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 ~~September~~June 30, ~~2019~~2020


☐			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 000-23211

CASELLA WASTE SYSTEMS, INC.

(Exact name of registrant as specified in its charter)


Delaware			03-0338873
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


25 Greens Hill Lane,
Rutland,	Vermont	05701
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (802) 775-0325

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

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Class A common stock, $0.01 par value per share

CWST

The ~~NASDAQ~~Nasdaq Stock Market LLC

(~~NASDAQ~~Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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


Large accelerated filer			☒			Accelerated filer			☐


Non-accelerated filer			☐			Smaller reporting company			☐


						Emerging growth company			☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of each of the registrant’s classes of common stock, as of ~~October~~July 15, ~~2019:~~2020:


Class A common stock, $0.01 par value per share:			~~46,792,758~~47,382,798
Class B common stock, $0.01 par value per share:			988,200

PART I.

ITEM 1. FINANCIAL STATEMENTS

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)


		September 30, 2019		December 31, 2018			June 30, 2020		December 31, 2019
		(Unaudited)					(Unaudited)
ASSETS	ASSETS									ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	5,028	$	4,007	Cash and cash equivalents	$	3,073	$	3,471
Accounts receivable, net of allowance for doubtful accounts of $1,478 and $931, respectively		89,882		74,937
Accounts receivable, net of allowance for credit losses of $2,615 and $1,468, respectively						Accounts receivable, net of allowance for credit losses of $2,615 and $1,468, respectively	73,700		80,205

Refundable income taxes	Refundable income taxes	2,789		2,254		Refundable income taxes	2,228		1,251
Prepaid expenses	Prepaid expenses	8,423		7,345		Prepaid expenses	9,906		8,994
Inventory	Inventory	6,976		6,542		Inventory	7,938		7,679

Other current assets	Other current assets	693		2,008		Other current assets	1,234		1,213
Total current assets	Total current assets	113,791		97,093		Total current assets	98,079		102,813
Property, plant and equipment, net of accumulated depreciation and amortization of $831,950 and $878,701, respectively		434,081		404,577
Property, plant and equipment, net of accumulated depreciation and amortization of $879,090 and $844,874, respectively						Property, plant and equipment, net of accumulated depreciation and amortization of $879,090 and $844,874, respectively	480,388		443,825
Operating lease right-of-use assets	Operating lease right-of-use assets	109,604		—		Operating lease right-of-use assets	104,759		108,025
Goodwill	Goodwill	184,295		162,734		Goodwill	190,966		185,819
Intangible assets, net	Intangible assets, net	60,983		34,767		Intangible assets, net	60,408		58,721

Restricted assets	Restricted assets	1,410		1,248		Restricted assets	1,555		1,586
Cost method investments	Cost method investments	11,264		11,264		Cost method investments	11,264		11,264
Deferred income taxes	Deferred income taxes	8,840		9,594		Deferred income taxes	7,366		8,577
Other non-current assets	Other non-current assets	11,512		11,133		Other non-current assets	12,186		11,552
Total assets	Total assets	$	935,780	$	732,410	Total assets	$	966,971	$	932,182

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

(in thousands, except for share and per share data)


		September 30, 2019		December 31, 2018			June 30, 2020		December 31, 2019
		(Unaudited)					(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES AND STOCKHOLDERS' EQUITY						LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Current maturities of long-term debt and finance leases		$	3,571	$	2,298
Current maturities of debt						Current maturities of debt	$	6,948	$	4,301
Current operating lease liabilities	Current operating lease liabilities	9,582		—		Current operating lease liabilities	8,417		9,356
Accounts payable	Accounts payable	59,370		57,289		Accounts payable	57,443		64,396
Accrued payroll and related expenses	Accrued payroll and related expenses	10,116		10,969		Accrued payroll and related expenses	9,940		14,375
Accrued interest	Accrued interest	2,340		2,415		Accrued interest	1,717		2,041
Contract liabilities	Contract liabilities	2,812		3,074		Contract liabilities	3,056		2,299
Current accrued capping, closure and post-closure costs	Current accrued capping, closure and post-closure costs	8,527		11,633		Current accrued capping, closure and post-closure costs	9,005		10,223
Other accrued liabilities	Other accrued liabilities	30,641		23,819		Other accrued liabilities	32,430		23,598
Total current liabilities	Total current liabilities	126,959		111,497		Total current liabilities	128,956		130,589
Long-term debt and finance leases, less current portion		523,975		542,001
Debt, less current portion						Debt, less current portion	527,757		509,021
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	71,910		—		Operating lease liabilities, less current portion	70,208		70,709
Accrued capping, closure and post-closure costs, less current portion	Accrued capping, closure and post-closure costs, less current portion	64,092		61,442		Accrued capping, closure and post-closure costs, less current portion	66,392		61,704
Deferred income taxes	Deferred income taxes	2,637		2,519		Deferred income taxes	2,576		2,643
Other long-term liabilities	Other long-term liabilities	35,395		30,783		Other long-term liabilities	40,337		34,763
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES					COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Casella Waste Systems, Inc. stockholders' equity (deficit)
Class A common stock, 0.01 par value per share; 100,000,000 shares authorized; 46,792,000 and 41,944,000 shares issued and outstanding, respectively		468		419
STOCKHOLDERS' EQUITY:						STOCKHOLDERS' EQUITY:
Casella Waste Systems, Inc. stockholders' equity						Casella Waste Systems, Inc. stockholders' equity
Class A common stock, 0.01 par value per share; 100,000,000 shares authorized; 47,382,000 and 46,803,000 shares issued and outstanding, respectively						Class A common stock, 0.01 par value per share; 100,000,000 shares authorized; 47,382,000 and 46,803,000 shares issued and outstanding, respectively	474		468
Class B common stock, 0.01 par value per share; 1,000,000 shares authorized; 988,000 shares issued and outstanding, respectively; 10 votes per share	Class B common stock, 0.01 par value per share; 1,000,000 shares authorized; 988,000 shares issued and outstanding, respectively; 10 votes per share	10		10		Class B common stock, 0.01 par value per share; 1,000,000 shares authorized; 988,000 shares issued and outstanding, respectively; 10 votes per share	10		10
Additional paid-in capital	Additional paid-in capital	482,987		373,716		Additional paid-in capital	489,193		485,332
Accumulated deficit	Accumulated deficit	(366,082)		(388,669)		Accumulated deficit	(344,133)		(357,016)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(6,571)		(1,308)		Accumulated other comprehensive loss	(14,799)		(6,041)

Total stockholders' equity (deficit)		110,812		(15,832)
Total liabilities and stockholders' equity (deficit)		$	935,780	$	732,410
Total stockholders' equity						Total stockholders' equity	130,745		122,753
Total liabilities and stockholders' equity						Total liabilities and stockholders' equity	$	966,971	$	932,182

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except for per share data)


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018			2020		2019		2020		2019
Revenues	Revenues	$	198,547	$	172,832	$	549,670	$	485,936	Revenues	$	188,767	$	187,459	$	371,676	$	351,123
Operating expenses:	Operating expenses:									Operating expenses:
Cost of operations	Cost of operations	131,273		114,118		377,707		331,527		Cost of operations	123,462		128,674		251,980		246,434
General and administration	General and administration	22,536		20,545		67,423		62,365		General and administration	24,874		22,145		49,226		44,887
Depreciation and amortization	Depreciation and amortization	20,940		18,202		58,144		51,572		Depreciation and amortization	22,076		19,715		43,482		37,204
Withdrawal costs - multiemployer pension plan		3,591		—		3,591		—
Expense from acquisition activities and other items		1,097		581		2,237		930
Southbridge landfill closure charge (settlement), net		625		(9,498)		2,097		(7,740)
Contract settlement charge		—		—		—		2,100
Development project charge		—		—		—		311

Southbridge Landfill closure charge										Southbridge Landfill closure charge	559		917		1,172		1,472
Expense from acquisition activities										Expense from acquisition activities	352		464		1,360		1,140

		180,062		143,948		511,199		441,065			171,323		171,915		347,220		331,137
Operating income	Operating income	18,485		28,884		38,471		44,871		Operating income	17,444		15,544		24,456		19,986
Other expense (income):	Other expense (income):									Other expense (income):
Interest income	Interest income	(66)		(53)		(287)		(161)		Interest income	(45)		(105)		(96)		(222)
Interest expense	Interest expense	6,235		6,424		18,849		19,347		Interest expense	5,511		6,155		11,463		12,615
Loss on debt extinguishment		—		—		—		7,352

Other income	Other income	(248)		(166)		(960)		(597)		Other income	(492)		(496)		(449)		(711)
Other expense, net	Other expense, net	5,921		6,205		17,602		25,941		Other expense, net	4,974		5,554		10,918		11,682
Income before income taxes	Income before income taxes	12,564		22,679		20,869		18,930		Income before income taxes	12,470		9,990		13,538		8,304
Provision (benefit) for income taxes	Provision (benefit) for income taxes	178		377		(1,718)		(1,166)		Provision (benefit) for income taxes	357		(1,925)		466		(1,897)
Net income	Net income	$	12,386	$	22,302	$	22,587	$	20,096	Net income	$	12,113	$	11,915	$	13,072	$	10,201

