Waste nections(WCN) - 2025 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION (unaudited) Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements and detailed notes for the periods ended September 30, 2025 and 2024 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands of U.S. dollars): | Metric | September 30, 2025 | December 31, 2024 | Change (vs. Dec 31, 2024) | | :-------------------------- | :------------------- | :-------------------- | :-------------------------- | | Total Assets | $20,782,495 | $19,817,809 | +$964,686 (+4.87%) | | Current Assets | $1,403,640 | $1,226,912 | +$176,728 (+14.40%) | | Total Liabilities | $12,689,127 | $11,957,455 | +$731,672 (+6.12%) | | Total Equity | $8,093,368 | $7,860,354 | +$233,014 (+2.96%) | Condensed Consolidated Statements of Net Income Condensed Consolidated Statements of Net Income (in thousands of U.S. dollars, except per share amounts): | Metric | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Change (YoY) | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | Change (YoY) | | :---------------------------------------------------------------- | :------------------------------ | :------------------------------ | :----------- | :----------------------------- | :----------------------------- | :----------- | | Revenues | $2,458,378 | $2,338,488 | +5.1% | $7,093,609 | $6,659,308 | +6.5% | | Operating income | $439,591 | $475,343 | -7.5% | $1,289,346 | $1,266,849 | +1.8% | | Net income attributable to Waste Connections | $286,271 | $308,046 | -7.0% | $818,057 | $813,577 | +0.5% | | Basic Earnings per common share | $1.11 | $1.19 | -6.7% | $3.17 | $3.15 | +0.6% | | Diluted Earnings per common share | $1.11 | $1.19 | -6.7% | $3.16 | $3.15 | +0.3% | | Cash dividends per common share | $0.315 | $0.285 | +10.5% | $0.945 | $0.855 | +10.5% | Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (in thousands of U.S. dollars): | Metric | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Change (YoY) | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | Change (YoY) | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----------- | :----------------------------- | :----------------------------- | :----------- | | Net income | $286,271 | $308,046 | -7.0% | $818,057 | $812,574 | +0.7% | | Other comprehensive income (loss), net of tax | $(45,272) | $21,705 | -308.6% | $66,656 | $(55,124) | +221.0% | | Comprehensive income attributable to Waste Connections | $240,999 | $329,751 | -26.9% | $884,713 | $758,453 | +16.6% | Condensed Consolidated Statements of Equity Changes in Waste Connections' Equity (in thousands of U.S. dollars): | Metric | Balance at Dec 31, 2024 | Balance at Sep 30, 2025 | Change | | :-------------------------------- | :---------------------- | :---------------------- | :----- | | Common Shares Amount | $3,283,161 | $2,846,773 | $(436,388) | | Additional Paid-In Capital | $325,928 | $354,567 | +$28,639 | | Accumulated Other Comprehensive Loss | $(205,740) | $(139,084) | +$66,656 | | Retained Earnings | $4,457,005 | $5,031,112 | +$574,107 | | Total Waste Connections' Equity | $7,860,354 | $8,093,368 | +$233,014 | - The company repurchased 2,391,251 common shares for $441,787 during the three months ended September 30, 2025, contributing to the decrease in common shares amount[12] - Net income for the nine months ended September 30, 2025, contributed $818,057 to retained earnings, partially offset by cash dividends of $243,950[8][12][15] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands of U.S. dollars): | Metric | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | Change (YoY) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------- | | Net cash provided by operating activities | $1,857,190 | $1,659,998 | +$197,192 (+11.9%) | | Net cash used in investing activities | $(1,433,913) | $(2,645,810) | +$1,211,897 (+45.8%) | | Net cash provided by (used in) financing activities | $(331,492) | $1,040,357 | $(1,371,849) (-131.9%) | | Net increase in cash, cash equivalents and restricted cash | $92,412 | $54,470 | +$37,942 (+69.7%) | | Cash, cash equivalents and restricted cash at end of period | $290,585 | $238,508 | +$52,077 (+21.8%) | Notes to Condensed Consolidated Financial Statements 1. BASIS OF PRESENTATION AND SUMMARY The condensed consolidated financial statements are prepared under U.S. GAAP, relying on management estimates, and interim results are not necessarily indicative of full-year performance - Financial statements require management to make estimates and assumptions for areas such as landfills, self-insurance accruals, income taxes, acquisition purchase price allocation, contingent consideration, and asset impairments[17] - Interim results are not necessarily indicative of full-year results and should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[18] 2. REPORTING CURRENCY The Company's functional currency is the U.S. dollar for U.S. operations and the Canadian dollar for Canadian operations, with the consolidated reporting currency being the U.S. dollar - The functional currency for U.S. operations is the U.S. dollar, and for Canadian operations, it is the Canadian dollar[19] - The reporting currency for the Company is the U.S. dollar, with translation adjustments included in other comprehensive income or loss[19] 3. NEW ACCOUNTING