenses, and a 0.3 percentage point increase from the net impact of cost of operations expenses from acquisitions closed during, or subsequent to, the three months ended March 31, 2019, partially offset by a 0.3 percentage point decrease associated with trucking and transportation expenses, primarily attributable to our E&P segment, a 0.2 percentage point decrease from ~~a decrease in insurance premiums,~~lower disposal expenses, a 0.2 percentage point decrease ~~resulting~~ from lower diesel fuel expenses and a 0.2 percentage point decrease from leveraging existing personnel to support certain price-led revenue increases, partially offset by a 0.2 percentage point increase from the accrual of cash incentive compensation to non-management personnel, a 0.2 percentage point increase from higher employee medical benefits expenses and a 0.1 percentage point increase from all other net changes.

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~~decreased compressed natural gas expenses and leveraging decreases in per gallon diesel fuel costs and a 0.3 percentage point decrease from all other net changes.~~

SG&A. SG&A expenses increased ~~$3.5~~$5.3 million, or ~~2.6%~~3.9%, to $141.4 million for the three months ended March 31, 2021, from $136.1 million for the three months ended March 31, ~~2020, from $132.6 million for the three months ended March 31, 2019.~~2020. The increase was comprised of ~~$3.5~~$3.0 million of additional SG&A expenses from operating locations at acquisitions closed ~~during, or~~ subsequent to the three months ended March 31, ~~2019 and~~2020, an increase of ~~$0.2~~$1.5 million in SG&A expenses at our existing operations, assuming foreign currency parity, ~~partially offset by a decrease of $0.2~~and $1.0 million resulting from ~~a decrease~~an increase in the average foreign currency exchange rate in effect during the comparable reporting ~~periods.~~periods, partially offset by a decrease in SG&A expenses of $0.2 million at operations divested subsequent to the three months ended March 31, 2020.

The increase in SG&A expenses at our existing operations, assuming foreign currency parity, of ~~$0.2~~$1.5 million for the three months ended March 31, ~~2020~~2021, was comprised of an increase ~~of $3.3 million~~ in ~~equity-based~~deferred compensation expenses ~~associated with the current year period adjustment~~ of Waste Connections, Inc. common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, an increase in accrued recurring cash incentive compensation expense to our management of $3.1 million, an increase in payroll expenses of $2.4$5.7 million as a result of ~~annual pay~~ increases an increase in expenses for uncollectible accounts receivable of $1.2 million due to the prior year period having a higher amount of recoveries of prior period accounts receivable previously deemed uncollectible, an increase in software licenses and subscriptions expenses of $1.0 million due primarily to the addition of new sales and customer service applications and $1.0 million of other net expense increases, partially offset by a decrease in deferred compensation expenses of $6.5 million as a result of decreases in the market value of investments to which employee deferred compensation liability balances are tracked, ~~a decrease~~an increase in ~~equity-based~~accrued recurring cash incentive compensation expense to our management of $5.0 million, an increase in professional fees of $1.6 million due primarily to adjustments recorded during the prior year period to reduce estimated accrued liabilities associated with unbilled legal services, an increase in share-based compensation expenses of ~~$3.8~~$1.2 million ~~associated with~~due primarily to increased average share price values in the current period for equity awards accounted for as liabilities that were granted to employees of Progressive Waste prior to June 1, 2016 which are subject to valuation adjustments each period based on changes in fair value and an increase in employee medical benefits expenses of $1.2 million due to ~~decreases~~an increase in ~~both~~medical visits, partially offset by a collective decrease in travel, meeting, training and community activity expenses of $6.0 million from shelter at home and other restrictions on our employees due to the ~~number~~COVID-19 pandemic resulting in the cancellation of ~~outstanding awards and the per share valuation of our common shares and~~non-essential off-site activities, a ~~further~~ decrease in equity-based compensation expenses of ~~$1.5~~$3.4 million ~~resulting primarily from non-recurring~~associated with an adjustment during the prior year period ~~adjustments~~of our common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, a decrease in expenses for uncollectible accounts receivable of $0.8 million primarily due to collections in the current period of customer accounts deemed uncollectible in prior periods, a decrease in office supplies and office utilities of $0.7 million due to office closures resulting from shelter at home restrictions, a decrease in direct acquisition expenses of $0.6 million due to a decrease in acquisition activity in the comparable periods, a decrease in equity-compensation expenses of $0.6 million due primarily to a decrease in the amount of performance-based restricted share units granted in ~~2017 that were~~2019 and 2020 estimated to ultimately ~~vest.~~vest based on the achievement of required financial performance results and $1.1 million of other net expense decreases.

SG&A ~~expenses~~ as a percentage of revenues ~~decreased 0.6~~was 10.1% for both the three months ended March 31, 2021 and 2020. SG&A remained unchanged as a percentage ~~points~~of revenues as a result of a 0.4 percentage point decrease from a reduction in travel, meeting, training and community activity expenses, a 0.3 percentage point decrease from a reduction in equity-based compensation expenses associated with the designation of our common shares held in our deferred compensation plan and a 0.1 percentage point decrease from the net impact of SG&A expenses from acquisitions closed subsequent to ~~10.1%~~the three months ended March 31, 2020, partially offset by a 0.4 percentage point increase from cash incentive compensation expenses and a 0.4 percentage point increase from deferred compensation expenses.

Depreciation. Depreciation expense increased $6.6 million, or 4.4%, to $157.4 million for the three months ended March 31, ~~2020,~~2021, from 10.7% for the three months ended March 31, 2019. The decrease as a percentage of revenues consisted of a 0.5 percentage point decrease from lower deferred compensation expenses, a 0.2 percentage point decrease from leveraging existing SG&A personnel to support our growth and a 0.1 percentage point decrease from lower equity-based compensation expenses, partially offset by a 0.1 percentage point increase from higher cash incentive compensation expense and a 0.1 percentage point increase from all other changes.

~~Depreciation. Depreciation expense increased $4.0 million, or 2.7%, to~~ $150.8 million for the three months ended March 31, ~~2020, from $146.8 million for the three months ended March 31, 2019.~~2020. The increase was comprised of $5.0 million of depreciation ~~and depletion expense of $6.1 million~~ from acquisitions closed during, or subsequent to, the three months ended March 31, 2019, partially offset by a decrease in depreciation expense at our existing operations of $1.4 million due primarily to the impact of certain equipment acquired from the Progressive Waste acquisition becoming fully depreciated subsequent to March 31, 2019 exceeding the impact of additions to our fleet and equipment purchased to support our existing operations, ~~a decrease in~~depreciation and depletion expense of ~~$0.5~~$4.0 million ~~at our existing landfills due primarily~~from acquisitions closed subsequent to ~~a decrease in E&P~~the three months ended March 31, 2020 and ~~municipal solid waste volumes and a decrease of $0.2~~$1.1 million resulting from ~~a decrease~~an increase in the average foreign currency exchange rate in effect during the comparable reporting ~~periods.~~periods, partially offset by a decrease in depletion expense of $2.7 million primarily at our E&P landfills as a decrease in demand for oil has resulted in decreased levels of oil and natural gas exploration and production activity and a corresponding decrease in disposal volumes and a decrease in depreciation and depletion expense of $0.8 million from operations divested subsequent to the three months ended March 31, 2020.

Depreciation expense as a percentage of revenues ~~decreased 0.6~~increased 0.1 percentage points to 11.3% for the three months ended March 31, 2021, from 11.2% for the three months ended March 31, ~~2020, from 11.8% for the three months ended March 31, 2019.~~2020. The ~~decrease~~increase as a percentage of revenues consisted of a ~~0.4~~0.3 percentage point ~~decrease~~increase from depreciation expense attributable to ~~certain~~the impact of additions to our fleet and equipment, ~~acquired from the Progressive Waste acquisition becoming fully depreciated subsequent to March 31, 2019 and~~partially offset by a 0.2 percentage point decrease ~~resulting~~ from depletion expense due to declines in E&P ~~and~~ landfill ~~municipal solid waste~~ volumes.

~~Amortization of Intangibles~~. Amortization of intangibles expense increased $1.1 million, or 3.6%, to $31.6 million for the three months ended March 31, 2020, from $30.5 million for the three months ended March 31, 2019. The increase was the result of $4.5 million from intangible assets acquired in acquisitions closed during, or subsequent to, the three

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Amortization of Intangibles. Amortization of intangibles expense increased $0.6 million, or 1.8%, to $32.2 million for the three months ended March 31, ~~2019, partially offset by a decrease~~2021, from $31.6 million for the three months ended March 31, 2020. The increase was the result of ~~$3.3~~$2.8 million from ~~certain~~ intangible assets ~~becoming fully amortized~~acquired in acquisitions closed subsequent to the three months ended March 31, ~~2019~~2020 and ~~a decrease of $0.1~~$0.3 million ~~resulting~~ from ~~a decrease~~an increase in the average foreign currency exchange rate in effect during the comparable reporting ~~periods.~~periods, partially offset by a decrease of $2.4 million from certain intangible assets becoming fully amortized subsequent to March 31, 2020 and a decrease of $0.1 million from operations divested subsequent to the three months ended March 31, 2020.

Amortization expense as a percentage of revenues ~~decreased 0.1 percentage points to~~was 2.3% for both the three months ended March 31, ~~2020, from 2.4% for the three months ended March 31, 2019.~~2021 and 2020.

Impairments and Other Operating Items. Impairments and other operating items decreased ~~$14.6~~$0.9 million, to net losses totaling $0.6 million for the three months ended March 31, 2021, from net losses totaling $1.5 million for the three months ended March 31, ~~2020, from~~2020.

The net losses ~~totaling $16.1~~of $0.6 million ~~for~~recorded during the three months ended March 31, ~~2019.~~2021 consisted of $0.5 million of charges to terminate or write off the carrying cost of certain contracts that were not, or are not expected to be, renewed prior to their original estimated termination date and $0.1 million of other net charges.

The net losses of $1.5 million recorded during the three months ended March 31, 2020 consisted of $0.9 million of charges to terminate or write off the carrying cost of certain contracts that were not, or ~~are~~were not expected to be, renewed prior to their original estimated termination date and $0.6 million of other net charges.

~~The net losses of $16.1~~Operating Income. Operating income increased $21.4 million, ~~recorded during~~or 9.9%, to $238.4 million for the three months ended March 31, 2019 consisted of $12.2 million of charges to terminate or write off the carrying cost of certain contracts, primarily acquired in the Progressive Waste acquisition, that were not renewed prior to their original estimated termination date, a $1.5 million expense charge to increase the fair value of amounts payable under liability-classified contingent consideration arrangements2021, from acquisitions closed in periods prior to 2018 and $2.5 million of losses on property and equipment that were disposed of through sales or as a result of being damaged in operations, partially offset by $0.1 million of other gains.

~~Operating Income. Operating income increased $32.1 million, or 17.4%, to~~ $217.0 million for the three months ended March 31, ~~2020,~~2020. The increase was due primarily to price increases for our solid waste services, operating income contributions from ~~$184.9 million for~~increased sales of recyclable commodities and renewable energy credits associated with the generation of landfill gas, operating income generated from acquisitions closed subsequent to the three months ended March 31, ~~2019. The~~2020 and an increase ~~was primarily attributable~~in the average Canadian dollar to ~~price-led growth~~U.S. dollar currency exchange rate, partially offset by declines in our existing solid waste ~~business, a decrease in impairments~~ and ~~other operating charges and operating income generated~~E&P volumes resulting from ~~acquisitions.~~the impact of the COVID-19 pandemic.

Operating income as a percentage of revenues increased ~~1.2~~1.1 percentage points to 17.1% for the three months ended March 31, 2021, from 16.0% for the three months ended March 31, ~~2020, from 14.8% for the three months ended March 31, 2019.~~2020. The increase as a percentage of revenues was comprised of a ~~1.2~~1.1 percentage point ~~decrease~~increase in cost of operations and a 0.1 percentage point increase in impairments and other operating items, ~~a 0.6 percentage point decrease in SG&A expense, a 0.6 percentage point decrease in depreciation expense and~~partially offset by a 0.1 percentage point decrease in ~~amortization expense, partially offset by a 1.3 percentage point increase in cost of operations.~~depreciation expense.

Interest Expense. Interest expense increased ~~$0.7~~$4.4 million, or ~~1.9%~~11.7%, to $42.4 million for the three months ended March 31, 2021, from $38.0 million for the three months ended March 31, ~~2020, from $37.3 million for the three months ended March 31, 2019.~~2020. The increase was primarily attributable to an increase of ~~$4.4~~$3.0 million from the ~~April 2019~~March 2020 issuance of our ~~2029~~2050 Senior Notes (as defined below), an increase of ~~$3.0~~$2.0 million from higher net interest rates on borrowings outstanding under our Credit Agreement due primarily to $600 million in interest rate swap agreements commencing in October 2020 at higher interest rates than $575 million in interest rate swap agreements which expired between September 2020 and October 2020, an increase of $0.9 million from the January 2020 issuance of our 2030 Senior Notes (as defined below) and ~~an increase~~$0.6 million of ~~$0.8 million from the March 2020 issuance of our 2050 Senior Notes,~~other net increases, partially offset by a decrease of ~~$5.1~~$2.1 million due to a ~~decrease~~reduction in the average borrowings outstanding under our Credit ~~Agreement, a decrease of $2.3 million from the repayment of our 2019 Senior Notes and $0.1 million of other net decreases.~~Agreement.

Interest Income. Interest income decreased $1.1 million to $1.1 million for the three months ended March 31, 2021, from $2.2 million for the three months ended March 31, ~~2020, from $3.3 million for the three months ended March 31, 2019.~~2020. The decrease was primarily attributable to lower reinvestment rates in the current period.

Other Income (Expense), Net. Other income (expense) ~~decreased $12.2~~, net increased $13.0 million, to an income total of $3.5 million for the three months ended March 31, 2021, from an expense total of $9.5 million for the three months ended March 31, ~~2020, from an~~2020.

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Other income ~~total~~ of ~~$2.7~~$3.5 million ~~for~~recorded during the three months ended March 31, ~~2019. The decrease was due primarily to a $6.6~~2021 consisted of $1.2 million ~~decrease in the value~~ of income earned on investments purchased to fund our employee deferred compensation obligations, $1.2 million of adjustments to decrease certain accrued liabilities acquired in prior period acquisitions, an increase in foreign currency transaction gains of $0.7 million due to ~~stock market valuation declines,~~an increase in the value of the Canadian dollar and a $0.4 million increase in other net income sources.

Other expense of $9.5 million recorded during the three months ended March 31, 2020 consisted of $4.7 million of losses on investments purchased to fund our employee deferred compensation obligations, a $3.0 million adjustment to increase certain accrued liabilities acquired in the 2016 Progressive Waste acquisition and ~~a $2.6 million decrease~~an increase in foreign currency transaction ~~gains~~losses of $2.5 million due to a ~~decline~~decrease in the value of the Canadian ~~dollar.~~dollar, partially offset by a $0.7 million increase in other income sources.

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Income Tax Provision. Income taxes increased ~~$0.7~~$11.6 million, or 36.4%, to $40.3 million for the three months ended March 31, 2021, from $28.7 million for the three months ended March 31, ~~2020, from $28.0 million~~2020. Our effective tax rate for the three months ended March 31, ~~2019.~~2021 was 20.1%. Our effective tax rate for the three months ended March 31, 2020 was 16.7%. ~~Our effective tax rate for the three months ended March 31, 2019 was 18.2%.~~

The income tax provision for the three months ended March 31, ~~2020~~2021 included a benefit of ~~$5.1~~$2.0 million from share-based payment awards being recognized in the income statement when settled, as well as a portion of our internal financing being taxed at effective rates substantially lower than the U.S. federal statutory rate.

The income tax provision for the three months ended March 31, ~~2019~~2020 included a benefit of ~~$5.0~~$5.1 million from share-based payment awards being recognized in the income statement when settled, ~~and~~as well as a portion of our internal financing being taxed at effective rates substantially lower than the U.S. federal statutory rate.

SEGMENT RESULTS

General

No single contract or customer accounted for more than 10% of our total revenues at the consolidated or reportable segment level during the periods presented. The following table disaggregates our revenue by service line for the periods indicated (dollars in thousands of U.S. dollars).

Three Months Ended March 31,

2020

2019
Commercial

$
416,507

$
381,509
Residential

365,731

322,404
Industrial and construction roll off

206,771

187,440
Total collection

989,009

891,353
Landfill

266,218

244,601
Transfer

180,765

161,191
Recycling

18,108

19,804
E&P

65,377

66,830
Intermodal and other

30,018

32,837
Intercompany

(197,091)

(171,979)
Total

$
1,352,404

$
1,244,637


		Three Months Ended March 31,
	2021		2020
Commercial	$	426,395	$	416,507
Residential		400,819		365,731
Industrial and construction roll off		209,258		206,771
Total collection		1,036,472		989,009
Landfill		271,936		266,218
Transfer		189,323		180,765
Recycling		32,448		18,108
E&P		28,012		65,377
Intermodal and other		35,634		30,018
Intercompany		(197,883)		(197,091)
Total	$	1,395,942	$	1,352,404

Our Chief Operating Decision Maker evaluates operating segment profitability and determines resource allocations based on several factors, of which the primary financial measure is segment EBITDA. We define segment EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and other operating items and other income (expense). Segment EBITDA is not a measure of operating income, operating performance or liquidity under GAAP and may not be comparable to similarly titled measures reported by other companies. Our management uses segment EBITDA in the evaluation of segment operating performance as it is a profit measure that is generally within the control of the operating segments.