Basic earnings per share attributable to common stockholders:	Basic earnings per share attributable to common stockholders:									Basic earnings per share attributable to common stockholders:
Weighted average common shares outstanding	Weighted average common shares outstanding	47,690		42,779		47,029		42,605		Weighted average common shares outstanding	48,348		47,464		48,176		46,693
Basic earnings per common share	Basic earnings per common share	$	0.26	$	0.52	$	0.48	$	0.47	Basic earnings per common share	$	0.25	$	0.25	$	0.27	$	0.22
Diluted earnings per share attributable to common stockholders:	Diluted earnings per share attributable to common stockholders:									Diluted earnings per share attributable to common stockholders:
Weighted average common shares outstanding	Weighted average common shares outstanding	48,361		44,175		47,660		43,938		Weighted average common shares outstanding	48,563		48,221		48,411		47,424
Diluted earnings per common share	Diluted earnings per common share	$	0.26	$	0.50	$	0.47	$	0.46	Diluted earnings per common share	$	0.25	$	0.25	$	0.27	$	0.22

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(Unaudited)

(in thousands)


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018			2020		2019		2020		2019
Net income	Net income	$	12,386	$	22,302	$	22,587	$	20,096	Net income	$	12,113	$	11,915	$	13,072	$	10,201
Other comprehensive (loss) income, before tax:
Other comprehensive loss, before tax:										Other comprehensive loss, before tax:
Hedging activity:	Hedging activity:									Hedging activity:
Interest rate swap settlements	Interest rate swap settlements	(120)		(147)		(187)		(217)		Interest rate swap settlements	(940)		(38)		(1,351)		(66)
Interest rate swap amounts reclassified into interest expense	Interest rate swap amounts reclassified into interest expense	147		156		216		247		Interest rate swap amounts reclassified into interest expense	990		(60)		1,293		(115)
Unrealized (loss) gain resulting from changes in fair value of derivative instruments		(774)		863		(5,292)		1,503
Unrealized loss resulting from changes in fair value of derivative instruments										Unrealized loss resulting from changes in fair value of derivative instruments	(1,619)		(2,861)		(8,812)		(4,335)

Other comprehensive (loss) income, before tax		(747)		872		(5,263)		1,533
Income tax provision related to items of other comprehensive (loss) income		—		235		—		413
Other comprehensive (loss) income, net of tax		(747)		637		(5,263)		1,120
Other comprehensive loss, before tax										Other comprehensive loss, before tax	(1,569)		(2,959)		(8,870)		(4,516)
Income tax benefit related to items of other comprehensive loss										Income tax benefit related to items of other comprehensive loss	—		—		(112)		—
Other comprehensive loss, net of tax										Other comprehensive loss, net of tax	(1,569)		(2,959)		(8,758)		(4,516)
Comprehensive income	Comprehensive income	$	11,639	$	22,939	$	17,324	$	21,216	Comprehensive income	$	10,544	$	8,956	$	4,314	$	5,685

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF

STOCKHOLDERS' EQUITY (DEFICIT)

(Unaudited)

(in thousands)


				Class A Common Stock				Class B Common Stock						Additional Paid-In Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss				Class A Common Stock					Class B Common Stock						Additional Paid-In Capital		Accumulated Deficit	Accumulated Other Comprehensive Loss
		Total		Shares	Amount		Shares	Amount												Total	Shares		Amount	Shares		Amount						Additional Paid-In Capital	Accumulated Deficit		Accumulated Other Comprehensive Loss
Balance, December 31, 2018		$	(15,832)	41,944	$	419	988	$	10	$	373,716	$	(388,669)	$	(1,308)
Issuance of Class A common stock - equity offering		100,446		3,565	36		—	—		100,410		—		—
Issuance of Class A common stock - acquisition		—		67	1		—	—		(1)		—		—
Issuances of Class A common stock		260		676	7		—	—		253		—		—
Stock-based compensation		1,431		—	—		—	—		1,431		—		—
Comprehensive loss:
Net loss		(1,714)		—	—		—	—		—		(1,714)		—
Other comprehensive loss:
Hedging activity		(1,557)		—	—		—	—		—		—		(1,557)
Balance, March 31, 2019		83,034		46,252	463		988	10		475,809		(390,383)		(2,865)
Balance, December 31, 2019																	Balance, December 31, 2019	$	122,753	46,803	$	468	988	$	10	$	485,332	$	(357,016)	$	(6,041)
Cumulative effect of new accounting principle																	Cumulative effect of new accounting principle	(189)		—	—		—	—		—		(189)		—

Issuances of Class A common stock	Issuances of Class A common stock	2,318		347	3		—	—		2,315		—		—			Issuances of Class A common stock	100		517	5		—	—		95		—		—
Stock-based compensation	Stock-based compensation	1,889		—	—		—	—		1,889		—		—			Stock-based compensation	1,562		—	—		—	—		1,562		—		—
Comprehensive income:
Comprehensive loss:																	Comprehensive loss:
Net income	Net income	11,915		—	—		—	—		—		11,915		—			Net income	959		—	—		—	—		—		959		—
Other comprehensive loss:	Other comprehensive loss:																Other comprehensive loss:
Hedging activity	Hedging activity	(2,959)		—	—		—	—		—		—		(2,959)			Hedging activity	(7,189)		—	—		—	—		—		—		(7,189)
Balance, June 30, 2019		96,197		46,599	466		988	10		480,013		(378,468)		(5,824)
Balance, March 31, 2020																	Balance, March 31, 2020	117,996		47,320	473		988	10		486,989		(356,246)		(13,230)

Issuance of Class A common stock - acquisition																	Issuance of Class A common stock - acquisition	—		36	1		—	—		(1)		—		—
Issuances of Class A common stock	Issuances of Class A common stock	1,078		193	2		—	—		1,076		—		—			Issuances of Class A common stock	387		26	—		—	—		387		—		—
Stock-based compensation	Stock-based compensation	1,898		—	—		—	—		1,898		—		—			Stock-based compensation	1,818		—	—		—	—		1,818		—		—
Comprehensive income:	Comprehensive income:																Comprehensive income:
Net income	Net income	12,386		—	—		—	—		—		12,386		—			Net income	12,113		—	—		—	—		—		12,113		—
Other comprehensive loss:	Other comprehensive loss:																Other comprehensive loss:
Hedging activity	Hedging activity	(747)		—	—		—	—		—		—		(747)			Hedging activity	(1,569)		—	—		—	—		—		—		(1,569)

Balance, September 30, 2019		$	110,812	46,792	$	468	988	$	10	$	482,987	$	(366,082)	$	(6,571)

Balance, June 30, 2020																	Balance, June 30, 2020	$	130,745	47,382	$	474	988	$	10	$	489,193	$	(344,133)	$	(14,799)


			Class A Common Stock				Class B Common Stock						Additional Paid-In Capital		Accumulated Deficit	Accumulated Other Comprehensive Loss
	Total		Shares	Amount		Shares	Amount
Balance, December 31, 2018	$	(15,832)	41,944	$	419	988	$	10	$	373,716	$	(388,669)	$	(1,308)
Issuance of Class A common stock - equity offering	100,446		3,565	36		—	—		100,410		—		—
Issuance of Class A common stock - acquisition	—		67	1		—	—		(1)		—		—
Issuances of Class A common stock	260		676	7		—	—		253		—		—
Stock-based compensation	1,431		—	—		—	—		1,431		—		—
Comprehensive loss:
Net loss	(1,714)		—	—		—	—		—		(1,714)		—
Other comprehensive loss:
Hedging activity	(1,557)		—	—		—	—		—		—		(1,557)
Balance, March 31, 2019	83,034		46,252	463		988	10		475,809		(390,383)		(2,865)

Issuances of Class A common stock	2,318		347	3		—	—		2,315		—		—
Stock-based compensation	1,889		—	—		—	—		1,889		—		—
Comprehensive income:
Net income	11,915		—	—		—	—		—		11,915		—
Other comprehensive loss:
Hedging activity	(2,959)		—	—		—	—		—		—		(2,959)
Balance, June 30, 2019	$	96,197	46,599	$	466	988	$	10	$	480,013	$	(378,468)	$	(5,824)

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

~~CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENT OF~~

~~STOCKHOLDERS' EQUITY (DEFICIT) (Continued)~~

~~(Unaudited)~~

~~(in thousands)~~

Class A
Common Stock Class B
Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other
Comprehensive Income
Total Shares Amount Shares Amount
Balance, December 31, 2017 $ (37,862) 41,298 $ 413 988 $ 10 $ 356,638 $ (395,107) $ 184
Cumulative effect of new accounting principle — — — — — — 18 (18)
Issuances of Class A common stock 310 402 4 — — 306 — —
Stock-based compensation 2,077 — — — — 2,077 — —
Comprehensive loss:
Net loss (3,910) — — — — — (3,910) —
Other comprehensive income:
Hedging activity 568 — — — — — — 568
Balance, March 31, 2018 (38,817) 41,700 417 988 10 359,021 (398,999) 734
Issuances of Class A common stock 361 65 1 — — 360 — —
Stock-based compensation 2,121 — — — — 2,121 — —
Comprehensive income:
Net income 1,704 — — — — — 1,704 —
Other comprehensive loss:
Hedging activity (85) — — — — — — (85)
Balance, June 30, 2018 (34,716) 41,765 418 988 10 361,502 (397,295) 649
Issuance of Class A common stock - acquisition 4,258 150 1 — — 4,257 — —
Issuances of Class A common stock 72 17 — — — 72 — —
Stock-based compensation 2,168 — — — — 2,168 — —
Comprehensive income:
Net income 22,302 — — — — — 22,302 —
Other comprehensive income:
Hedging activity 637 — — — — — — 637
Balance, September 30, 2018 $ (5,279) 41,932 $ 419 988 $ 10 $ 367,999 $ (374,993) $ 1,286

