Waste nections(WCN) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and related disclosures for Waste Connections, Inc Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for periods ended June 30, 2025, and December 31, 2024, including balance sheets, income, comprehensive income, equity, and cash flow statements, along with detailed notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | June 30, 2025 (in thousands of U.S. dollars) | December 31, 2024 (in thousands of U.S. dollars) | | :-------------------------------- | :--------------------------------------------- | :----------------------------------------------- | | Assets | | | | Total current assets | $1,349,739 | $1,226,912 | | Total assets | $20,678,610 | $19,817,809 | | Liabilities and Equity | | | | Total current liabilities | $2,001,199 | $1,878,834 | | Total liabilities | $12,324,953 | $11,957,455 | | Total equity | $8,353,657 | $7,860,354 | - Total assets increased by $860.8 million (4.3%) from December 31, 2024, to June 30, 2025, primarily due to increases in property, equipment, goodwill, and intangible assets[7] - Total equity increased by $493.3 million (6.3%) from December 31, 2024, to June 30, 2025[7] Condensed Consolidated Statements of Net Income This section details the company's revenues, expenses, and net income over specific reporting periods | Metric | Three Months Ended June 30, 2025 (in thousands of U.S. dollars) | Three Months Ended June 30, 2024 (in thousands of U.S. dollars) | Six Months Ended June 30, 2025 (in thousands of U.S. dollars) | Six Months Ended June 30, 2024 (in thousands of U.S. dollars) | | :----------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :--------------------------------------------------- | :--------------------------------------------------- | | Revenues | $2,407,055 | $2,248,166 | $4,635,231 | $4,320,819 | | Operating income | $459,545 | $424,705 | $849,755 | $791,505 | | Net income attributable to Waste Connections | $290,276 | $275,477 | $531,787 | $505,531 | | Basic EPS | $1.12 | $1.07 | $2.06 | $1.96 | | Diluted EPS | $1.12 | $1.07 | $2.05 | $1.96 | | Cash dividends per common share | $0.315 | $0.285 | $0.630 | $0.570 | - Revenues increased by 7.1% for the three months and 7.3% for the six months ended June 30, 2025, compared to the prior year periods[8] - Net income attributable to Waste Connections increased by 5.4% for the three months and 5.2% for the six months ended June 30, 2025, year-over-year[8] Condensed Consolidated Statements of Comprehensive Income This section presents net income and other comprehensive income components, reflecting changes in equity from non-owner sources | Metric | Three Months Ended June 30, 2025 (in thousands of U.S. dollars) | Three Months Ended June 30, 2024 (in thousands of U.S. dollars) | Six Months Ended June 30, 2025 (in thousands of U.S. dollars) | Six Months Ended June 30, 2024 (in thousands of U.S. dollars) | | :---------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :--------------------------------------------------- | :--------------------------------------------------- | | Net income | $290,276 | $275,400 | $531,787 | $504,528 | | Other comprehensive income (loss), net of tax | $113,474 | $(23,819) | $111,928 | $(76,829) | | Comprehensive income attributable to Waste Connections | $403,750 | $251,658 | $643,715 | $428,702 | - Other comprehensive income (loss) significantly improved, moving from a loss of $23.8 million in Q2 2024 to an income of $113.5 million in Q2 2025, primarily due to foreign currency translation adjustments[10] Condensed Consolidated Statements of Equity This section outlines changes in the company's equity components, including common shares, retained earnings, and other comprehensive income | Equity Component | Balance at Dec 31, 2024 (in thousands of U.S. dollars) | Balance at Jun 30, 2025 (in thousands of U.S. dollars) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Common Shares | $3,283,161 | $3,285,689 | | Additional Paid-in Capital | $325,928 | $335,939 | | Accumulated Other Comprehensive Loss | $(205,740) | $(93,812) | | Retained Earnings | $4,457,005 | $4,825,841 | | Total Waste Connections' Equity | $7,860,354 | $8,353,657 | - Total Waste Connections' equity increased by $493.3 million during the six months ended June 30, 2025, driven by net income and positive foreign currency translation adjustments[13] - Retained earnings increased by $368.8 million, reflecting net income partially offset by cash dividends[13] Condensed Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands of U.S. dollars) | Six Months Ended June 30, 2024 (in thousands of U.S. dollars) | | :----------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Net cash provided by operating activities | $1,179,741 | $1,101,687 | | Net cash used in investing