~~We manage~~36

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Prior to July 2020, we managed our operations through five geographic solid waste operating segments and our E&P segment, which ~~includes~~were also our reportable segments. As of July 2020, our Chief Operating Decision Maker determined that the ~~majority~~E&P and Southern operating segments met all of the aggregation criteria and eliminated our E&P segment by combining all operations of the E&P segment into the Southern segment. After giving effect to this combination, our reportable segments consist of our ~~E&P waste treatment and disposal operations. Our~~ five geographic ~~solid waste~~ operating segments and ~~our~~no longer include a separate E&P ~~segment comprise our reportable segments.~~segment. Each operating segment is responsible for managing several vertically integrated operations, which are comprised of districts. The segment information presented herein reflects the realignment of these districts. Segment results for the 2020 periods reflected in this report have been reclassified to reflect the realignment of our reportable segments for comparison with the same period in 2021.

At March 31, ~~2020,~~2021, under the current orientation, our Southern segment services customers located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Dakota, southern Oklahoma, western Tennessee, Texas, Wyoming and along the Gulf of Mexico; our Eastern segment services customers located in Delaware, northern Illinois, Kentucky, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, eastern Tennessee, Vermont, Virginia and Wisconsin; ~~our Southern segment services customers located in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, southern Oklahoma, western Tennessee and Texas;~~ our Western segment services customers located in Alaska, California, Idaho, Montana, Nevada, Oregon, Washington and western Wyoming; our Central segment services customers located in Arizona, Colorado, southern Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Oklahoma, South Dakota, western Texas, Utah and eastern Wyoming; and our Canada segment services

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customers located in the state of Michigan and in the provinces of Alberta, British Columbia, Manitoba, Ontario, Québec and Saskatchewan. ~~The E&P segment services E&P customers located in Louisiana, New Mexico, North Dakota, Oklahoma, Texas, Wyoming and along the Gulf of Mexico.~~

Revenues, net of intercompany eliminations, for our reportable segments are shown in the following table in thousands of U.S. dollars and as a percentage of total revenues for the periods indicated:

Three Months Ended March 31,


2020

2019

Eastern

$
332,202

24.6
%
$
292,827

23.5
%
Southern

309,387

22.9

287,329

23.1

Western

271,981

20.1

254,979

20.5

Central

208,542

15.4

177,877

14.3

Canada

170,423

12.6

168,347

13.5

E&P

59,869

4.4

63,278

5.1

$
1,352,404

100.0
%
$
1,244,637

100.0
%


	Three Months Ended March 31,
	2021				2020
Southern	$	338,161	24.2	%	$	369,256	27.3	%
Eastern		336,461	24.1			332,202	24.6
Western		297,004	21.3			271,981	20.1
Central		235,386	16.9			208,542	15.4
Canada		188,930	13.5			170,423	12.6
	$	1,395,942	100.0	%	$	1,352,404	100.0	%

Segment EBITDA for our reportable segments is shown in the following table in thousands of U.S. dollars and as a percentage of segment revenues for the periods indicated:

Three Months Ended March 31,


2020

2019

Eastern

$
84,662

25.5
%
$
76,957

26.3
%
Western

81,029

29.8
%

77,005

30.2
%
Southern

74,517

24.1
%

74,377

25.9
%
Central

73,151

35.1
%

63,027

35.4
%
Canada

59,398

34.9
%

59,244

35.2
%
E&P

31,802

53.1
%

31,609

50.0
%
Corporate^(a)

(3,631)

—

(3,858)

—

$
400,928

29.6
%
$
378,361

30.4
%


	Three Months Ended March 31,
	2021				2020
Western	$	93,825	31.6	%	$	81,029	29.8	%
Southern		93,424	27.6	%		106,319	28.8	%
Eastern		89,121	26.5	%		84,662	25.5	%
Central		79,040	33.6	%		73,151	35.1	%
Canada		73,940	39.1	%		59,398	34.9	%
Corporate^(a)		(750)	—			(3,631)	—
	$	428,600	30.7	%	$	400,928	29.6	%

(a)

The majority of Corporate ~~functions include accounting, legal, tax, treasury, information technology, risk management, human resources, training, direct~~expenses are allocated to the five operating segments. Direct acquisition expenses, expenses associated with common shares held in the deferred compensation plan exchanged for other ~~administrative functions~~investment options and share-based compensation ~~expense~~expenses associated with Progressive Waste share-based grants outstanding at June 1, 2016 that were continued by the ~~Company. Amounts reflected~~Company are ~~net of allocations~~not allocated to the ~~six~~five operating ~~segments.~~segments and comprise the net EBITDA for our Corporate segment for the periods presented.

A reconciliation of segment EBITDA to Income before income tax provision is included in Note 1110 to our Condensed Consolidated Financial Statements included in Part 1, Item 1 of this report.

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Significant changes in revenue and segment EBITDA for our reportable segments for the three month periods ended March 31, ~~2020,~~2021, compared to the three month periods ended March 31, ~~2019,~~2020, are discussed below:

Segment Revenue

Revenue in our Southern segment decreased $31.1 million, or 8.4%, to $338.2 million for the three months ended March 31, 2021, from $369.3 million for the three months ended March 31, 2020. The components of the decrease consisted of a decline in revenue at our E&P operations of $34.3 million, partially offset by an increase in revenue at our solid waste operations of $3.2 million. The $34.3 million decrease in revenue at our E&P operations was attributable to decreases in the demand for crude oil as a result of economic disruptions from the COVID-19 pandemic resulting in a drop in the value of crude oil, decreases in drilling and production activity levels and decreases in overall demand for our E&P waste services. The components of the $3.2 million increase in revenue at our solid waste operations consisted of net price increases of $13.5 million, higher prices for old corrugated cardboard and other paper products contributing to a $1.6 million increase in sales from recyclable commodities and other revenue increases of $0.3 million, partially offset by solid waste volume decreases of $10.4 million attributable primarily to COVID-19-related economic disruptions driving declines in commercial collection, roll off collection and municipal solid waste landfill volumes and net revenue reductions from divestitures closed subsequent to March 31, 2020 of $1.8 million.

Revenue in our Eastern segment increased ~~$39.4~~$4.3 million, or ~~13.4%~~1.3%, to $336.5 million for the three months ended March 31, 2021, from $332.2 million for the three months ended March 31, ~~2020, from $292.8 million for the three months ended March 31, 2019.~~2020. The components of the increase consisted of net price increases of $13.2 million, net revenue growth from acquisitions closed ~~during, or~~ subsequent to the three months ended March 31, ~~2019,~~2020 of ~~$39.0~~$9.6 million and ~~net price increases of $16.4~~higher prices for old corrugated cardboard and other paper products contributing to a $5.6 million increase in sales from recyclable commodities, partially offset by solid waste volume decreases of ~~$9.8~~$24.1 million attributable primarily to ~~declines~~COVID-19-related economic disruptions in ~~residential volumes due to competitive pressures, reduced landfill municipal solid waste and COVID-19 economic disruptions~~our Northeastern markets driving declines in commercial collection, roll off collection, transfer station and landfill volumes primarily in our East Coast markets, net revenue reductions from divestitures closed subsequent to March 31, 2019 of $3.9 million, decreased recyclable commodity sales of $1.6 million resulting from the impact of declines in prices for old corrugated cardboard and other fiber products and other revenue decreases of $0.7 million.volumes.

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Revenue in our ~~Southern~~Western segment increased ~~$22.1~~$25.0 million, or ~~7.7%~~9.2%, to ~~$309.4~~$297.0 million for the three months ended March 31, ~~2020,~~2021, from $287.3 million for the three months ended March 31, 2019. The components of the increase consisted of net price increases of $16.9 million and net revenue growth from acquisitions closed during, or subsequent to, the three months ended March 31, 2019, of $7.2 million, partially offset by decreased recyclable commodity sales of $0.8 million resulting from the impact of declines in prices for old corrugated cardboard and other fiber products, net revenue reductions from divestitures closed subsequent to March 31, 2019 of $0.6 million and $0.6 million of other revenue decreases.

~~Revenue in our Western segment increased $17.0 million, or 6.7%, to~~ $272.0 million for the three months ended March 31, ~~2020, from $255.0 million for the three months ended March 31, 2019.~~2020. The components of the increase consisted of solid waste volume increases of ~~$9.3~~$9.8 million ~~due~~attributable to ~~the net impact before COVID-19 economic disruptions of increases associated with~~increased residential collection, transfer station and landfill municipal solid waste ~~residential collection and commercial collection offsetting COVID-19 economic disruptions driving deceases in commercial collection, roll off collection and landfill~~ volumes, ~~and~~net revenue growth from acquisitions closed subsequent to the three months ended March 31, 2020 of $8.5 million, net price increases of ~~$8.0~~$7.0 million ~~partially offset by decreased~~and recyclable commodity ~~sales~~revenue increases of ~~$0.3~~$1.8 million ~~resulting from the impact of declines in~~due primarily to higher prices for old corrugated cardboard and ~~other fiber products.~~higher volumes collected from residential recycling customers, partially offset by intermodal revenue decreases of $2.1 million due primarily to customer losses resulting in a reduction in intermodal cargo volumes.

Revenue in our Central segment increased ~~$30.6~~$26.9 million, or ~~17.2%~~12.9%, to $235.4 million for the three months ended March 31, 2021, from $208.5 million for the three months ended March 31, ~~2020, from $177.9 million for the three months ended March 31, 2019.~~2020. The components of the increase consisted of revenue growth from acquisitions closed ~~during, or~~ subsequent to the three months ended March 31, ~~2019,~~2020 of ~~$17.0~~$25.2 million, net price increases of ~~$11.0~~$9.4 million ~~volume~~and other revenue increases of ~~$2.5~~$0.2 million, partially offset by solid waste volume decreases of $6.5 million due to the ~~net~~ impact ~~before COVID-19~~of COVID-19-related economic disruptions ~~of increased~~driving decreases in roll off collection and landfill ~~special~~municipal solid waste ~~offsetting COVID-19 economic disruptions driving decreases in commercial collection, roll off collection and landfill~~ volumes and ~~other~~net revenue ~~increases~~reductions from divestitures closed subsequent to March 31, 2020 of ~~$0.1~~$1.4 million.

Revenue in our Canada segment increased ~~$2.1~~$18.5 million, or ~~1.2%~~10.9%, to $188.9 million for the three months ended March 31, 2021, from $170.4 million for the three months ended March 31, ~~2020, from $168.3 million for the three months ended March 31, 2019.~~2020. The components of the increase consisted of net price increases of $12.2 million and other revenue increases of $0.4 million, partially offset by solid waste volume decreases of $6.1 million attributable primarily to declines in residential volumes due to competitive pressures, reduced landfill municipal solid waste and COVID-19 economic disruptions driving declines in commercial collection, roll off collection and landfill volumes, a decrease of $1.7$10.3 million resulting from a ~~lower~~higher average foreign currency exchange rate in effect during the comparable reporting periods, ~~decreased recyclable commodity sales~~net price increases of ~~$1.4~~$9.2 million, $6.0 million resulting from ~~the impact of declines in~~higher prices for ~~old corrugated cardboard and other fiber products, and a decrease of $1.3 million resulting from reduced demand causing a reduction in the prices for renewal~~renewable energy credits associated with the generation of landfill ~~gas.~~gas, recyclable commodity revenue increases of $2.0 million due primarily to higher prices for old corrugated cardboard and higher volumes collected from residential recycling customers and other revenue increases of $0.3 million, partially offset by solid waste volume decreases of $9.3 million due to the net impact of COVID-19-related economic disruptions driving decreases in commercial collection, roll off and transfer station volumes.

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Segment EBITDA

~~Revenue~~Segment EBITDA in our ~~E&P~~Western segment ~~decreased $3.4~~increased $12.8 million, or ~~5.4%~~15.8%, to ~~$59.9~~$93.8 million for the three months ended March 31, ~~2020,~~2021, from ~~$63.3~~$81.0 million for the three months ended March 31, 2019. The decrease was due primarily to a year over year decrease in the Williston Basin and Eagle Ford Basin, partially offset by higher activity in the Permian Basin and the Gulf of Mexico. Overall demand for E&P waste services and related drilling and production activity levels were impacted by the drop in the value of crude oil due to the increased supply of oil resulting from Saudi Arabia and Russia abandoning production quotas and increasing production levels that was exacerbated by the impact of COVID-19. We estimate that the reduction in oil prices that began in March 2020 resulting from these developments caused a decrease in drilling and production activity, reducing the demand for E&P waste services in certain basins in which we operate and contributing to an approximate $2.0 million decrease in our E&P revenues.

~~Segment EBITDA~~

~~Segment EBITDA in our Eastern segment increased $7.7 million, or 10.0%, to $84.7 million for the three months ended March 31, 2020, from $77.0 million for the three months ended March 31, 2019.~~2020. The increase was due primarily to an increase in revenues of ~~$43.3~~$25.0 million, ~~from organic growth and acquisitions,~~ a decrease in ~~corporate overhead expense allocations~~intermodal rail expenses of ~~$0.6~~$1.8 million due to customer losses resulting in a reduction in cargo volume, a collective decrease in travel, meeting, training, and community activity expenses of $0.9 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, a decrease in expenses for auto and workers’ compensation claims of $0.9 million due primarily to adjustments recorded in the ~~overhead allocation rate~~current year period to decrease projected losses on outstanding claims originally recorded prior to 2021 and ~~an increase~~a decrease in expenses for processing recyclable commodities of $0.8 million due to ~~EBITDA of $0.6 million from the impact of operations disposed of during the three months ended March 31, 2020,~~increased recyclable commodity values resulting in price reductions charged by third-party recycling processors, partially offset by a net ~~$27.5~~$6.3 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in ~~direct and administrative~~corporate overhead expense allocations of $3.7 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in labor expenses of ~~$3.7~~$1.9 million due primarily to employee pay ~~rate~~ increases ~~an increase~~exceeding the benefit in ~~truck, container,~~

~~Table~~the current year period of ~~Contents~~

~~equipment~~one less calendar and ~~facility maintenance and repair expenses of $2.8 million~~business day due to parts and service rate increases and variability impacting the timing of major repairs, an increase in expenses for auto and workers’ compensation claims of $1.4 million due primarily to non-recurring adjustments recordedleap year occurring in the prior year period, to decrease projected losses on outstanding claims, an increase in leachate disposal expenses of $0.5 million due to increased leachate volumes at a new landfill cell constructed subsequent to March 31, 2019 and $0.9 million of other net expense increases.

Segment EBITDA in our Western segment increased $4.0 million, or 5.2%, to $81.0 million for the three months ended March 31, 2020, from $77.0 million for the three months ended March 31, 2019. The increase was due primarily to an increase in revenues of $17.0 million and a decrease in corporate overhead expense allocations of $1.0 million due to a decrease in the overhead allocation rate, partially offset by an increase in direct and administrative labor expenses of $4.1 million due primarily to employee pay rate increases, an increase in third party disposal expenses of ~~$2.1~~$1.7 million due primarily to increased residential collection volumes requiring disposal ~~rate increases and roll off collection volume increases in certain markets, an increase in taxes on revenues of $1.8 million due primarily to higher landfill and collection revenues,~~at third party facilities, an increase in third-party trucking and transportation expenses of $1.2 million due primarily to ~~increased rates charged~~higher residential collection tonnage increasing transfer station volumes and landfill volumes in certain markets that require transportation services to our disposal sites, an increase in employee medical benefits expenses of $1.0 million due to an increase in medical visits and other expense increases of $0.8 million.

Segment EBITDA in our Southern segment decreased $12.9 million, or 12.1%, to $93.4 million for the three months ended March 31, 2021, from $106.3 million for the three months ended March 31, 2020. The decrease was due to a decline in E&P revenues of $34.3 million, an increase in corporate overhead expense allocations to our solid waste operations of $3.5 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in subcontracted hauling services at our solid waste operations of $2.7 million due to outsourcing the servicing of certain non-strategic contracts and commercial collection customers to third party haulers, an increase in employee medical benefits expenses of $1.4 million due to an increase in medical visits and a decrease to EBITDA of $0.9 million from operations disposed of subsequent to the three months ended March 31, 2020, partially offset by ~~third parties to provide trucking, an increase~~a decrease in expenses for auto and workers’ compensation claims of ~~$1.2~~$6.4 million at our solid waste operations due primarily to ~~non-recurring~~higher claims severity in the prior year period and adjustments recorded in the ~~prior~~current year period to decrease projected losses on outstanding claims originally recorded prior to 2021, an increase in revenues at our solid waste operations of $5.0 million from organic growth and acquisitions, a decrease in labor expenses of $2.3 million due primarily to one less calendar and business day in the current year period due to leap year in the prior year period and a decrease in employee hours worked due to commercial and roll off collection volume declines, a decrease in third party disposal expenses at our solid waste operations of $1.7 million due primarily to declines in commercial and roll off collection volumes, a collective decrease in travel, meeting, training, and community activity expenses at our solid waste operations of $1.0 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, a decrease in fuel expense at our solid waste operations of $0.9 million due to declines in the volume of fuel used in our operations, a net $1.2 million decrease in all other expenses at our solid waste operations and the following expense decreases at our E&P operations which were directly attributable to the decline in E&P volumes and corresponding decline in E&P revenues: a decrease in labor expenses of $3.0 million, a decrease in operating activities outsourced to third-parties of $2.1 million, a decrease in equipment and property repair and maintenance expenses of $2.1 million, a decrease in corporate overhead expense allocations of $0.7 million as the calculation of the overhead allocation rate from corporate is based upon revenues, a decrease in equipment rental expenses of $0.6 million, a decrease in fuel expense of $0.5 million, a decrease in royalty expenses paid on revenues of $0.5 million, a decrease in travel, meetings and training expenses of $0.5 million, a decrease in third-party trucking and transportation services of $0.4 million, a decrease in landfill operating supplies of $0.4 million and $0.6 million of other net expense decreases.