STANDARDS The Company is monitoring new FASB standards on income tax disclosures, expense disaggregation, and credit loss estimation, none of which are expected to have a material impact - New FASB standard on income tax disclosures, effective for annual periods beginning after December 15, 2024, requires additional categories of information in rate reconciliation and disaggregation of income taxes paid. The Company does not expect a material impact[20] - New FASB standard on disaggregation of income statement expenses, effective for annual periods beginning after December 15, 2026, requires additional disclosures about specific expense types. The Company does not expect a material impact[21][23] - New FASB guidance on credit losses for accounts receivable, effective for fiscal years beginning after December 15, 2025, allows a practical expedient for estimating expected credit losses. The Company does not expect a material impact[24] 4. REVENUE The Company's revenue primarily derives from non-hazardous waste collection, transfer, disposal, recycling, E&P waste services, and intermodal services, recognized when performed Disaggregated Revenues by Service Line (in thousands of U.S. dollars): | Service Line | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Change (YoY) | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | Change (YoY) | | :---------------------------- | :------------------------------ | :------------------------------ | :----------- | :----------------------------- | :----------------------------- | :----------- | | Commercial | $750,384 | $680,444 | +10.3% | $2,194,417 | $1,980,228 | +10.8% | | Residential | $600,832 | $574,305 | +4.6% | $1,764,676 | $1,687,899 | +4.6% | | Industrial and construction roll off | $379,123 | $367,559 | +3.1% | $1,083,107 | $1,052,339 | +2.9% | | Total collection | $1,730,339 | $1,622,308 | +6.7% | $5,042,200 | $4,720,466 | +6.8% | | Landfill | $414,614 | $418,508 | -0.9% | $1,155,449 | $1,177,899 | -1.9% | | Transfer | $389,828 | $358,420 | +8.8% | $1,091,031 | $1,010,528 | +8.0% | | Recycling | $58,351 | $69,748 | -16.4% | $188,855 | $182,071 | +3.7% | | E&P | $188,679 | $154,202 | +22.4% | $517,695 | $375,176 | +38.0% | | Intermodal and other | $42,686 | $47,341 | -9.8% | $133,170 | $145,979 | -8.7% | | Intercompany | $(366,119) | $(332,039) | +10.3% | $(1,034,791) | $(952,811) | +8.6% | | Total | $2,458,378 | $2,338,488 | +5.1% | $7,093,609 | $6,659,308 | +6.5% | - Contract acquisition costs, primarily sales incentives, are capitalized as 'Other assets' and amortized to 'Selling, general and administrative expense' over 1 to 5 years. Deferred sales incentives were $28,911 at September 30, 2025[27] 5. ACCOUNTS RECEIVABLE Accounts receivable are recorded net of an allowance for credit losses, estimated based on historical trends, age, geography, and economic conditions Allowance for Credit Losses Rollforward (in thousands of U.S. dollars): | Metric | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Beginning balance | $25,730 | $23,553 | | Current period provision | $9,321 | $12,681 | | Write-offs charged against allowance | $(17,965) | $(16,481) | | Recoveries collected | $5,668 | $3,952 | | Impact of changes in foreign currency | $89 | $(45) | | Ending balance | $22,843 | $23,660 | 6. LANDFILL ACCOUNTING The Company operates 101 owned and 12 agreement-based landfills with an average remaining life of 31 years, reserving for capping, closure, and post-closure liabilities at a 5.50% discount rate - As of September 30, 2025, the Company owned 101 landfills and operated 12 under agreements. The average remaining landfill life is approximately 31 years (33 years including probable expansion capacity)[31][33] Final Capping, Closure and Post-Closure Liability (in thousands of U.S. dollars): | Metric | September 30, 2025 | | :---------------------------------------------------- | :------------------- | | Balance at December 31, 2024 | $860,123 | | Liability adjustments | $37,482 | | Accretion expense | $35,793 | | Closure payments | $(223,380) | | Foreign currency translation adjustment | $2,918 | | Balance at September 30, 2025 | $712,936 | - The discount rate assumption for final capping, closure, and post-closure liabilities was 5.50% for both 2025 and 2024, with a long-term inflation rate assumption of 2.75%[35] 7. ACQUISITIONS During the nine months ended September 30, 2025, the Company acquired 14 immaterial businesses, incurring $19.8 million in transaction expenses and adding $261.0 million in goodwill - The Company acquired 12 non-hazardous solid waste collection and recycling businesses and 2 E&P waste treatment and disposal businesses during the nine months ended September 30, 2025[38] - Total transaction-related expenses for these acquisitions were $19,778 for the nine months ended September 30, 2025[38] Acquisition Consideration and Goodwill (in thousands of U.S. dollars): | Metric | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Cash consideration transferred | $627,310 | $2,010,274 | | Debt assumed | $92,786 | $83,589 | | Total identifiable net assets acquired | $459,096 | $1,541,101 | | Goodwill acquired | $261,000 | $552,762 | 8. INTANGIBLE ASSETS, NET The Company's intangible assets, excluding goodwill, totaled $2.004 billion at September 30, 