activities | $(1,019,972) | $(1,794,104) | | Net cash provided by (used in) financing activities | $(92,478) | $701,881 | | Net increase in cash, cash equivalents and restricted cash | $69,298 | $8,368 | | Cash, cash equivalents and restricted cash at end of period | $267,471 | $192,406 | - Net cash provided by operating activities increased by $78.1 million (7.1%) for the six months ended June 30, 2025, compared to the prior year[18] - Net cash used in investing activities decreased significantly by $774.1 million, primarily due to lower payments for acquisitions[18] - Net cash from financing activities shifted from a $701.9 million inflow in 2024 to a $92.5 million outflow in 2025, mainly due to a $794.4 million decrease in net long-term borrowings[18] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements Note 1. BASIS OF PRESENTATION AND SUMMARY This note explains the basis for preparing the unaudited financial statements and the significant estimates involved - The financial statements are unaudited and include all normal recurring adjustments necessary for fair statement in conformity with U.S. GAAP[20] - Preparation involves estimates and assumptions for landfills, self-insurance, income taxes, acquisition purchase price allocation, contingent consideration, and asset impairments[20] Note 2. REPORTING CURRENCY This note clarifies the company's reporting currency and the translation methods for foreign operations - The Company's reporting currency is the U.S. dollar, with Canadian operations using the Canadian dollar as functional currency[22] - Canadian dollar financial positions are translated using period-end exchange rates, with adjustments included in other comprehensive income or loss[22] Note 3. NEW ACCOUNTING STANDARDS This note discusses new FASB standards pending adoption and their expected impact on the financial statements - New FASB standards pending adoption include additional income tax disclosures and disaggregation of income statement expenses, effective in 2024 and 2026, respectively[23][24][26] - The Company does not expect these new accounting standards to have a material impact on its consolidated financial statements[23][26] Note 4. REVENUE This note disaggregates the company's revenue by primary service lines and highlights significant changes - The Company's primary revenue sources are non-hazardous waste collection, transfer, disposal, recycling, E&P waste services, and intermodal services[27] | Service Line | Three Months Ended June 30, 2025 (in thousands of U.S. dollars) | Three Months Ended June 30, 2024 (in thousands of U.S. dollars) | Six Months Ended June 30, 2025 (in thousands of U.S. dollars) | Six Months Ended June 30, 2024 (in thousands of U.S. dollars) | | :----------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | :--------------------------------------------------- | :--------------------------------------------------- | | Commercial | $731,573 | $656,926 | $1,444,033 | $1,299,785 | | Residential | $592,225 | $567,383 | $1,163,844 | $1,113,594 | | Industrial and construction roll off | $366,987 | $358,789 | $703,984 | $684,779 | | Landfill | $402,080 | $405,912 | $740,834 | $759,391 | | E&P | $178,117 | $123,566 | $329,016 | $220,974 | - E&P waste services revenue saw significant growth, increasing by 44.1% for the three months and 49.0% for the six months ended June 30, 2025, year-over-year[27] Note 5. ACCOUNTS RECEIVABLE This note details the company's accounts receivable and the methodology for estimating the allowance for credit losses - The allowance for credit losses is estimated based on historical trends, age of receivables, geographical location, economic conditions, and forecasts[31] | Metric | Six Months Ended June 30, 2025 (in thousands of U.S. dollars) | Six Months Ended June 30, 2024 (in thousands of U.S. dollars) | | :------------------------------------ | :---------------------------------------------------- | :---------------------------------------------------- | | Beginning balance | $25,730 | $23,553 | | Current period provision for expected credit losses | $5,171 | $8,756 | | Write-offs charged against the allowance | $(11,481) | $(10,903) | | Ending balance | $23,612 | $24,017 | Note 6. LANDFILL ACCOUNTING This note provides information on the company's landfill operations, estimated remaining life, and related accounting expenses and liabilities - As of June 30, 2025, the Company operates 101 owned landfills, five under life-of-site agreements, and seven under limited-term agreements[33] - The average remaining landfill life for owned and life-of-site operated landfills is estimated at 31 years (34 years including probable expansion capacity)[35] | Metric | Six Months Ended June 30, 2025 (in thousands of U.S. dollars) | Six Months Ended June 30, 2024 (in thousands