Segment EBITDA in our Eastern segment increased $4.4 million, or 5.3%, to $89.1 million for the three months ended March 31, 2021, from $84.7 million for the three months ended March 31, 2020. The increase was due primarily to an increase in revenues of $4.3 million, a decrease in third-party trucking and transportation expenses of $1.7 million attributable to declines in commercial and roll off collection volumes requiring third-party transportation services, a

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decrease in labor expenses of $1.5 million due to lower headcount resulting from ~~higher costs per ton charged by third party processors~~reductions in the number of ~~recyclable commodities, an increase~~routes needed to service our collection customers, a decrease in truck, container, equipment and facility maintenance and repair expenses of ~~$0.9 million due to parts and service rate increases and variability impacting the timing of major repairs and $1.8 million of other net expense increases.~~

Segment EBITDA in our Southern segment increased $0.1 million, or 0.2%, to $74.5 million for the three months ended March 31, 2020, from $74.4 million for the three months ended March 31, 2019. The increase was due to an increase in revenues of $22.1 and a decrease in corporate overhead expense allocations of $0.8$1.5 million due to a decrease in the ~~overhead allocation rate, partially offset by an increase~~number of routed vehicles and reductions in equipment operating hours, a decrease in expenses for uncollectible accounts receivable of $1.4 million due primarily to collections in the current period of customer accounts deemed uncollectible in prior periods, a decrease in leachate disposal expenses of $1.1 million due to increased on-site treatment of leachate and the prior year period incurring higher costs to dispose of leachate in newly constructed landfill cells, a decrease in expenses for auto and workers’ compensation claims of ~~$6.8~~$1.0 million due primarily to ~~higher claims severity in the current year period and non-recurring~~ adjustments recorded in the ~~prior~~current year period to decrease projected losses on outstanding claims originally recorded prior to 2021, a decrease in expenses for processing recyclable commodities of $0.9 million due to declines in commercial recycling volumes, a decrease in fuel expense of $0.7 million due to reductions in collection routes and equipment hours operated resulting in declines in the volume of fuel used in our operations and a collective decrease in travel, meeting, training, and community activity expenses of $0.5 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, partially offset by a net $5.0 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in ~~direct and administrative labor expenses~~corporate overhead expense allocations of ~~$4.9~~$3.9 million due ~~primarily~~ to ~~employee pay rate increases,~~ an increase in ~~truck, container, equipment and facility maintenance and repair~~the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in employee medical benefits expenses of ~~$4.0~~$1.1 million due to ~~parts and service rate increases and variability impacting the timing of major repairs,~~ an increase in ~~third-party trucking~~medical visits and ~~transportation expenses~~other expense increases of $1.4 million due primarily to transportation associated with increased landfill special waste volumes and increased rates charged by third parties to provide trucking and transportation services and $0.7 million of other net expense increases.$0.2 million.

Segment EBITDA in our Central segment increased ~~$10.2~~$5.8 million, or ~~16.1%~~8.0%, to $79.0 million for the three months ended March 31, 2021, from $73.2 million for the three months ended March 31, ~~2020, from $63.0 million for the three months ended March 31, 2019.~~2020. The increase was due primarily to an increase in revenues of ~~$30.6~~$28.3 million from organic growth and acquisitions and a collective decrease in travel, meeting, training, and community activity expenses of $0.5 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, partially offset by a net ~~$11.0~~$15.7 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in ~~direct and administrative~~corporate overhead expense allocations of $3.2 million due to an increase in the overhead allocation rate resulting from an increase in corporate expenses qualifying for allocation, an increase in labor expenses of ~~$4.9~~$1.5 million due primarily to employee pay ~~rate~~ increases exceeding the benefit in the current year period of one less calendar and business day due to leap year occurring in the prior year period, an increase in ~~truck, container, equipment and facility maintenance and repair~~employee medical benefits expenses of ~~$1.4~~$1.1 million due to ~~the variability and timing of major repairs,~~ an increase in ~~third party disposal expenses of $1.0 million due primarily to disposal rate increases and roll off collection volume increases in certain markets,~~medical visits, an increase in expenses for ~~auto and workers’ compensation claims~~uncollectible accounts receivable of $0.9 million due primarily to ~~non-recurring adjustments recorded in~~ the prior ~~year~~ period ~~to decrease projected losses on outstanding claims, an increase in third-party trucking~~benefiting from the collection of certain accounts previously deemed uncollectible and ~~transportation expenses~~other expense increases of $0.7 million due primarily to transportation associated with increased landfill special waste volumes and increased rates charged by third parties to provide trucking and transportation services and $0.5 million of other net expense increases.$0.6 million.

Segment EBITDA in our Canada segment increased ~~$0.2~~$14.5 million, or ~~0.3%~~24.5%, to $73.9 million for the three months ended March 31, 2021, from $59.4 million for the three months ended March 31, ~~2020, from $59.2 million for the three months ended March 31, 2019.~~2020. The increase was comprised of an increase of ~~$0.9~~$10.8 million assuming foreign currency parity during the comparable reporting periods ~~partially offset by a decrease~~and an increase of ~~$0.7~~$3.7 million from a ~~decrease in the~~higher average foreign currency exchange rate in effect during the comparable reporting periods. The ~~$0.9~~$10.8 million increase, which assumes foreign currency parity, was due primarily to an increase in revenues of ~~$3.8~~$8.2 million, ~~and other net expense decreases of $0.2 million, partially offset by an increase in direct labor expenses of $1.5 million due primarily to employee pay rate increases, an increase~~a decrease in third-party disposal expenses of ~~$0.9~~

~~Table~~$1.4 million attributable to declines in commercial and roll off collection volumes requiring disposal at third-party locations, a decrease in expenses for uncollectible accounts receivable of ~~Contents~~

$0.8 million due primarily to collections in the current period of customer accounts deemed uncollectible in prior periods and a collective decrease in travel, meeting, training, and community activity expenses of $0.4 million due to ~~higher disposal rates charged by operators~~shelter at home and ~~an increase in truck, container, equipment and facility maintenance and repair expenses of $0.7 million~~other restrictions on our employees due to the ~~variability and timing~~COVID-19 pandemic resulting in the cancellation of ~~major repairs.~~non-essential off-site activities.

Segment EBITDA ~~in our E&P segment~~at Corporate increased ~~$0.2~~$2.9 million, ~~or 0.6%,~~ to ~~$31.8~~a loss of $0.7 million for the three months ended March 31, ~~2020,~~2021, from $31.6 million for the three months ended March 31, 2019. The increase was due primarily to a decrease in third party trucking and transportation expenses in our E&P segment of $1.7 million due to changes in customer mix in the Williston Basin that resulted in us reducing the scope of these services, a decrease in cell processing expenses of $1.1 million due primarily to decreased disposal volumes, a decrease in corporate overhead expense allocations of $0.6 million due to a decrease in the overhead allocation rate and $0.2 million of other net expense decreases, partially offset by a decrease in revenues of $3.4 million.

~~Segment EBITDA at Corporate increased $0.3 million, to~~ a loss of $3.6 million for the three months ended March 31, ~~2020, from a loss of $3.9 million for the three months ended March 31, 2019.~~2020. The increase was due to an increase in corporate overhead allocated through charges to our segments of $13.9 million due to an increase in expenses qualifying for allocation, a decrease in equity-based compensation expenses of $3.4 million associated with an adjustment during the prior year period of our common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, a collective decrease in travel, meeting, training and community activity expenses of $2.2 million due to shelter at home and other restrictions on our employees due to the COVID-19 pandemic resulting in the cancellation of non-essential off-site activities, a decrease in direct acquisition expenses of $0.6 million due to a decrease in acquisition activity in the comparable periods and a decrease in equity-compensation expenses of $0.6 million due primarily to a decrease in the amount of performance-based restricted share

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units granted in 2019 and 2020 estimated to ultimately vest based on the achievement of required financial performance results, partially offset by an increase in accrued cash incentive compensation expense to our management and non-management employees of $8.5 million, an increase in deferred compensation expenses of ~~$6.5~~$5.7 million as a result of decreases in the market value of investments to which employee deferred compensation liability balances are tracked, ~~a decrease~~an increase in ~~equity-based~~professional fees of $1.8 million due primarily to adjustments recorded during the prior year period to reduce estimated accrued liabilities associated with unbilled legal services, an increase in share-based compensation expenses of ~~$3.8~~$1.2 million ~~associated with~~due primarily to increased average share price values in the current period for equity awards accounted for as liabilities that were granted to employees of Progressive Waste prior to June 1, 2016 which are subject to valuation adjustments each period based on changes in fair value ~~due to decreases in both the number~~and $0.6 million of outstanding awards and the per share valuation of our common shares and a further decrease in equity-based compensation expenses of $1.5 million resulting primarily from non-recurring prior year period adjustments to the amount of performance-based restricted share units granted in 2017 that were estimated to ultimately vest, partially offset by an increase of $3.3 million in equity-based compensation expenses associated with the current year period adjustment of Waste Connections, Inc. common shares held in our deferred compensation plan by certain key executives to fair value as a result of the shares being exchanged for other investment options, a reduction in corporate overhead allocated through charges to our segments of $2.9 million due to a reduction in expenses qualifying for allocation resulting in a decrease in the overhead allocation rates, an increase in accrued recurring cash incentive compensationnet expense to our management of $2.6 million, an increase in software licenses and subscriptions expenses of $1.0 million due primarily to the addition of new sales and customer service applications, an increase in employee relocation expenses of $1.0 million due to an increase in the number of our employees transferring to new markets within the Company and an increase in payroll expenses of $0.7 million as a result of annual pay increases.

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth certain cash flow information for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands of U.S. dollars):

Three Months Ended

March 31,

2020

2019
Net cash provided by operating activities

$
369,586

$
363,772
Net cash used in investing activities

(133,626)

(128,046)
Net cash provided by (used) in financing activities

627,389

(55,203)
Effect of exchange rate changes on cash, cash equivalents and restricted cash

(2,364)

193
Net increase in cash, cash equivalents and restricted cash

860,985

180,716
Cash, cash equivalents and restricted cash at beginning of period

423,221

403,966
Cash, cash equivalents and restricted cash at end of period

$
1,284,206

$
584,682


	Three Months Ended
	March 31,
	2021		2020
Net cash provided by operating activities	$	400,396	$	369,586
Net cash used in investing activities		(100,553)		(133,626)
Net cash provided by (used in) financing activities		(165,482)		627,389
Effect of exchange rate changes on cash, cash equivalents and restricted cash		403		(2,364)
Net increase in cash, cash equivalents and restricted cash		134,764		860,985
Cash, cash equivalents and restricted cash at beginning of period		714,389		423,221
Cash, cash equivalents and restricted cash at end of period	$	849,153	$	1,284,206

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Operating Activities Cash Flows

For the three months ended March 31, 2021, net cash provided by operating activities was $400.4 million. For the three months ended March 31, 2020, net cash provided by operating activities was $369.6 million. ~~For the three months ended March 31, 2019, net cash provided by operating activities was $363.8 million.~~ The ~~$5.8~~$30.8 million increase was due primarily to the following:

Increase in earnings — Our increase in net cash provided by operating activities was favorably impacted by ~~$13.8~~$21.6 million from an increase in net income, excluding depreciation, amortization of intangibles, ~~amortization of leases, deferred income taxes,~~ share-based compensation, adjustments to and payments of contingent consideration recorded in earnings and loss on disposal of assets and impairments, due primarily to ~~the impact of~~price increases, earnings from acquisitions closed subsequent to the three months ended March 31, ~~2019~~2020, earnings generated from the increased sales of recyclable commodities and ~~price-led~~renewal energy credits associated with the generation of landfill gas and an increase in the average Canadian dollar to U.S. dollar currency exchange rate offsetting a decline in earnings ~~growth~~ at ~~certain~~our E&P operations, as well as solid waste ~~segments.~~volume losses resulting from the COVID-19 pandemic.

~~Accounts receivable —~~ ~~Our increase in net cash provided by operating activities was favorably impacted by $13.1 million from accounts receivable due to improved collection results.~~

~~Accounts payable and accrued~~Other long-term liabilities — Our increase in net cash provided by operating activities was favorably impacted by ~~$8.3 million from accounts payable and accrued liabilities due primarily to period end timing of payments to vendors for goods and services.~~

~~Prepaid expenses~~ – Our increase in net cash provided by operating activities was unfavorably impacted by $25.5 million from prepaid expenses due primarily to a higher utilization of prepaid income taxes during the prior year period.

~~Other long-term liabilities~~ ~~– Our increase in net cash provided by operating activities was unfavorably impacted by $5.7~~$19.3 million from other long-term liabilities, ~~due primarily to~~as changes in other long-term liabilities resulted in an increase to operating cash flows of $6.1 million for the three months ended March 31, 2021, compared to a decrease to operating cash flows of $13.2 million for the three months ended March 31, 2020. The increase for the three months ended March 31, 2021 was primarily attributable to the receipt of funds associated with the eminent domain purchase of an operating facility that will be replaced with a newly constructed facility in a future period. The decrease for the three months ended March 31, 2020 was primarily attributable to declines in our deferred compensation liabilities due to distributions and the cash settlement of equity awards accounted for as liabilities that were granted to employees of Progressive Waste prior to June 1, 2016.

Prepaid expenses — Our increase in net cash provided by operating activities was favorably impacted by $15.7 million from prepaid expenses due primarily to a decrease in prepaid insurance and prepaid vendor payments. Our prepaid expenses at March 31, 2021 include $49.7 million of prepaid income taxes.

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Deferred revenue — Our increase in net cash provided by operating activities was favorably impacted by $9.8 million from deferred revenue as changes in deferred revenue resulted in an increase to operating cash flows of $8.9 million for the three months ended March 31, 2021, compared to a decrease to operating cash flows of $0.9 million for the three months ended March 31, 2020. During the three months ended March 31, 2021, deferred revenue increased due to price increases on our advanced billed residential and commercial collection services, the timing of bi-monthly advance service billings and a landfill in our Southern segment receiving a $3.3 million advance payment for future disposal services. During the three months ended March 31, 2020, our deferred revenue decreased due primarily to commercial collection customer closures resulting from the COVID-19 pandemic that began in March 2020 which reduced the amount of advance service billings sent to our customers.

Deferred income taxes — Our increase in net cash provided by operating activities was unfavorably impacted by $14.9 million from deferred income taxes as changes in deferred income taxes resulted in an increase to operating cash flows of $8.4 million for the three months ended March 31, 2021, compared to an increase to operating cash flows of $23.3 million for the three months ended March 31, 2020. The higher increase in deferred taxes in the prior year period was attributable to increased capital expenditures providing tax benefits resulting from accelerated tax depreciation.

Accounts payable and accrued liabilities — Our increase in net cash provided by operating activities was unfavorably impacted by $10.8 million from accounts payable and accrued liabilities due primarily to the timing of interest payments and payroll cycles.

As of March 31, ~~2020,~~2021, we had a working capital surplus of ~~$972.1~~$397.1 million, including cash and equivalents of ~~$1.195 billion.~~$743.5 million. Our working capital surplus increased ~~$848.7~~$17.5 million from a working capital surplus of ~~$123.4~~$379.6 million at December 31, ~~2019,~~2020 including cash and equivalents of ~~$326.7~~$617.3 million, due primarily to the impact of increased cash ~~balances.~~balances, decreased accounts payable and decreased book overdraft being partially offset by an increase in the current portion of notes payable, higher deferred revenue and a reduction in accounts receivable. To date, we have experienced no loss or lack of access to our cash and equivalents; however, we can provide no assurances that access to our cash and equivalents will not be impacted by adverse conditions in the financial markets. Our strategy in managing our working capital is generally to apply the cash generated from our operations that remains after satisfying our working capital and capital expenditure requirements, along with share repurchase and dividend programs, to reduce the unhedged portion of our indebtedness under our Credit Agreement and to minimize our cash balances.

Investing Activities Cash Flows

Net cash used in investing activities ~~increased $5.6~~decreased $33.0 million to $100.6 million for the three months ended March 31, 2021, from $133.6 million for the three months ended March 31, ~~2020, from $128.0~~2020. The significant components of the decrease included the following:

A decrease in capital expenditures of $41.0 million due to decreases in vehicles for our collection operations and landfill site costs; less

An increase in cash paid for acquisitions of $2.6 million.