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


		Nine Months Ended September 30,							Six Months Ended June 30,
		2019		2018			2020		2019
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	22,587	$	20,096	Net income	$	13,072	$	10,201
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	58,144		51,572		Depreciation and amortization	43,482		37,204
Depletion of landfill operating lease obligations	Depletion of landfill operating lease obligations	5,580		7,827		Depletion of landfill operating lease obligations	3,468		3,623
Interest accretion on landfill and environmental remediation liabilities	Interest accretion on landfill and environmental remediation liabilities	5,310		4,291		Interest accretion on landfill and environmental remediation liabilities	3,542		3,579
Amortization of debt issuance costs and discount on long-term debt		1,724		1,875
Amortization of debt issuance costs						Amortization of debt issuance costs	1,054		1,149
Stock-based compensation	Stock-based compensation	5,218		6,366		Stock-based compensation	3,380		3,320
Operating lease right-of-use assets expense	Operating lease right-of-use assets expense	7,272		—		Operating lease right-of-use assets expense	4,588		4,921
Gain on sale of property and equipment		(806)		(414)
Loss (gain) on sale of property and equipment						Loss (gain) on sale of property and equipment	131		(327)
Southbridge Landfill non-cash closure charge	Southbridge Landfill non-cash closure charge	58		1,354		Southbridge Landfill non-cash closure charge	41		179
Southbridge Landfill insurance recovery for investing activities		—		(3,506)
Development project charge		—		311
Non-cash expense from acquisition activities and other items		71		211
Loss on debt extinguishment		—		7,352

Non-cash expense from acquisition activities						Non-cash expense from acquisition activities	575		(68)

Withdrawal costs - multiemployer pension plan		3,591		—

Deferred income taxes	Deferred income taxes	(1,267)		79		Deferred income taxes	1,256		(1,565)
Changes in assets and liabilities, net of effects of acquisitions and divestitures:	Changes in assets and liabilities, net of effects of acquisitions and divestitures:					Changes in assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable	Accounts receivable	(15,141)		(12,161)		Accounts receivable	6,448		(10,057)
Landfill operating lease contract expenditures	Landfill operating lease contract expenditures	(3,197)		—		Landfill operating lease contract expenditures	(1,358)		(2,140)
Accounts payable	Accounts payable	1,634		8,009		Accounts payable	(6,967)		3,995
Prepaid expenses, inventories and other assets	Prepaid expenses, inventories and other assets	(1,297)		829		Prepaid expenses, inventories and other assets	(2,309)		(2,975)
Accrued expenses, contract liabilities and other liabilities	Accrued expenses, contract liabilities and other liabilities	(17,986)		(4,174)		Accrued expenses, contract liabilities and other liabilities	(7,910)		(12,788)
Net cash provided by operating activities	Net cash provided by operating activities	71,495		89,917		Net cash provided by operating activities	62,493		38,251
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(73,496)		(58,176)		Acquisitions, net of cash acquired	(20,091)		(27,687)

Additions to property, plant and equipment	Additions to property, plant and equipment	(75,998)		(51,841)		Additions to property, plant and equipment	(51,570)		(46,659)
Payments on landfill operating lease contracts		—		(5,006)

Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	542		609		Proceeds from sale of property and equipment	200		363
Proceeds from Southbridge Landfill insurance recovery for investing activities		—		3,506
Proceeds from property insurance settlement		332		992

Net cash used in investing activities	Net cash used in investing activities	(148,620)		(109,916)		Net cash used in investing activities	(71,461)		(73,983)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Proceeds from long-term borrowings		121,500		566,800
Principal payments on long-term debt		(149,774)		(540,611)
Proceeds from debt borrowings						Proceeds from debt borrowings	91,200		41,400
Principal payments on debt						Principal payments on debt	(82,719)		(109,241)
Payments of debt issuance costs	Payments of debt issuance costs	—		(5,573)		Payments of debt issuance costs	(11)		—

Proceeds from the exercise of share based awards	Proceeds from the exercise of share based awards	3,355		471		Proceeds from the exercise of share based awards	100		2,277
Proceeds from the public issuance of Class A Common Stock	Proceeds from the public issuance of Class A Common Stock	100,446		—		Proceeds from the public issuance of Class A Common Stock	—		100,446
Proceeds from unregistered sale of Class A Common Stock		2,619		—

Net cash provided by financing activities	Net cash provided by financing activities	78,146		21,087		Net cash provided by financing activities	8,570		34,882
Net increase in cash and cash equivalents		1,021		1,088
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(398)		(850)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	4,007		1,995		Cash and cash equivalents, beginning of period	3,471		4,007
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	5,028	$	3,083	Cash and cash equivalents, end of period	$	3,073	$	3,157
Supplemental Disclosure of Cash Flow Information:	Supplemental Disclosure of Cash Flow Information:					Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	17,200	$	16,950	Interest	$	10,733	$	11,672
Income taxes, net of refunds	Income taxes, net of refunds	$	84	$	84	Income taxes, net of refunds	$	187	$	16
Supplemental Disclosure of Non-Cash Investing and Financing Activities:	Supplemental Disclosure of Non-Cash Investing and Financing Activities:					Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Non-current assets obtained through long-term obligations	Non-current assets obtained through long-term obligations	$	9,797	$	4,342	Non-current assets obtained through long-term obligations	$	11,859	$	9,333
Contingent consideration from business combinations		$	—	$	2,924

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands, except for per share data)

1. BASIS OF PRESENTATION

Casella Waste Systems, Inc. (“Parent”), and its consolidated subsidiaries (collectively, “we”, “us” or “our”), is a regional, vertically integrated solid waste services company that provides collection, transfer, disposal, landfill, landfill gas-to-energy, recycling and organics services in the northeastern United States. We market recyclable metals, aluminum, plastics, paper, and corrugated cardboard, which have been processed at our recycling facilities, as well as recyclables purchased from third-parties. Effective January 1, 2020, we reorganized our operations to consist of a single resource-renewal focused operation by combining our larger-scale recycling and commodity brokerage operations along with our organics services and major account and industrial services into our Resource Solutions segment. We continue to manage our solid waste operations on a geographic basis through 2 regional operating segments, the Eastern and Western regions, each of which provides a full range of solid waste ~~services,~~services. Legal, tax, information technology, human resources, certain finance and ~~our larger-scale recycling~~accounting and ~~commodity brokerage operations through our Recycling segment. Organics services, ancillary operations, along with major account and industrial services~~other administrative functions are included in our ~~Other~~Corporate Entities segment. Segment information reported in the three and six months ended June 30, 2019 and as of December 31, 2019 has been reclassified to conform with the three and six months ended June 30, 2020 and as of June 30, 2020 presentation.

The accompanying unaudited consolidated financial statements, which include the accounts of the Parent and our wholly-owned subsidiaries, have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). All significant intercompany accounts and transactions are eliminated in consolidation. Investments in entities in which we do not have a controlling financial interest are accounted for under either the equity method or the cost method of accounting, as appropriate. Our significant accounting policies are more fully discussed in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, which was filed with the SEC on February ~~22, 2019.~~21, 2020.

Preparation of our consolidated financial statements in accordance with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with a high degree of precision given the available data, or simply cannot be readily calculated. In the opinion of management, these consolidated financial statements include all adjustments, which include normal recurring and nonrecurring adjustments, necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. The results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 may not be indicative of the results for any other interim period or the entire fiscal year. The consolidated financial statements presented herein should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019.

Recent Events

With the global outbreak of the novel coronavirus ("COVID-19") and the declaration of a pandemic by the World Health Organization in March 2020, the U.S. Government and all of the states in which we operate have declared the waste services industry as an essential services provider and as a result we are committed to continue to operate and provide our full breadth of services. We have prioritized the safety and well-being of our employees by strictly adhering to recommendations of the Centers for Disease Control and Prevention as well as executive orders of the states in which we operate.

The COVID-19 outbreak has caused, and is likely to continue to cause, significant economic disruption across our geographic footprint and has adversely affected, and is expected to continue to adversely affect, our business. COVID-19 negatively impacted our revenues starting at the end of the quarter ended March 31, 2020 as many collection customers required service level changes and volumes into our landfills declined. We did experience improved demand for services in the quarter ended June 30, 2020 as local economies started to reopen as allowed by State Governments. This demand has continued to grow at a fairly steady rate, but our collection and disposal operations remain negatively impacted by lower volumes attributable to COVID-19. We continue to experience increased costs associated with the protection of our employees including costs for additional safety equipment, hygiene products and enhanced facility cleaning. These costs are expected to continue throughout the remainder of the year. We have taken measures to reduce costs in other areas and preserve liquidity during this period of uncertainty. As of the date of this filing, we are unable to determine or predict the nature, duration or scope of the overall impact that COVID-19 will have on our business, results of operations, liquidity and capital resources.

Subsequent Events

We have evaluated subsequent events or transactions that have occurred after the consolidated balance sheet date of ~~September~~June 30, ~~2019~~2020 through the date of filing of the consolidated financial statements with the SEC on this Quarterly Report on Form 10-Q. We have determined that ~~except as disclosed,~~ there are no subsequent events that require disclosure in this Quarterly Report on Form 10-Q.

2. ACCOUNTING CHANGES

A table providing a brief description of recent Accounting Standards Updates ("ASUs") to the Accounting Standards Codification (“ASC”) issued by the Financial Accounting Standards Board (“FASB”) that we adopted and deemed to have a material impact on our consolidated financial statements based on current account balances and activity follows:

Standard

Description

Effect on the Financial Statements or Other
Significant Matters

Accounting standards adopted effective January 1, ~~2019~~2020

ASU No. ~~2016-02,~~2016-13, as amended through March ~~2019: Leases (Topic 842~~)2020: Financial Instrument Credit Losses (Topic 326)

Requires that ~~a lessee recognize at the commencement date: a lease liability, which is the obligation~~an entity measures all of ~~the lessee to make lease payments arising from a lease, measured~~its expected credit losses for financial assets held based on ~~a discounted basis;~~historical experience, current conditions, and ~~a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.~~reasonable and supportable forecasts.