of U.S. dollars) | | :---------------------------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Landfill depletion expense | $126,953 | $134,304 | | Final capping, closure and post-closure accretion expense | $23,886 | $15,386 | | Final capping, closure and post-closure liability at June 30, 2025 | $759,482 | N/A (Dec 31, 2024: $860,123) | Note 7. ACQUISITIONS This note details the company's acquisition activities, including the number of businesses acquired and the financial impact - During the six months ended June 30, 2025, the Company acquired 12 immaterial businesses (10 solid waste, 2 E&P waste), incurring $15.9 million in transaction-related expenses[42] | Acquisition Metric | Six Months Ended June 30, 2025 (in thousands of U.S. dollars) | Six Months Ended June 30, 2024 (in thousands of U.S. dollars) | | :-------------------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Cash consideration | $510,738 | $1,435,704 | | Debt assumed | $71,557 | $64,450 | | Total identifiable net assets | $416,583 | $1,140,093 | | Goodwill | $165,712 | $360,061 | - Goodwill acquired for the six months ended June 30, 2025, was $165.7 million, compared to $360.1 million in the prior year, with a significant portion expected to be tax deductible[46] Note 8. INTANGIBLE ASSETS, NET This note provides a breakdown of the company's intangible assets, excluding goodwill, and their estimated future amortization expenses | Intangible Asset Type | Net Carrying Amount at June 30, 2025 (in thousands of U.S. dollars) | Net Carrying Amount at December 31, 2024 (in thousands of U.S. dollars) | | :------------------------------------ | :---------------------------------------------------- | :---------------------------------------------------- | | Long-term franchise agreements and contracts | $696,367 | $703,911 | | Customer lists | $313,013 | $311,761 | | Permits and other (finite-lived) | $871,052 | $794,334 | | Solid waste collection and transportation permits (indefinite-lived) | $181,613 | $181,613 | | Total Intangible Assets, exclusive of goodwill | $2,062,045 | $1,991,619 | | Year Ending December 31 | Estimated Future Amortization Expense (in thousands of U.S. dollars) | | :------------------------ | :--------------------------------------------------- | | 2025 | $200,421 | | 2026 | $178,828 | | 2027 | $156,177 | | 2028 | $138,320 | | 2029 | $124,608 | Note 9. LONG-TERM DEBT This note details the company's long-term debt instruments, including senior notes and revolving credit agreements | Debt Instrument | June 30, 2025 (in thousands of U.S. dollars) | December 31, 2024 (in thousands of U.S. dollars) | | :------------------------------------ | :---------------------------------------------------- | :---------------------------------------------------- | | Revolving Credit Agreement | $1,906,421 | $2,164,325 | | 5.25% Senior Notes due 2035 | $500,000 | — | | Total long-term debt | $8,417,361 | $8,151,713 | | Long-term portion of debt and notes payable | $8,337,178 | $8,072,928 | - The Company completed an underwritten public offering of $500 million aggregate principal amount of 5.25% Senior Notes due 2035 on June 4, 2025[53] - The Revolving Credit Agreement had $1.91 billion outstanding at June 30, 2025, with interest rates ranging from 3.86% to 7.50%[50][52] Note 10. SEGMENT REPORTING This note provides financial information for the company's operating segments, including revenue and EBITDA - The Company manages operations through six geographic solid waste operating segments: Southern, Western, Eastern, Central, Canada, and MidSouth[62] - Segment EBITDA is the primary financial measure used by the Chief Operating Decision Maker (CODM) to evaluate profitability and allocate resources[63] | Segment | Reported Revenue (3 Months Ended June 30, 2025) | Segment EBITDA (3 Months Ended June 30, 2025) | Segment EBITDA Margin (3 Months Ended June 30, 2025) | | :-------- | :---------------------------------------------- | :-------------------------------------------- | :--------------------------------------------------- | | Southern | $476,945 | $154,307 | 32.4% | | Western | $461,665 | $127,969 | 27.7% | | Eastern | $442,213 | $114,340 | 25.9% | | Central | $402,087 | $143,420 | 35.7% | | Canada | $343,416 | $155,939 | 45.4% | | MidSouth | $280,729 | $78,490 | 28.0% | | Consolidated | $2,407,055 | $771,232 | 32.0% | | Segment | Reported Revenue (6 Months Ended June 30, 2025) | Segment EBITDA (6 Months Ended June 30, 2025) | Segment EBITDA Margin (6 Months Ended June 30, 2025) | | :-------- | :---------------------------------------------- | :-------------------------------------------- | :--------------------------------------------------- | | Southern | $930,347 | $303,007 | 32.6% | | Western | $900,067 | $240,315 | 26.7% | | Eastern | $845,483 | $217,435 | 25.7% | | Central | $775,470 | $275,129 | 35.5% | | Canada | $646,147 | $291,510 | 45.1% | | MidSouth | $537,717 | $147,409 | 27.4% | | Consolidated | $4,635,231 | $1,457,832 | 31.5% | Note 11. DERIVATIVE FINANCIAL INSTRUMENTS This note describes the company's use of interest rate swaps to manage exposure to variable interest rate fluctuations - The Company uses interest rate swaps as cash flow hedges to reduce exposure to variable interest rate fluctuations on its Revolving Credit Agreement[72] | Derivative Type | Fair Value at June 30, 2025 (in thousands of U.S. dollars) | Fair Value at December 31, 2024 (in thousands of U.S. dollars) | | :---------------------- | :---------------------------------------------------- | :---------------------------------------------------- | | Interest rate swaps (net asset) | $6,176 | $13,929 | - The fair value of interest rate swaps decreased from $13.9 million at December 31, 2024, to $6.2 million at June 30, 2025[76][77] Note 12. FAIR VALUE OF FINANCIAL INSTRUMENTS This note provides information on the fair value of the company's financial instruments, including debt and other assets/liabilities - The carrying values of cash and equivalents, trade receivables, restricted cash and investments, trade payables, and contingent consideration approximate their fair values[79] | Debt Instrument | Carrying Value at June 30, 2025 (in thousands of U.S. dollars) | Fair Value at June 30, 2025 (in thousands of U.S. dollars) | | :------------------------ | :---------------------------------------------------- | :------------------------------------------------ | | 4.25% Senior Notes due 2028 | $500,000 | $501,850 | | 3.50% Senior Notes due 2029 | $500,000 | $489,100 | | 5.25% Senior Notes due 2035 | $500,000 | $511,600 | | 2.95% Senior Notes due 2052 | $850,000 | $543,405 | - Senior Notes are classified as Level 2 within the fair value hierarchy, with fair value inputs including third-party calculations of market interest rates for similar notes[80] Note 13. NET INCOME PER SHARE INFORMATION This note presents the calculation of basic and diluted net income per share for various periods | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income attributable to Waste Connections (in thousands of U.S. dollars) | $290,276 | $275,477 | $531,787 | $505,531 | | Basic shares outstanding | 258,377,345 | 257,994,105 | 258,286,168 | 257,897,609 | | Diluted shares outstanding | 258,982,647 | 258,565,246 | 258,944,234 | 258,523,996 | | Basic EPS | $1.12 | $1.07 | $2.06 | $1.96 | | Diluted EPS | $1.12 | $1.07 | $2.05 | $1.96 | - Basic and diluted EPS increased year-over-year for both the three and six months ended June 30, 2025[82] Note 14. FAIR VALUE MEASUREMENTS This note describes the company's fair value hierarchy and measurements for recurring fair value items - The Company uses a three-tier fair value hierarchy (Level 1, 2, and 3) for recurring fair value measurements[83][84] | Asset/Liability | Fair Value at June 30, 2025 (in thousands of U.S. dollars) | Fair Value at December 31, 2024 (in thousands of U.S. dollars) | | :------------------------------------ | :---------------------------------------------------- | :---------------------------------------------------- | | Interest rate swap derivative instruments – net asset position (Level 2) | $6,176 | $13,929 | | Restricted cash (Level 1) | $157,305 | $135,807 | | Restricted investments (Level 2) | $78,209 | $77,900 | | Contingent consideration (Level 3) | $(108,072) | $(87,162) | - Contingent consideration, a Level 3 liability, increased from $87.2 million at December 31, 2024, to $108.1 million at June 30, 2025, primarily due to new acquisitions and adjustments[86][87] Note 15. OTHER COMPREHENSIVE INCOME (LOSS) This note details the components of other comprehensive income (loss), including interest rate swaps and foreign currency translation adjustments - Other comprehensive income (loss) includes changes in the fair value of interest rate swaps and foreign currency translation adjustments[88] | Component | Six Months Ended June 30, 2025 (Net of Tax, in thousands of U.S. dollars) | Six Months Ended June 30, 2024 (Net of Tax, in thousands of U.S. dollars) | | :------------------------------------------ | :---------------------------------------------------- | :---------------------------------------------------- | | Interest rate swap amounts reclassified into interest expense | $(4,942) | $(7,942) | | Changes in fair value of interest rate swaps | $(756) | $10,137 | | Foreign currency translation adjustment | $117,626 | $(79,024) | | Total Other Comprehensive Income (Loss) | $111,928 | $(76,829) | - A significant positive foreign currency translation adjustment of $117.6 million contributed to a positive other comprehensive income for the six months ended