Financing Activities Cash Flows

Net cash used in financing activities increased $792.9 million to net cash used in financing activities of $165.5 million for the three months ended March 31, ~~2019. The significant components of the increase included the following:~~

An increase in capital expenditures of $23.5 million due to an increase in the purchase of trucks for operations owned in the comparable periods, increased additions to existing facilities and additional trucks and containers purchased for operations acquired subsequent to March 31, 2019; less

~~A decrease in cash paid for acquisitions of $9.0 million due primarily to a decrease in acquisitions closed during the three months ended March 31, 2020.~~

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~~Financing Activities Cash Flows~~

~~Net~~2021, from net cash provided by financing activities ~~increased $682.6 million to~~of $627.4 million for the three months ended March 31, ~~2020, from net cash used in financing activities of $55.2 million for the three months ended March 31, 2019.~~2020. The significant components of the increase included the following:

An increase from the net change in long-term borrowings of ~~$816.9~~$825.6 million (long-term borrowings decreased $5.4 million during the three months ended March 31, 2021 and increased $820.2 million during the three months ended March 31, ~~2020 and increased $3.3 million during the three months ended March 31, 2019)~~2020) due primarily to maintaining a portion of the proceeds from our 2050 Senior Notes offering in March 2020 in cash and borrowing on our credit facility in March 2020 to provide us with additional available cash reserves; ~~less~~

An increase in ~~payments~~book overdraft of $13.0 million due primarily to ~~repurchase~~maintaining additional funds in our ~~common shares of $105.7 million as we resumed our share repurchase activity during the three months ended March 31, 2020; less~~bank accounts that are used to fund outstanding checks; and

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~~An increase in debt issuance costs of $10.9 million due to the issuance during the three months ended March 31, 2020 of our 2030 Senior Notes and 2050 Senior Notes; less~~

~~An increase in tax withholdings related to net share settlements of equity-based compensation of $6.1 million due to an increase is the value of equity-based compensation awards vesting; less~~

An increase in cash dividends paid of $5.9 million due primarily to an increase in our quarterly dividend rate for the three months ended March 31, ~~2020~~2021 to ~~$0.185~~$0.205 per share, from ~~$0.16~~$0.185 per share for the three months ended March 31, ~~2019.~~2020; less

A decrease in payments to repurchase our common shares of $39.7 million due to fewer shares repurchased;

A decrease in debt issuance costs of $10.9 million due to the prior year period including costs incurred for the issuance of our 2030 Senior Notes and 2050 Senior Notes; and

A decrease in tax withholdings related to net share settlements of equity-based compensation of $4.6 million due to a decrease in the value of equity-based compensation awards vesting.

Our business is capital intensive. Our capital requirements include acquisitions and capital expenditures for landfill cell construction, landfill development, landfill closure activities and intermodal facility construction in the future.

On July ~~25, 2019,~~23, 2020, our Board of Directors approved, subject to receipt of regulatory approvals, the annual renewal of our normal course issuer bid, or the NCIB, to purchase up to ~~13,184,474~~13,144,773 of our common shares during the period of August ~~8, 2019~~10, 2020 to August ~~7, 2020~~9, 2021 or until such earlier time as the NCIB is completed or terminated at our option. Shareholders may obtain a copy of our TSX Form 12 – Notice of Intention to Make a Normal Course Issuer Bid, without charge, by request directed to our ~~Senior~~Executive Vice President and Chief Financial Officer at (832) 442-2200. The timing and amounts of any repurchases pursuant to the NCIB will depend on many factors, including our capital structure, the market price of our common shares and overall market conditions. All common shares purchased under the NCIB will be immediately cancelled following their repurchase. Information regarding our NCIB ~~plan~~ can be found under the “Shareholders’ Equity” section in Note 1716 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Our Board of Directors authorized the initiation of a quarterly cash dividend in October 2010 and has increased it on an annual basis. In October ~~2019,~~2020, our Board of Directors authorized an increase to our regular quarterly cash dividend of ~~$0.025,~~$0.02, from ~~$0.16~~$0.185 to ~~$0.185~~$0.205 per share. Cash dividends of ~~$48.0~~$53.9 million and ~~$42.1~~$48.0 million were paid during the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. We cannot assure you as to the amounts or timing of future dividends.

We made ~~$137.8~~$96.8 million in capital expenditures for property and equipment during the three months ended March 31, ~~2020,~~2021, and we expect to make total capital expenditures for property and equipment of ~~between $500 million and $550~~approximately $625 million in ~~2020, which reflects a reduction of approximately $110 million in projected 2020 capital expenditures as a result of the impact from COVID-19.~~2021. We have funded and intend to fund the balance of our planned ~~2020~~2021 capital expenditures principally through cash on hand, internally generated funds and borrowings under our Credit Agreement. In addition, we may make substantial additional capital expenditures in acquiring land and ~~municipal~~ solid ~~waste and E&P~~ waste businesses. If we acquire additional landfill disposal facilities, we may also have to make significant expenditures to bring them into compliance with applicable regulatory requirements, obtain permits or expand our available disposal capacity. We cannot currently determine the amount of these expenditures because they will depend on the number, nature, condition and permitted status of any acquired landfill disposal facilities. We believe that our cash and equivalents, Credit Agreement and the funds we expect to generate from operations will provide adequate cash to fund our working capital and other cash needs for the foreseeable future. However, disruptions in the capital and credit markets could adversely affect our ability to draw on our Credit Agreement or raise other capital. Our access to funds under the Credit Agreement is dependent on

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the ability of the banks that are parties to the agreement to meet their funding commitments. Those banks may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period of time.

As of March 31, ~~2020,~~2021, $650.0 million under the term loan and ~~$692.6~~$204.0 million under the revolving credit facility were outstanding under our Credit Agreement, exclusive of outstanding standby letters of credit of ~~$107.3~~$118.4 million. We also have issued $6.8 million of letters of credit at March 31, 2021 under facilities other than the Credit Agreement. Our Credit Agreement matures in March 2023.

On January 23, 2020, we completed an underwritten public offering of $600.0 million aggregate principal amount of 2.60% Senior Notes due 2030, or the 2030 Senior Notes. The 2030 Senior Notes were issued under the Indenture, dated as of November 16, 2018, by and between the Company and U.S. Bank National Association, as trustee, as supplemented by the Third Supplemental Indenture, dated as of January 23, 2020.

We will pay interest on the 2030 Senior Notes semi-annually in arrears and the 2030 Senior Notes will mature on February 1, 2030. The 2030 Senior Notes are senior unsecured obligations, ranking equally in right of payment with our other existing and future unsubordinated debt and senior to any of our future subordinated debt. The 2030 Senior Notes are not guaranteed by any of our subsidiaries.

On March 13, 2020, we completed an underwritten public offering of $500.0 million aggregate principal amount of 3.05% Senior Notes due 2050, or the 2050 Senior Notes. The 2050 Senior Notes were issued under the Indenture, dated as of November 16, 2018, by and between the Company and U.S. Bank National Association, as trustee, as supplemented by the Fourth Supplemental Indenture, dated as of March 13, 2020.

We will pay interest on the 2050 Senior Notes semi-annually in arrears and the 2050 Senior Notes will mature on April 1, 2050. The 2050 Senior Notes are senior unsecured obligations, ranking equally in right of payment with our other existing and future unsubordinated debt and senior to any of our future subordinated debt. The 2050 Senior Notes are not guaranteed by any of our subsidiaries.

~~See Note 10 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details on the debt agreements.~~

We are a well-known seasoned issuer with an effective shelf registration statement on Form S-3 filed with the SEC in May 2018, which registers an unspecified amount of debt securities, including debentures, notes or other types of debt. In the future, we may issue debt securities under our shelf registration statement or in private placements from time to time on an opportunistic basis, based on market conditions and available pricing. WeUnless otherwise indicated in the relevant

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offering documents, we expect to use the proceeds from any such offerings for general corporate purposes, including repaying, redeeming or repurchasing debt, acquiring additional assets or businesses, capital expenditures and increasing our working capital.

As of March 31, ~~2020,~~2021, we had the following contractual obligations:

Payments Due by Period

(amounts in thousands of U.S. dollars)




Less Than

1 to 3



Over 5
Recorded Obligations

Total

1 Year

Years

3 to 5 Years

Years
Long-term debt

$
5,194,532

$
4,318

$
375,869

$
1,693,597

$
3,120,748
Cash interest payments

$
1,312,469

$
147,180

$
307,036

$
196,451

$
661,802
Contingent consideration

$
88,644

$
37,549

$
11,069

$
3,224

$
36,802
Operating leases

$
219,214

$
27,581

$
65,503

$
49,278

$
76,852
Final capping, closure and post-closure

$
1,530,565

$
7,279

$
65,995

$
13,750

$
1,443,541


	Payments Due by Period
	(amounts in thousands of U.S. dollars)
			Less Than		1 to 3				Over 5
Recorded Obligations	Total		1 Year		Years		3 to 5 Years		Years
Long-term debt	$	4,744,690	$	105,386	$	1,340,226	$	536,585	$	2,762,493
Cash interest payments	$	1,217,092	$	160,761	$	268,554	$	203,981	$	583,796
Contingent consideration	$	86,498	$	42,360	$	5,724	$	3,224	$	35,190
Operating leases	$	213,877	$	28,245	$	67,921	$	43,115	$	74,596
Final capping, closure and post-closure	$	1,500,547	$	16,726	$	40,739	$	9,541	$	1,433,541

____________________

Long-term debt payments include:

$~~692.6~~204.0 million in principal payments due March 2023 related to our revolving credit facility under our Credit Agreement. We may elect to draw amounts on our Credit Agreement in U.S. dollar LIBOR rate loans, U.S. dollar

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base rate loans, Canadian-based bankers’ acceptances, and Canadian dollar prime rate loans. At March 31, ~~2020, $675.0~~2021, $200.0 million of the outstanding borrowings drawn under the revolving credit facility were in U.S. LIBOR rate loans, which bear interest at the LIBOR rate plus the applicable margin (for a total rate of ~~2.09%~~1.31% on such date) and ~~$17.6~~$4.0 million of the outstanding borrowings drawn under the revolving credit facility were in Canadian-based bankers’ acceptances, which bear interest at the Canadian Dollar Offered Rate plus the applicable acceptance fee (for a total rate of ~~2.33%~~1.61% on such date).

$650.0 million in principal payments due March 2023 related to our term loan under our Credit Agreement. Outstanding amounts on the term loan can be either base rate loans or LIBOR loans. At March 31, ~~2020,~~2021, all amounts outstanding under the term loan were in LIBOR loans which bear interest at the LIBOR rate plus the applicable margin (for a total rate of ~~2.09%~~1.31% on such date).

$100.0 million in principal payments due 2021 related to our 2021 Senior Notes. The 2021 Senior Notes bear interest at a rate of 4.64%. We redeemed the 2021 Senior Notes on April 1, 2021.

$150.0 million in principal payments due 2021 related to our New 2021 Senior Notes. The New 2021 Senior Notes bear interest at a rate of 2.39%. We have recorded this obligation in the payments due in 1 to 3 years category in the table above as we have the intent and ability to redeem the New 2021 Senior Notes on June 1, 2021 using borrowings under our Credit Agreement.

$125.0 million in principal payments due 2022 related to our 2022 Senior Notes. The 2022 Senior Notes bear interest at a rate of 3.09%.

$200.0 million in principal payments due 2023 related to our 2023 Senior Notes. The 2023 Senior Notes bear interest at a rate of 2.75%.

$150.0 million in principal payments due 2024 related to our 2024 Senior Notes. The 2024 Senior Notes bear interest at a rate of 3.24%.

$375.0 million in principal payments due 2025 related to our 2025 Senior Notes. The 2025 Senior Notes bear interest at a rate of 3.41%.

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$400.0 million in principal payments due 2026 related to our 2026 Senior Notes. The 2026 Senior Notes bear interest at a rate of 3.03%.

10)

$250.0 million in principal payments due 2027 related to our 2027 Senior Notes. The 2027 Senior Notes bear interest at a rate of 3.49%.

11)

$500.0 million in principal payments due 2028 related to our 2028 Senior Notes. The 2028 Senior Notes bear interest at a rate of 4.25%.

12)

$500.0 million in principal payments due 2029 related to our 2029 Senior Notes. The 2029 Senior Notes bear interest at a rate of 3.50%.

13)

$600.0 million in principal payments due 2030 related to our 2030 Senior Notes. The 2030 Senior Notes bear interest at a rate of 2.60%.

14)

$500.0 million in principal payments due 2050 related to our 2050 Senior Notes. The 2050 Senior Notes bear interest at a rate of 3.05%.

15)

$~~9.3~~38.0 million in principal payments related to our notes payable to sellers and other third parties. Our notes payable to sellers and other third parties bear interest at rates between ~~2.75%~~2.42% and 10.35% at March 31, ~~2020,~~2021, and have maturity dates ranging from ~~2021~~2028 to 2036.

16)

$9.8 million in principal payments related to our financing leases. Our financing leases bear interest at a rate of 1.89% at March, 31 2021, and have a lease expiration date of 2026.

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The following assumptions were made in calculating cash interest payments:

We calculated cash interest payments on the Credit Agreement using the LIBOR rate plus the applicable LIBOR margin, ~~and~~the base rate plus the applicable base rate margin, the Canadian Dollar Offered Rate plus the applicable acceptance fee and the Canadian prime rate plus the applicable prime rate margin at March 31, ~~2020.~~2021. We assumed the Credit Agreement is paid off when it matures in March 2023.

We calculated cash interest payments on our interest rate swaps using the stated interest rate in the swap agreement less the LIBOR rate through the earlier expiration of the term of the swaps or the term of the credit facility.

Contingent consideration payments include ~~$67.6~~$67.0 million recorded as liabilities in our Condensed Consolidated Financial Statements at March 31, ~~2020,~~2021, and ~~$21.0~~$19.5 million of future interest accretion on the recorded obligations.

We are party to operating lease ~~agreements.~~agreements and finance leases. These lease agreements are established in the ordinary course of our business and are designed to provide us with access to facilities and equipment at competitive, market-driven prices.

The estimated final capping, closure and post-closure expenditures presented above are in current dollars.

Amount of Commitment Expiration Per Period

(amounts in thousands of U.S. dollars)

Less Than

1 to 3

3 to 5

Over 5
Unrecorded Obligations⁽¹⁾

Total

1 Year

Years

Years

Years
Unconditional purchase obligations

$
163,777

$
89,986

$
73,791

$
—

$
—


	Amount of Commitment Expiration Per Period
	(amounts in thousands of U.S. dollars)
			Less Than		1 to 3		3 to 5		Over 5
Unrecorded Obligations⁽¹⁾	Total		1 Year		Years		Years		Years
Unconditional purchase obligations	$	116,619	$	82,673	$	33,946	$	—	$	—

____________________

(1)

We are party to unconditional purchase obligations. These purchase obligations are established in the ordinary course of our business and are designed to provide us with access to products at competitive, market-driven prices. At March 31, ~~2020,~~2021, our unconditional purchase obligations consisted of multiple fixed-price fuel purchase contracts under which we have ~~66.9~~46.7 million gallons remaining to be purchased for a total of ~~$163.8~~$116.6 million. The current fuel purchase contracts expire on or before

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December 31, ~~2022.~~2023. These arrangements have not materially affected our financial position, results of operations or liquidity during the three months ended March 31, ~~2020,~~2021, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.

We have obtained financial surety bonds, primarily to support our financial assurance needs and landfill and E&P operations. We provided customers and various regulatory authorities with surety bonds in the aggregate amounts of approximately ~~$1.106~~$1.242 billion and ~~$1.081~~$1.210 billion at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. These arrangements have not materially affected our financial position, results of operations or liquidity during the three months ended March 31, ~~2020,~~2021, nor are they expected to have a material impact on our future financial position, results of operations or liquidity.

From time to time, we evaluate our existing operations and their strategic importance to us. If we determine that a given operating unit does not have future strategic importance, we may sell or otherwise dispose of those operations. Although we believe our reporting units would not be impaired by such dispositions, we could incur losses on them.

The disposal tonnage that we received in the three month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, at all of our landfills during the respective period, is shown below (tons in thousands):

Three Months Ended March 31,

2020

2019


Number

Total

Number

Total

of Sites

Tons

of Sites

Tons
Owned operational landfills and landfills operated under life-of-site agreements

88

10,843

89

10,253
Operated landfills

4

133

4

127

92

10,976

93

10,380


	Three Months Ended March 31,
	2021		2020
	Number	Total	Number	Total
	of Sites	Tons	of Sites	Tons
Owned operational landfills and landfills operated under life-of-site agreements	87	10,189	88	10,843
Operated landfills	4	127	4	133
	91	10,316	92	10,976

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NON-GAAP FINANCIAL MEASURES

Adjusted Free Cash Flow

We present adjusted free cash flow, a non-GAAP financial measure, supplementally because it is widely used by investors as a valuation and liquidity measure in the solid waste industry. Management uses adjusted free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of our operations. We define adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, less capital expenditures for property and equipment and distributions to noncontrolling interests. We further adjust this calculation to exclude the effects of items management believes impact the ability to assess the operating performance of our business. This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures. Other companies may calculate adjusted free cash flow differently. Our adjusted free cash flow for the three month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, are calculated as follows (amounts in thousands of U.S. dollars):

Three Months Ended

March 31,

2020

2019
Net cash provided by operating activities

$
369,586

$
363,772
Less: Change in book overdraft

(3,848)

(2,784)
Plus: Proceeds from disposal of assets

3,499

639
Less: Capital expenditures for property and equipment

(137,781)

(114,238)
Adjustments:

Cash received for divestitures ^(a)

—

(2,376)
Transaction-related expenses ^(b)

1,146

837
Pre-existing Progressive Waste share-based grants ^(c)

6,440

2,182
Tax effect ^(d)

(3,318)

(1,697)
Adjusted free cash flow

$
235,724

$
246,335


	Three Months Ended
	March 31,
	2021		2020
Net cash provided by operating activities	$	400,396	$	369,586
Less: Change in book overdraft		(16,849)		(3,848)
Plus: Proceeds from disposal of assets		2,080		3,499
Less: Capital expenditures for property and equipment		(96,793)		(137,781)
Adjustments:
Payment of contingent consideration recorded in earnings ^(a)		520		—
Transaction-related expenses ^(b)		526		1,146
Pre-existing Progressive Waste share-based grants ^(c)		97		6,440
Tax effect ^(d)		(188)		(3,318)
Adjusted free cash flow	$	289,789	$	235,724

____________________

(a)

Reflects the ~~elimination~~addback of acquisition-related payments for contingent consideration that were recorded as expenses in earnings and as a component of cash ~~received in conjunction with~~flows from operating activities as the ~~divestiture~~amounts paid exceeded the fair value of ~~certain Progressive Waste operations.~~the contingent consideration recorded at the acquisition date.