2025, primarily comprising franchise agreements, customer lists, and permits Intangible Assets, Net (in thousands of U.S. dollars): | Asset Type | Sep 30, 2025 Net Carrying Amount | Dec 31, 2024 Net Carrying Amount | | :------------------------------------ | :------------------------------- | :------------------------------- | | Long-term franchise agreements and contracts | $684,338 | $703,911 | | Customer lists | $302,512 | $311,761 | | Permits and other (finite-lived) | $835,137 | $794,334 | | Solid waste collection and transportation permits (indefinite-lived) | $181,613 | $181,613 | | Total Intangible Assets, Net | $2,003,600 | $1,991,619 | Estimated Future Amortization Expense (in thousands of U.S. dollars): | Year Ending December 31, | Amount | | :----------------------- | :----- | | 2025 | $200,849 | | 2026 | $181,718 | | 2027 | $158,581 | | 2028 | $140,101 | | 2029 | $125,853 | 9. LONG-TERM DEBT The Company's long-term debt increased to $8.621 billion at September 30, 2025, including outstanding Revolving Credit Agreement balances and newly issued 5.25% Senior Notes due 2035 Long-Term Debt (in thousands of U.S. dollars): | Debt Instrument | September 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------------- | :-------------------- | | Revolving Credit Agreement | $2,199,421 | $2,164,325 | | 4.25% Senior Notes due 2028 | $500,000 | $500,000 | | 3.50% Senior Notes due 2029 | $500,000 | $500,000 | | 4.50% Senior Notes due 2029 | $359,150 | $347,500 | | 2.60% Senior Notes due 2030 | $600,000 | $600,000 | | 2.20% Senior Notes due 2032 | $650,000 | $650,000 | | 3.20% Senior Notes due 2032 | $500,000 | $500,000 | | 4.20% Senior Notes due 2033 | $750,000 | $750,000 | | 5.00% Senior Notes due 2034 | $750,000 | $750,000 | | 5.25% Senior Notes due 2035 | $500,000 | — | | 3.05% Senior Notes due 2050 | $500,000 | $500,000 | | 2.95% Senior Notes due 2052 | $850,000 | $850,000 | | Notes payable to sellers and other third parties | $27,451 | $30,641 | | Finance leases | $14,879 | $9,247 | | Total Long-Term Debt | $8,700,901 | $8,151,713 | | Less: Current portion | $(8,619) | $(7,851) | | Less: Unamortized debt discount and issuance costs | $(70,911) | $(70,934) | | Long-term portion of debt and notes payable | $8,621,371 | $8,072,928 | - On June 4, 2025, the Company issued $500,000 aggregate principal amount of 5.25% Senior Notes due 2035[49] - The Revolving Credit Agreement had $2,199,421 drawn at September 30, 2025, with interest rates ranging from 3.71% to 7.25%[47] 10. SEGMENT REPORTING The Company manages operations through six geographic solid waste segments and a Corporate segment, evaluating profitability using Segment EBITDA, with goodwill increasing to $8.275 billion due to acquisitions - The Company's operations are managed through six geographic solid waste operating segments: Western, Southern, Eastern, Central, Canada, and MidSouth[57] - Segment EBITDA is the primary financial measure used by the Chief Operating Decision Maker to evaluate operating segment profitability and determine resource allocations[58] Segment EBITDA and Margin (in thousands of U.S. dollars): | Segment | Three Months Ended Sep 30, 2025 EBITDA | Three Months Ended Sep 30, 2025 Margin | Three Months Ended Sep 30, 2024 EBITDA | Three Months Ended Sep 30, 2024 Margin | Nine Months Ended Sep 30, 2025 EBITDA | Nine Months Ended Sep 30, 2025 Margin | Nine Months Ended Sep 30, 2024 EBITDA | Nine Months Ended Sep 30, 2024 Margin | | :-------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Western | $143,782 | 29.6% | $147,490 | 31.0% | $384,097 | 27.7% | $394,974 | 29.2% | | Southern | $158,356 | 32.6% | $144,384 | 31.9% | $461,363 | 32.6% | $411,320 | 31.4% | | Eastern | $121,000 | 27.5% | $114,007 | 28.0% | $338,435 | 26.3% | $312,101 | 27.0% | | Central | $150,648 | 36.4% | $143,486 | 36.6% | $425,777 | 35.8% | $408,217 | 35.8% | | Canada | $159,915 | 45.7% | $153,580 | 44.9% | $451,427 | 45.3% | $411,089 | 43.7% | | MidSouth | $80,641 | 28.5% | $77,011 | 28.8% | $228,049 | 27.8% | $209,251 | 27.5% | | Corporate | $706 | — | $(8,075) | — | $(16,268) | — | $(26,686) | — | | Consolidated | $815,048 | 33.2% | $771,883 | 33.0% | $2,272,880 | 32.0% | $2,120,266 | 31.8% | Goodwill by Reportable Segment (in thousands of U.S. dollars): | Segment | Balance as of Dec 31, 2024 | Goodwill acquired (9M 2025) | Impact of foreign currency (9M 2025) | Balance as of Sep 30, 2025 | | :-------- | :------------------------- | :-------------------------- | :----------------------------------- | :------------------------- | | Western | $864,602 | $2,395 | — | $866,997 | | Southern | $1,577,114 | $188,812 | — | $1,765,926 | | Eastern | $1,735,584 | $44,580 | — | $1,780,164 | | Central | $1,010,574 | $12,636 | — | $1,023,210 | | Canada | $1,913,091 | $12,902 | $63,980 | $1,989,973 | | MidSouth | $849,441 | — | — | $849,116 | | Total | $7,950,406 | $261,325 | $63,980 | $8,275,386 | 11. DERIVATIVE FINANCIAL INSTRUMENTS The Company uses interest rate swaps as cash flow hedges to mitigate variable interest rate exposure on its Revolving Credit Agreement, with a net asset fair value of $3.083 million at September 30, 2025 - The Company uses interest rate swaps designated as cash flow hedges to manage exposure to variable interest rates on its Revolving Credit Agreement[68] Interest