Investor Presentation March 2023 SAFE HARBOR STATEMENT This document contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 ("PSLRA"), including "forward-looking information" within the meaning of applicable Canadian securities laws. These forward-looking statements are neither historical facts nor assurances of future performance and reflect Waste Connections' current beliefs and expectations regarding future events ...

Financial Data and Key Metrics Changes - In Q4 2022, revenue reached $1.869 billion, exceeding expectations by $24 million and reflecting a year-over-year increase of 15.1% [22] - Adjusted EBITDA for Q4 was $564 million, up 13.8% year-over-year, resulting in an adjusted EBITDA margin of 30.2%, which was a 20 basis point beat to the outlook [28][29] - For the full year 2022, adjusted free cash flow was $1.165 billion, representing a 15% increase year-over-year, with capital expenditures (CapEx) of $913 million, up 23% year-over-year [14][30] Business Line Data and Key Metrics Changes - Solid waste pricing in Q4 increased by 10.6%, with core pricing contributing 9% and showing a sequential increase of 70 basis points from Q3 [23] - Commercial collection revenue rose by 14% year-over-year, primarily driven by pricing, while landfill rates per ton increased by about 7.5% [26] - Recycled commodity revenues were down approximately 70% year-over-year due to a significant decline in values since July [27] Market Data and Key Metrics Changes - The company experienced a 1.7% decline in solid waste volumes in Q4, attributed to the non-renewal of two municipal contracts [25] - The pricing acceleration in competitive regions during 2022 positioned the company for an estimated 9.5% total price increase in 2023, primarily from core pricing [24] Company Strategy and Development Direction - The company plans to continue its focus on sustainability and operational execution, with a significant increase in CapEx for sustainability-related projects expected in 2023 [15][17] - Acquisition activity in 2022 totaled approximately $640 million in annualized revenue, with a disciplined approach to market selection and risk profiles [18][19] - The company aims for double-digit revenue growth and adjusted EBITDA margin expansion in 2023, with potential upside from improved commodity values and additional acquisitions [7][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming inflationary pressures and commodity-related headwinds, with expectations for continued pricing momentum in 2023 [5][12] - The company anticipates a challenging operating environment but remains optimistic about the potential for margin expansion and revenue growth [41][42] - Management noted that improvements in recycled commodity prices have been observed in February, although these have not been factored into the current outlook [36] Other Important Information - The company returned $668 million to shareholders through dividends and share repurchases in 2022, marking a nearly 20% increase from the previous year [20] - The 2023 outlook includes an estimated revenue of $8.05 billion and adjusted EBITDA of approximately $2.5 billion, reflecting a 30 basis point increase in margin year-over-year [33][34] Q&A Session Summary Question: Can you expand on the margin cadence implied by guidance? - Management indicated that the first quarter is expected to have the toughest comparisons, with margin improvements anticipated in subsequent quarters [44][46] Question: What is the outlook for R&D and monetizing gas at facilities? - Management stated that there are currently 17 sites with electric generation facilities, but further details on monetization will depend on regulatory developments [51][53] Question: How is volume expected to trend in 2023? - Management expects volume growth to remain flat to down 1%, with potential episodic increases from new contracts [55][57] Question: What is the M&A pipeline looking like? - The company noted that while there have been larger transactions, the average size of targeted acquisitions remains consistent, focusing on companies with $20 million to $40 million in revenue [66][70] Question: What is the sustainability CapEx budget for 2023? - The sustainability CapEx budget for 2023 is expected to be between $75 million and $85 million, reflecting some shifts from previous expectations [85]

WASTE CONNECTIONS REPORTS FOURTH QUARTER 2022 RESULTS AND PROVIDES 2023 OUTLOOK Fourth Quarter Highlights - Price-led organic growth and acquisition activity drive Q4 results above expectations and provide higher entry point into 2023 - Revenue of $1.869 billion, net income(a) of $194.4 million, and adjusted EBITDA(b) of $563.6 million, or 30.2% of revenue, above expectations - Net income and adjusted net income(b) of $0.75 and $0.89 per share, respectively Full Year 2022 Highlights - Revenue of $7.212 bill ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) Waste Connections is a leading North American solid waste services company focused on secondary markets, growth through acquisitions, and decentralized operations - Waste Connections is the **third largest** solid waste services provider in North America, operating in **43 U.S. states** and **six Canadian provinces** and also provides non-hazardous exploration and production (E&P) waste services[9](index=9&type=chunk) - The company's operating strategy focuses on **secondary and rural markets** to achieve **high market share**, control the waste stream through **exclusive contracts**, optimize asset positioning, provide vertically integrated services, and manage on a **decentralized basis**[11](index=11&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk) Acquisition Activity (2020-2022) | Year | Number of Acquisitions | Net Fair Value of Consideration | | :--- | :--- | :--- | | 2022 | 24 | $2.334 billion | | 2021 | 30 | $1.069 billion | | 2020 | 21 | $481.6 million | [Human Capital](index=7&type=section&id=Human%20Capital) The