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Table of Contents

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, 2024

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

Graphic

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.)

6220 Hwy 7, Suite 600

Woodbridge

Ontario 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 12, 2024: 258,021,193 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

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

33

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

52

Item 4.

Controls and Procedures

54

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

55

Item 6.

Exhibits

55

Signatures

56

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, 

    

2024

    

2023

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and equivalents

$

111,985

$

78,399

Accounts receivable, net of allowance for credit losses of $22,858 and $23,553 at March 31, 2024 and December 31, 2023, respectively

 

896,682

 

856,953

Prepaid expenses and other current assets

 

208,387

 

206,433

Total current assets

 

1,217,054

 

1,141,785

Restricted cash

105,683

105,639

Restricted investments

 

74,655

 

70,350

Property and equipment, net

 

7,827,304

 

7,228,331

Operating lease right-of-use assets

273,371

261,782

Goodwill

 

7,597,175

 

7,404,400

Intangible assets, net

 

1,877,226

 

1,603,541

Other assets, net

 

110,192

 

100,048

Total assets

$

19,082,660

$

17,915,876

LIABILITIES AND EQUITY

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

589,861

$

642,455

Book overdraft

 

14,584

 

14,855

Deferred revenue

 

370,380

 

355,203

Accrued liabilities

507,259

 

521,428

Current portion of operating lease liabilities

 

36,430

32,533

Current portion of contingent consideration

 

96,931

 

94,996

Current portion of long-term debt and notes payable

 

16,096

 

26,462

Total current liabilities

 

1,631,541

 

1,687,932

Long-term portion of debt and notes payable

 

7,795,191

 

6,724,771

Long-term portion of operating lease liabilities

249,419

238,440

Long-term portion of contingent consideration

 

20,802

 

20,034

Deferred income taxes

 

1,052,508

 

1,022,480

Other long-term liabilities

 

542,239

 

524,438

Total liabilities

 

11,291,700

 

10,218,095

Commitments and contingencies (Note 17)

 

  

 

  

Equity:

 

 

  

Common shares: 258,019,417 shares issued and 257,961,725 shares outstanding at March 31, 2024; 257,659,921 shares issued and 257,600,479 shares outstanding at December 31, 2023

 

3,279,130

 

3,276,661

Additional paid-in capital

 

272,450

 

284,284

Accumulated other comprehensive loss

 

(62,836)

 

(9,826)

Treasury shares: 57,692 and 59,442 shares at March 31, 2024 and December 31, 2023, respectively

 

 

Retained earnings

 

4,298,171

 

4,141,690

Total Waste Connections’ equity

 

7,786,915

 

7,692,809

Noncontrolling interest in subsidiaries

 

4,045

 

4,972

Total equity

 

7,790,960

 

7,697,781

Total liabilities and equity

$

19,082,660

$

17,915,876

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

1

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, 

    

2024

    

2023

Revenues

$

2,072,653

$

1,900,503

Operating expenses:

 

 

Cost of operations

1,221,783

1,146,941

Selling, general and administrative

220,735

193,667

Depreciation

222,691

204,059

Amortization of intangibles

40,290

39,282

Impairments and other operating items

354

1,865

Operating income

 

366,800

 

314,689

Interest expense

(78,488)

(68,353)

Interest income

2,051

2,715

Other income (expense), net

(1,823)

3,174

Income before income tax provision

 

288,540

 

252,225

Income tax provision

(59,413)

(54,389)

Net income

 

229,127

 

197,836

Plus (less): Net loss (income) attributable to noncontrolling interests

927

(23)

Net income attributable to Waste Connections

$

230,054

$

197,813

Earnings per common share attributable to Waste Connections’ common shareholders:

 

  

 

Basic

$

0.89

$

0.77

Diluted

$

0.89

$

0.77

Shares used in the per share calculations:

 

 

Basic

 

257,801,116

257,372,942

Diluted

 

258,482,473

257,988,971

Cash dividends per common share

$

0.285

$

0.255

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

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WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands of U.S. dollars)

Three Months Ended March 31, 

    

2024

    

2023

Net income

$

229,127

$

197,836

Other comprehensive income (loss), before tax:

 

 

Interest rate swap amounts reclassified into interest expense

(5,385)

(4,080)

Changes in fair value of interest rate swaps

9,972

(3,299)

Foreign currency translation adjustment

(56,381)

1,682

Other comprehensive income (loss), before tax

 

(51,794)

 

(5,697)

Income tax expense (benefit) related to items of other comprehensive income (loss)

(1,216)

1,955

Other comprehensive income (loss), net of tax

 

(53,010)

 

(3,742)

Comprehensive income

 

176,117

 

194,094

Plus (less): Comprehensive loss (income) attributable to noncontrolling interests

927

(23)

Comprehensive income attributable to Waste Connections

$

177,044

$

194,071

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

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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, 2023

    

257,600,479

   

$

3,276,661

   

$

284,284

   

$

(9,826)

   

59,442

   

$

   

$

4,141,690

   

$

4,972

   

$

7,697,781

Sale of common shares held in trust

1,750

286

(1,750)

286

Vesting of restricted share units

329,996

Vesting of performance-based restricted share units

153,555

Restricted share units released from deferred compensation plan

19,149

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

(256,512)

(30,850)

(30,850)

Equity-based compensation

19,016

19,016

Exercise of warrants

97,901

Issuance of shares under employee share purchase plan

15,407

2,183

2,183

Cash dividends on common shares

(73,573)

(73,573)

Amounts reclassified into earnings, net of taxes

(3,958)

(3,958)

Changes in fair value of cash flow hedges, net of taxes

7,329

7,329

Foreign currency translation adjustment

(56,381)

(56,381)

Net income (loss)

230,054

(927)

229,127

Balances at March 31, 2024

257,961,725

$

3,279,130

$

272,450

$

(62,836)

57,692

$

$

4,298,171

$

4,045

$

7,790,960

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

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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, 2022

257,145,716

$

3,271,958

$

244,076

$

(56,830)

65,459

$

$

3,649,494

$

4,946

$

7,113,644

Sale of common shares held in trust

5,803

765

(5,803)

765

Vesting of restricted share units

 

325,490

 

 

 

 

 

 

 

 

Vesting of performance-based restricted share units

140,498

Restricted share units released from deferred compensation plan

 

19,151

 

 

 

 

 

 

 

 

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

 

(176,837)

 

 

(22,966)

 

 

 

 

 

 

(22,966)

Equity-based compensation

 

 

 

17,374

 

 

 

 

 

 

17,374

Exercise of warrants

 

13,019

 

 

 

 

 

 

 

 

Issuance of shares under employee share purchase plan

14,594

1,841

1,841

Cash dividends on common shares

 

 

 

 

 

 

 

(65,788)

 

 

(65,788)

Amounts reclassified into earnings, net of taxes

 

 

 

 

(2,999)

 

 

 

 

 

(2,999)

Changes in fair value of cash flow hedges, net of taxes

 

 

 

 

(2,425)

 

 

 

 

 

(2,425)

Foreign currency translation adjustment

1,682

1,682

Net income

 

 

 

 

 

 

 

197,813

 

23

 

197,836

Balances at March 31, 2023

257,487,434

$

3,274,564

$

238,484

$

(60,572)

 

59,656

$

$

3,781,519

$

4,969

$

7,238,964

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

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WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands of U.S. dollars)

Three Months Ended March 31, 

    

2024

    

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

  

  

Net income

$

229,127

$

197,836

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Loss on disposal of assets and impairments

 

1,649

1,910

Depreciation

 

222,691

204,059

Amortization of intangibles

 

40,290

39,282

Deferred income taxes, net of acquisitions

 

30,395

28,229

Current period provision for expected credit losses

3,730

2,247

Amortization of debt issuance costs

 

4,055

1,621

Share-based compensation

 

21,952

18,469

Interest accretion

 

11,279

4,884

Adjustments to contingent consideration

 

(637)

Other

902

(2,937)

Net change in operating assets and liabilities, net of acquisitions

(75,761)

(52,605)

Net cash provided by operating activities

 

490,309

 

442,358

CASH FLOWS FROM INVESTING ACTIVITIES:

 

  

 

Payments for acquisitions, net of cash acquired

 

(1,156,422)

(144,611)

Capital expenditures for property and equipment

 

(169,951)

(175,786)

Proceeds from disposal of assets

 

1,085

1,260

Other

 

(9,291)

1,378

Net cash used in investing activities

 

(1,334,579)

 

(317,759)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

Proceeds from long-term debt

 

2,353,022

336,649

Principal payments on notes payable and long-term debt

 

(1,350,932)

(320,027)

Payment of contingent consideration recorded at acquisition date

 

(11,295)

(1,319)

Change in book overdraft

 

(271)

5,421

Payments for cash dividends

 

(73,573)

(65,788)

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

 

(30,850)

(22,966)

Debt issuance costs

 

(10,093)

Proceeds from issuance of shares under employee share purchase plan

2,183

1,841

Proceeds from sale of common shares held in trust

 

286

765

Net cash provided by (used in) financing activities

 

878,477

 

(65,424)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(577)

(54)

Net increase in cash, cash equivalents and restricted cash

 

33,630

 

59,121

Cash, cash equivalents and restricted cash at beginning of period

 

184,038

181,364

Cash, cash equivalents and restricted cash at end of period

$

217,668

$

240,485

Non-cash financing activities:

Liabilities assumed and notes payable issued to sellers of businesses acquired

$

149,634

$

34,224

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

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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)

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, 2024 and 2023. In the opinion of management, the accompanying balance sheets and related interim statements of net income, comprehensive income, 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.

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, 2023.

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 Pending Adoption

Disclosure of Significant Segment Expenses and Other Segment Items.  In November 2023, the Financial Accounting Standards Board (the “FASB”) amended its existing guidance for segment reporting to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.  The amended guidance does not change how a public entity identifies its operating segments, aggregates them or applies the quantitative thresholds to determine its reportable segments.  The guidance is applied retrospectively to all periods presented in financial statements, unless it is impracticable.  The guidance applies to all public entities and is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024.  Early adoption is permitted.  The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Additional Income Tax Disclosures.  In December 2023, the FASB issued a final standard on improvements to income tax disclosures.  The standard requires public business entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold.  The guidance also requires all entities to disclose

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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)

annually income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold.  The standard applies to all entities subject to income taxes.  For public business entities, the new requirements will be effective for annual periods beginning after December 15, 2024.  The guidance will be applied on a prospective basis with the option to apply the standard retrospectively.  Early adoption is permitted.  The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

4.REVENUE

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

Three Months Ended March 31, 

    

2024

    

2023

    

Commercial

$

642,859

$

602,279

 

Residential

546,211

514,053

Industrial and construction roll off

325,990

318,315

Total collection

1,515,060

1,434,647

Landfill

353,478

343,433

Transfer

301,882

273,521

Recycling

49,025

31,301

E&P

97,408

51,759

Intermodal and other

49,541

38,212

Intercompany

(293,741)

(272,370)

Total

$

2,072,653

$

1,900,503

 

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, 2023 was recognized as revenue during the three months ended March 31, 2024 when the service was performed.

See Note 10 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 Sheets, 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 Company would have recognized is one year or less. The Company had $26,102 and $25,977 of deferred sales incentives at March 31, 2024 and December 31, 2023, respectively.

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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.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.

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 due to all trade receivables 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 for the periods indicated:

Three Months Ended March 31, 

2024

    

2023

Beginning balance

$

23,553

$

22,939

Current period provision for expected credit losses

3,730

2,247

Write-offs charged against the allowance

(5,728)

(5,017)

Recoveries collected

1,356

2,068

Impact of changes in foreign currency

(53)

2

Ending balance

$

22,858

$

22,239

6.LANDFILL ACCOUNTING

At March 31, 2024, the Company’s landfills consisted of 100 owned landfills, five landfills operated under life-of-site operating agreements and seven landfills operated under limited-term operating agreements. The Company’s landfills had site costs with a net book value of $3,297,752 at March 31, 2024. 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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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)

Based on remaining permitted capacity as of March 31, 2024, 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 32 years.  As of March 31, 2024, the Company is seeking to expand permitted capacity at nine of its owned landfills and two 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 35 years.  The estimated remaining lives of the Company’s owned landfills and landfills operated under life-of-site operating agreements range from two to 382 years, with approximately 90% of the projected annual disposal volume from landfills with remaining lives of less than 70 years.