(b)	Reflects the addback of acquisition-related transaction costs.

(c)	Reflects the cash settlement of pre-existing Progressive Waste share-based awards during the period.

(d)	The aggregate tax effect of footnotes (a) through (c) is calculated based on the applied tax rates for the respective periods.

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Adjusted EBITDA

We present adjusted EBITDA, a non-GAAP financial measure, supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry. Management uses adjusted EBITDA as one of the principal measures to evaluate and monitor the ongoing financial performance of our operations. We define adjusted EBITDA as net income attributable to Waste Connections, plus or minus net income (loss) attributable to noncontrolling interests, plus income tax provision, plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income. We further adjust this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of our business. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate adjusted EBITDA differently. Our adjusted EBITDA for the three month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, are calculated as follows (amounts in thousands of U.S. dollars):

Three Months Ended

March 31,

2020

2019
Net income attributable to Waste Connections

$
143,035

$
125,622
Less: Net loss attributable to noncontrolling interests

(142)

(45)
Plus: Income tax provision

28,734

27,968
Plus: Interest expense

37,990

37,287
Less: Interest income

(2,175)

(3,311)
Plus: Depreciation and amortization

182,459

177,389
Plus: Closure and post-closure accretion

3,908

3,490
Plus: Impairments and other operating items

1,506

16,112
Plus (less): Other expense (income), net

9,521

(2,661)
Adjustments:

Plus: Transaction-related expenses ^(a)

1,146

837
Plus: Fair value changes to equity awards ^(b)

2,541

3,021
Adjusted EBITDA

$
408,523

$
385,709


	Three Months Ended
	March 31,
	2021		2020
Net income attributable to Waste Connections	$	160,309	$	143,035
Less: Net loss attributable to noncontrolling interests		(2)		(142)
Plus: Income tax provision		40,291		28,734
Plus: Interest expense		42,425		37,990
Less: Interest income		(1,103)		(2,175)
Plus: Depreciation and amortization		189,594		182,459
Plus: Closure and post-closure accretion		3,709		3,908
Plus: Impairments and other operating items		634		1,506
Plus (less): Other expense (income), net		(3,548)		9,521
Adjustments:
Plus: Transaction-related expenses ^(a)		526		1,146
Plus: Fair value changes to equity awards ^(b)		339		2,541
Adjusted EBITDA	$	433,174	$	408,523

____________________

(a)	Reflects the addback of acquisition-related transaction costs.

(b)	Reflects fair value accounting changes associated with certain equity awards.

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Adjusted Net Income Attributable to Waste Connections and Adjusted Net Income per Diluted Share Attributable to Waste Connections

We present adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections, both non-GAAP financial measures, supplementally because they are widely used by investors as a valuation measure in the solid waste industry. Management uses adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor the ongoing financial performance of our operations. We provide adjusted net income attributable to Waste Connections to exclude the effects of items management believes impact the comparability of operating results between periods. Adjusted net income attributable to Waste Connections has limitations due to the fact that it excludes items that have an impact on our financial condition and results of operations. Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections are not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate these non-GAAP financial measures differently. Our adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections for the three month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, are calculated as follows (amounts in thousands of U.S. dollars, except per share amounts):

Three Months Ended

March 31,


2020

2019
Reported net income attributable to Waste Connections

$
143,035

$
125,622
Adjustments:

Amortization of intangibles ^(a)

31,638

30,542
Impairments and other operating items ^(b)

1,506

16,112
Transaction-related expenses ^(c)

1,146

837
Fair value changes to equity awards ^(d)

2,541

3,021
Tax effect ^(e)

(9,304)

(12,197)
Adjusted net income attributable to Waste Connections

$
170,562

$
163,937

Diluted earnings per common share attributable to Waste Connections’ common shareholders:




Reported net income

$
0.54

$
0.48
Adjusted net income

$
0.65

$
0.62


	Three Months Ended
	March 31,
	2021		2020
Reported net income attributable to Waste Connections	$	160,309	$	143,035
Adjustments:
Amortization of intangibles ^(a)		32,192		31,638
Impairments and other operating items ^(b)		634		1,506
Transaction-related expenses ^(c)		526		1,146
Fair value changes to equity awards ^(d)		339		2,541
Tax effect ^(e)		(8,543)		(9,304)
Adjusted net income attributable to Waste Connections	$	185,457	$	170,562

Diluted earnings per common share attributable to Waste Connections’ common shareholders:
Reported net income	$	0.61	$	0.54
Adjusted net income	$	0.70	$	0.65

____________________

(a)	Reflects the elimination of the non-cash amortization of acquisition-related intangible assets.

(b)	Reflects the addback of impairments and other operating items.

(c)	Reflects the addback of acquisition-related transaction costs.

(d)	Reflects fair value accounting changes associated with certain equity awards.

(e)	The aggregate tax effect of the adjustments in footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

INFLATION

Other than volatility in fuel prices, third party brokerage and labor costs in certain markets, inflation has not materially affected our operations in recent years. Consistent with industry practice, many of our contracts allow us to pass through certain costs to our customers, including increases in landfill tipping fees and, in some cases, fuel costs. To the extent that there are decreases in fuel costs, in some cases, a portion of these reductions are passed through to customers in the form of lower fuel and material surcharges. Therefore, we believe that we should be able to increase prices to offset many cost increases that result from inflation in the ordinary course of business. However, competitive pressures or delays in the timing of rate increases under our contracts, particularly amid the economic impact of the COVID-19 ~~outbreak,~~pandemic, may require us to absorb at least part of these cost increases, especially if cost increases exceed the average rate of inflation. Management’s estimates associated with inflation have an impact on our accounting for landfill liabilities.

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SEASONALITY

Based on historic trends, excluding any impact from the COVID-19 ~~outbreak~~pandemic or an economic recession, we would expect our operating results to vary seasonally, with revenues typically lowest in the first quarter, higher in the second and third quarters and lower in the fourth quarter than in the second and third quarters. This seasonality reflects (a) the lower volume of solid waste generated during the late fall, winter and early spring because of decreased construction and demolition activities during winter months in Canada and the U.S. and (b) reduced E&P activity during harsh weather conditions, with expected fluctuation due to such seasonality between our highest and lowest quarters of approximately 10%. In addition, some of our operating costs may be higher in the winter months. Adverse winter weather conditions slow waste collection activities, resulting in higher labor and operational costs. Greater precipitation in the winter increases the weight of collected municipal solid waste, resulting in higher disposal costs, which are calculated on a per ton basis.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

In the normal course of business, we are exposed to market risk, including changes in interest rates and prices of certain ~~commodities.~~commodities, and to a lesser extent, foreign currency exchange rate risks. We use hedge agreements to manage a portion of our risks related to interest rates and fuel prices. While we are exposed to credit risk in the event of non-performance by counterparties to our hedge agreements, in all cases such counterparties are highly rated financial institutions and we do not anticipate non-performance under current market conditions. We do not hold or issue derivative financial instruments for trading purposes. We monitor our hedge positions by regularly evaluating the positions at market and by performing sensitivity analyses over the unhedged fuel and variable rate debt positions.

At March 31, ~~2020,~~2021, our derivative instruments included 14six interest rate swap agreements that effectively fix the interest rate on the applicable notional amounts of our variable rate debt as follows (dollars in thousands of U.S. dollars):


			Fixed		Variable					Fixed		Variable
	Notional		Interest		Interest Rate		Expiration	Notional		Interest		Interest Rate		Expiration
Date Entered	Amount		Rate Paid*		Received	Effective Date	Date	Amount		Rate Paid*		Received	Effective Date	Date
May 2014	$	50,000	2.344	%	1-month LIBOR	October 2015	October 2020
May 2014	$	25,000	2.326	%	1-month LIBOR	October 2015	October 2020
May 2014	$	50,000	2.350	%	1-month LIBOR	October 2015	October 2020
May 2014	$	50,000	2.350	%	1-month LIBOR	October 2015	October 2020
June 2016	$	150,000	0.950	%	1-month LIBOR	January 2018	January 2021
June 2016	$	150,000	0.950	%	1-month LIBOR	January 2018	January 2021
July 2016	$	50,000	0.900	%	1-month LIBOR	January 2018	January 2021
July 2016	$	50,000	0.890	%	1-month LIBOR	January 2018	January 2021
August 2017	$	100,000	1.900	%	1-month LIBOR	July 2019	July 2022	$	100,000	1.900	%	1-month LIBOR	July 2019	July 2022
August 2017	$	200,000	2.200	%	1-month LIBOR	October 2020	October 2025	$	200,000	2.200	%	1-month LIBOR	October 2020	October 2025
August 2017	$	150,000	1.950	%	1-month LIBOR	February 2020	February 2023	$	150,000	1.950	%	1-month LIBOR	February 2020	February 2023
June 2018	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025
June 2018	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025
December 2018	$	200,000	2.850	%	1-month LIBOR	July 2022	July 2027	$	200,000	2.850	%	1-month LIBOR	July 2022	July 2027

____________________

* Plus applicable margin.

Under derivatives and hedging guidance, the interest rate swap agreements are considered cash flow hedges for a portion of our variable rate debt, and we apply hedge accounting to account for these instruments. The notional amounts and all other significant terms of the swap agreements are matched to the provisions and terms of the variable rate debt being hedged.

We have performed sensitivity analyses to determine how market rate changes will affect the fair value of our unhedged floating rate debt. Such an analysis is inherently limited in that it reflects a singular, hypothetical set of assumptions. Actual market movements may vary significantly from our assumptions. Fair value sensitivity is not necessarily indicative of the ultimate cash flow or earnings effect we would recognize from the assumed market rate movements. We are exposed to cash flow risk due to changes in interest rates with respect to the unhedged floating rate

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balances owed at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, of ~~$517.6~~$4.0 million and ~~$766.2~~$3.7 million, respectively, including floating rate debt under our Credit Agreement. A one percentage point increase in interest rates on our variable-rate debt as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, would decrease our annual pre-tax income by approximately ~~$5.2~~$0.1 million and ~~$7.7~~$0.1 million, respectively. All of our remaining debt instruments are at fixed rates, or effectively fixed under the interest rate swap agreements described above; therefore, changes in market interest rates under these instruments would not significantly impact our cash flows or results of operations, subject to counterparty default risk.

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The market price of diesel fuel is unpredictable and can fluctuate significantly. Because of the volume of fuel we purchase each year, a significant increase in the price of fuel could adversely affect our business and reduce our operating margins. To manage a portion of this risk, we periodically enter into fuel hedge agreements related to forecasted diesel fuel purchases, and we also enter into fixed price fuel purchase contracts. At March 31, ~~2020,~~2021, we had no fuel hedge agreements in place; however, we have entered into fixed price fuel purchase contracts for ~~2020~~2021 as described below.

For the year ending December 31, ~~2020,~~2021, we expect to purchase approximately ~~75.3~~79.6 million gallons of fuel, of which ~~41.4~~40.7 million gallons will be purchased at market prices and ~~33.9~~38.9 million gallons will be purchased under our fixed price fuel purchase contracts. We have performed sensitivity analyses to determine how market rate changes will affect the fair value of our unhedged, market rate diesel fuel purchases. Such an analysis is inherently limited in that it reflects a singular, hypothetical set of assumptions. Actual market movements may vary significantly from our assumptions. Fair value sensitivity is not necessarily indicative of the ultimate cash flow or earnings effect we would recognize from the assumed market rate movements. During the nine month period of April 1, ~~2020~~2021 to December 31, ~~2020,~~2021, we expect to purchase approximately ~~31.1~~30.5 million gallons of fuel at market prices; therefore, a $0.10 per gallon increase in the price of fuel over the remaining nine months in ~~2020~~2021 would decrease our pre-tax income during this period by approximately $3.1 million.

We market a variety of recyclable materials, including compost, cardboard, mixed paper, plastic containers, glass bottles and ferrous and aluminum metals. We own and operate recycling operations and market ~~other~~ collected recyclable materials to third parties for processing before resale. ToWhere possible, to reduce our exposure to commodity price risk with respect to recycled materials, we have adopted a pricing strategy of charging collection and processing fees for recycling volume collected from third parties. In the event of a decline in recycled commodity prices, a 10% decrease in average recycled commodity prices from the average prices that were in effect during the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, would have had a ~~$1.8~~$3.1 million and ~~$1.9~~$1.8 million impact on revenues for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

We have operations in Canada and, where significant, we have quantified and described the impact of foreign currency translation on components of income, including operating revenue and operating costs. However, the impact of foreign currency has not materially affected our results of operations in ~~2019~~2020 or ~~2020.~~2021. A $0.01 change in the Canadian dollar to U.S. dollar exchange rate would impact our annual revenue and EBITDA by approximately ~~$9.0~~$10.1 million and ~~$3.0~~$4.0 million, respectively.

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Item 4.Controls and Procedures

As required by Rule 13a-15(b) under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Executive Officer and our ~~Senior~~Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) as of the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on this evaluation, our President and Chief Executive Officer and our ~~Senior~~Executive Vice President and Chief Financial Officer concluded as of March 31, ~~2020,~~2021, that our disclosure controls and procedures were effective at the reasonable assurance level such that information required to be disclosed in our Exchange Act reports: (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (2) is accumulated and communicated to our management, including our President and Chief Executive Officer and ~~Senior~~Executive Vice President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

During the quarter ended March 31, ~~2020,~~2021, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.Legal Proceedings

Information regarding our legal proceedings can be found in Note 1817 of our Condensed Consolidated Financial Statements included in Part I, Item 1 of this report and is incorporated herein by reference.

~~Item 1A.~~ ~~Risk Factors~~

Certain statements contained in this Quarterly Report on Form 10-Q are forward-looking in nature, including statements related to the impact of global economic conditions, including the price of crude oil, on our volume, business and results of operations; the impact of the COVID-19 outbreak on our business, financial condition and results of operations; our ability to generate internal growth or expand permitted capacity at landfills we own or operate; our ability to grow through acquisitions and our expectations with respect to the impact of acquisitions on our expected revenues and expenses following the integration of such businesses; the competitiveness of our industry and how such competition may affect our operating results; the possibility of losing contracts through competitive bidding, early termination or governmental action; the effects of financial difficulties of some of our customers, including governmental entities, affecting their credit risk; our ability to provide adequate cash to fund our operating activities; our ability to draw from our credit facility or raise additional capital; our ability to generate free cash flow and reduce our leverage; the impact on our tax positions by recent changes in U.S. tax law and future changes in tax laws in the jurisdictions in which we operate; the effects of landfill special waste projects on volume results; the impact that price increases may have on our business and operating results; demand for recyclable commodities and recyclable commodity pricing; the effects of seasonality on our business and results of operations; our ability to obtain additional exclusive arrangements; increasing alternatives to landfill disposal; increases in labor and pension plan costs or the impact that labor union activity may have on our operating results; operational and safety risks, including the risk of personal injury to employees and others; our expectations with respect to the purchase of fuel and fuel prices; our expectations with respect to capital expenditures; our expectations with respect to the outcomes of our legal proceedings; the impairment of our goodwill; insurance costs; disruptions to or breaches of our information systems and other cybersecurity threats; and environmental, health and safety laws and regulations, including changes to the regulation of landfills, solid waste disposal, E&P waste disposal, or hydraulic fracturing. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “intends,” “may,” “might,” “will,” “could,” “should” or “anticipates,” or the negative thereof or comparable terminology, or by discussions of strategy. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to, those listed below and elsewhere in this report and in our other filings with the SEC, as well as in our filings during the year with the Canadian Securities Administrators. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.

~~Our results are vulnerable to economic conditions~~.

~~Our business and results of operations may be adversely affected by changes in national or global economic conditions, including the price of crude oil.~~

In an economic slowdown, we may experience the negative effects of the following, any of which could negatively impact our operating income and cash flows: decreased waste generation, increased competitive pricing pressure, increased customer turnover, and reductions in customer service requirements. In a recessionary environment, two of our business lines that could see a more immediate impact are construction and demolition debris and E&P waste disposal, as demand for new construction or energy exploration decreases. Our commercial and industrial collection activity and the related demand for our landfill disposal and other services may also be impacted, depending on the drivers of the economic slowdown. In addition, a weaker economy may result in declines in recycled commodity prices. Worsening economic conditions or a prolonged or recurring economic recession could adversely affect our operating results and expected seasonal fluctuations. Further, we cannot assure you that any improvement in economic conditions after such a slowdown will result in an immediate, if at all, positive improvement in our operating results or cash flows.

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The impact of public health crises, pandemics and epidemics, and the effects of governmental initiatives to manage resulting economic conditions, have adversely affected and may continue to adversely affect our business, financial condition and results of operations.