June 30, 2025, compared to a large loss in the prior year[88] Note 16. SHAREHOLDERS' EQUITY This note provides details on changes in shareholders' equity, including share-based awards, repurchases, and dividends | Share-Based Award Type | Outstanding at December 31, 2024 | Outstanding at June 30, 2025 | | :----------------------------- | :------------------------------- | :--------------------------- | | Restricted Share Units (RSUs) | 912,560 | 899,170 | | Performance-Based RSUs (PSUs) | 219,143 | 211,283 | | Deferred Share Units (DSUs) | 20,418 | 22,903 | | Progressive Waste RSUs | 45,466 | 43,716 | - Under the Employee Share Purchase Plan (ESPP), employees purchased 15,922 common shares for $2.6 million during the six months ended June 30, 2025[95] - The Company repurchased 2,100 common shares for $389,000 under its Normal Course Issuer Bid (NCIB) during the six months ended June 30, 2025[99] - Cash dividends of $163.0 million were paid during the six months ended June 30, 2025, an increase from $147.3 million in the prior year, following an increase in the quarterly dividend rate to $0.315 per share[100] Note 17. COMMITMENTS AND CONTINGENCIES This note outlines the company's legal proceedings, environmental regulations, and potential liabilities - The Company is subject to various judicial and administrative proceedings, including environmental regulations and claims for damages[101][102] - Jefferson Parish Landfill Litigation: The Company settled claims in the Addison action and reached an agreement in principle to settle the Ictech-Bendeck action, which was dismissed without prejudice pending settlement consummation[104][109] - Chiquita Canyon Landfill Litigation: The landfill closed active waste disposal operations on December 31, 2024, due to severe tonnage restrictions, leading to numerous civil lawsuits and regulatory NOVs related to an Elevated Temperature Landfill (ETLF) event and alleged odors/violations[118][122][123][126][128][130][135][136] - Los Angeles County has also filed a lawsuit seeking injunctions, civil penalties, and potential relocation/mitigation subsidies for affected citizens, with a motion for preliminary injunction seeking a $20 million abatement fund[142][143][144] Note 18. SUBSEQUENT EVENTS This note discloses significant events that occurred after the reporting period but before the financial statements were issued - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, and its impact on the Company's financial position is being evaluated but not expected to be material in the current fiscal year[146] - The Board of Directors approved the annual renewal of its Normal Course Issuer Bid (NCIB) on July 22, 2025, and a regular quarterly cash dividend of $0.315 per common share on July 23, 2025[148][149] - Subsequent to June 30, 2025, and through the filing date, the Company repurchased 1,297,239 common shares for $240.2 million under the NCIB[149] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year, covering business overview, revenue/expense drivers, segment performance, liquidity, capital resources, and the impact of inflation and seasonality FORWARD-LOOKING STATEMENTS This section highlights that the report contains forward-looking statements and discusses associated risks and uncertainties - The report contains forward-looking statements identifiable by terms like 'believes,' 'expects,' 'intends,' 'may,' 'will,' or 'anticipates'[151] - Actual results may differ materially due to various risks and uncertainties detailed in SEC filings, and the Company does not commit to updating these statements unless required by law[152][153] OVERVIEW OF OUR BUSINESS This section provides a general description of Waste Connections' operations, strategic focus, and market approach - Waste Connections is an integrated solid waste services company providing non-hazardous waste collection, transfer, disposal, recycling, and E&P waste services across 46 U.S. states and six Canadian provinces[154][156][157] - The Company focuses on value creation through ESG initiatives, committing $500 million to targets like reducing Scope 1 and 2 emissions, expanding resource recovery, and enhancing employee safety[158] - The strategy involves targeting exclusive and secondary markets to achieve high market share, often through exclusive contracts, vertical integration, or asset positioning, and avoiding highly competitive large urban markets[159] CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS This section emphasizes the reliance on significant estimates and assumptions in preparing the financial statements - The preparation of financial statements requires significant estimates and assumptions, which are material due to subjectivity and uncertainty[163] - A complete description of critical accounting estimates and assumptions