We adopted ~~the~~this guidance ~~using the prospective optional transition method~~ effective January 1, ~~2019, which allowed us to elect not to restate comparative periods and, if applicable, to recognize~~2020 using the ~~effects of applying this guidance as a cumulative-effect adjustment to retained earnings as of January 1, 2019.~~required modified-retrospective approach. We ~~did not recognize~~recognized a cumulative effect adjustment of $(189) to retained earnings upon implementation. ~~Upon adopting this~~This guidance ~~we recognized a right-of-use asset~~replaces the incurred loss methodology with an expected loss methodology that is referred to as current expected credit loss ("CECL") methodology. CECL requires consideration of past events, current conditions, and ~~lease liability~~reasonable and supportable forecasts about the future to assess credit loss estimates and will generally result in the earlier recognition of an allowance for ~~leases classified as operating leases with a term in excess of 12 months in~~credit losses. We have updated our consolidated balance sheet. We also prospectively reclassified landfill operating lease payments, along with related accumulated depreciation, that were previously capitalized as property, plant and equipment to operating lease right-of-use assets. Accordingly, the related cash outlays, which were historically considered cash flows from investing activities, were prospectively reclassified as cash flows from operating activities in accordance with Topic 842. With the assistance of third-party resources, we designed internal controls over the adoption of this guidance and implemented a third-party enterprise lease management software solution. In conjunction with the implementation, we modified our lease policy and internal business processes ~~to effectively manage~~ and ~~account for leases,~~systems and controls to support recognition and disclosure ~~requirements~~ under the new standard. The adoption of this guidance did not have a material impact on the accounting for our finance leases. This guidance required additional disclosure over leases in order to comply with the new lease standard.guidance. See Note 5, ~~Leases~~Accounts Receivable, Net of Allowance for Credit Losses for additional disclosure.

A table providing a brief description of recent ASUs to the ASC issued by the FASB that are pending adoption and deemed to have a possible material impact on our consolidated financial statements based on current account balances and activity follows:

Standard

Description

Effect on the Financial Statements or Other
Significant Matters

Accounting standards issued pending adoption

ASU No. 2020-04: Reference Rate Reform (Topic 848)

Provides temporary optional guidance to ease the potential burden in applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued.

We are currently assessing the provisions of this guidance and do not expect that its adoption will have an impact on our consolidated financial statements and related disclosures. This guidance will be in effect from March 12, 2020 through December 31, 2022.

ASU No. ~~2017-04: Intangibles - Goodwill and Other (Topic 350~~)

Requires that when an entity is performing its annual, or interim, goodwill impairment test, it should compare the fair value of the reporting unit with its carrying amount when calculating its impairment charge, noting that the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, if applicable, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when calculating its impairment charge.2019-12: Income Taxes (Topic 740)

AsReduces the complexity over accounting for income taxes by removing certain exceptions and amending guidance to improve consistent application of ~~December 31, 2018, we did~~accounting over income taxes.

We are currently assessing the provisions of this guidance to determine whether or not ~~record a goodwill impairment charge~~its adoption will have an impact on our consolidated financial statements and related to our annual goodwill impairment test because at that time the fair value of each reporting unit exceeded its respective carrying value. Upon adoption, if the carrying value of any of these reporting units exceeds the fair value when we perform a goodwill impairment test, we would record an impairment charge equal to the amount by which the carrying value exceeds its fair value.disclosures. This guidance is effective January 1, ~~2020~~2021 with early adoption ~~permitted for interim or annual goodwill impairment tests performed after January 1, 2017.~~permitted.

3. REVENUE RECOGNITION

A table of revenues disaggregated by service line and timing of revenue recognition by operating segment for each of the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 follows:

Three Months Ended ~~September~~June 30, 2020


	Eastern		Western		Resource Solutions		Total Revenues
Collection	$	37,115	$	58,546	$	—	$	95,661
Landfill	4,568		15,218		—		19,786
Transfer	11,451		9,016		—		20,467
Customer solutions	—		—		20,239		20,239


Recycling	4		332		12,487		12,823


Organics	—		—		15,419		15,419
Transportation	—		3,454		—		3,454


Landfill gas-to-energy	198		720		—		918
Total revenues	$	53,336	$	87,286	$	48,145	$	188,767

Transferred at a point-in-time	$	69	$	367	$	8,231	$	8,667
Transferred over time	53,267		86,919		39,914		180,100
Total revenues	$	53,336	$	87,286	$	48,145	$	188,767

Three Months Ended June 30, 2019


		Eastern		Western		Recycling		Other		Total Revenues			Eastern		Western		Resource Solutions		Total Revenues
Collection	Collection	$	41,868	$	59,323	$	—	$	—	$	101,191	Collection	$	38,955	$	54,151	$	—	$	93,106
Landfill	Landfill	5,414		20,018		—		—		25,432		Landfill	5,427		18,855		—		24,282
Transfer	Transfer	12,247		9,694		—		—		21,941		Transfer	11,923		8,597		—		20,520
Customer solutions	Customer solutions	—		—		—		20,689		20,689		Customer solutions	—		—		19,216		19,216

Recycling	Recycling	4		461		10,726		—		11,191		Recycling	577		341		10,514		11,432

Organics	Organics	—		—		—		14,166		14,166		Organics	—		—		14,905		14,905
Transportation	Transportation	—		2,709		—		420		3,129		Transportation	—		3,287		—		3,287

Landfill gas-to-energy	Landfill gas-to-energy	142		666		—		—		808		Landfill gas-to-energy	194		517		—		711
Total revenues	Total revenues	$	59,675	$	92,871	$	10,726	$	35,275	$	198,547	Total revenues	$	57,076	$	85,748	$	44,635	$	187,459

Transferred at a point-in-time	Transferred at a point-in-time	$	36	$	186	$	4,592	$	1,156	$	5,970	Transferred at a point-in-time	$	52	$	178	$	6,505	$	6,735
Transferred over time	Transferred over time	59,639		92,685		6,134		34,119		192,577		Transferred over time	57,024		85,570		38,130		180,724
Total revenues	Total revenues	$	59,675	$	92,871	$	10,726	$	35,275	$	198,547	Total revenues	$	57,076	$	85,748	$	44,635	$	187,459

109

~~Three~~Six Months Ended ~~September~~June 30, ~~2018~~2020


		Eastern		Western		Recycling		Other		Total Revenues			Eastern		Western		Resource Solutions		Total Revenues
Collection	Collection	$	36,392	$	44,452	$	—	$	—	$	80,844	Collection	$	73,944	$	117,185	$	—	$	191,129
Landfill	Landfill	8,336		18,764		—		—		27,100		Landfill	8,112		31,528		—		39,640
Transfer	Transfer	11,001		7,290		—		—		18,291		Transfer	20,834		15,722		—		36,556
Customer solutions	Customer solutions	—		—		—		17,195		17,195		Customer solutions	—		—		41,902		41,902

Recycling	Recycling	5		875		10,877		—		11,757		Recycling	6		571		23,453		24,030

Organics	Organics	—		—		—		13,413		13,413		Organics	—		—		30,351		30,351
Transportation	Transportation	—		2,396		—		916		3,312		Transportation	—		6,124		—		6,124

Landfill gas-to-energy	Landfill gas-to-energy	272		648		—		—		920		Landfill gas-to-energy	583		1,361		—		1,944
Total revenues	Total revenues	$	56,006	$	74,425	$	10,877	$	31,524	$	172,832	Total revenues	$	103,479	$	172,491	$	95,706	$	371,676

Transferred at a point-in-time	Transferred at a point-in-time	$	128	$	233	$	7,436	$	1,138	$	8,935	Transferred at a point-in-time	$	125	$	602	$	12,692	$	13,419
Transferred over time	Transferred over time	55,878		74,192		3,441		30,386		163,897		Transferred over time	103,354		171,889		83,014		358,257
Total revenues	Total revenues	$	56,006	$	74,425	$	10,877	$	31,524	$	172,832	Total revenues	$	103,479	$	172,491	$	95,706	$	371,676

~~Nine~~Six Months Ended ~~September~~June 30, 2019

Eastern Western Recycling Other Total Revenues
Collection $ 115,363 $ 163,070 $ — $ — $ 278,433
Landfill 14,558 54,341 — — 68,899
Transfer 33,157 23,566 — — 56,723
Customer solutions — — — 58,058 58,058
Recycling 5 1,243 32,006 — 33,254
Organics — — — 42,668 42,668
Transportation — 7,650 — 1,330 8,980
Landfill gas-to-energy 665 1,990 — — 2,655
Total revenues $ 163,748 $ 251,860 $ 32,006 $ 102,056 $ 549,670
Transferred at a point-in-time $ 123 $ 673 $ 15,768 $ 2,877 $ 19,441
Transferred over time 163,625 251,187 16,238 99,179 530,229
Total revenues $ 163,748 $ 251,860 $ 32,006 $ 102,056 $ 549,670