Public health crises, pandemics and epidemics, such as the outbreak of coronavirus disease 2019 (“COVID-19”), may impact our operations directly or may disrupt the operations of our customers in ways that could have an adverse effect on our business, results of operations and financial condition. COVID-19 has resulted in adverse impacts to our business. Fear of such events and their duration and spread might also alter consumer confidence, behavior and spending patterns, resulting in an economic slowdown that could continue to affect demand for our services. The following could be among the contributing factors:

●

Mandatory and voluntary closures, shelter-in-place orders, and similar government restrictions on or advisories with respect to travel, business operations and public gatherings have impacted and may continue to impact the operations of our commercial, municipal, industrial and E&P collection customers, as well as affiliated and third-party haulers that bring waste to our landfills, transfer stations, E&P waste and recycling facilities, resulting in a decline in demand for our service offerings;

●

Weakness in the economy resulting from business closures, unemployment and other direct and indirect impacts of the COVID-19 outbreak has caused and may continue to cause customers, including residential, commercial, industrial and E&P accounts, to suffer financial difficulties and ultimately to be unable or unwilling to pay amounts owed to us. This could negatively impact our consolidated financial condition, results of operations and cash flows;

●

To the extent that a significant percentage of our workforce is unable to work, including because of illness or government restrictions in connection with the COVID-19 outbreak, our workforce and operations will be negatively impacted;

●

The additional costs associated with COVID-19, including those related to emergency wages, supplemental pay, personal protective equipment and extended benefits programs provided by the Company to employees affected by the COVID-19 outbreak, may impact our financial results;

●

~~Volatility in commodity and other input costs could substantially impact our result of operations; and~~

●

It may become more costly or difficult to obtain debt or equity financing to fund operations or investment opportunities, or to refinance our debt in the future, in each case on terms and within a time period acceptable to us.

The ultimate extent of the impact of the COVID-19 outbreak on our business, results of operations, financial condition and cash flows will depend largely on future developments, including the duration and spread of the outbreak in the U.S. and Canada, its severity, the actions to contain the novel coronavirus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and cannot be predicted at this time.

Our industry is highly competitive and includes companies with lower prices, return expectations or other advantages, and governmental service providers, which could adversely affect our ability to compete and our operating results.

Our industry is highly competitive and requires substantial labor and capital resources. Some of the markets in which we compete or will seek to compete are served by one or more large, national companies, as well as by regional and local companies of varying sizes and resources, some of which we believe have accumulated substantial goodwill in their markets. Some of our competitors may also have greater name recognition than we do, or be able to provide or be willing to bid their services at a lower price than we may be willing to offer. In addition, existing and future competitors may develop or offer services or new technologies, new facilities or other advantages. Our inability to compete effectively could hinder our growth or negatively impact our operating results.

In our solid waste business, we also compete with counties, municipalities and solid waste districts that maintain or could in the future choose to maintain their own waste collection and disposal operations, including through the

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implementation of flow control ordinances or similar legislation. These operators may have financial advantages over us because of their access to user fees and similar charges, tax revenues and tax-exempt financing.

In our E&P waste business, we compete for disposal volumes with existing facilities owned by third parties (including those owned by municipalities or quasi-governmental entities), and we face potential competition from new facilities that are currently under development. Increased competition in certain markets may result in lower pricing and decreased volumes at our facilities. In addition, customers in certain markets may decide to use internal disposal methods for the treatment and disposal of their waste.

~~Competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions~~.

We seek to grow through strategic acquisitions in addition to internal growth. Although we have and expect to continue to identify numerous acquisition candidates that we believe may be suitable, we may not be able to acquire them at prices or on terms and conditions favorable to us.

Other companies have adopted or may in the future adopt our strategy of acquiring and consolidating regional and local businesses, and they may be willing to accept terms and conditions or valuations that we deem inappropriate. To the extent that competition increases, it may become uneconomical for us to make further acquisitions or we may be unable to locate or acquire suitable acquisition candidates at price levels and on terms and conditions that we consider appropriate, particularly in markets we do not already serve.

We expect that increased consolidation in the solid waste services industry will continue to reduce the number of attractive acquisition candidates. Moreover, general economic conditions, including pandemics and public health crises such as the COVID-19 outbreak, and the environment for attractive investments may affect the desire of the owners of acquisition candidates to sell their companies. As a result, we may have fewer acquisition opportunities, and those opportunities may be on less attractive terms than in the past, which could cause a reduction in our rate of growth from acquisitions. In addition, the COVID-19 outbreak may delay the closing of acquisitions already in process due to logistical constraints associated with business closures or travel restrictions.

Our ability to access the capital markets may be severely restricted at a time when we would like, or need, to do so. While we expect we will be able to fund some of our acquisitions with our existing resources, additional financing to pursue additional acquisitions may be required. However, particularly if market conditions deteriorate, we may be unable to secure additional financing or any such additional financing may not be available to us on favorable terms, which could have an impact on our flexibility to pursue additional acquisition opportunities. In addition, disruptions in the capital and credit markets could adversely affect our ability to draw on our credit facility or raise other capital. Our access to funds under the credit facility is dependent on the ability of the banks that are parties to the facility to meet their funding commitments. Those banks may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests within a short period.

~~Price increases may not be adequate to offset the impact of increased costs, or may cause us to lose customers~~.

We seek price increases necessary to offset increased costs, to improve operating margins and to obtain adequate returns on our deployed capital. Contractual, general economic, competitive or market-specific conditions, including the impact of pandemics or public health crises such as the COVID-19 outbreak, may limit our ability to raise prices or otherwise impact our plans with respect to implementing price increases. As a result of these factors, we may be unable to offset increases in costs, improve operating margins and obtain adequate investment returns through price increases. We may also lose customers to lower-price competitors, and new competitors may enter our markets as we raise prices.

~~We may lose contracts through competitive bidding, early termination or governmental action~~.

We derive a significant portion of our revenues from market areas where we have exclusive arrangements, including franchise agreements, municipal contracts and certificates issued by Washington State known as G Certificates. Many franchise agreements and municipal contracts are for a specified term and are, or will be, subject to competitive bidding

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in the future. For example, at the beginning of 2020, we had approximately 480 contracts, representing approximately 3.9% of our annual revenues, which were set for expiration or automatic renewal on or before December 31, 2020. Although we intend to bid on existing contracts subject to competitive bidding in the future and additional municipal contracts and franchise agreements, we may not be the successful bidder, or we may need to lower our price in order to retain the contract. In addition, some of our customers, including municipalities, may terminate their contracts with us before the end of the terms of those contracts. Similar risks may affect our contracts to operate municipally-owned assets, such as landfills.

Governmental action may also affect our exclusive arrangements. Municipalities may annex unincorporated areas within counties where we provide collection services. As a result, our customers in annexed areas may be required to obtain services from competitors that have been previously franchised by the annexing municipalities to provide those services. For example, municipalities in the State of Washington may, by law, annex any unincorporated territory, which could remove such territory from an area covered by a G Certificate issued to us by the Washington Utilities and Transportation Commission, or WUTC. Such occurrences could subject more of our Washington operations to competitive bidding. Moreover, legislative action could amend or repeal the laws governing WUTC regulation, which could eliminate or diminish service exclusivity, subjecting more areas to competitive bidding and/or overlapping service. In addition, municipalities in which we provide services on a competitive basis may elect to franchise those services to other service providers. Unless we are awarded franchises by these municipalities, we will lose customers. Municipalities may also decide to provide services to their residents themselves, on an optional or mandatory basis, causing us to lose customers. If we are not able to replace revenues from contracts lost through competitive bidding or early termination or from the renegotiation of existing contracts with other revenues within a reasonable time, our revenues could decline.

~~Our financial and operating performance may be affected by the inability to renew landfill operating permits, obtain new landfills and expand existing ones~~.

We currently own and/or operate 92 landfills and one development stage landfill throughout the United States and Canada. Our ability to meet our financial and operating objectives may depend in part on our ability to acquire, lease, or renew landfill operating permits, expand existing landfills and develop new landfill sites, especially in our E&P waste business. It has become increasingly difficult and expensive to obtain required permits and approvals to build, operate and expand solid waste management facilities, including landfills and transfer stations. Although the process generally takes less time, the process of obtaining permits and approvals for E&P landfills has similar uncertainties. Operating permits for landfills in states and provinces where we operate must generally be renewed every five to ten years, although some permits are required to be renewed more frequently. These operating permits often must be renewed several times during the permitted life of a landfill. The permit and approval process is often time consuming, requires numerous hearings and compliance with zoning, environmental and other requirements, is frequently challenged by special interest and other groups, including those utilizing social media to further their objectives, and may result in the denial of a permit or renewal, the award of a permit or renewal for a shorter duration than we believed was otherwise required by law, or burdensome terms and conditions being imposed on our operations. This process may be further complicated by the COVID-19 outbreak, which may impact the timeliness of the receipt of approvals and permits. We may not be able to obtain new landfill sites or expand the permitted capacity of our existing landfills when necessary, and may ultimately be required to expense up to the carrying value of the landfill or expansion project, less the recoverable value of the property and other amounts recovered. Obtaining new landfill sites is important to our expansion into new, non-exclusive solid waste markets and in our E&P waste business. If we do not believe that we can obtain a landfill site in a non-exclusive market, we may choose not to enter that market. Expanding existing landfill sites is important in those markets where the remaining lives of our landfills are relatively short. We may choose to forego acquisitions and internal growth in these markets because increased volumes would further shorten the lives of these landfills. Any of these circumstances could adversely affect our operating results.

~~Lower crude oil prices have and may continue to adversely affect the level of exploration, development and production activity of E&P companies and the demand for our E&P waste services~~.

Lower crude oil prices and the volatility of such prices may affect the level of investment and the amount of linear feet drilled in the basins where we operate, as it may impact the ability of E&P companies to access capital on economically advantageous terms or at all. In addition, E&P companies may elect to decrease investment in basins where the returns on

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investment are inadequate or uncertain due to lower crude oil prices or volatility in crude oil prices. Recent declines in the price of crude oil to historic lows have resulted in announced reductions to capital spending plans by E&P companies. Such reductions in capital spending would be expected to negatively impact E&P waste generation and therefore the demand for our services. Given the unexpected oversupply of oil and the decreased demand for oil associated with the economic slowdown caused by the COVID-19 outbreak, we cannot estimate when crude oil prices will increase. Further, we cannot provide assurances that higher crude oil prices will result in increased capital spending and linear feet drilled by our customers in the basins where we operate.

~~Increases in labor costs and limitations on labor availability could impact our financial results~~.

Labor is one of our highest costs and relatively small increases in labor costs per employee could materially affect our cost structure. We compete with other businesses in our markets for qualified employees and the labor supply is sometimes tight in our markets, which can drive higher turnover and increase the time it takes to fill job openings. In our E&P waste business, for example, we are exposed to the cyclical variations in demand that are particular to the development and production of oil and natural gas. A shortage of qualified employees in solid waste or E&P, including due to the COVID-19 outbreak in our markets, would require us to incur additional costs related to wages and benefits, to hire more expensive temporary employees or to contract for services with more expensive third-party vendors. In addition, higher turnover can result in increased costs associated with recruiting and training; it can also impact operating costs, including maintenance and risk. As an essential services provider, in March 2020 we implemented temporary emergency wages, supplemental pay and extended benefits programs for our frontline workforce and other employees directly or indirectly affected by the COVID-19 outbreak. We expect that increased labor costs resulting from these programs will be partially offset by cost reductions we have implemented in other areas, including temporary salary freezes for certain non-frontline employees and the temporary suspension of Company matching contributions to our 401(k) employee retirement plan.

~~Increases in capital expenditures could impact our financial results~~.

Increases in fleet, equipment and landfill construction costs due to the imposition of tariffs on steel and other items, as well as other cost pressures, could result in capital expenditures being higher than anticipated. In addition, acquisitions and new contracts may increase capital expenditures. This could impact our ability to generate free cash flow in line with our expectations.

~~A portion of our growth and future financial performance depends on our ability to integrate acquired businesses, and the success of our acquisitions~~.

A component of our growth strategy involves achieving economies of scale and operating efficiencies by growing through acquisitions. We may not achieve these goals unless we effectively combine the operations of acquired businesses with our existing operations. Similar risks may affect contracts that we are awarded to operate municipally-owned assets, such as landfills. In addition, we are not always able to control the timing of our acquisitions. Our inability to complete acquisitions within the time frames that we expect may cause our operating results to be less favorable than expected, which could cause our share price to decline.

Even if we are able to make acquisitions on advantageous terms and are able to integrate them successfully into our operations and organization, some acquisitions may not fulfill our anticipated financial or strategic objectives in a given market due to factors that we cannot control, such as market conditions, including the price of crude oil, market position, competition, customer base, loss of key employees, third-party legal challenges or governmental actions. In addition, we may change our strategy with respect to a market or acquired businesses and decide to sell such operations at a loss, or keep those operations and recognize an impairment of goodwill and/or intangible assets. Similar risks may affect contracts that we are awarded to operate municipally-owned assets, such as landfills.

~~The seasonal nature of our business and “event-driven” waste projects cause our results to fluctuate~~.

Based on historic trends, excluding any impact from the COVID-19 outbreak or an economic recession, we would expect our operating results to vary seasonally, with revenues typically lowest in the first quarter, higher in the second and third quarters, and lower in the fourth quarter than in the second and third quarters. We expect the fluctuation in our

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revenues between our highest and lowest quarters to be approximately 10%. This seasonality reflects the lower volume of solid waste generated during the late fall, winter and early spring because of decreased construction and demolition activities during the winter months in Canada and the U.S., and reduced E&P activity during harsh weather conditions. Conversely, mild winter weather conditions may reduce demand for oil and natural gas, which may cause our customers to curtail their drilling programs, which could result in production of lower volumes of E&P waste.

Adverse winter weather conditions, including severe storms or extended periods of inclement weather, slow waste collection activities, resulting in higher labor and operational costs. Greater precipitation in the winter increases the weight of collected solid waste, resulting in higher disposal costs, which are calculated on a per ton basis. Certain weather conditions, including severe storms, may result in temporary suspension of our operations, which can significantly impact the operating results of the affected areas. Conversely, weather-related occurrences and other “event-driven” waste projects can boost revenues through heavier weight loads or additional work for a limited time. These factors impact period-to-period comparisons of financial results, and our share price may be negatively affected by these variations.

~~Our results will be affected by changes in recycled commodity prices and quantities~~.

We provide recycling services to some of our customers. The recyclables we process for sale include paper products and plastics that are shipped to customers in the United States, as well as other markets, including Asia. The sale prices of and the demand for recyclable commodities are frequently volatile and when they decline, our revenues, operating results and cash flows will be affected. The value of plastics are influenced by the volatility of crude oil, and we have seen a resulting decline in the value of plastic recyclables associated with the precipitous drop in the value of crude in 2020. The value of paper products are impacted by demand, which is often influenced by quality concerns. In 2017, the Chinese government announced a ban on certain materials, including mixed waste paper and mixed plastics, as well as extremely restrictive quality requirements that have been difficult for the industry to achieve. Also in 2017, the Chinese government began to limit the flow of material into the country by restricting the issuance of required import licenses, and this practice continued through 2018 and 2019. Many other markets, both domestic and foreign, have also tightened their quality requirements. In addition, other countries have limited or restricted the import of certain recyclables. Singlestream recycling facilities process a wide range of commingled materials and tend to receive a higher percentage of non-recyclables, which results in increased processing and residual disposal costs to achieve quality standards.

The new quality standards imposed by China and the restrictions on import licenses have made the sale of recycled commodities more difficult and have resulted in lower prices for such commodities, higher operating costs or additional capital expenditures in order to meet the requirements, or higher fees imposed by third parties for the processing of recyclables. As a result, we have increased the fees that we charge customers at our recycling facilities in order to recover the higher processing costs for recyclables. This may result in lower recycled commodity volumes at our recycling facilities, as customers may elect to pursue cheaper alternatives for processing or disposal. Any such reduction could impact revenues, operating results and cash flow. Some of our recycling operations offer rebates to customers based on the market prices of commodities we buy to process for resale. Therefore, if we recognize increased revenues resulting from higher prices for recyclable commodities, the rebates we pay to suppliers will also increase, which also may impact our operating results. To the extent that there is an economic slowdown, including the one associated with the COVID-19 outbreak, a resulting decline in demand for recycled commodities could impact our revenues, operating results and cash flow.

~~Our results will be affected by changes in the value of renewable fuels~~.

Variations in the price of methane gas and other energy-related products that are marketed and sold by our landfill gas recovery operations affect our results. Pursuant to the Energy Independence and Security Act of 2007, the United States EPA has promulgated the Renewable Fuel Standards, or RFS, which require refiners to either blend "renewable fuels," such as ethanol and biodiesel, into their transportation fuels or to purchase renewable fuel credits, known as renewable identification numbers, or RINs, in lieu of blending. In some cases, landfill gas generated at our landfills qualifies as a renewable fuel for which RINs are available. The price of RINs has been extremely volatile and is dependent upon a variety of factors, including potential legislative changes, the availability of RINs for purchase, the demand for RINs, which is dependent on transportation fuel production levels, the mix of the petroleum business’ petroleum products and fuel blending performed at the refineries and downstream terminals, all of which can vary significantly from period to

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period. In addition, demand for RINs can be impacted by the ability of refineries to obtain small refinery exemptions, or SREs, through the EPA. In December 2019, the EPA released its targets for renewable volume obligations, or RVOs, for 2020, which included a slight increase over the 2019 RVOs with no change to the EPA’s plan to account for the impact of granting SREs. Any reductions or limitations on the requirement to blend renewable fuel, including a reduction associated with the economic slowdown associated with the COVID-19 outbreak, and any related waivers including SREs, would likely reduce the demand for RINs, which could impact the value of RINs.