can be found in the Company's most recent Annual Report on Form 10-K[163] NEW ACCOUNTING PRONOUNCEMENTS This section refers to Note 3 for details on new accounting standards affecting the company - Information regarding new accounting standards affecting the Company is detailed in Note 3 to the Condensed Consolidated Financial Statements[165] RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024 This section analyzes the company's financial performance, including revenue, operating income, and net income, for the specified periods | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Revenues | $2,407,055 | $2,248,166 | $4,635,231 | $4,320,819 | | Operating income | $459,545 | $424,705 | $849,755 | $791,505 | | Net income attributable to Waste Connections | $290,276 | $275,477 | $531,787 | $505,531 | | Operating income as % of revenues | 19.1% | 18.8% | 18.3% | 18.3% | | Net income as % of revenues | 12.1% | 12.2% | 11.5% | 11.7% | - Total revenues increased by $158.9 million (7.1%) for the three months and $314.4 million (7.3%) for the six months ended June 30, 2025, driven by acquisitions ($115.0 million and $246.0 million respectively) and core price increases ($136.9 million and $270.1 million respectively)[167][168][170][171] - Operating income increased by 8.2% for the three months and 7.4% for the six months, primarily due to price increases, acquisition contributions, and lower fuel costs, partially offset by higher risk management, labor, and benefits costs[205][206] - Cost of operations as a percentage of revenues remained flat at 57.9% for the three months and decreased by 0.5 percentage points to 57.9% for the six months, benefiting from price-led revenue growth and acquisition impacts[181][182] - SG&A expenses as a percentage of revenues decreased 0.1 percentage point for the three months but increased 0.3 percentage points for the six months, mainly due to higher administrative payroll and professional fees[188][189] - Interest expense increased slightly due to new senior notes and higher average borrowings, while interest income decreased due to lower average investment rates[209][210][211] - Income tax provision increased, with effective tax rates of 25.4% and 24.3% for the three and six months ended June 30, 2025, respectively[218] SEGMENT RESULTS This section analyzes the financial performance of each of the company's six operating segments - All six operating segments (Southern, Western, Eastern, Central, Canada, MidSouth) reported revenue increases for both the three and six months ended June 30, 2025, primarily driven by acquisitions and price increases[232][236][239][243][246][250] - Canada segment showed the highest EBITDA margin at 45.4% for the three months and 45.1% for the six months ended June 30, 2025, benefiting from price-led revenue and acquisition impacts[225][227][249] - Western segment experienced a decrease in EBITDA margin for both periods, primarily due to an operation closure, increased allocated overhead, and higher risk management costs[238] - Southern segment's EBITDA margin increased due to price-led revenue, higher-margin acquisitions, and lower fuel costs, despite higher risk management and landfill monitoring costs[235] LIQUIDITY AND CAPITAL RESOURCES This section discusses the company's cash flows, debt, and capital expenditure plans, along with contractual obligations | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands of U.S. dollars) | Six Months Ended June 30, 2024 (in thousands of U.S. dollars) | | :------------------------------------ | :---------------------------------------------------- | :---------------------------------------------------- | | Net cash provided by operating activities | $1,179,741 | $1,101,687 | | Net cash used in investing activities | $(1,019,972) | $(1,794,104) | | Net cash provided by (used in) financing activities | $(92,478) | $701,881 | | Cash, cash equivalents and restricted cash at end of period | $267,471 | $192,406 | - Operating cash flow increased by $78.1 million, driven by higher net income and favorable changes in accounts payable and deferred revenue, partially offset by increased closure and post-closure payments and accounts receivable[255] - Investing cash flow decreased by $774.1 million, primarily due to a $925.0 million decrease in cash paid for acquisitions[258][260] - Financing cash flow decreased by $794.4 million, mainly due to a $780.6 million decrease in net long-term borrowings and higher cash dividends paid[258][260] - The Company expects to make $1.200 billion to $1.250 billion in capital expenditures for property and equipment in 2025, funded by cash on hand, internally generated funds, and borrowings under its Revolving Credit Agreement[264] | Contractual Obligation | Total (in thousands of U.S. dollars) | Less Than 1 