company prioritizes employee development, safety, and diversity, with over 22,000 employees and significant investments in training and wages Workforce Demographics (as of Dec 31, 2022) | Metric | Value | | :--- | :--- | | Total Active Employees | 22,109 | | - U.S. Employees | 18,799 | | - Canada Employees | 3,310 | | Commercial Truck Drivers | 10,866 | | Mechanics | 1,815 | | Employees under Collective Bargaining | ~15% | | Ethnic Minorities | 40% | | Women | 17% | | Armed Services Veterans | 8% | - The company has incurred over **$50 million** in incremental COVID-19-related costs through the end of 2022, including supplemental pay for frontline employees, and proactively raised its minimum wage target to **$17 per hour** in the U.S. (CAD $17 in Canada) in 2022[36](index=36&type=chunk)[37](index=37&type=chunk) - Safety is a core value, with a 'Drive to ZERO' goal for incidents; in 2022, approximately **60%** of operating locations had zero safety-related incidents or reduced incident frequency, and the **Total Recordable Incident Rate (TRIR) remains below industry averages**[38](index=38&type=chunk)[40](index=40&type=chunk) - The company promotes a 'Servant Leadership' culture and invests heavily in training; in 2022, approximately **72%** of all employees participated in training, and the number of sessions offered increased by **over 40%** from the prior year[43](index=43&type=chunk)[49](index=49&type=chunk) [Sustainability/Environmental Social and Governance (ESG)](index=15&type=section&id=Sustainability%2FEnvironmental%20Social%20and%20Governance%2C%20or%20ESG) The company commits $500 million to ESG targets, focusing on environmental impact reduction, safety, and employee engagement, with executive compensation linked to these goals - The company has committed **$500 million** to advance long-term, aspirational ESG targets established in 2020[61](index=61&type=chunk) - ESG targets include **reducing environmental impact**, **enhancing employee safety**, and **improving engagement**; in 2022, targets were expanded to include **reductions in absolute emissions and emissions intensity**[62](index=62&type=chunk) - Since 2021, the company has **incorporated its ESG targets into executive compensation metrics** to align leadership incentives with sustainability goals[62](index=62&type=chunk) [Waste Services](index=17&type=section&id=Waste%20Services) The company offers comprehensive waste services, including collection, transfer, recycling, and disposal at 100 landfills with significant remaining capacity, alongside E&P waste management Landfill Portfolio (as of Dec 31, 2022) | Landfill Type | Owned/Operated Count | | :--- | :--- | | Municipal Solid Waste (MSW) | 75 | | E&P Waste Only | 9 | | Non-MSW (e.g., C&D) | 16 | | **Total** | **100** | - The average remaining life for owned and operated landfills is estimated to be approximately **31 years** based on permitted capacity, and **35 years** when considering probable expansion capacity[68](index=68&type=chunk)[69](index=69&type=chunk)[71](index=71&type=chunk) Landfill Airspace Changes (in thousands of tons) | | 2022 | 2021 | | :--- | :--- | :--- | | **Beginning Balance (Permitted + Probable Expansion)** | **1,687,476** | **1,541,645** | | Acquired landfills | 92,270 | 41,374 | | Airspace consumed | (47,229) | (46,632) | | **Ending Balance (Permitted + Probable Expansion)** | **1,721,211** | **1,687,476** | - The company has landfill gas recovery systems at **55** of its landfills, converting methane into clean energy sources like electricity or pipeline-quality natural gas[77](index=77&type=chunk) [Competition](index=23&type=section&id=Competition) The company faces intense competition in both municipal solid waste and E&P waste sectors from large public, regional, and public sector operators, primarily on price and service quality - Key competitors in the municipal solid waste (MSW) industry include **Waste Management, Inc.**, **Republic Services, Inc.**, and **GFL Environmental, Inc.**, along with numerous regional and local companies[81](index=81&type=chunk) - Competition for collection, transfer, and disposal is based on **price and service quality**; the company also competes with **public sector operators** who may have financial advantages like access to tax revenues[81](index=81&type=chunk) - In the E&P waste market, competition comes from smaller regional companies and larger public and private firms such as **Waste Management, Inc.**, **Republic Services, Inc.**, and **Clean Harbors, Inc.**[84](index=84&type=chunk) [Regulation](index=25&type=section&id=Regulation) The company's operations are subject to extensive and evolving environmental, health, and safety regulations in the U.S. and Canada, including emerging rules on climate change and PFAS, potentially increasing costs - Operations are subject to **extensive environmental, health, and safety laws** in the U.S. and Canada, administered by agencies like the **EPA** and **Environment and Climate Change Canada**, which require permits and govern discharges, waste handling, and cleanup responsibilities[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) - Key U.S. regulations include the **Resource Conservation and Recovery Act (RCRA)** for waste management, the **Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or "Superfund")** for cleanup liability, the **Clean Water Act** for discharges, and the **Clean Air Act** for air emissions[95](index=95&type=chunk)[100](index=100&type=chunk)[108](index=108&type=chunk) - The company faces **evolving regulations related to climate change and greenhouse gas (GHG) emissions**, including **Canada's Greenhouse Gas Pollution Pricing Act** and various EPA rules, which could **increase operating costs** for both the company and its E&P customers[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - Emerging contaminants, particularly **per- and polyfluoroalkyl substances (PFAS)**, are under increasing