During the three months ended March 31, 2024 and 2023, the Company expensed $62,525 and $59,055, respectively, or an average of $5.29 and $5.06 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 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 “layers” for final capping, closure and post-closure liabilities is based on its long-term credit adjusted risk-free rate. The Company’s discount rate assumption for purposes of computing 2024 and 2023 “layers” for final capping, closure and post-closure obligations was 5.50% for both periods. The Company’s long-term inflation rate assumption is 2.75% for each of the years ending December 31, 2024 and 2023. The resulting final capping, closure and post-closure obligations 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. Interest is accreted on the recorded liability using the corresponding discount rate. During the three months ended March 31, 2024 and 2023, the Company expensed $9,356 and $4,474, respectively, or an average of $0.78 and $0.38 per ton consumed, respectively, related to final capping, closure and post-closure accretion expense. In the event that changes in an estimate for a closure and post-closure liability are associated with a significant change in facts and circumstances at a landfill or a non-operating section of a landfill, corresponding adjustments to recorded liabilities and Impairments and other operating items are made as soon as is practical.

The following is a reconciliation of the Company’s final capping, closure and post-closure liability balance from December 31, 2023 to March 31, 2024:

Final capping, closure and post-closure liability at December 31, 2023

    

$

522,233

Liability adjustments

 

(8,726)

Accretion expense associated with landfill obligations

 

9,356

Closure payments

 

(28,950)

Assumption of closure liabilities from acquisitions

48,220

Foreign currency translation adjustment

 

(829)

Final capping, closure and post-closure liability at March 31, 2024

$

541,304

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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)

Liability adjustments of $8,726 for the three months ended March 31, 2024, 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 Consolidated Balance Sheets.  The Company performs its annual review of its cost and capacity estimates in the first quarter of each year.  In the event that changes in an estimate for a closure and post-closure liability are associated with a significant change in facts and circumstances at a landfill or a non-operating section of a landfill, corresponding adjustments to recorded liabilities and Impairments and other operating items are made as soon as is practical.

At March 31, 2024 and December 31, 2023, $7,655 and $12,381, respectively, of the Company’s restricted cash balance and $63,697 and $59,551, respectively, of the Company’s restricted investments balance was for purposes of securing its performance of future final capping, closure and post-closure obligations.

7.ACQUISITIONS

The Company acquired nine individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses and one E&P waste treatment and disposal business during the three months ended March 31, 2024.  The total transaction-related expenses incurred during the three months ended March 31, 2024 for these acquisitions were $9,847. These expenses are included in Selling, general and administrative expenses in the Company’s Condensed Consolidated Statements of Net Income.

The Company acquired four individually immaterial non-hazardous solid waste collection, transfer, recycling and disposal businesses during the three months ended March 31, 2023.  The total transaction-related expenses incurred during the three months ended March 31, 2023 for these acquisitions were $2,081. 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.

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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)

The following table summarizes the consideration transferred to acquire these businesses and the preliminary amounts of identifiable assets acquired and liabilities assumed at the acquisition dates for the acquisitions consummated in the three months ended March 31, 2024 and 2023:

    

2024

    

2023

Acquisitions

Acquisitions

Fair value of consideration transferred:

 

  

 

  

Cash

$

1,156,422

$

144,611

Debt assumed

 

64,450

 

17,097

 

1,220,872

 

161,708

Recognized amounts of identifiable assets acquired and liabilities assumed associated with businesses acquired:

 

 

Accounts receivable

 

51,852

3,882

Prepaid expenses and other current assets

 

9,951

2,290

Restricted investments

5,462

Operating lease right-of-use assets

2,317

587

Property and equipment

 

688,906

67,201

Long-term franchise agreements and contracts

 

77,384

58,630

Customer lists

 

102,418

1,527

Permits and other intangibles

136,868