~~Nine Months Ended September 30, 2018~~


		Eastern		Western		Recycling		Other		Total Revenues			Eastern		Western		Resource Solutions		Total Revenues
Collection	Collection	$	101,544	$	121,804	$	—	$	—	$	223,348	Collection	$	72,919	$	103,746	$	—	$	176,665
Landfill	Landfill	22,179		49,504		—		—		71,683		Landfill	9,144		34,323		—		43,467
Transfer	Transfer	29,305		20,907		—		—		50,212		Transfer	20,909		13,872		—		34,781
Customer solutions	Customer solutions	—		—		—		48,315		48,315		Customer solutions	—		—		37,370		37,370

Recycling	Recycling	—		3,271		30,634		—		33,905		Recycling	578		782		21,280		22,640

Organics	Organics	—		—		—		40,259		40,259		Organics	—		—		28,501		28,501
Transportation	Transportation	—		11,779		—		2,421		14,200		Transportation	—		5,852		—		5,852

Landfill gas-to-energy	Landfill gas-to-energy	1,071		2,943		—		—		4,014		Landfill gas-to-energy	523		1,324		—		1,847
Total revenues	Total revenues	$	154,099	$	210,208	$	30,634	$	90,995	$	485,936	Total revenues	$	104,073	$	159,899	$	87,151	$	351,123

Transferred at a point-in-time	Transferred at a point-in-time	$	500	$	847	$	20,311	$	3,219	$	24,877	Transferred at a point-in-time	$	88	$	487	$	12,896	$	13,471
Transferred over time	Transferred over time	153,599		209,361		10,323		87,776		461,059		Transferred over time	103,985		159,412		74,255		337,652
Total revenues	Total revenues	$	154,099	$	210,208	$	30,634	$	90,995	$	485,936	Total revenues	$	104,073	$	159,899	$	87,151	$	351,123

Payments to customers that are not in exchange for a distinct good or service are recorded as a reduction of revenues. Rebates to certain customers associated with payments for recycled or organic materials that are received and subsequently processed and sold to other third-parties amounted to ~~$1,027~~$1,546 and ~~$3,474~~$2,537 in the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, and ~~$1,648~~$1,109 and ~~$4,732~~$2,447 in the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively. Rebates are generally recorded as a reduction of revenues upon the sale of such materials, or upon receipt of the recycled materials at our facilities. ~~These payments were previously recorded as a cost of operations.~~ We did 0t record any revenues in the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018~~2019 from performance obligations satisfied in previous periods.

Contract receivables, which are included in Accounts receivable, net are recorded when billed or when related revenue is earned, if earlier, and represent claims against third-parties that will be settled in cash. Accounts receivable, net includes gross receivables from contracts of ~~$90,291~~$74,091 and ~~$73,500~~$80,191 as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Certain customers are billed in advance and, accordingly, recognition of the related revenues is deferred as a contract liability until the services are provided and control transferred to the customer. We recognized contract liabilities of ~~$2,812~~$3,056 and ~~$3,074~~$2,299 as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Due to the short term nature of advanced billings, substantially all of the deferred revenue recognized as a contract liability as of December 31, ~~2018~~2019 and December 31, ~~2017 were~~2018 was recognized as revenue during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively, when the services were performed.

4. BUSINESS COMBINATIONS

In the ~~nine~~six months ended ~~September~~June 30, 2020, we acquired 4 businesses: 3 tuck-in solid waste collection businesses in our Western region and 1 recycling operation in our Resource Solutions segment. In the six months ended June 30, 2019, we acquired ~~8 businesses:~~ 3 tuck-in solid waste collection businesses in our Eastern region and ~~3 tuck-in solid waste collection businesses,~~ a business comprised of solid waste collection, transfer and recycling operations and a business comprised of solid waste hauling and transfer assets in our Western region. In the nine months ended September 30, 2018, we acquired 1 solid waste collection, transfer and processing business in our Eastern region and 3 solid waste collection businesses, including a transfer station, in our Western region. The operating results of ~~these~~the acquired businesses are included in the accompanying unaudited consolidated statements of operations from each date of acquisition, and the purchase price has been allocated to the net assets acquired based on fair values at each date of acquisition, with the residual amounts recorded as goodwill. Acquired intangible assets other than goodwill that are subject to amortization include client lists and non-compete covenants. Such assets are amortized over a five to ten year period from the date of acquisition. All amounts recorded to goodwill ~~except amounts related to certain acquisitions,~~ are expected to be deductible for tax purposes.

A summary of the purchase price paid for these acquisitions and the allocation of the purchase price for these acquisitions follows:


		Nine Months Ended September 30,							Six Months Ended June 30,
		2019		2018			2020		2019
Purchase Price:	Purchase Price:					Purchase Price:
Cash used in acquisitions, net of cash acquired	Cash used in acquisitions, net of cash acquired	$	71,038	$	57,824	Cash used in acquisitions, net of cash acquired	$	19,212	$	25,546
Notes payable	Notes payable	2,714		—		Notes payable	—		2,250
Common stock		—		4,258
Other non-cash consideration		5,470		—

Contingent consideration and holdbacks	Contingent consideration and holdbacks	1,755		4,996		Contingent consideration and holdbacks	2,837		1,120
Total	Total	80,977		67,078		Total	22,049		28,916
Allocated as follows:	Allocated as follows:					Allocated as follows:
Current assets	Current assets	1,935		2,968		Current assets	132		1,865
Other non-current assets		367		—

Land	Land	2,487		—		Land	685		726
Buildings	Buildings	5,422		7,539		Buildings	2,118		2,602
Equipment	Equipment	20,592		11,520		Equipment	8,277		8,655
Intangible assets	Intangible assets	31,171		20,300		Intangible assets	5,912		11,619
Other liabilities, net	Other liabilities, net	(3,040)		(2,443)		Other liabilities, net	(222)		(1,546)
Deferred tax liability	Deferred tax liability	(2,137)		(1,230)		Deferred tax liability	—		(2,137)
Fair value of assets acquired and liabilities assumed	Fair value of assets acquired and liabilities assumed	56,797		38,654		Fair value of assets acquired and liabilities assumed	16,902		21,784
Excess purchase price allocated to goodwill	Excess purchase price allocated to goodwill	$	24,180	$	28,424	Excess purchase price allocated to goodwill	$	5,147	$	7,132

Certain purchase price allocations are preliminary and are based on information existing at the acquisition dates or upon closing the transaction. Accordingly, these purchase price allocations are subject to change. Unaudited pro forma combined information that shows our operational results as though each acquisition completed since the beginning of the prior fiscal year had occurred as of January 1, ~~2018~~2019 is as follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018			2020		2019		2020		2019
Revenues	Revenues	$	204,293	$	196,686	$	579,390	$	561,912	Revenues	$	189,026	$	201,608	$	373,623	$	381,518
Operating income	Operating income	$	19,369	$	31,505	$	42,321	$	53,051	Operating income	$	17,448	$	16,850	$	24,517	$	22,751
Net income	Net income	$	12,905	$	23,794	$	24,810	$	24,745	Net income	$	12,115	$	12,629	$	13,087	$	11,709

Basic earnings per share attributable to common stockholders:	Basic earnings per share attributable to common stockholders:									Basic earnings per share attributable to common stockholders:
Weighted average common shares outstanding	Weighted average common shares outstanding	47,690		42,779		47,029		42,605		Weighted average common shares outstanding	48,348		47,464		48,176		46,693
Basic earnings per common share	Basic earnings per common share	$	0.27	$	0.56	$	0.53	$	0.58	Basic earnings per common share	$	0.25	$	0.27	$	0.27	$	0.25
Diluted earnings per share attributable to common stockholders:	Diluted earnings per share attributable to common stockholders:									Diluted earnings per share attributable to common stockholders:
Weighted average shares outstanding		48,361		44,175		47,660		43,938
Weighted average common shares outstanding										Weighted average common shares outstanding	48,563		48,221		48,411		47,424
Diluted earnings per common share	Diluted earnings per common share	$	0.27	$	0.54	$	0.52	$	0.56	Diluted earnings per common share	$	0.25	$	0.26	$	0.27	$	0.25

The unaudited pro forma results set forth in the table above have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the acquisitions occurred as of January 1, ~~2018~~2019 or of the results of our future operations. Furthermore, the unaudited pro forma results do not give effect to all cost savings or incremental costs that may occur as a result of the integration and consolidation of the completed acquisitions.

5. ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR CREDIT LOSSES

Accounts receivable represent receivables from customers for collection, transfer, recycling, disposal and other services. Our accounts receivable are recorded when billed or when related revenue is earned, if earlier, and represent claims against third-parties that will be settled in cash. The carrying value of our accounts receivable, net of allowance for credit losses represents its estimated net realizable value. Estimates are used in determining our allowance for credit losses based on, among other things, our historical loss trends, the age of outstanding accounts receivable, and current and expected economic conditions. Additions – charged to expense in the six months ended June 30, 2020 considers the current economic conditions associated with the COVID-19 pandemic and the potential impact to our customers’ ability to pay for services that we have provided. Our reserve is evaluated and revised on a monthly basis. Past due accounts receivable are written off when deemed to be uncollectible.

13A summary of the changes to allowance for credit losses follows:


	Six Months Ended June 30, 2020
Balance at beginning of period	$	1,468
Cumulative effect of new accounting principle	189
Additions - charged to expense	1,697
Deductions - bad debts written off, net of recoveries	(739)
Balance at end of period	$	2,615

6. LEASES

We lease vehicles, equipment, property and other non-core equipment in the ordinary course of our business. Leases are classified as either operating leases or finance leases, as appropriate. Our leases have varying terms and may include renewal or purchase options, escalation clauses, restrictions, lease concessions, capital project funding, penalties or other obligations that we considered historically in determining minimum rental payments. We recognize lease expense for operating leases on a straight-line basis over the lease term. We recognize depreciation expense for finance leases over either the useful life of the asset or the lease term based on the terms of the lease agreement.