Year (in thousands of U.S. dollars) | 1 to 3 Years (in thousands of U.S. dollars) | 3 to 5 Years (in thousands of U.S. dollars) | Over 5 Years (in thousands of U.S. dollars) | | :------------------------------------ | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Long-term debt | $8,417,361 | $8,759 | $14,160 | $3,884,526 | $4,509,916 | | Cash interest payments | $2,765,222 | $317,962 | $659,188 | $477,738 | $1,310,334 | | Contingent consideration | $122,921 | $87,800 | $3,224 | $3,224 | $28,673 | | Operating leases | $405,788 | $27,997 | $107,043 | $81,222 | $189,526 | | Final capping, closure and post-closure | $2,496,163 | $176,067 | $220,447 | $47,495 | $2,052,154 | INFLATION This section discusses the impact of inflationary pressures on the company's costs and its ability to mitigate these effects - The Company faces inflationary pressures from higher materials, labor, and third-party costs (brokerage, repairs, construction)[285] - Many contracts allow for passing through certain costs, such as landfill tipping fees and fuel costs, to customers[285] - Management believes it can generally increase prices to offset most cost increases from inflation, but competitive pressures or delays in rate increases may require absorbing some costs[285][287] SEASONALITY This section explains how seasonal factors influence the company's operating results and waste volumes - Operating results are expected to vary seasonally, with revenues typically lowest in Q1, higher in Q2 and Q3, and lower in Q4[288] - Seasonality is influenced by decreased construction/demolition activities and reduced E&P activity during winter months, leading to lower waste volumes and potentially higher operating costs due to adverse weather[288] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the Company's exposure to market risks, including changes in interest rates, commodity prices (fuel, recyclables), and foreign currency exchange rates, outlining the use of hedge agreements to manage interest rate risk and strategies to mitigate commodity price and foreign currency risks - The Company is exposed to market risks from interest rates, commodity prices (fuel, recyclables), and foreign currency exchange rates, using hedge agreements for interest rates[289] - A one percentage point increase in interest rates on unhedged variable-rate debt ($1.106 billion at June 30, 2025) would decrease annual pre-tax income by approximately $11.1 million[293] - For the second half of 2025, a $0.10 per gallon increase in diesel fuel price would decrease pre-tax income by approximately $2.5 million on unhedged purchases[296] - A 10% decrease in average recycled commodity prices would have impacted revenues by $12.6 million for the six months ended June 30, 2025[297] - A $0.01 change in the Canadian dollar to U.S. dollar exchange rate would impact annual revenue by approximately $19.0 million and EBITDA by $9.0 million[298] Item 4. Controls and Procedures This section confirms the effectiveness of the Company's disclosure controls and procedures and states that there were no material changes to internal control over financial reporting during the quarter ended June 30, 2025 - As of June 30, 2025, the Company's disclosure controls and procedures were evaluated as effective at the reasonable assurance level[301] - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[302] PART II – OTHER INFORMATION This section contains additional information not covered in Part I, including legal proceedings, other disclosures, and a list of exhibits Item 1. Legal Proceedings This section refers to Note 17 of the Condensed Consolidated Financial Statements for detailed information regarding the Company's legal proceedings - Detailed information on legal proceedings is incorporated by reference from Note 17 of the Condensed Consolidated Financial Statements[304] Item 5. Other Information This section states that no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[305] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including articles of amendment, credit agreements, supplemental indentures, separation benefit agreements, certifications, and XBRL taxonomy documents - The report includes various exhibits such as Articles of Amendment, Revolving Credit Agreement amendments, Senior Notes supplemental indentures, separation benefit agreements, and certifications[307] SIGNATURES This section contains the duly authorized signatures of the Company's President and Chief Executive Officer, Ronald J. Mittelstaedt, and Executive Vice President and Chief Financial Officer, Mary Anne Whitney, affirming the report's submission - The report is signed by Ronald J. Mittelstaedt, President and Chief Executive Officer, and Mary Anne Whitney, Executive Vice President and Chief Financial Officer, on July 24, 2025[311]