regulatory scrutiny; potential designation as hazardous substances under CERCLA and other regulations could **significantly increase future cleanup liabilities and compliance costs**[144](index=144&type=chunk)[149](index=149&type=chunk)[154](index=154&type=chunk) [Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from intense competition, economic downturns, regulatory changes, operational hazards, and financial exposures including debt and acquisition integration challenges - The company faces **significant competition** from large national companies, regional players, and government service providers, which could affect its ability to win or retain contracts and maintain pricing[212](index=212&type=chunk)[213](index=213&type=chunk) - **Growth through acquisitions** is a key strategy, but competition for candidates and market conditions may **limit opportunities**; integrating acquired businesses **presents challenges** and may not always achieve anticipated financial objectives[215](index=215&type=chunk)[229](index=229&type=chunk) - Financial results are **vulnerable to economic conditions**, including inflation and recessions, which can **decrease waste generation**, **increase pricing pressure**, and **negatively impact recycled commodity prices**[271](index=271&type=chunk)[272](index=272&type=chunk)[275](index=275&type=chunk) - The business is subject to **extensive and evolving environmental, health, and safety laws**; changes in regulations, particularly regarding climate change (GHG emissions) and emerging contaminants (PFAS), could **significantly increase operating costs and liabilities**[291](index=291&type=chunk)[295](index=295&type=chunk) - The company's indebtedness of approximately **$6.963 billion** as of year-end 2022 could **increase vulnerability to adverse economic conditions** and expose it to **interest rate risk**, potentially **limiting financial flexibility**[250](index=250&type=chunk)[251](index=251&type=chunk) [Unresolved Staff Comments](index=91&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - None[304](index=304&type=chunk) [Properties](index=91&type=section&id=Item%202.%20Properties) As of December 31, 2022, the company owned or operated a vast network of 359 collection operations, 209 transfer stations, 100 landfills, 79 recycling facilities, and 22 E&P injection wells across North America Key Properties Owned or Operated (as of Dec 31, 2022) | Facility Type | Count | | :--- | :--- | | Solid waste collection operations | 359 | | Transfer stations | 209 (157 owned, 52 operated) | | MSW landfills | 75 (63 owned, 12 operated) | | E&P waste landfills | 9 | | Non-MSW landfills | 16 | | Recycling operations | 79 | | E&P liquid waste injection wells | 22 | [Legal Proceedings](index=93&type=section&id=Item%203.%20Legal%20Proceedings) Information on legal proceedings is incorporated by reference from Note 13 to the consolidated financial statements - Details on legal proceedings are located in Note 13 of the consolidated financial statements[308](index=308&type=chunk) [Mine Safety Disclosure](index=93&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) There is no mine safety disclosure to report - None[309](index=309&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=94&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Waste Connections' common shares trade on NYSE and TSX, with a regular dividend and active share repurchase program, demonstrating strong historical stock performance - The company's common shares trade on the **NYSE** and **TSX** under the symbol '**WCN**'[312](index=312&type=chunk) - A regular quarterly cash dividend of **$0.255 per common share** was approved on February 15, 2023[313](index=313&type=chunk) - The company renewed its **Normal Course Issuer Bid (NCIB)** to purchase up to **12,859,066 common shares** from August 10, 2022, to August 9, 2023[314](index=314&type=chunk) Five-Year Cumulative Total Shareholder Returns (Indexed) | Company / Index | Dec 2017 | Dec 2018 | Dec 2019 | Dec 2020 | Dec 2021 | Dec 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Waste Connections, Inc.** | **$100** | **$105.47** | **$129.93** | **$147.93** | **$197.93** | **$193.93** | | S&P 500 Index | $100 | $95.62 | $125.72 | $148.85 | $191.58 | $156.88 | | S&P/TSX 60 Index | $100 | $84.78 | $108.88 | $116.99 | $151.09 | $132.06 | | Dow Jones U.S. Waste & Disposal Services Index | $100 | $100.11 | $135.25 | $144.12 | $201.48 | $190.59 | [Reserved](index=95&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=97&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, revenues grew 17.2% to $7.212 billion, driven by acquisitions and pricing, with net income up 35.2% and adjusted EBITDA up 15.7%, despite margin compression and increased leverage from acquisition spending 2022 vs. 2021 Financial Performance | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $7.212 billion | $6.151 billion | +17.2% | | Net Income (attributable to WCN) | $835.7 million | $618.0 million | +35.2% | | Adjusted EBITDA | $2.221 billion | $1.919 billion | +15.7% | | Adjusted EBITDA Margin | 30.8% | 31.2% | -40 bps | | Adjusted Free Cash Flow | $1.165 billion | $1.010 billion | +15.3% | - The **17.2%** revenue growth in 2022 was primarily driven by acquisitions (contributing **$552.0 million**), solid waste pricing growth of **9.2%**, and a **1.2%** increase from higher E&P waste activity[340](index=340&type=chunk) - The company returned **$668.0 million** to shareholders in 2022, consisting of **$243.0 million** in cash dividends and **$425.0 million** in share repurchases[345](index=345&type=chunk) - The company's leverage ratio (Total Debt to EBITDA) increased from **2.50x** at year-end 2021 to **2.93x** at year-end 2022, primarily due to debt-funded acquisition spending[346](index=346&type=chunk) [Results of Operations](index=112&type=section&id=Results%20of%20Operations) In 2022, revenues increased 17.2% to $7.212 billion, driven by