In Canada, the Renewable Fuels Regulations under the Canadian Environmental Protection Act, 1999 require producers and importers of gasoline, diesel fuel and heating distillate to acquire a certain number of renewable fuel compliance units, or Compliance Units, in connection with the volumes of fuel they produce or import. Compliance Units can be generated in a number of ways, including through the blending of renewable fuel into liquid petroleum fuels. Certain provincial jurisdictions in Canada also impose obligations to incorporate renewable fuels into fuels that are distributed within the jurisdiction. In some cases, landfill gas generated at our landfills in Canada is sold by our Company as a renewable fuel for which RINs are available under the United States RFS. Our Company could also sell landfill gas generated in Canada in connection with renewable fuel obligations in Canada. The price for our renewable fuel is dependent on a variety of factors, including demand. The Canadian federal government released details on a proposed new clean fuel regulatory framework at the end of 2017 called the “Clean Fuel Standard.” The proposed framework would impose lifecycle carbon intensity requirements on certain liquid, gaseous and solid fuels that are used in transportation, industry and buildings, and establish rules relating to the trading of compliance credits. The carbon intensity requirements would become more stringent over time. Carbon intensity would be differentiated between different types of renewable fuels to reflect the associated emissions reduction potential. Regulated parties, which may include fuel producers and importers, would have some flexibility with respect to how to achieve lower carbon fuels in Canada. The Canadian federal government has indicated that over time, the new Clean Fuel Standard would replace the current Renewable Fuels Regulations. Since January 2017, the Canadian federal government has been conducting public consultation on the proposed framework. The Canadian Government is reporting that new regulations under the Clean Fuel Standard are targeted to come into force on January 1, 2022 (for liquid fuels) and January 1, 2023 (for gaseous and solid fuel regulations). At this time, we do not know how a new clean fuel regulatory framework in Canada could impact demand for our renewable fuel.

~~A significant reduction in the value of RINs in the United States or the price paid for our renewable fuel in Canada could adversely impact our reported results.~~

~~Increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings~~.

We maintain insurance policies for automobile, general, employer’s, environmental, cyber, employment practices and directors’ and officers’ liability as well as for employee group health insurance, property insurance and workers’ compensation. We carry umbrella policies for certain types of claims to provide excess coverage over the underlying policies and per incident deductibles or self-insured retentions. The amounts that we effectively self-insure could cause significant volatility in our operating margins and reported earnings based on the event and claim costs of incidents, accidents, injuries and adverse judgments. Our insurance accruals are based on claims filed and estimates of claims incurred but not reported and are developed by our management with assistance from our third-party actuary and our third-party claims administrator. To the extent these estimates are inaccurate, we may recognize substantial additional expenses in future periods that would reduce operating margins and reported earnings. Furthermore, while we maintain liability insurance, our insurance is subject to coverage limitations. If we were to incur substantial liability, our insurance coverage may be inadequate to cover the entirety of such liability. This could have a material adverse effect on our financial position, results of operations and cash flows. One form of coverage limitation concerns claims for punitive damages, which are generally excluded from coverage under all of our liability insurance policies. A punitive damage award could have an adverse effect on our reported earnings in the period in which it occurs. Significant increases in premiums on insurance that we retain also could reduce our margins.

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~~Increases in the price of diesel or compressed natural gas fuel may adversely affect our collection business and reduce our operating margins~~.

The market price of diesel fuel is volatile. We generally purchase diesel fuel at market prices, and such prices have fluctuated significantly in recent years. A significant increase in market prices for fuel could adversely affect our waste collection business through a combination of higher fuel and disposal-related transportation costs and reduce our operating margins and reported earnings. To manage a portion of this risk, we have entered into fixed-price fuel purchase contracts. During periods of falling diesel fuel prices, it may become more expensive to purchase fuel under fixed-price fuel purchase contracts than at market prices as the prices under our fixed-price fuel purchase contracts may be above market prices.

We utilize compressed natural gas, or CNG, in a small percentage of our fleet and we may convert more of our fleet from diesel fuel to CNG over time. The market price of CNG is also volatile; a significant increase in such cost could adversely affect our operating margins and reported earnings.

~~Our financial results are based upon estimates and assumptions that may differ from actual results~~.

In preparing our consolidated financial statements in accordance with U.S. generally accepted accounting principles, estimates and assumptions are made that affect the accounting for and recognition of assets, liabilities, revenues and expenses. These estimates and assumptions must be made because certain information that is used in the preparation of our financial statements is dependent on future events, cannot be calculated with a high degree of precision from data available or is not capable of being readily calculated based on generally accepted methodologies. In some cases, including those resulting from the COVID-19 outbreak and associated impacts, these estimates are particularly difficult to determine and we must exercise significant judgment. The most difficult, subjective and complex estimates and the assumptions that deal with the greatest amount of uncertainty are related to our accounting for landfills, self-insurance accruals, income taxes, allocation of acquisition purchase price, asset impairments and litigation, claims and assessments. Actual results for all estimates could differ materially from the estimates and assumptions that we use, which could have an adverse effect on our financial condition and results of operations.

~~Our accruals for our landfill site closure and post-closure costs may be inadequate~~.

We are required to pay capping, closure and post-closure maintenance costs for landfill sites that we own and operate. We are also required to pay capping, closure and post-closure maintenance costs for operated landfills for which we have life-of-site agreements. Our obligations to pay closure or post-closure costs may exceed the amount we have accrued and reserved and other amounts available from funds or reserves established to pay such costs. In addition, the completion or closure of a landfill site does not end our environmental obligations. After completion or closure of a landfill site, there exists the potential for unforeseen environmental problems to occur that could result in substantial remediation costs or potential litigation. Paying additional amounts for closure or post-closure costs and/or for environmental remediation and/or for litigation could harm our financial condition or operating results.

We may be subject in the normal course of business to judicial, administrative or other third-party proceedings that could interrupt or limit our operations, require expensive remediation, result in adverse judgments, settlements or fines and create negative publicity.

Governmental agencies may, among other things, impose fines or penalties on us relating to the conduct of our business, attempt to revoke or deny renewal of our operating permits, franchises or licenses for violations or alleged violations of environmental laws or regulations or as a result of third-party challenges, require us to install additional pollution control equipment or require us to remediate potential environmental problems relating to any real property that we or our predecessors ever owned, leased or operated or any waste that we or our predecessors ever collected, transported, disposed of or stored. Individuals, citizens groups, trade associations or environmental activists may also bring actions against us in connection with our operations that could interrupt or limit the scope of our business. Any adverse outcome in such proceedings could harm our operations and financial results and create negative publicity, which could damage our reputation, competitive position and share price.

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~~Pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements~~.

We are, and from time to time become, involved in lawsuits, regulatory inquiries, and governmental and other legal proceedings arising out of the ordinary course of our business. Many of these matters raise complicated factual and legal issues and are subject to uncertainties and complexities, all of which make the matters costly to address. For example, in recent years, wage and employment laws have changed regularly and become increasingly complex, which has fostered litigation, including purported class actions. Similarly, citizen suits brought pursuant to environmental laws, such as those regulating the treatment of storm water runoff, have proliferated. The timing of the final resolutions to lawsuits, regulatory inquiries, and governmental and other legal proceedings is uncertain. Additionally, the possible outcomes or resolutions to these matters could include adverse judgments or settlements, either of which could require substantial payments, adversely affecting our consolidated financial condition, results of operations and cash flows. See discussion in Note 18, “Commitments and Contingencies,” of our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

~~Our financial results could be adversely affected by impairments of goodwill, indefinite-lived intangibles or property and equipment~~.

As a result of our acquisition strategy, we have a material amount of goodwill, indefinite-lived intangibles and property and equipment recorded in our financial statements. We do not amortize our existing goodwill or indefinite-lived intangibles and are required to test goodwill and indefinite-lived intangibles for impairment annually in the fourth quarter of the year and whenever events or changes in circumstances indicate that the carrying value of goodwill and/or indefinite-lived intangible assets may not be recoverable using the one-step process prescribed in the new accounting guidance that we early adopted on January 1, 2017. The process screens for and measures the amount of the impairment, if any. The recoverability of property and equipment is tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Application of the impairment test requires judgment. A significant deterioration in a key estimate or assumption or a less significant deterioration to a combination of assumptions could result in an impairment charge in the future, which could have a significant adverse impact on our reported results. See discussion in “Overview of Our Business” in Item 2 of this Quarterly Report on Form 10-Q regarding the potential impact of recent declines in the value of crude oil on certain intangible assets and property and equipment at our E&P segment.

~~Income taxes may be uncertain~~.

Our actual effective tax rate may vary from our expectation and that variance may be material. Tax interpretations, regulations and legislation in the various jurisdictions in which we and our affiliates operate are subject to measurement uncertainty and the interpretations can impact net income, income tax expense or recovery, and deferred income tax assets or liabilities. In addition, tax rules and regulations, including those relating to foreign jurisdictions, are subject to interpretation and require judgment by us that may be challenged by the taxation authorities upon audit.

Changes in our tax provision or an increase to our tax liabilities, whether due to legislation commonly referred to as the Tax Cut and Jobs Act (“Tax Act”) or interpretations of the Tax Act, such as through final regulations and the potential finalization of proposed regulations, or a final determination of tax audits, could have a material adverse effect on our financial position, results of operations, and cash flows. See Note 19, “Subsequent Events,” of our Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q.

~~Future changes to U.S., Canadian and foreign tax laws could materially adversely affect us~~.

~~We cannot give any assurance as to what our effective tax rate will be in the future, because of, among other things, uncertainty regarding the tax policies of the jurisdictions where we operate.~~

For example, the U.S. Congress, the Canadian government, the Organisation for Economic Co-operation and Development (“OECD”) and other government agencies in jurisdictions where we and our affiliates do business have had an extended focus on issues related to the taxation of multinational corporations. One example is in the area of "base erosion and profit shifting," where payments are made between affiliates from a jurisdiction with high tax rates to a

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jurisdiction with lower tax rates. In 2019, Canada ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, or the MLI, as part of the OECD/G20 initiative to counter what was perceived as base erosion and profit shifting. The MLI entered into force in Canada on December 1, 2019 and entered into effect with respect to certain of Canada’s tax treaties on January 1, 2020 for withholding taxes and will enter into effect with respect to certain other taxes (including capital gains taxes) for tax years beginning on or after June 1, 2020 (which, for us and our affiliates, in general, will be January 1, 2021). The MLI may enter into effect at a later date for certain of Canada’s tax treaties with countries that have not yet completed their domestic procedures to cause the MLI to come into effect. As a result of these and other changes, the tax laws in the United States, Canada, and other countries in which we and our affiliates do business could change on a prospective or retroactive basis, and any such changes could adversely affect us and our affiliates.

Each business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, or that become more adverse to our business than we anticipated at the time of acquisition.

It is possible that the corporate entities or sites we have acquired, or which we may acquire in the future, have liabilities or risks in respect of former or existing operations or properties, or otherwise, which we have not been able to identify and assess through our due diligence investigations. As a successor owner, we may be legally responsible for those liabilities that arise from businesses that we acquire. Even if we obtain legally enforceable representations, warranties and indemnities from the sellers of such businesses, they may not cover the liabilities fully or the sellers may not have sufficient funds to perform their obligations. Some environmental liabilities, even if we do not expressly assume them, may be imposed on us under various regulatory schemes and other applicable laws. In addition, our insurance program may not cover such sites and will not cover liabilities associated with some environmental issues that may have existed prior to attachment of coverage. A successful uninsured claim against us could harm our financial condition or operating results. Additionally, there may be other risks of which we are unaware that could have an adverse effect on businesses that we acquire or have acquired, such as foreign, state and local regulation and administrative risks. Another example of risk is interested parties that may bring actions against us in connection with operations that we acquire or have acquired. Furthermore, risks or liabilities we judge to be not material or remote at the time of acquisition may develop into more serious risks to our business. Any adverse outcome resulting from such risks or liabilities could harm our operations and financial results and create negative publicity, which could damage our reputation, competitive position and share price. For example, see the discussions regarding the Lower Duwamish Waterway Superfund Site Allocation Process in Note 18, “Commitments and Contingencies,” of our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

~~Our indebtedness could adversely affect our financial condition and limit our financial flexibility~~.

~~As of March 31, 2020, we had approximately $5.202 billion of total indebtedness outstanding, and we may incur additional debt in the future. This amount of indebtedness could:~~

●~~increase our vulnerability to general adverse economic and industry conditions;~~

●~~expose us to interest rate risk since a significant portion of our indebtedness is at variable rates;~~

●~~limit our ability to obtain additional financing or refinancing at attractive rates;~~

●require the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, our indebtedness, thereby reducing the availability of such cash flow to fund our growth strategy, working capital, capital expenditures, dividends, share repurchases and other general corporate purposes;

●~~limit our flexibility in planning for, or reacting to, changes in our business and the industry; and~~

●~~place us at a competitive disadvantage relative to our competitors with less debt.~~

In addition, a portion of our indebtedness, including interest rate swaps, is at variable rates which are based on the London Interbank Offered Rate, or LIBOR, which is expected to no longer be published by 2021. The FASB added the Secured Overnight Financing Rate, or SOFR, as an eligible benchmark interest rate in order to facilitate the LIBOR to SOFR transition and provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies

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~~for both risk management and hedge accounting purposes. We are developing a plan to transition our indebtedness from LIBOR to SOFR.~~

Further, our outstanding indebtedness is subject to financial and other covenants, which may be affected by changes in economic or business conditions or other events that are beyond our control, including the impacts from the COVID-19 outbreak. If we fail to comply with the covenants under any of our indebtedness, we may be in default under the indebtedness, which may entitle the lenders or holders of indebtedness to accelerate the debt obligations. A default under one of our loans or debt securities could result in cross-defaults under our other indebtedness. In order to avoid defaulting on our indebtedness, we may be required to take actions such as reducing or delaying capital expenditures, reducing or eliminating dividends or share repurchases, selling assets, restructuring or refinancing all or part of our existing debt, or seeking additional equity capital, any of which may not be available on terms that are favorable to us, if at all.

~~We may be unable to obtain performance or surety bonds, letters of credit or other financial assurances or to maintain adequate insurance coverage~~.

If we are unable to obtain performance or surety bonds, letters of credit or insurance, we may not be able to enter into additional solid waste or other collection contracts or retain necessary landfill operating permits. Collection contracts, municipal contracts, transfer station operations and landfill closure and post-closure obligations may require performance or surety bonds, letters of credit or other financial assurance to secure contractual performance or comply with federal, state, provincial or local environmental laws or regulations. We typically satisfy these requirements by posting bonds or letters of credit. As of March 31, 2020, we had approximately $1.106 billion of such surety bonds in place and approximately $107.3 million of letters of credit issued. Closure bonds are difficult and costly to obtain. If we are unable to obtain performance or surety bonds or additional letters of credit in sufficient amounts or at acceptable rates, we could be precluded from entering into additional collection contracts or obtaining or retaining landfill operating permits. Any future difficulty in obtaining insurance also could impair our ability to secure future contracts that are conditional upon the contractor having adequate insurance coverage. Accordingly, our failure to obtain performance or surety bonds, letters of credit or other financial assurances or to maintain adequate insurance coverage could limit our operations or violate federal, state, provincial, or local requirements, which could have a materially adverse effect on our business, financial condition and results of operations.

~~Our operations in Canada expose us to exchange rate fluctuations that could adversely affect our financial performance and our reported results of operations~~.

Our operations in Canada are conducted primarily in Canadian dollars. Our consolidated financial statements are denominated in U.S. dollars, and to prepare those financial statements we must translate the amounts of the assets, liabilities, net sales, other revenues and expenses of our operations in Canada from Canadian dollars into U.S. dollars using exchange rates for the current period. Fluctuations in the exchange rates that are unfavorable to us, including those resulting from the impact of the COVID-19 outbreak, would have an adverse effect on our financial performance and reported results of operations.

~~Alternatives to landfill disposal may cause our revenues and operating results to decline~~.

Counties and municipalities in which we operate landfills may be required to formulate and implement comprehensive plans to reduce the volume of municipal solid waste deposited in landfills through waste planning, composting, recycling or other programs, while working to reduce the amount of waste they generate. Some state, provincial and local governments mandate diversion, recycling and waste reduction at the source and prohibit the disposal of certain types of wastes, such as yard waste, food waste and electronics, at landfills. Even where not prohibited by state, provincial or local law, some grocery stores and restaurants have chosen to divert their organic waste from landfills, while other companies have set zero-waste goals and communicated an intention to cease the disposal of any waste in landfills. Although such actions are useful to protect our environment, these actions, as well as the actions of our customers to reduce waste or seek disposal alternatives, have reduced and may in the future further reduce the volume of waste going to landfills in certain areas, which may affect our ability to operate our landfills at full capacity and could adversely affect our operating results.

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~~Labor union activity could divert management attention and adversely affect our operating results~~.

From time to time, labor unions attempt to organize our employees, and these efforts are likely to continue in the future. Certain groups of our employees are represented by unions, and we have negotiated collective bargaining agreements with most of these unions. Additional groups of employees may seek union representation in the future. As a result of these activities, we may be subjected to unfair labor practice charges, grievances, complaints and other legal and administrative proceedings initiated against us by unions or federal, state or provincial labor boards, which could negatively impact our operating results. Negotiating collective bargaining agreements with these unions could divert our management’s attention, which could also adversely affect our operating results. If we are unable to negotiate acceptable collective bargaining agreements, we might have to wait through “cooling off” periods, which may be followed by work stoppages, including strikes or lock-outs. Depending on the type and duration of any such labor disruptions, our operating expenses could increase significantly, which could adversely affect our financial condition, results of operations and cash flows.

We could face significant withdrawal liability if we withdraw from participation in one or more multiemployer pension plans in which we participate and the accrued pension benefits are not fully funded.