We are also party to 3 landfill operation and management agreements. These agreements are long-term landfill operating contracts with government bodies whereby we receive tipping revenue, pay normal operating expenses and assume future final capping, closure and post-closure obligations. The government body retains ownership of the landfill. There is no bargain purchase option and title to the property does not pass to us at the end of the lease term. We allocate the consideration paid to the landfill airspace rights and underlying land lease based on the relative fair values. In addition to up-front or one-time payments, the landfill operating agreements may require us to make future minimum rental payments, including success/expansion fees, other direct costs and final capping, closure and post-closure costs. The value of all future minimum rental payments is amortized and charged to cost of operations over the life of the ~~contract~~contract. We amortize the consideration allocated to airspace rights as airspace is utilized on a units-of-consumption basis and such amortization is charged to cost of operations as airspace is ~~utilized~~consumed (e.g., as tons are placed into the landfill). The underlying value of any land lease is amortized to cost of operations on a straight-line basis over the estimated life of the operating agreement.

~~As a part of the implementation of~~ ~~Topic 842~~, we elected to adopt the practical expedient package and to not elect the hindsight practical expedient in determining lease term. The practical expedient package allowed us to: 1) not reassess lease classification for existing leases; 2) not reassess whether a contract contains a lease for existing contracts; and 3) not reassess initial direct costs for existing leases. Accordingly, we retained the operating lease and finance lease classifications in all periods presented and did not alter ~~Topic 840~~ accounting over operating leases in place at transition allowing us to use historical minimum rental payments when determining the right-of-use asset and lease liability for existing operating leases. Upon adopting this guidance, we recognized a right-of-use asset and a lease liability for core leases classified as operating leases with a term in excess of 12 months in our consolidated balance sheet. For other non-core operating leases, which is comprised of small-dollar-value items such as office equipment, we continued to expense these costs in the period incurred rather than capitalizing such expenditures on our consolidated balance sheet. Accounting for finance leases was not impacted by the adoption of this guidance.

~~Under~~ ~~Topic 842~~, we identify lease and nonlease components in a contract to which consideration in the contract will be allocated. As an election, we may elect by class of underlying asset to choose not to separate nonlease components from lease components and instead account for each separate lease component and the nonlease components in a contract as part of the single lease component. We have elected to not separate lease components from nonlease components for property leases and are, therefore, not allocating consideration between lease and nonlease components for this asset class. Lease payments include: fixed payments, including in-substance fixed payments, less any lease incentives paid or payable to the lessee; variable lease payments that depend on an index or a rate; exercise price of a purchase option reasonably certain to be exercised; penalties for terminating a lease; and amounts where it is probable that we will owe under a residual value guarantee. Refundable deposits are not considered to be a fixed payment. Variable lease costs that are not based on an index or a rate are recorded to expense in the period incurred. Lease term is determined at lease commencement, and includes any noncancellable period for which we have the right to use the underlying asset together with any periods covered by an option to extend or terminate the lease if we are reasonably certain to exercise the option to extend or not to exercise the option to terminate. The initial determination of a lease liability is calculated as the net present value of the lease payments not yet paid. The discount rate used to determine present value is the rate implicit in the lease, if present, or, if not present, our incremental borrowing rate, which is a rate that reflects interest that we would have to pay to borrow funds on a collateralized basis over a similar term to the lease and in a similar economic environment. For shorter term leases, such as vehicle and equipment leases, we calculate our incremental borrowing rate using the interest rate from our existing secured line of credit, adjusted based on term. For longer term leases, such as our landfill operating leases, we calculate our incremental borrowing rate based on an industry yield curve with a similar credit rating, adjusted by a company specific spread as determined by a third-party.

1412

A schedule of lease costs and other lease information follows:


								Three Months Ended June 30,						Six Months Ended June 30,
		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019				2020		2019		2020		2019
Lease cost:	Lease cost:						Lease cost:
Amortization of right-of-use assets	Amortization of right-of-use assets	$	593	$	1,505		Amortization of right-of-use assets	$	859	$	503	$	1,591	$	912
Interest expense	Interest expense	213		555			Interest expense	290		186		536		342
Fixed lease cost - vehicles, equipment and property	Fixed lease cost - vehicles, equipment and property	2,351		7,271			Fixed lease cost - vehicles, equipment and property	2,171		2,342		4,588		4,921
Fixed lease cost - landfill operating leases	Fixed lease cost - landfill operating leases	1,957		5,580			Fixed lease cost - landfill operating leases	1,795		1,975		3,468		3,623
Fixed lease cost	Fixed lease cost	4,308		12,851			Fixed lease cost	3,966		4,317		8,056		8,544
Short-term lease cost	Short-term lease cost	853		2,261			Short-term lease cost	729		1,092		1,658		1,750
Variable lease cost	Variable lease cost	329		712			Variable lease cost	129		35		261		42
Total lease cost	Total lease cost	$	6,296	$	17,884		Total lease cost	$	5,973	$	6,133	$	12,102	$	11,590

Other information:	Other information:						Other information:
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:						Cash paid for amounts included in the measurement of lease liabilities:
Financing cash flows for finance leases	Financing cash flows for finance leases	$	666	$	1,870		Financing cash flows for finance leases	$	981	$	733	$	1,942	$	1,204
Operating cash flows for operating leases	Operating cash flows for operating leases	$	2,963	$	9,837		Operating cash flows for operating leases	$	3,272	$	4,831	$	5,714	$	6,874
Right-of-use assets obtained in exchange for new finance lease liabilities	Right-of-use assets obtained in exchange for new finance lease liabilities	$	—	$	6,857		Right-of-use assets obtained in exchange for new finance lease liabilities	$	5,391	$	4,384	$	11,793	$	6,857
Right-of-use assets obtained in exchange for new operating lease liabilities	Right-of-use assets obtained in exchange for new operating lease liabilities	$	831	$	1,419		Right-of-use assets obtained in exchange for new operating lease liabilities	$	776	$	173	$	3,142	$	588

				September 30, 2019										June 30, 2020
Weighted-average remaining lease term - finance leases (years)	Weighted-average remaining lease term - finance leases (years)			6.7			Weighted-average remaining lease term - finance leases (years)									6.1
Weighted-average remaining lease term - operating leases (years)	Weighted-average remaining lease term - operating leases (years)			12.0			Weighted-average remaining lease term - operating leases (years)									11.8
Weighted-average discount rate - finance leases	Weighted-average discount rate - finance leases			5.2		%	Weighted-average discount rate - finance leases									4.6	%
Weighted-average discount rate - operating leases	Weighted-average discount rate - operating leases			5.2		%	Weighted-average discount rate - operating leases									5.1	%

Estimated minimum future lease obligations are as follows:


		Operating Leases		Finance Leases			Operating Leases		Finance Leases
Fiscal year ending December 31, 2019		$	3,792	$	799
Fiscal year ending December 31, 2020	Fiscal year ending December 31, 2020	13,218		3,872		Fiscal year ending December 31, 2020	$	7,512	$	2,928
Fiscal year ending December 31, 2021	Fiscal year ending December 31, 2021	10,870		3,336		Fiscal year ending December 31, 2021	12,145		5,706
Fiscal year ending December 31, 2022	Fiscal year ending December 31, 2022	8,494		2,740		Fiscal year ending December 31, 2022	9,486		5,113
Fiscal year ending December 31, 2023	Fiscal year ending December 31, 2023	6,652		2,572		Fiscal year ending December 31, 2023	7,296		4,947
Fiscal year ending December 31, 2024						Fiscal year ending December 31, 2024	6,638		4,847
Thereafter	Thereafter	69,323		6,924		Thereafter	63,964		9,778
Total lease payments	Total lease payments	112,349		20,243		Total lease payments	107,041		33,319
Less: interest expense	Less: interest expense	(30,857)		(3,733)		Less: interest expense	(28,416)		(5,056)
Lease liability balance	Lease liability balance	$	81,492	$	16,510	Lease liability balance	$	78,625	$	28,263

6.7. GOODWILL AND INTANGIBLE ASSETS

A summary of the activity and balances related to goodwill by reporting segment is as follows:

December 31,
2018 Acquisitions Other (1) September 30,
2019
Eastern region $ 28,154 $ 2,566 $ — $ 30,720
Western region 120,536 21,614 (2,619) 139,531
Recycling 12,315 — — 12,315
Other 1,729 — — 1,729
Total $ 162,734 $ 24,180 $ (2,619) $ 184,295

~~(1)Relates to the unregistered sale of Class A common stock that was previously held in escrow and released to us for liquidation . See Note 10,~~ ~~Stockholders' Equity~~ ~~for additional disclosure.~~


	December 31, 2019		Acquisitions		June 30, 2020
Eastern region	$	30,720	$	—	$	30,720
Western region	141,055		5,147		146,202
Resource solutions	14,044		—		14,044

Total	$	185,819	$	5,147	$	190,966

A summary of intangible assets by intangible asset type follows:


		Covenants Not-to-Compete		Client Lists		Total			Covenants Not-to-Compete		Client Lists		Total
Balance, September 30, 2019
Balance, June 30, 2020								Balance, June 30, 2020
Intangible assets	Intangible assets	$	26,162	$	71,122	$	97,284	Intangible assets	$	26,652	$	76,635	$	103,287
Less accumulated amortization	Less accumulated amortization	(18,575)		(17,726)		(36,301)		Less accumulated amortization	(19,756)		(23,123)		(42,879)
		$	7,587	$	53,396	$	60,983		$	6,896	$	53,512	$	60,408


		Covenants Not-to-Compete		Client Lists		Total			Covenants Not-to-Compete		Client Lists		Total
Balance, December 31, 2018
Balance, December 31, 2019								Balance, December 31, 2019
Intangible assets	Intangible assets	$	21,750	$	44,363	$	66,113	Intangible assets	$	26,162	$	71,122	$	97,284
Less accumulated amortization	Less accumulated amortization	(17,584)		(13,762)		(31,346)		Less accumulated amortization	(18,968)		(19,595)		(38,563)
		$	4,166	$	30,601	$	34,767		$	7,194	$	51,527	$	58,721

Intangible amortization expense was ~~1,916~~$2,222 and ~~4,956~~$4,316 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, as compared to ~~$714~~$1,639 and ~~$1,848~~$3,039 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively.