acquisitions and pricing, while operating income grew 19.5% to $1.242 billion, improving the operating margin to 17.2% despite higher costs of operations Consolidated Statements of Net Income Highlights (in thousands) | | 2022 | % of Rev | 2021 | % of Rev | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | **$7,211,859** | **100.0%** | **$6,151,361** | **100.0%** | | Cost of operations | 4,336,012 | 60.1% | 3,654,074 | 59.4% | | Selling, general and administrative | 696,467 | 9.7% | 612,337 | 10.0% | | **Operating income** | **1,242,190** | **17.2%** | **1,039,625** | **16.9%** | | **Net income attributable to Waste Connections** | **$835,662** | **11.6%** | **$618,047** | **10.0%** | - Revenue growth in 2022 was primarily driven by acquisitions (**$563.1 million** net), price increases and surcharges (**$541.7 million**), and increased E&P waste revenues (**$75.8 million**)[383](index=383&type=chunk)[384](index=384&type=chunk)[386](index=386&type=chunk) - Cost of Operations as a percentage of revenue increased by **0.7 percentage points** to **60.1%**, mainly due to higher fuel expense, increased third-party transportation costs, and the impact of acquisitions with lower operating margins[394](index=394&type=chunk) - Operating income margin improved by **0.3 percentage points** to **17.2%**, benefiting from lower SG&A, depreciation, and impairment expenses as a percentage of revenue, which offset the increase in cost of operations[409](index=409&type=chunk) [Segment Reporting](index=120&type=section&id=Segment%20Reporting) In 2022, all five geographic segments reported revenue growth, with varying EBITDA margin performance influenced by factors like E&P activity, acquisitions, and operating costs Segment Revenue and EBITDA (2022) | Segment | Revenue (in millions) | EBITDA (in millions) | EBITDA Margin | | :--- | :--- | :--- | :--- | | Eastern | $1,890.7 | $486.6 | 25.7% | | Southern | $1,667.8 | $497.8 | 29.9% | | Western | $1,484.6 | $445.9 | 30.0% | | Central | $1,228.1 | $424.6 | 34.6% | | Canada | $940.6 | $349.4 | 37.1% | - The Southern segment's EBITDA margin increased from **27.3%** in 2021 to **29.9%** in 2022, driven by higher earnings in E&P operations and price-led revenue growth[432](index=432&type=chunk) - The Canada segment's EBITDA margin decreased from **39.7%** in 2021 to **37.1%** in 2022, primarily due to acquisitions with lower margins and increased fuel and disposal expenses[442](index=442&type=chunk) [Liquidity and Capital Resources](index=126&type=section&id=Liquidity%20and%20Capital%20Resources) In 2022, operating cash flow increased to $2.022 billion, but investing activities surged to $3.087 billion due to acquisitions and capital expenditures, leading to increased long-term debt of $6.963 billion Cash Flow Summary (in millions) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,022.5 | $1,698.2 | | Net cash used in investing activities | $(3,087.2) | $(1,693.5) | | Net cash provided by (used in) financing activities | $1,028.5 | $(499.5) | - The increase in cash used in investing activities was driven by a **$1.246 billion** increase in cash paid for acquisitions and a **$168.4 million** increase in capital expenditures[449](index=449&type=chunk)[344](index=344&type=chunk) - As of December 31, 2022, the company had total long-term debt of **$6.963 billion** and contractual obligations including interest payments, leases, and landfill closure costs[473](index=473&type=chunk) - The company plans for total capital expenditures of approximately **$895 million** in 2023, to be funded by cash on hand, internally generated funds, and borrowings[454](index=454&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=144&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rates, commodity prices, and foreign currency, with specific sensitivities outlined for unhedged debt, fuel, and recycled commodity price changes - The company uses interest rate swaps to fix the rate on a portion of its variable-rate debt; as of December 31, 2022, five swaps were outstanding with notional amounts totaling **$950 million**[497](index=497&type=chunk) - A **one percentage point** increase in interest rates on the **$1.115 billion** of unhedged variable-rate debt as of year-end 2022 would decrease annual pre-tax income by approximately **$11.1 million**[502](index=502&type=chunk)[503](index=503&type=chunk) - A **$0.10 per gallon** increase in the price of unhedged diesel fuel would decrease pre-tax income by approximately **$4.7 million** in 2023[505](index=505&type=chunk) - A **10%** decrease in average recycled commodity prices from 2022 levels would have reduced revenues by an estimated **$19.7 million**[506](index=506&type=chunk) [Financial Statements and Supplementary Data](index=147&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2020-2022, along with the independent auditor's report from Grant Thornton LLP, highlighting key audit matters like landfill accounting and intangible asset valuation - The independent auditor's report from Grant Thornton LLP provides an **unqualified opinion** on the financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[513](index=513&type=chunk)[514](index=514&type=chunk) - Critical audit matters identified by the auditor include the significant judgments and estimates involved in **landfill accounting** (closure and post-closure liabilities) and the **valuation of intangible assets** acquired in business combinations[517](index=517&type=chunk)[518](index=518&type=chunk)[521](index=521&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=244&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure - None[791](index=791&type=chunk) [Controls and Procedures](index=244&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes in the fourth quarter - Management concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2022[792](index=792&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2022; this assessment was audited by Grant Thornton LLP, which issued an **unqualified opinion**[794](index=794&type=chunk)[795](index=795&type=chunk) [Other Information](index=245&type=section&id=Item%209B.