We participate in 11 “multiemployer” pension plans administered by employee and union trustees. We make periodic contributions to these plans to fund pension benefits for our union employees pursuant to our various contractual obligations to do so. In the event that we withdraw from participation in or otherwise cease our contributions to one of these plans, then applicable law regarding withdrawal liability could require us to make additional contributions to the plan if the accrued benefits are not fully funded, and we would have to reflect that “withdrawal liability” as an expense in our consolidated statement of operations and as a liability on our consolidated balance sheet. Our withdrawal liability for any multiemployer plan would depend on the extent to which accrued benefits are funded. In the ordinary course of our renegotiation of collective bargaining agreements with labor unions that participate in these plans, we may decide to discontinue participation in a multiemployer plan, and in that event, we could face withdrawal liability. Some multiemployer plans in which we participate may from time to time have significant accrued benefits that are not funded. The size of our potential withdrawal liability may be affected by the level of unfunded accrued benefits, the actuarial assumptions used by the plan and the investment gains and losses experienced by the plan.

We rely on computer systems to run our business and disruptions or privacy breaches in these systems could impact our ability to service our customers and adversely affect our financial results, damage our reputation, and expose us to litigation risk.

Our businesses rely on computer systems to provide customer information, process customer transactions and provide other general information necessary to manage our businesses. We also rely on a payment card industry-compliant third party to protect our customers’ credit card information. We have an active disaster recovery plan in place that we continuously review and test. However, our computer systems are subject to damage or interruption due to cybersecurity threats, system conversions, power outages, computer or telecommunication failures, catastrophic physical events such as fires, tornadoes and hurricanes and usage errors by our employees. Given the unpredictability of the timing, nature and scope of such disruptions, we could be potentially subject to operational delays and interruptions in our ability to provide services to our customers. Any disruption caused by the unavailability of our computer systems could adversely affect our revenues or could require significant investment to fix or replace them, and, therefore, could affect our operating results. In addition, cybersecurity attacks are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and corruption of data. We are regularly the target of attempted cyber and other security threats and must continuously monitor and develop our information technology networks and infrastructure to prevent, detect, address and mitigate the risk of unauthorized access, misuse, computer viruses and other events that could have a security impact.

Further, as we pursue our acquisition growth strategy and pursue new initiatives that improve our operations and reduce our costs, we are also expanding and improving our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk. If we fail to assess and identify cybersecurity risks associated with acquisitions and new initiatives, we may become increasingly vulnerable to such risks. Additionally, while we have

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implemented measures to prevent security breaches and cyber incidents, our preventative measures and incident response efforts may not be entirely effective. If our network of security controls, policy enforcement mechanisms or monitoring systems we use to address these threats to technology fail, the theft or compromise of confidential or otherwise protected company, customer or employee information, destruction or corruption of data, security breaches or other manipulation or improper use of our systems and networks could result in financial losses from remedial actions, business disruption, loss of business or potential liability, liabilities due to the violation of privacy laws and other legal actions, and damage to our reputation.

~~Extensive and evolving environmental, health and safety laws and regulations may restrict our operations and growth and increase our costs~~.

Existing environmental laws and regulations have become more stringently enforced in recent years. In addition, our industry is subject to regular enactment of new or amended federal, state, provincial and local environmental and health and safety statutes, regulations and ballot initiatives, as well as judicial decisions interpreting these requirements, which have become more stringent over time. Citizen suits brought pursuant to environmental laws have proliferated, along with the use of social media to drive such efforts. We expect these trends to continue, which could lead to material increases in our costs for future environmental, health and safety compliance. These requirements also impose substantial capital and operating costs and operational limitations on us and may adversely affect our business. In addition, federal, state, provincial and local governments may change the rights they grant to, the restrictions they impose on or the laws and regulations they enforce against, solid waste and E&P waste services companies. These changes could adversely affect our operations in various ways, including without limitation, by restricting the way in which we manage storm water runoff, comply with health and safety laws, treat and dispose of E&P or other waste or our ability to operate and expand our business.

Governmental authorities and various interest groups in the United States and Canada have promoted laws and regulations designed to limit greenhouse gas, or GHG, emissions in response to growing concerns regarding climate change. For example, the State of California, the Canadian federal government and several Canadian provinces have enacted climate change laws, and other states and provinces in which we operate are considering similar actions. The US EPA made an endangerment finding in 2009 allowing certain GHGs to be regulated under the CAA. This finding allows the EPA to create regulations that will impact our operations – including imposing emission reporting, permitting, control technology installation and monitoring requirements, although the materiality of the impacts will not be known until all applicable regulations are promulgated and finalized. The Canadian federal government enacted the Greenhouse Gas Pollution Pricing Act in June 2018, which established a national carbon-pricing regime starting in 2019 for provinces and territories in Canada where there is no provincial regime in place or where the provincial regime does not meet the federal benchmark. Often referred to as the federal backstop, the federal carbon-pricing regime consists of a carbon levy that is applied to fossil fuels and an output-based pricing system (“OBPS”) that is applied to certain industrial facilities with reported emissions of 50,000 tonnes of carbon dioxide equivalent (“CO2e”) or more per year. The carbon levy applies to prescribed liquid, gaseous, and solid fuels at a rate that is equivalent to $20 per tonne of CO2e in 2019, increasing annually, until it reaches $50 per tonne of CO2e by 2022. Several Canadian provinces have promulgated legislation and regulations to limit GHG emissions through requirements of specific controls, carbon levies, cap and trade programs or other measures. Comprehensive GHG legislation or regulation, including carbon pricing, affects not only our business, but also that of our customers.

Regulation of GHG emissions from oil and natural gas E&P operations may also increase the costs to our customers of developing and producing hydrocarbons, and as a result, may have an indirect and adverse effect on the amount of oilfield waste delivered to our facilities by our customers. These statutes and regulations increase the costs of our operations, and future climate change statutes and regulations may have an impact as well.

~~Our business is subject to operational and safety risks, including the risk of personal injury to employees and others~~.

Providing environmental and waste management services, including constructing and operating landfills, involves risks such as truck accidents, equipment defects, malfunctions and failures. We are also an essential services provider, and our frontline employees have continued to provide services during the COVID-19 outbreak amid related mandatory and voluntary closures, shelter-in-place orders, and similar government restrictions on or advisories with respect to travel,

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business operations and public gatherings, which could involve additional risks. Additionally, we closely monitor and manage landfills to minimize the risk of waste mass instability and releases of hazardous materials or odors that could be triggered by weather or natural disasters. There may also be risks presented by the potential for subsurface chemical reactions causing elevated landfill temperatures.

We also build and operate natural gas fueling stations, some of which also serve the public or third parties. Operation of fueling stations and landfill gas collection and control systems involves additional risks of fire and explosion. Any of these risks could potentially result in injury or death of employees and others, a need to shut down or reduce operation of facilities, increased operating expense and exposure to liability for pollution and other environmental damage, and property damage or destruction.

While we seek to minimize our exposure to such risks through comprehensive training, compliance and response and recovery programs, as well as vehicle and equipment maintenance programs and the use of personal protective equipment, if we were to incur substantial liabilities in excess of any applicable insurance coverage, our business, results of operations and financial condition could be adversely affected. Any such incidents could also tarnish our reputation and reduce the value of our brand. Additionally, a major operational failure, even if suffered by a competitor, may bring enhanced scrutiny and regulation of our industry, with a corresponding increase in operating expense.

~~Future changes in laws regulating the flow of solid waste in interstate commerce could adversely affect our operating results~~.

Various state, provincial and local governments and the Canadian federal government have enacted, have the authority to enact or are considering enacting laws and regulations that restrict disposal within the jurisdiction of solid waste generated outside the jurisdiction. In addition, some state, provincial and local governments and the Canadian federal government have promulgated, have the authority to promulgate or are considering promulgating laws and regulations which govern the flow of waste generated within their respective jurisdictions. These “flow control” laws and regulations typically require that waste generated within the jurisdiction be retained within the jurisdiction or be directed to specified facilities for disposal or processing, which could limit or prohibit the disposal or processing of waste in our transfer stations and landfills or require notices be delivered or permits to be obtained prior to transport or final disposal. Certain of these flow control laws and regulations could also require us to deliver waste we collect within a particular jurisdiction to facilities not owned or controlled by us, which could increase our costs and reduce our revenues. In addition, such laws and regulations could require us to obtain additional costly licenses or authorizations in order to be deemed an authorized hauler or disposal facility. All such waste disposal laws and regulations are subject to judicial interpretation and review. Court decisions, legislation and federal, state, provincial and local regulation in the waste disposal area could adversely affect our operations.

~~Extensive regulations that govern the design, operation, expansion and closure of landfills may restrict our landfill operations or increase our costs of operating landfills~~.

If we fail to comply with federal, state and provincial regulations, as applicable, governing the design, operation, expansion, closure and financial assurance of MSW, non-MSW and E&P waste landfills, we could be required to undertake investigatory or remedial activities, curtail operations or close such landfills temporarily or permanently. Future changes to these regulations, including related to per- and polyfluoroalkyl substances (“PFAS”), which can be found in water, soil and air, may require us to modify, supplement or replace equipment or facilities at substantial costs.

If regulatory agencies fail to enforce these regulations vigorously or consistently, our competitors whose facilities are not forced to comply with the regulations may obtain an advantage over us. Our financial obligations arising from any failure to comply with these regulations could harm our business and operating results.

~~Our E&P waste business could be adversely affected by changes in laws regulating E&P waste~~.

We believe that the demand for our E&P waste services is directly related to the regulation of E&P waste. In particular, the U.S. Resource Conservation and Recovery Act, or RCRA, which governs the disposal of solid and hazardous waste, currently exempts certain E&P wastes from classification as hazardous wastes. In recent years, proposals have been made

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to rescind this exemption from RCRA. If the exemption covering E&P wastes is repealed or modified, or if the regulations interpreting the rules regarding the treatment or disposal of this type of waste were changed, our operations could face significantly more stringent regulations, permitting requirements, and other restrictions, which could have a material adverse effect on our business.

In addition, if new federal, state, provincial or local laws or regulations that significantly restrict hydraulic fracturing are adopted, such legal requirements could result in delays, eliminate certain drilling and injection activities and make it more difficult or costly for our customers to perform fracturing. Any such regulations limiting or prohibiting hydraulic fracturing could reduce our customers’ oil and natural gas E&P activities and, therefore, adversely affect our business. Such laws or regulations could also materially increase our costs of compliance and doing business by more strictly regulating how hydraulic fracturing wastes are handled or disposed. Conversely, any loosening of existing federal, state, provincial or local laws or regulations regarding how such wastes are handled or disposed could adversely impact demand for our services.

~~Liabilities for environmental damage may adversely affect our financial condition, business and earnings~~.

We may be liable for any environmental damage that our current or former operations cause, including damage to neighboring landowners or residents, particularly as a result of the contamination of soil, groundwater or surface water, and especially drinking water, or to natural resources. We may be liable for damage resulting from conditions existing before we acquired these operations. Even if we obtain legally enforceable representations, warranties and indemnities from the sellers of these operations, they may not cover the liabilities fully or the sellers may not have sufficient funds to perform their obligations.

We may also be liable for any on-site environmental contamination caused by pollutants or hazardous substances whose transportation, treatment or disposal we or our predecessors arranged or conducted. Some environmental laws and regulations may impose strict, joint and several liability in connection with releases of regulated substances into the environment. Therefore, in some situations we could be exposed to liability as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, third parties, including our predecessors. If we were to incur liability for environmental damage, environmental clean-ups, corrective action or damage not covered by insurance or in excess of the amount of our coverage, our financial condition or operating results could be materially adversely affected. For example, see the discussion regarding the Lower Duwamish Waterway Superfund Site Allocation Process in Note 18, “Commitments and Contingencies,” of our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

~~We depend significantly on the services of the members of our senior and regional management team, and the departure of any of those persons could cause our operating results to suffer~~.

Our success depends significantly on the continued individual and collective contributions of our senior and regional management team. Key members of our management have entered into employment agreements, but we may not be able to enforce these agreements. The loss of the services of any member of our senior and regional management, including as a result of the COVID-19 outbreak, or the inability to hire and retain experienced management personnel could harm our operating results.

~~Our decentralized decision-making structure could allow local managers to make decisions that may adversely affect our operating results~~.

We manage our operations on a decentralized basis. Local managers have the authority to make many decisions concerning their operations without obtaining prior approval from executive officers, subject to compliance with general company-wide policies. Poor decisions by local managers could result in the loss of customers or increases in costs, in either case adversely affecting operating results.

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~~If we are not able to develop and protect intellectual property, or if a competitor develops or obtains exclusive rights to a breakthrough technology, our financial results may suffer~~.

Our existing and proposed service offerings to customers may require that we develop or license, and protect, new technologies. We may experience difficulties or delays in the research, development, production and/or marketing of new products and services which may negatively impact our operating results and prevent us from recouping or realizing a return on the investments required to bring new products and services to market. Further, protecting our intellectual property rights and combating unlicensed copying and use of intellectual property is difficult, and any inability to obtain or protect new technologies could impact our services to customers and development of new revenue sources. Additionally, a competitor may develop or obtain exclusive rights to a “breakthrough technology” that claims to provide a revolutionary change in traditional waste management. If we have inferior intellectual property to our competitors, our financial results may suffer.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

On July ~~25, 2019,~~23, 2020, our Board of Directors approved, subject to receipt of regulatory approvals, the annual renewal of our NCIB to purchase up to ~~13,184,474~~13,144,773 of our common shares during the period of August ~~8, 2019~~10, 2020 to August ~~7, 2020~~9, 2021 or until such earlier time as the NCIB is completed or terminated at our option. The renewal followed on the conclusion of our NCIB that expired August 7, ~~2019.~~2020. We received TSX approval for our annual renewal of the NCIB on August ~~2, 2019.~~5, 2020. Under the NCIB, we may make share repurchases only in the open market, including on the NYSE, the TSX, and/or alternative Canadian trading systems, at the prevailing market price at the time of the transaction. The timing and amounts of any repurchases pursuant to the NCIB will depend on many factors, including our capital structure, the market price of the common shares and overall market conditions. All common shares purchased under the NCIB shall be immediately cancelled following their repurchase. As of March 31, ~~2020,~~2021, we have repurchased ~~approximately 1.3~~0.7 million of our common shares pursuant to the NCIB at an aggregate cost of ~~$105.7~~$66.0 million, or an average price of ~~$83.06~~$99.07 per share. The table below reflects repurchases we made during the three months ended March 31, ~~2020~~2021 (in thousands of U.S. dollars, except share and per share amounts):

Total Number of

Maximum Number

Shares Purchased

of Shares that

Total Number

Average

as Part of Publicly

May Yet Be

of Shares

Price Paid

Announced

Purchased Under
Period

Purchased

Per Share ⁽¹⁾

Program

the Program
1/1/20 - 1/31/20

—

$
—

—

13,184,474
2/1/20 - 2/29/20

—

$
—

—

13,184,474
3/1/20 - 3/31/20

1,271,977

$
83.06

1,271,977

11,912,497

1,271,977

$
83.06

1,271,977


				Total Number of	Maximum Number
				Shares Purchased	of Shares that
	Total Number	Average		as Part of Publicly	May Yet Be
	of Shares	Price Paid		Announced	Purchased Under
Period	Purchased	Per Share ⁽¹⁾		Program	the Program
1/1/21 - 1/31/21	200,000	$	99.43	200,000	12,944,773
2/1/21 - 2/28/21	466,184	$	98.92	466,184	12,478,589
3/1/21 - 3/31/21	—	$	-	—	12,478,589
	666,184	$	99.07	666,184

~~(1)~~

(1)

This amount represents the weighted average price paid per common share. This price includes a per share commission paid for all repurchases.

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Item 6.Exhibits

Exhibit Number		Description of Exhibits
3.1		Articles of Amendment (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on May 26, 2017)
3.2		Articles of Amalgamation (incorporated by reference to Exhibit 3.2 of the Registrant’s Form 8-K filed on June 7, 2016)
3.3		Articles of Amendment (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on June 7, 2016)
3.4		By-law No. 1 of the Registrant (incorporated by reference to Exhibit 3.3 of the Registrant’s Form 8-K filed on June 7, 2016)
~~4.1~~		Indenture, dated as of November 16, 2018, by and between Waste Connections, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 of the Registrant’s Form 8-K filed on November 16, 2018)
~~4.2~~		Third Supplemental Indenture, dated as of January 23, 2020, by and between Waste Connections, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 of the Registrant’s Form 8-K filed on January 23, 2020)
~~4.3~~		Fourth Supplemental Indenture, dated as of March 13, 2020, by and between Waste Connections, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 of the Registrant’s Form 8-K filed on March 13, 2020)
31.1		Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a)
31.2		Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a)
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. §1350
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. §1350
101.INS		The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
104		Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	WASTE CONNECTIONS, INC.

Date: ~~May 7, 2020~~April 29, 2021	BY:	/s/ Worthing F. Jackman
		Worthing F. Jackman
		President and Chief Executive Officer

Date: ~~May 7, 2020~~April 29, 2021	BY:	/s/ Mary Anne Whitney
		Mary Anne Whitney
		~~Senior~~Executive Vice President and Chief Financial Officer

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For the year ending December 31, 2020	$	125,910
For the year ending December 31, 2021	$	109,183
For the year ending December 31, 2022	$	94,080
For the year ending December 31, 2023	$	79,600
For the year ending December 31, 2024	$	68,241


	Three Months Ended March 31, 2019
	Gross		Tax Effect		Net of Tax
Interest rate swap amounts reclassified into interest expense	$	(2,472)	$	655	$	(1,817)
Changes in fair value of interest rate swaps		(15,721)		4,166		(11,555)
Foreign currency translation adjustment		42,180		—		42,180
	$	23,987	$	4,821	$	28,808