A summary of intangible amortization expense estimated for the five fiscal years following the fiscal year ended December 31, ~~2018~~2019 and thereafter follows:



Estimated Future Amortization Expense as of ~~September~~June 30, ~~2019~~
~~Fiscal year ending December 31, 2019~~	$	~~2,264~~ 2020
Fiscal year ending December 31, 2020	$	~~8,222~~4,441
Fiscal year ending December 31, 2021	$	~~6,826~~7,500
Fiscal year ending December 31, 2022	$	~~6,188~~6,848
Fiscal year ending December 31, 2023	$	~~5,993~~6,640
Fiscal year ending December 31, 2024	$	7,603
Thereafter	$	~~31,490~~27,376

7.8. ACCRUED FINAL CAPPING, CLOSURE AND POST CLOSURE

Accrued final capping, closure and post-closure costs include the current and non-current portion of costs associated with obligations for final capping, closure and post-closure of our landfills. We estimate our future final capping, closure and post-closure costs in order to determine the final capping, closure and post-closure expense per ton of waste placed into each landfill. The anticipated time frame for paying these costs varies based on the remaining useful life of each landfill as well as the duration of the post-closure monitoring period.

A summary of the changes to accrued final capping, closure and post-closure liabilities follows:


		Nine Months Ended September 30,							Six Months Ended June 30,
		2019		2018			2020		2019
Beginning balance	Beginning balance	$	73,075	$	62,290	Beginning balance	$	71,927	$	73,075
Obligations incurred	Obligations incurred	1,901		2,874		Obligations incurred	1,764		1,217
Revision in estimates (1)	Revision in estimates (1)	—		1,492		Revision in estimates (1)	152		—
Accretion expense	Accretion expense	4,742		4,175		Accretion expense	3,204		3,194

Obligations settled (2)	Obligations settled (2)	(7,099)		(2,310)		Obligations settled (2)	(1,650)		(2,947)
Ending balance	Ending balance	$	72,619	$	68,521	Ending balance	$	75,397	$	74,539

(1)Relates to changes in ~~estimates~~estimated costs and ~~assumptions associated with anticipated costs~~timing of ~~future~~ final capping, closure and post-closure activities at the Town of Southbridge, Massachusetts ~~landfill.~~landfill ("Southbridge Landfill"). See Note 9,10, Commitments and Contingenciesand Note ~~12,~~13, Other Items and Charges for ~~additional disclosure regarding the matter.~~further discussion.

(2)Includes amounts that are being processed through accounts payable as a part of our disbursements cycle.

~~8. LONG-TERM~~9. DEBT

A summary of ~~long-term~~ debt ~~and finance leases by debt instrument~~is as follows:


		September 30, 2019		December 31, 2018			June 30, 2020		December 31, 2019
Senior Secured Credit Facility:	Senior Secured Credit Facility:					Senior Secured Credit Facility:
Revolving line of credit facility ("Revolving Credit Facility") due May 2023; bearing interest at LIBOR plus 1.75%	Revolving line of credit facility ("Revolving Credit Facility") due May 2023; bearing interest at LIBOR plus 1.75%	$	43,400	$	69,600	Revolving line of credit facility ("Revolving Credit Facility") due May 2023; bearing interest at LIBOR plus 1.75%	$	37,700	$	26,900
Term loan A facility ("Term Loan Facility") due May 2023; bearing interest at LIBOR plus 1.75%	Term loan A facility ("Term Loan Facility") due May 2023; bearing interest at LIBOR plus 1.75%	350,000		350,000		Term loan A facility ("Term Loan Facility") due May 2023; bearing interest at LIBOR plus 1.75%	350,000		350,000

Tax-Exempt Bonds:	Tax-Exempt Bonds:					Tax-Exempt Bonds:
New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014 ("New York Bonds 2014") due December 2044 - fixed rate interest period through 2019; bearing interest at 3.75%		25,000		25,000
New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014 ("New York Bonds 2014") due December 2044 - fixed rate interest period through 2019; bearing interest at 2.875%						New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014 ("New York Bonds 2014") due December 2044 - fixed rate interest period through 2019; bearing interest at 2.875%	25,000		25,000
New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014R-2 ("New York Bonds 2014R-2") due December 2044 - fixed rate interest period through 2026; bearing interest at 3.125%	New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014R-2 ("New York Bonds 2014R-2") due December 2044 - fixed rate interest period through 2026; bearing interest at 3.125%	15,000		15,000		New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014R-2 ("New York Bonds 2014R-2") due December 2044 - fixed rate interest period through 2026; bearing interest at 3.125%	15,000		15,000
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-3 ("FAME Bonds 2005R-3") due January 2025 - fixed rate interest period through 2025; bearing interest at 5.25%	Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-3 ("FAME Bonds 2005R-3") due January 2025 - fixed rate interest period through 2025; bearing interest at 5.25%	25,000		25,000		Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-3 ("FAME Bonds 2005R-3") due January 2025 - fixed rate interest period through 2025; bearing interest at 5.25%	25,000		25,000
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015R-1 ("FAME Bonds 2015R-1") due August 2035 - fixed rate interest period through 2025; bearing interest at 5.125%	Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015R-1 ("FAME Bonds 2015R-1") due August 2035 - fixed rate interest period through 2025; bearing interest at 5.125%	15,000		15,000		Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015R-1 ("FAME Bonds 2015R-1") due August 2035 - fixed rate interest period through 2025; bearing interest at 5.125%	15,000		15,000
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015R-2 ("FAME Bonds 2015R-2") due August 2035 - fixed rate interest period through 2025; bearing interest at 4.375%	Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015R-2 ("FAME Bonds 2015R-2") due August 2035 - fixed rate interest period through 2025; bearing interest at 4.375%	15,000		15,000		Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015R-2 ("FAME Bonds 2015R-2") due August 2035 - fixed rate interest period through 2025; bearing interest at 4.375%	15,000		15,000
Vermont Economic Development Authority Solid Waste Disposal Long-Term Revenue Bonds Series 2013 ("Vermont Bonds") due April 2036 - fixed rate interest period through 2028; bearing interest at 4.625%	Vermont Economic Development Authority Solid Waste Disposal Long-Term Revenue Bonds Series 2013 ("Vermont Bonds") due April 2036 - fixed rate interest period through 2028; bearing interest at 4.625%	16,000		16,000		Vermont Economic Development Authority Solid Waste Disposal Long-Term Revenue Bonds Series 2013 ("Vermont Bonds") due April 2036 - fixed rate interest period through 2028; bearing interest at 4.625%	16,000		16,000
Business Finance Authority of the State of New Hampshire Solid Waste Disposal Revenue Bonds Series 2013 ("New Hampshire Bonds") due April 2029 - fixed rate interest period through September 2019; bore interest at 4.00%		11,000		11,000
Business Finance Authority of the State of New Hampshire Solid Waste Disposal Revenue Bonds Series 2013 ("New Hampshire Bonds") due April 2029 - fixed rate interest period through 2029; bearing interest at 2.95%						Business Finance Authority of the State of New Hampshire Solid Waste Disposal Revenue Bonds Series 2013 ("New Hampshire Bonds") due April 2029 - fixed rate interest period through 2029; bearing interest at 2.95%	11,000		11,000
Other:	Other:					Other:
Finance leases maturing through December 2107; bearing interest at a weighted average of 5.2%		16,510		11,248
Finance leases maturing through December 2107; bearing interest at a weighted average of 4.6%						Finance leases maturing through December 2107; bearing interest at a weighted average of 4.6%	28,263		18,364
Notes payable maturing through June 2027; bearing interest at a weighted average of 3.5%	Notes payable maturing through June 2027; bearing interest at a weighted average of 3.5%	4,862		2,401		Notes payable maturing through June 2027; bearing interest at a weighted average of 3.5%	5,104		5,464
Principal amount of long-term debt and finance leases		536,772		555,249
Principal amount of debt						Principal amount of debt	543,067		522,728
Less—unamortized debt issuance costs (1)	Less—unamortized debt issuance costs (1)	9,226		10,950		Less—unamortized debt issuance costs (1)	8,362		9,406
Long-term debt and finance leases less unamortized debt issuance costs		527,546		544,299
Less—current maturities of long-term debt and finance leases		3,571		2,298
Debt less unamortized debt issuance costs						Debt less unamortized debt issuance costs	534,705		513,322
Less—current maturities of debt						Less—current maturities of debt	6,948		4,301
		$	523,975	$	542,001		$	527,757	$	509,021

1715

(1)A summary of unamortized debt issuance costs by debt instrument follows:


		September 30, 2019		December 31, 2018			June 30, 2020		December 31, 2019
Revolving Credit Facility and Term Loan Facility (collectively, the "Credit Facility")	Revolving Credit Facility and Term Loan Facility (collectively, the "Credit Facility")	$	5,889	$	7,118	Revolving Credit Facility and Term Loan Facility (collectively, the "Credit Facility")	$	4,659	$	5,478
New York Bonds 2014	New York Bonds 2014	707		847		New York Bonds 2014	1,034		1,057
New York Bonds 2014R-2	New York Bonds 2014R-2	405		450		New York Bonds 2014R-2	359		390
FAME Bonds 2005R-3	FAME Bonds 2005R-3	453		517		FAME Bonds 2005R-3	389		432
FAME Bonds 2015R-1	FAME Bonds 2015R-1	569		622		FAME Bonds 2015R-1	517		552
FAME Bonds 2015R-2	FAME Bonds 2015R-2	436		493		FAME Bonds 2015R-2	380		417
Vermont Bonds	Vermont Bonds	554		595		Vermont Bonds	514		541
New Hampshire Bonds	New Hampshire Bonds	213		308		New Hampshire Bonds	510		539
		$	9,226	$	10,950		$	8,362	$	9,406

~~Financing Activities~~

In October 2019, we completed the remarketing of $11,000 aggregate principal amount of New Hampshire Bonds. The New Hampshire Bonds, which are unsecured and guaranteed jointly and severally, fully and unconditionally by all of our significant wholly-owned subsidiaries, accrue interest at 2.95% per annum from October 1, 2019 through final maturity on April 1, 2029.