%20Other%20Information) There is no other information to report - None[797](index=797&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=245&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) There is no disclosure regarding foreign jurisdictions that prevent inspections - None[798](index=798&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=245&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's 2023 Management Information Circular and Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[799](index=799&type=chunk) [Executive Compensation](index=245&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's 2023 Management Information Circular and Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[802](index=802&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=245&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information for this item is incorporated by reference from the company's 2023 Management Information Circular and Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[803](index=803&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=245&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's 2023 Management Information Circular and Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[804](index=804&type=chunk) [Principal Accounting Fees and Services](index=247&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's 2023 Management Information Circular and Proxy Statement - Information is incorporated by reference from the 2023 Proxy Statement[807](index=807&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=247&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists exhibits filed with the Form 10-K, including corporate governance documents, debt agreements, and Financial Statement Schedule II - This section contains a list of all exhibits filed with the Form 10-K and includes Schedule II – Valuation and Qualifying Accounts[808](index=808&type=chunk) [Form 10-K Summary](index=251&type=section&id=Item%2016.%20Form%2010-K%20Summary) There is no Form 10-K summary provided - None[815](index=815&type=chunk)

Waste Connections, Inc. (NYSE:WCN) Q3 2022 Earnings Conference Call November 3, 2022 8:30 AM ET Company Participants Worthing Jackman - President, CEO & Director Mary Anne Whitney - EVP & CFO Conference Call Participants Toni Kaplan - Morgan Stanley Jerry Revich - Goldman Sachs Kyle White - Deutsche Bank Sean Eastman - KeyBanc Capital Markets Michael Hoffman - Stifel Noah Kaye - Oppenheimer Stephanie Moore - Jefferies Walter Spracklin - RBC Capital Stephanie Yee - JPMorgan Operator Good morning, and welcome ...

Revenue Growth - Total revenues increased by $282.7 million, or 17.7%, to $1.880 billion for the three months ended September 30, 2022, compared to $1.597 billion for the same period in 2021[151]. - For the nine months ended September 30, 2022, total revenues rose by $815.5 million, or 18.0%, to $5.343 billion from $4.527 billion in the prior year[151]. - Acquisitions closed during or subsequent to the comparable periods contributed an increase of $154.1 million and $410.6 million to revenues for the three and nine months ended September 30, 2022, respectively[152]. Price Increases - The net increase in prices charged to customers at existing operations was $154.2 million for the three months ended September 30, 2022, consisting of $126.3 million in core price increases and $27.9 million in surcharges[153]. - For the nine months ended September 30, 2022, the net increase in prices charged to customers was $376.9 million, including $315.3 million in core price increases and $61.6 million in surcharges[153]. Operating Income and Expenses - Operating income for the three months ended September 30, 2022, was $326.8 million, representing 17.4% of revenues, compared to $285.1 million, or 17.9%, in the same period of 2021[151]. - The cost of operations for the three months ended September 30, 2022, was $1.121 billion, or 59.6% of revenues, compared to $946.1 million, or 59.2%, in the same period of 2021[151]. - Total cost of operations increased by $174.5 million, or 18.4%, to $1.121 billion for the three months ended September 30, 2022, primarily due to additional operating costs from acquisitions and increased operating costs at existing operations[160]. Net Income - Net income attributable to Waste Connections for the three months ended September 30, 2022, was $236.9 million, or 12.6% of revenues, compared to $114.4 million, or 7.2%, in the prior year[151]. - Reported net income attributable to Waste Connections for the nine months ended September 30, 2022, was $641,310 thousand, an increase of 42% from $451,736 thousand in 2021[278]. - Adjusted net income attributable to Waste Connections for the nine months ended September 30, 2022, was $755,516 thousand, compared to $629,472 thousand in 2021, indicating a rise of 20%[278]. Segment Performance - Revenue for the Eastern segment increased by $104.9 million to $501.1 million for the three months ended September 30, 2022, compared to $396.2 million for the same period in 2021[214]. - Southern segment revenue increased by $57.4 million to $428.4 million for the three months ended September 30, 2022, from $371.0 million in the prior year[219]. - Western segment revenue increased by $53.5 million to $385.5 million for the three months ended September 30, 2022, compared to $332.0 million in the same period of 2021[222]. - Central segment revenue increased by $49.0 million to $322.7 million for the three months ended September 30, 2022, from $273.7 million in the prior year[227]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $1.500 billion for the nine months ended September 30, 2022, an increase of $230.2 million from $1.270 billion in the same period of 2021[239]. - Net cash used in investing