Rate Swap Agreements (as of September 30, 2025): | Date Entered | Notional Amount | Fixed Interest Rate Paid | Variable Interest Rate Received | Expiration Date | | :------------- | :-------------- | :----------------------- | :------------------------------ | :-------------- | | August 2017 | $200,000 | 2.1230% | 1-month Term SOFR | October 2025 | | June 2018 | $200,000 | 2.8480% | 1-month Term SOFR | October 2025 | | June 2018 | $200,000 | 2.8284% | 1-month Term SOFR | October 2025 | | December 2018 | $200,000 | 2.7715% | 1-month Term SOFR | July 2027 | Fair Value of Derivative Instruments (in thousands of U.S. dollars): | Metric | Sep 30, 2025 Fair Value | Dec 31, 2024 Fair Value | | :------------------------------------------ | :---------------------- | :---------------------- | | Interest rate swap derivative instruments – net asset position | $3,083 | $13,929 | 12. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair values of most financial instruments approximate their carrying values, with debt instruments generally classified as Level 2, reflecting market interest rates - The carrying values of cash and equivalents, trade receivables, restricted cash and investments, trade payables, and contingent consideration are considered representative of their fair values[74] - The carrying values of the Company's debt instruments, excluding certain notes, approximate their fair values and are classified as Level 2 within the fair value hierarchy[74] Carrying Value vs. Fair Value of Senior Notes (in thousands of U.S. dollars): | Senior Notes | Sep 30, 2025 Carrying Value | Sep 30, 2025 Fair Value | Dec 31, 2024 Carrying Value | Dec 31, 2024 Fair Value | | :-------------------------- | :-------------------------- | :---------------------- | :-------------------------- | :---------------------- | | 4.25% Senior Notes due 2028 | $500,000 | $503,500 | $500,000 | $488,500 | | 3.50% Senior Notes due 2029 | $500,000 | $491,300 | $500,000 | $471,450 | | 4.50% Senior Notes due 2029 | $359,150 | $374,510 | $347,500 | $359,168 | | 2.60% Senior Notes due 2030 | $600,000 | $563,220 | $600,000 | $536,220 | | 2.20% Senior Notes due 2032 | $650,000 | $571,935 | $650,000 | $535,275 | | 3.20% Senior Notes due 2032 | $500,000 | $462,700 | $500,000 | $437,150 | | 4.20% Senior Notes due 2033 | $750,000 | $735,750 | $750,000 | $696,300 | | 5.00% Senior Notes due 2034 | $750,000 | $765,525 | $750,000 | $731,625 | | 5.25% Senior Notes due 2035 | $500,000 | $516,050 | — | — | | 3.05% Senior Notes due 2050 | $500,000 | $338,650 | $500,000 | $321,700 | | 2.95% Senior Notes due 2052 | $850,000 | $556,325 | $850,000 | $528,955 | 13. NET INCOME PER SHARE INFORMATION Basic net income per common share was $1.11 for the three months and $3.17 for the nine months ended September 30, 2025, with diluted EPS at $1.11 and $3.16 respectively Net Income Per Share Calculation: | Metric | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------------------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income attributable to Waste Connections for basic and diluted earnings per share (in thousands) | $286,271 | $308,046 | $818,057 | $813,577 | | Basic shares outstanding | 256,948,902 | 258,023,661 | 257,835,515 | 257,939,935 | | Dilutive effect of equity-based awards | 631,419 | 732,867 | 649,183 | 661,880 | | Diluted shares outstanding | 257,580,321 | 258,756,528 | 258,484,698 | 258,601,815 | | Basic EPS | $1.11 | $1.19 | $3.17 | $3.15 | | Diluted EPS | $1.11 | $1.19 | $3.16 | $3.15 | 14. FAIR VALUE MEASUREMENTS The Company classifies fair value measurements into a three-tier hierarchy, with derivative instruments, restricted cash, and investments measured recurringly, and contingent consideration as a Level 3 liability - The Company uses a three-tier fair value hierarchy: Level 1 (quoted market prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[78][79] Assets and Liabilities Measured at Fair Value (in thousands of U.S. dollars): | Metric | Sep 30, 2025 Total Fair Value | Level 1 | Level 2 | Level 3 | Dec 31, 2024 Total Fair Value | Level 1 | Level 2 | Level 3 | | :------------------------------------------ | :---------------------------- | :------ | :------ | :-------- | :---------------------------- | :------ | :------ | :-------- | | Interest rate swap derivative instruments – net asset position | $3,083 | $— | $3,083 | $— | $13,929 | $— | $13,929 | $— | | Restricted cash | $172,989 | $172,989 | $— | $— | $135,807 | $135,807 | $— | $— | | Restricted investments | $79,860 | $— | $79,860 | $— | $77,900 | $— | $77,900 | $— | | Contingent consideration | $(109,124) | $— | $— | $(109,124) | $(87,162) | $— | $— | $(87,162) | Changes in Level 3 Contingent Consideration (in thousands of U.S. dollars): | Metric | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Beginning balance | $87,162 | $115,030 | | Contingent consideration recorded at acquisition date | $16,934 | $23,926 | | Payment of contingent consideration recorded at acquisition date | $(28,324) | $(26,625) | | Payment of contingent consideration recorded in earnings | $(400) | $(35,035) | | Adjustments to contingent consideration | $30,874 | — | | Interest accretion expense | $2,632 | $5,303 | | Foreign currency translation adjustment | $246 | — | | Ending balance | $109,124 | $82,599 | 15. OTHER COMPREHENSIVE INCOME (LOSS) Other comprehensive income (loss) includes fair value changes of interest rate swaps and foreign currency translation adjustments, showing a net income of $66.656 million for the nine months ended September 30, 2025 Components of Other Comprehensive Income (Loss), Net of Tax (in thousands of U.S. dollars): | Metric | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest rate swap amounts reclassified into interest expense | $(2,524) | $(3,992) | $(7,466) | $(11,934) | | Changes in fair value of interest rate swaps | $250 | $(6,576) | $(506) | $3,562 | | Foreign currency translation adjustment | $(42,998) | $32,273 | $74,628 | $(46,752) | | Total Other Comprehensive Income (Loss), Net of Tax | $(45,272) | $21,705 | $66,656 | $(55,124) | Rollforward of Accumulated Other Comprehensive Income (Loss) (in thousands of U.S. dollars): | Metric | Balance at Dec 31, 2024 | Balance at Sep 30, 2025 | | :------------------------------------------ | :---------------------- | :---------------------- | | Interest Rate Swaps | $10,237 | $2,265 | | Foreign Currency Translation Adjustment | $(215,977) | $(141,349) | | Total Accumulated Other Comprehensive Income (Loss) | $(205,740) | $(139,084) | 16. SHAREHOLDERS' EQUITY The Company's share-based compensation plans include RSUs, PSUs, and DSUs, with common shares repurchased under NCIB and quarterly cash dividends increased to $0.350 per share Share-Based Compensation Activity (Nine Months Ended Sep 30, 2025): | Metric | Restricted Share Units (Unvested Shares) | Performance-Based Restricted Share Units (Unvested Shares) | Deferred Share Units (Vested Shares) | | :-------------------------- | :--------------------------------------- | :----------------------------------------- | :----------------------------------- | | Outstanding at Dec 31, 2024 | 912,560 | 219,143 | 20,418 | | Granted | 355,031 | 80,104 | 2,485 | | Forfeited | (36,129) | — | — | | Vested and issued | (352,111) | (87,964) | — | | Outstanding at Sep 30, 2025 | 879,351 | 211,283 | 22,903 | - Under the Employee Share Purchase Plan (ESPP), employees purchased 32,150 common shares for $5,464 during the nine months ended September 30, 2025[90] Common Share Repurchases under NCIB (Three Months Ended Sep 30, 2025): | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--------------- | :----------------------------- | :--------------------------- | | 7/1/25 - 7/31/25 | 1,297,239 | $185.18 | | 8/1/25 - 8/31/25 | 524,352 | $187.41 | | 9/1/25 - 9/30/25 | 569,660 | $181.33 | | Total | 2,391,251 | $184.75 | - The Board of Directors increased the regular quarterly cash dividend from $0.285 to $0.315 per share in October 2024, and further to $0.350 per share in October 2025[95][137] 17. COMMITMENTS AND CONTINGENCIES The Company is involved in various legal and administrative proceedings, including class action lawsuits and regulatory actions related to landfill operations, with significant litigation concerning the Chiquita Canyon Landfill ETLF event - The Company is subject to various judicial and administrative proceedings, including those involving regulatory authorities and claims for alleged damages, particularly in the solid waste and E&P waste industries[96][97] - In the Jefferson Parish Landfill litigation, class certification was denied, and individual claims against the Company were settled. A new mass action (Crossman action) was filed on behalf of approximately 1,600 plaintiffs, with unspecified damages[105][106][107] - The Chiquita Canyon Landfill (CC Landfill) closed active waste disposal operations as of December 31, 2024, due to severe tonnage restrictions and the County's inability to implement a settlement agreement for CUP modification. Litigation challenging CUP terms is ongoing[112][113] - The CC Landfill is experiencing an Elevated Temperature Landfill (ETLF) event, leading to approximately 386 NOVs from SCAQMD for odor violations, 22 additional NOVs from SCAQMD, and multiple NOVs from the Water Board and DTSC for alleged environmental violations. The EPA also issued an FOV for NSPS/NESHAP violations[114][115][117][119][120][121] - The ETLF event has resulted in approximately 11,400 civil lawsuits (mass tort) against the Company's subsidiaries, alleging nuisance, chemical exposures, negligence, and seeking various damages including punitive damages. Los Angeles County also filed a lawsuit seeking injunctions, civil penalties, and potentially a relocation/home hardening fund[124][125][131][132][133] 18. SUBSEQUENT EVENTS Subsequent to September 30, 2025, the Board of Directors increased the quarterly cash dividend to $0.350 per common share, and the Company repurchased additional common shares under its NCIB - On October 21, 2025, the Board of Directors increased the regular quarterly cash dividend by $0.035, from $0.315 to $0.350 per common share[137] - Subsequent to September 30, 2025, the Company repurchased 20,894 common shares for an aggregate cost of $3,622 under its Normal Course Issuer Bid (NCIB)[138] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the Company's financial condition and results, covering business overview, critical accounting estimates, segment performance, liquidity, capital resources, and non-GAAP measures FORWARD-LOOKING STATEMENTS The report contains