activities increased by $823.7 million to $1.859 billion for the nine months ended September 30, 2022, primarily due to acquisitions and capital expenditures[243]. - Capital expenditures for property and equipment were $618.3 million for the nine months ended September 30, 2022, with an expected total of approximately $850 million for the year[248]. Debt and Financing - Long-term borrowings increased by $1.098 billion during the nine months ended September 30, 2022, compared to an increase of $131.9 million during the same period in 2021[249]. - The company completed a public offering of $500 million in 3.20% Senior Notes due 2032 and $750 million in 4.20% Senior Notes due 2033 in 2022[252][253]. - As of September 30, 2022, the company had $650 million under the term loan and $738.2 million under the revolving credit facility outstanding, with a total long-term debt of $6.28 billion[251][262]. Operational Challenges - The company incurred over $40 million in incremental COVID-19-related costs since the onset of the pandemic, primarily for supplemental pay for frontline employees[145]. - Volume losses totaled $22.3 million for the three months ended September 30, 2022, primarily due to nonrenewal of residential collection contracts and decreases in landfill disposal volumes[154]. - Inflationary pressures have been observed, particularly in fuel, materials, and labor costs, but the company can pass through certain costs to customers under many contracts[280]. Miscellaneous - The effective tax rate for Q3 2022 was 17.1%, up from 13.8% in Q3 2021, with income taxes increasing by $30.4 million to $48.8 million[202]. - The company approved a normal course issuer bid to purchase up to 12,859,066 common shares from August 10, 2022, to August 9, 2023[246]. - The company has financial surety bonds totaling approximately $1.425 billion as of September 30, 2022, supporting its financial assurance needs[267].

Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $1.816 billion, exceeding the outlook by approximately $30 million and up $282 million or 18.4% year-over-year [29] - Adjusted EBITDA for Q2 was $567 million, about $10 million above the outlook and up $82 million or 16.9% year-over-year, with an adjusted EBITDA margin of 31.2% [30] - Year-to-date adjusted free cash flow was over $638 million, representing 18.4% of revenue, up 9% year-over-year despite a 36% increase in capital expenditures [32] Business Line Data and Key Metrics Changes - Commercial collection revenue increased by about 14% year-over-year, primarily due to pricing [17] - Roll-off revenue rose by about 11%, with revenue per pull up approximately 8.5% [17] - E&P waste revenue reached $50.4 million in Q2, up 24% sequentially and 62% year-over-year, driven by increased drilling activity [23] Market Data and Key Metrics Changes - Solid waste pricing growth was 8.8% in Q2, up from 7.2% in the previous quarter, with total pricing ranging from almost 5% in exclusive markets to between 9.5% and 10.5% in competitive regions [14] - Recovered commodities revenue increased by about 14% year-over-year, attributed to higher values for recycled commodities and RINs [19] - Commodity values showed some weakening late in the quarter, with average prices for OCC at about $158 per ton and RINs averaging about $320 [20] Company Strategy and Development Direction - The company is focused on disciplined capital allocation and market selection to drive value creation, with a robust pipeline for acquisitions expected to close later this year and early next [26][27] - The strategy includes a strong emphasis on core pricing, which is expected to lead to margin expansion as inflationary pressures abate [15][43] - Sustainability initiatives include the development of greenfield recycling facilities and renewable gas facilities, expected to be completed by late 2023 [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit revenue growth in 2023, supported by solid waste pricing strength and contributions from acquisitions [6][43] - The company anticipates that inflationary pressures have peaked and will moderate, allowing for improved pricing and margin expansion [48][51] - Management highlighted the importance of maintaining a focus on core pricing to navigate the current economic challenges [96] Other Important Information - The company has closed 12 acquisitions year-to-date with annualized revenue of approximately $245 million, significantly above average levels [24] - The balance sheet remains strong with a leverage ratio of about 2.5x on a net debt-to-EBITDA basis, providing flexibility for continued acquisition activity [26] - The company plans to increase its cash dividend by a double-digit percentage later this year [26] Q&A Session Summary Question: Can you provide confidence around pricing for next year? - Management indicated that they are positioned for at least 5% pricing growth in 2023 without additional actions, with expectations that inflationary pressures will moderate [47][48] Question: What trends are being observed in the cost structure? - Management noted that cost pressures have peaked, and pricing has been implemented to recover these costs, with expectations of regular inflation moving forward [49][51] Question: How is pricing categorized internally? - The company focuses on core pricing, with 85% of reported pricing being core, while a small portion is attributed to fuel and material surcharges [59][60] Question: What is the outlook for M&A activity? - The pace of M&A activity remains strong, with a robust pipeline and continued interest from high-quality private company sellers [83][84] Question: How are inflationary pressures impacting margins? - Management expects margin expansion opportunities as inflation decreases, with a focus on core pricing to drive profitability [73][92]

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 June 30, 2022 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 ot ...

Revenue Growth - Total revenues increased by $250.3 million, or 17.9%, to $1.646 billion for the three months ended March 31, 2022, compared to $1.396 billion for the same period in 2021[140] - Incremental revenue from acquisitions closed during or subsequent to the three months ended March 31, 2021, contributed $112.3 million to revenues[141] - The net increase in prices charged to customers at existing operations was $94.0 million, consisting of $83.5 million in core price increases and $10.5 million in surcharges[142] - E&P waste revenues increased by $16.6 million due to recoveries in crude oil demand and increased drilling activity levels[144] - Revenues from sales of recyclable commodities increased by $15.0 million, driven by higher prices for materials and increased volumes collected from commercial recycling customers[145] - Total revenue for the three months ended March 31, 2022, was $1,646.3 million, up from $1,395.9 million in the same period of 2021[175] - Revenue for the three months ended March 31, 2022, increased by $250.3 million to $1,646.3 million compared to $1,395.9 million for the same period in 2021, representing an increase of 17.9%[180] - The Eastern segment's revenue increased by $85.1 million to $421.6 million, driven by price increases and higher solid waste collection volumes[181] - The Southern segment's revenue rose by $48.9 million to $387.1 million, attributed to solid waste price increases and contributions from acquisitions[184] - The Western segment's revenue increased by $49.7 million to $346.7 million, supported by contributions from acquisitions and higher collection volumes[188] - The Central segment's revenue grew by $40.8 million to $276.2 million, primarily due to price increases and contributions from acquisitions[191] - The Canada segment's revenue increased by $25.8 million to $214.7 million, driven by price increases and higher commercial collection volumes[194] Cost and Expenses - Total cost of operations rose by $163.6 million, or 19.8%, to $989.5 million for the three months ended March 31, 2022, from $825.9 million in the prior year[148] - Operating costs increased by $91.3 million for the three months ended March 31, 2022, driven by higher labor, fuel, and maintenance expenses[149] - SG&A expenses increased by $22.0 million, or 15.6%, to $163.4 million for the three months ended March 31, 2022, from $141.4 million in the prior year[151] - Depreciation expense rose by $22.5 million, or 14.3%, to $179.9 million for the three months ended March 31, 2022, from $157.4 million in the same period of 2021[156] - Cost of operations as a percentage of revenues rose by 0.9 percentage points to 60.1% for the three months ended March 31, 2022, compared to 59.2% for the same period in 2021[150] Income and Profitability - Operating income for the three months ended March 31, 2022, was $273.9 million, representing 16.6% of total revenues[140] - Net income attributable to Waste Connections was $180.3 million, or 11.0% of total revenues, for the three months ended March 31, 2022[140] - Operating income increased by $35.5 million, or 14.9%, to $273.9 million for the three months ended March 31, 2022, from $238.4 million in the prior year[162] - Reported net income attributable to Waste Connections for Q1 2022 is $180.3 million, an increase from $160.3 million in Q1 2021[231] - Adjusted net income attributable to Waste Connections for Q1 2022 is $213.4 million, compared to $185.5 million in Q1 2021, reflecting a 15.1% increase[231] Cash Flow and Working Capital - Net cash provided by operating activities for the three months ended March 31, 2022, was $440.9 million, an increase of $40.5 million from $400.4 million in 2021[200] - As of March 31, 2022, the company had a working capital surplus of $155.1 million, a significant improvement from a working capital deficit of $200.0 million at December 31, 2021[202] - Net cash provided by operating activities increased by $30.0 million from deferred income taxes, resulting in an increase of $38.4 million for the three months ended March 31, 2022, compared to $8.4 million for the same period in 2021[203] - Net cash provided by operating activities was positively impacted by $20.8 million from accounts payable and accrued liabilities, leading to an increase of $3.6 million for the three months ended March 31, 2022, compared to a decrease of $17.2 million for the same period in 2021[203] - Deferred revenue contributed an increase of $7.7 million to net cash provided by operating activities, resulting in an increase of $16.6 million for the three months ended March 31, 2022, compared to $8.9 million for the same period in 2021[203] Investment and Financing Activities - Net cash used in investing activities increased by $389.3 million to $489.9 million for the three months ended March 31, 2022, from $100.6 million for the same period in 2021[205] - Net cash provided by financing activities increased by $457.6 million to $292.1 million for the three months ended March 31, 2022, from net cash used of $165.5 million for the same period in 2021[205] - Capital expenditures for property and equipment were $152.3 million for the three months ended March 31, 2022, with an