forward-looking statements, and actual results may differ materially due to various risks and uncertainties detailed in SEC filings - The report contains forward-looking statements identified by terms like 'believes,' 'expects,' 'intends,' 'may,' 'will,' or 'anticipates'[140] - Actual results may differ materially from projections due to various risks and uncertainties detailed in SEC filings, including those related to landfills, competition, cash flows, regulatory developments, economic conditions, acquisitions, and litigation[141][144] OVERVIEW OF OUR BUSINESS Waste Connections is an integrated solid waste services company operating across 46 U.S. states and six Canadian provinces, focusing on strategic market positioning and ESG targets - Waste Connections is an integrated solid waste services company providing non-hazardous waste collection, transfer, and disposal, recycling, and renewable fuels generation across 46 U.S. states and six Canadian provinces[143][145] - The Company also offers non-hazardous oil and natural gas E&P waste treatment, recovery, and disposal services, and intermodal services[145][146] - A key strategy is to target markets with high market share through exclusive contracts, vertical integration, or asset positioning, avoiding highly competitive large urban markets[148] - The Company has committed $500 million to ESG targets, including reducing Scope 1 and 2 emissions, expanding resource recovery, increasing landfill gas recovery, and enhancing employee safety[147] CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS The preparation of financial statements requires significant and material estimates and assumptions, fully described in the Company's most recent Annual Report on Form 10-K - The preparation of financial statements requires significant estimates and assumptions, which are material due to subjectivity and susceptibility to change. A complete description is available in the Company's most recent Annual Report on Form 10-K[152] NEW ACCOUNTING PRONOUNCEMENTS Information regarding new accounting standards affecting the Company is detailed in Note 3 to the Condensed Consolidated Financial Statements - Information regarding new accounting standards affecting the Company is detailed in Note 3 to the Condensed Consolidated Financial Statements[154] RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 This section analyzes the Company's revenues, expenses, and net income for the three and nine months ended September 30, 2025 and 2024, highlighting key financial changes Key Financial Highlights (in thousands of U.S. dollars, except percentages): | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | Change (YoY) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | Change (YoY) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Revenues | $2,458,378 | $2,338,488 | +5.1% | $7,093,609 | $6,659,308 | +6.5% | | Cost of operations | $1,406,854 (57.2%) | $1,344,079 (57.5%) | +4.7% | $4,091,153 (57.7%) | $3,866,932 (58.1%) | +5.8% | | Selling, general and administrative | $236,476 (9.6%) | $222,526 (9.5%) | +6.3% | $729,576 (10.3%) | $672,110 (10.1%) | +8.6% | | Depreciation | $263,999 (10.7%) | $248,473 (10.7%) | +6.2% | $763,727 (10.7%) | $712,392 (10.7%) | +7.2% | | Amortization of intangibles | $51,331 (2.1%) | $45,170 (1.9%) | +13.6% | $149,209 (2.1%) | $129,584 (2.0%) | +15.1% | | Impairments and other operating items | $60,127 (2.5%) | $2,897 (0.1%) | +1975.8% | $70,598 (1.0%) | $11,441 (0.1%) | +517.1% | | Operating income | $439,591 (17.9%) | $475,343 (20.3%) | -7.5% | $1,289,346 (18.2%) | $1,266,849 (19.0%) | +1.8% | | Net income attributable to Waste Connections | $286,271 (11.6%) | $308,046 (13.2%) | -7.0% | $818,057 (11.5%) | $813,577 (12.2%) | +0.5% | - Revenue growth for the three and nine months ended September 30, 2025, was primarily driven by price increases ($132.1 million and $394.4 million, respectively) and contributions from acquisitions ($79.7 million and $325.7 million, respectively)[157][159][160] - Operating income decreased by 7.5% for the three months ended September 30, 2025, primarily due to increased impairments and other operating expenses ($57.2 million increase), labor and benefits costs, and trucking costs[188][190][194][195] - Net income attributable to Waste Connections decreased by 7.0% for the three months ended September 30, 2025, but increased by 0.5% for the nine months ended September 30, 2025[156] SEGMENT RESULTS This section details the financial performance of the Company's six geographic solid waste segments, including revenue and EBITDA margin analysis Segment Revenue (in thousands of U.S. dollars): | Segment | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | Change (YoY) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | Change (YoY) | | :-------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Western | $486,255 | $476,237 | +2.1% | $1,386,322 | $1,352,449 | +2.5% | | Southern | $485,394 | $453,215 | +7.1% | $1,415,741 | $1,311,437 | +7.9% | | Eastern | $440,770 | $407,668 | +8.1% | $1,286,253 | $1,153,835 | +11.5% | | Central | $413,389 | $391,740 | +5.5% | $1,188,859 | $1,138,708 | +4.4% | | Canada | $349,766 | $342,058 | +2.3% | $995,914 | $941,629 | +5.8% | | MidSouth | $282,804 | $267,570 | +5.7% | $820,520 | $761,250 | +7.8% | | Corporate | — | — | — | — | — | — | | Consolidated | $2,458,378 | $2,338,488 | +5.1% | $7,093,609 | $6,659,308 | +6.5% | Segment EBITDA Margin: | Segment | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | Change (YoY) | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | Change (YoY) | | :-------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Western | 29.6% | 31.0% | -1.4 pp | 27.7% | 29.2% | -1.5 pp | | Southern | 32.6% | 31.9% | +0.7 pp | 32.6% | 31.4% | +1.2 pp | | Eastern | 27.5% | 28.0% | -0.5 pp | 26.3% | 27.0% | -0.7 pp | | Central | 36.4% | 36.6% | -0.2 pp | 35.8% | 35.8% | 0.0 pp | | Canada | 45.7% | 44.9% | +0.8 pp | 45.3% | 43.7% | +1.6 pp | | MidSouth | 28.5% | 28.8% | -0.3 pp | 27.8% | 27.5% | +0.3 pp | | Consolidated | 33.2% | 33.0% | +0.2 pp | 32.0% | 31.8% | +0.2 pp | - Southern and Canada segments showed notable EBITDA margin increases for both three and nine-month periods, driven by price-led revenue growth and acquisitions with higher margins, partially offset by higher risk management and labor costs[226][236] - Western and Eastern segments experienced decreases in EBITDA margin, primarily due to operations closures, increased allocated corporate overhead, higher risk management costs, and increased labor/maintenance expenses[222][229] LIQUIDITY AND CAPITAL RESOURCES This section discusses the Company's cash flows, capital expenditures, debt, and contractual obligations, outlining its financial position and resource management Cash Flow Information (in thousands of U.S. dollars): | Metric | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | Change (YoY) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------- | | Net cash provided by operating activities | $1,857,190 | $1,659,998 | +$197,192 (+11.9%) | | Net cash used in investing activities | $(1,433,913) | $(2,645,810) | +$1,211,897 (+45.8%) | | Net cash provided by (used in) financing activities | $(331,492) | $1,040,357 | $(1,371,849) (-131.9%) | | Net increase in cash, cash equivalents and restricted cash | $92,412 | $54,470 | +$37,942 (+69.7%) | - The increase in operating cash flows was primarily driven by higher net income (excluding non-cash items), increased accounts payable and accrued liabilities, and a decrease in prepaid expenses[243][245] - Net cash used in investing activities decreased significantly due to a $1.383 billion decrease in cash paid for acquisitions, partially offset by increased capital expenditures[246][249] - Net cash used in financing activities increased due to a $918.3 million decrease in net long-term borrowings, $442.2 million in common share repurchases, and higher cash dividends paid[246][249] - The Company expects 2025 capital expenditures for property and equipment to be between $1.200 billion and $1.250 billion, including $75 million to $125 million for renewable natural gas facilities[250][251] Contractual Obligations (in thousands of U.S. dollars) as of September 30, 2025: | Obligation Type | Total | Less Than 1 Year | 1 to 3 Years | 3 to 5 Years | Over 5 Years | | :------------------------------------ | :---------- | :--------------- | :----------- | :----------- | :----------- | | Long-term debt | $8,700,901 | $8,619 | $13,594 | $4,169,179 | $4,509,509 | | Cash interest payments | $2,700,297 | $339,711 | $670,370 | $447,284 | $1,242,932 | | Contingent consideration | $123,556 | $89,044 | $3,224 | $3,224 | $28,064 | | Operating leases | $395,601 | $13,818 | $108,688 | $82,688 | $190,407 | | Final capping, closure and post-closure | $2,362,832 | $161,230 | $151,199 | $47,404 | $2,002,999 | | Unconditional purchase obligations | $152,768 | $120,987 | $31,160 | $621 | $— | NON-GAAP FINANCIAL MEASURES This section provides reconciliations of non-GAAP financial measures, including Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS, to their most directly comparable GAAP measures Adjusted EBITDA Reconciliation (in thousands of U.S. dollars): | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income attributable to Waste Connections | $286,271 | $308,046 | $818,057 | $813,577 | | Plus: Income tax provision | $88,503 | $92,012 | $258,852 | $232,008 | | Plus: Interest expense | $84,449 | $83,520 | $248,074 | $244,385 | | Less: Interest income | $(5,090) | $(3,331) | $(9,174) | $(9,391) | | Plus: Depreciation and amortization | $315,330 | $293,643 | $912,936 | $841,976 | | Plus: Closure and post-closure accretion | $11,963 | $7,387 | $35,779 | $22,879 | | Plus: Impairments and other operating items | $60,127 | $2,897 | $70,598 | $11,441 | | Less: Other income, net | $(14,542) | $(4,904) | $(26,463) | $(12,727) | | Plus: Transaction-related expenses | $3,835 | $8,067 | $19,778 | $25,169 | | Plus (less): Fair value changes to equity awards | $(509) | $99 | $527 | $1,602 | | Adjusted EBITDA | $830,337 | $787,436 | $2,328,964 | $2,169,916 | Adjusted Net Income and EPS Reconciliation (in thousands of U.S. dollars, except per share amounts): | Metric | 3 Months Ended Sep 30, 2025 | 3 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2025 | 9 Months Ended Sep 30, 2024 | | :------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Reported net income attributable to Waste Connections | $286,271 | $308,046 | $818,057 | $813,577 | | Plus: Amortization of intangibles | $51,331 | $45,170 | $149,209 | $129,584 | | Plus: Impairments and other operating items | $60,127 | $2,897 | $70,598 | $11,441 | | Plus: Transaction-related expenses | $3,835 | $8,067 | $19,778 | $25,169 | | Plus (less): Fair value changes to equity awards | $(509) | $99 | $527 | $1,602 | | Less: Tax effect | $(29,005) | $(14,275) | $(59,903) | $(42,655) | | Adjusted net income attributable to Waste Connections | $372,050 | $350,004 | $998,266 | $938,718 | | Reported diluted EPS | $1.11 | $1.19 | $3.16 | $3.15 | | Adjusted diluted EPS | $1.44 | $1.35 | $3.86 | $3.63 | INFLATION The Company faces inflationary pressures on materials, labor, and third-party costs, managing these through contractual pass-throughs and potential absorption due to competitive pressures - The Company is experiencing inflationary pressures from higher materials, labor, and third-party costs (brokerage, repairs, construction)[272] - Many contracts allow the Company to pass through certain costs, such as landfill tipping fees and fuel costs, to customers[272] - Competitive pressures or delays in rate increases may require the Company to absorb some cost increases, especially if they exceed the average rate of inflation[273] SEASONALITY Operating results typically vary seasonally, with revenues lowest in Q1 and higher in Q2/Q3, influenced by construction activity and E&P operations - Operating results typically vary seasonally, with revenues lowest in Q1, higher in Q2 and Q3, and lower in Q4[274] - Seasonality is driven by decreased construction/demolition activities and reduced E&P activity during winter months, leading to higher labor and operational costs due to adverse weather and increased waste weight[274] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to market risks from interest rates, commodity prices (fuel, recyclables), and foreign currency, using derivatives to manage interest rate exposure - The Company is exposed to market risks from changes in interest rates, prices of certain commodities (fuel, recyclables), and foreign currency exchange rates[275] - Interest rate swap agreements are used as cash flow hedges for a portion of variable-rate debt. A one percentage point increase in interest rates on unhedged variable-rate debt ($1.399 billion at Sep 30, 2025) would decrease annual pre-tax income by approximately $14.0 million[276][278][279][280] - To manage fuel price risk, the Company enters into fixed-price diesel fuel purchase contracts. For the three months ending December 31, 2025, a $0.10 per gallon increase in diesel fuel price would decrease pre-tax income by approximately $1.3 million[281][282] - A 10% decrease in average recycled commodity prices would have impacted revenues by $18.2 million for the nine months ended September 30, 2025[283] - A $0.01 change in the Canadian dollar to U.S. dollar exchange rate would impact annual revenue and EBITDA by approximately $19.0 million and $9.0 million, respectively[284] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures as of September 30, 2025, concluding they were effective, with no material changes to internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of September 30, 2025[286][287] - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2025[288] PART II – OTHER INFORMATION Item 1. Legal Proceedings This section incorporates by reference the detailed information on legal proceedings from Note 17 of the Condensed Consolidated Financial Statements - Information regarding legal proceedings is incorporated by reference from Note 17 of the Condensed Consolidated Financial Statements[290] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The Company renewed its NCIB to repurchase up to 12.86 million common shares, repurchasing 2.39 million shares for $442.2 million during the three months ended September 30, 2025 - The Company renewed its Normal Course Issuer Bid (NCIB) to purchase up to 12,855,691 common shares between August 12, 2025, and August 11, 2026[291] Common Share Repurchases under NCIB (Three Months Ended Sep 30, 2025): | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--------------- | :----------------------------- | :--------------------------- | | 7/1/25 - 7/31/25 | 1,297,239 | $185.18 | | 8/1/25 - 8/31/25 | 524,352 | $187.41 | | 9/1/25 - 9/30/25 | 569,660 | $181.33 | | Total | 2,391,251 | $184.75 | - As of September 30, 2025, 11,761,679 shares remained available for repurchase under the current NCIB[94][291] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended September 30, 2025 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended September 30, 2025[292] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, executive agreements, officer certifications, and XBRL taxonomy documents - The exhibits include corporate governance documents (Articles of Amendment, By-law No. 1), executive agreements (Separation Benefits Plan Participation Letters), officer certifications (13a-14(a)/15d-14(a) and 18 U.S.C. §1350), and XBRL interactive data files[293] Signatures The report is duly signed on behalf of Waste Connections, Inc. by its President and CEO and Executive VP and CFO on October 22, 2025 - The report was signed by Ronald J. Mittelstaedt, President and Chief Executive Officer, and Mary Anne Whitney, Executive Vice President and Chief Financial Officer, on October 22, 2025[297]