expected total of approximately $850 million for 2022[209] - As of March 31, 2022, $650.0 million under the term loan and $1.087 billion under the revolving credit facility were outstanding under the Credit Agreement[210] Dividends and Shareholder Returns - The company authorized an increase in the quarterly cash dividend from $0.205 to $0.230 per share, with cash dividends of $59.4 million paid during the three months ended March 31, 2022[208] Market and Economic Conditions - Inflationary pressures have been observed, particularly in fuel, materials, and labor costs, with contracts allowing for cost pass-throughs to customers[233] - A one percentage point increase in interest rates would decrease the company's annual pre-tax income by approximately $8.9 million as of March 31, 2022[239] - A $0.10 per gallon increase in fuel prices would decrease pre-tax income by approximately $3.3 million during the nine-month period from April 1, 2022, to December 31, 2022[241] - A 10% decrease in average recycled commodity prices would impact revenues by $6.1 million for the three months ended March 31, 2022[242] - A $0.01 change in the Canadian dollar to U.S. dollar exchange rate would impact annual revenue by approximately $12.0 million[243] Internal Controls and Compliance - The effectiveness of the company's disclosure controls and procedures was confirmed by management as of March 31, 2022[246] - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended March 31, 2022[247]

Financial Data and Key Metrics Changes - In Q4 2021, revenue was $1.624 billion, exceeding expectations by $44 million and representing a 16% year-over-year increase [21] - Adjusted EBITDA for Q4 was $495 million, about $9 million above outlook, with a margin of 30.5% of revenue, up 20 basis points year-over-year [26] - Adjusted free cash flow increased 20% year-over-year to $1.01 billion, reflecting a conversion rate of 52.6% of adjusted EBITDA [28] Business Line Data and Key Metrics Changes - Solid waste pricing growth was approximately 5.7% in Q4, with commercial collection revenue up 13% and roll-off revenue up 11% [21][23] - E&P waste revenue was about $34 million, up $9 million year-over-year, indicating a recovery from mid-2020 lows [24] - Revenues from recovered commodities increased by about 90% year-over-year, driven by higher RIN prices and strong fiber values [25] Market Data and Key Metrics Changes - Solid waste volumes increased by 1.2%, with positive trends across all U.S. regions, particularly in the Central and Western regions [22] - The company expects solid waste organic growth of 6.5% to 7% in 2022, supplemented by $350 million from completed acquisitions [30] Company Strategy and Development Direction - The company plans to maintain its focus on solid waste opportunities, with a capital deployment strategy that prioritizes acquisitions and resource recovery projects [45][47] - Investments in sustainability include $100 million for new landfill gas and resource recovery facilities, with a total CapEx of $850 million expected in 2022 [15][31] - The company aims for revenue growth to reach $10 billion and more in the future, emphasizing a culture of accountability and commitment [39][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit percentage growth in revenue, adjusted EBITDA, and adjusted free cash flow in 2022, despite inflationary pressures [4][11] - The company is well-positioned from a working capital standpoint, providing a strong cushion for future growth [28] - Management acknowledged the challenges posed by labor constraints and inflation but remains optimistic about the operational outlook [101] Other Important Information - The company completed over 30 acquisitions in 2021, contributing approximately $400 million in annualized revenue [18] - The effective tax rate for 2022 is expected to be around 22%, with cash taxes projected at 50% to 60% of book [31] Q&A Session Summary Question: Capital deployment priorities and risks of strategic drift - Management emphasized maintaining focus on solid waste opportunities and an all-of-the-above approach to capital deployment, with no intention of drifting away from core markets [45][47] Question: Future acquisition strategy and return of capital - Management indicated that as the company grows, the focus will shift towards organic growth and share repurchases to maintain double-digit free cash flow per share growth [49] Question: Operating leverage and cost inflation assumptions - Management explained that to achieve 20 basis points of leverage, a 6.5% price increase is necessary to offset inflationary pressures [54][56] Question: E&P waste revenue outlook - Management acknowledged the potential for increased E&P waste activity but noted that labor constraints could limit immediate growth [101] Question: Safety performance amidst labor challenges - Management highlighted a behavioral-based approach to safety, which has led to improved safety metrics despite challenges from acquisitions [90][91] Question: Recycling opportunities and acquisitions - Management confirmed that recent investments in recycling facilities aim to reduce reliance on third-party processing and optimize operations [86][87]