Credit Facility

As of ~~September~~June 30, ~~2019,~~2020, we are party to a credit agreement ("Credit Agreement"), which provides for a $350,000 Term Loan Facility and a $200,000 Revolving Credit Facility. We have the right to request, at our discretion, an increase in the amount of loans under the Credit Facility by an aggregate amount of $125,000, subject to the terms and conditions set forth in the Credit Agreement.

The Credit Facility has a 5-year term that matures in May 2023 and bears interest at a rate of LIBOR plus 1.75% per annum, which will be reduced to a rate of LIBOR plus as low as 1.25% upon us reaching a consolidated net leverage ratio of less than 2.25x. The Credit Facility is guaranteed jointly and severally, fully and unconditionally by all of our significant wholly-owned subsidiaries and secured by substantially all of our assets. As of ~~September~~June 30, ~~2019,~~2020, further advances were available under the Credit Facility in the amount of ~~$131,979.~~$135,875. The available amount is net of outstanding irrevocable letters of credit totaling ~~$24,621,~~$26,425, at which date no amount had been drawn.

The Credit Agreement requires us to maintain a minimum interest coverage ratio and a maximum consolidated net leverage ratio, to be measured at the end of each fiscal quarter. As of ~~September~~June 30, ~~2019,~~2020, we were in compliance with the covenants contained in the Credit Agreement. In addition to these financial covenants, the Credit Agreement also contains a number of important customary affirmative and negative covenants which restrict, among other things, our ability to sell assets, incur additional debt, create liens, make investments, and pay dividends. We do not believe that these restrictions impact our ability to meet future liquidity needs. An event of default under any of our debt agreements could permit some of our lenders, including the lenders under the Credit Facility, to declare all amounts borrowed from them to be immediately due and payable, together with accrued and unpaid interest, or, in the case of the Credit Facility, terminate the commitment to make further credit extensions thereunder, which could, in turn, trigger cross-defaults under other debt obligations. If we were unable to repay debt to our lenders, or were otherwise in default under any provision governing our outstanding debt obligations, our secured lenders could proceed against us and against the collateral securing that debt.

~~Loss on Debt Extinguishment~~

We recorded a loss on debt extinguishment of $7,352 in the nine months ended September 30, 2018 associated with the write-off of debt issuance costs and unamortized discount in connection with the refinancing of our term loan B facility with our existing Credit Facility, and the write-off of debt issuance costs in connection with the remarketing of our Vermont Bonds.

Cash Flow Hedges

~~As of September 30, 2019, we had in place 9~~Our strategy to reduce exposure to interest rate risk involves entering into interest rate derivative agreements to hedge against adverse movements in interest ~~rate risk associated with~~rates related to the variable rate portion of our long-term debt. ~~The~~In the six months ended June 30, 2020, we entered into 3 forward starting interest rate derivative agreements with a total notional amount of $60,000 that will serve to replace existing interest rate derivative agreements upon their expiration between June 2022 and May 2023. In the six months ended June 30, 2020, we also amended 3 interest rate derivative agreements to settle each of the 1.0% floors and replace each with a 0.0% floor in line with our Term Loan Facility, which resulted in us dedesignating the original hedging relationships. We subsequently designated new hedging relationships between ~~these~~the 3 interest rate derivative agreements and the variable rate interest payments related to the Term Loan Facility ~~were originally considered highly effective~~ based on a quantitative ~~assessments~~assessment that was performed using regression analysis, which indicated that the hedging relationships were highly effective. Because the interest rate payments associated with the variable rate portion of our long-term debt will still occur, the net loss of $(765) associated with the dedesignated interest rate derivative agreements and ~~subsequently, based on a qualitative assessment performed~~the $430 cash settlement received in exchange for settling the 1.0% floors in accumulated other comprehensive loss were not reclassified into earnings. Instead, this loss and settlement amount will continue to be reclassified from accumulated other comprehensive loss into interest expense as the interest payments affect earnings.

As of ~~September~~both June 30, ~~2019. Therefore, we have designated these derivative instruments as effective cash flow hedges.~~

~~The total notional amount of all of~~2020 and December 31, 2019, our interest rate derivative agreements ~~is $190,000 and according~~have a total notional amount of $190,000. According to the terms of the agreements, we receive interest based on the 1-month LIBOR index and pay interest at a weighted average rate of approximately 2.54%. The agreements mature between February 2021 and May 2023.

Additionally, we have forward starting interest rate derivative agreements with a total notional amount of $125,000 that mature between February 2026 and May 2028. We receive interest based on the 1-month LIBOR index, restricted by a 0.0% floor, and will pay interest at a weighted average rate of approximately 1.63%.

We have designated these derivative instruments as highly effective cash flow hedges, and therefore the change in fair value is recorded in our stockholders’ equity as a component of accumulated other comprehensive loss and included in interest expense at the same time as interest expense is affected by the hedged transactions. Differences paid or received over the life of the agreements are recorded as additions to or reductions of interest expense on the underlying debt and included in cash flows from operating activities.

A summary of the effect of cash flow hedges related to derivative instruments on the consolidated balance sheet follows:


			Fair Value								Fair Value
		Balance Sheet Location	September 30, 2019		December 31, 2018			Balance Sheet Location	June 30, 2020		December 31, 2019
Interest rate swaps		Other current assets	$	—	$	338
Interest rate swaps		Other non-current assets	—		482

			$	—	$	820

Interest rate swaps	Interest rate swaps	Other accrued liabilities	$	1,686	$	387	Interest rate swaps	Other accrued liabilities	$	4,636	$	1,824
Interest rate swaps	Interest rate swaps	Other long-term liabilities	4,398		1,555		Interest rate swaps	Other long-term liabilities	9,962		3,603
			$	6,084	$	1,942			$	14,598	$	5,427

Interest rate swaps	Interest rate swaps	Accumulated other comprehensive loss	$	(6,459)	$	(1,196)	Interest rate swaps	Accumulated other comprehensive loss	$	(14,799)	$	(5,929)
Interest rate swaps - tax provision	Interest rate swaps - tax provision	Accumulated other comprehensive loss	(112)		(112)		Interest rate swaps - tax provision	Accumulated other comprehensive loss	—		(112)
			$	(6,571)	$	(1,308)			$	(14,799)	$	(6,041)

A summary of the amount of expense on cash flow hedging relationships related to interest rate swaps reclassified from accumulated other comprehensive ~~income (loss)~~loss into earnings follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018			2020		2019		2020		2019
Statement of Operations Location	Statement of Operations Location	(Expense) Income						(Expense) Income						Statement of Operations Location	(Expense) Income				(Expense) Income
Interest expense	Interest expense	$	(147)	$	(156)	$	(216)	$	(247)	Interest expense	$	(990)	$	60	$	(1,293)	$	115

9.10. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

In the ordinary course of our business and as a result of the extensive governmental regulation of the solid waste industry, we are subject to various judicial and administrative proceedings involving state and local agencies. In these proceedings, an agency may seek to impose fines or to revoke or deny renewal of an operating permit held by us. From time to time, we may also be subject to actions brought by special interest or other groups, adjacent landowners or residents in connection with the permitting and licensing of landfills and transfer stations, or allegations of environmental damage or violations of the permits and licenses pursuant to which we operate. In addition, we may be named defendants in various claims and suits pending for alleged damages to persons and property, alleged violations of certain laws and alleged liabilities arising out of matters occurring during the ordinary operation of a waste management business.

In accordance with FASB ASC 450 - Contingencies, we accrue for legal proceedings, inclusive of legal costs, when losses become probable and reasonably estimable. As of the end of each applicable reporting period, we review each of our legal proceedings to determine whether it is probable, reasonably possible or remote that a liability has been incurred and, if it is at least reasonably possible, whether a range of loss can be reasonably estimated under the provisions of FASB ASC 450-20. In instances where we determine that a loss is probable and we can reasonably estimate a range of loss we may incur with respect to such a matter, we record an accrual for the amount within the range that constitutes our best estimate of the possible loss. If we are able to reasonably estimate a range, but no amount within the range appears to be a better estimate than any other, we record an accrual in the amount that is the low end of such range. When a loss is reasonably possible, but not probable, we will not record an accrual, but we will disclose our estimate of the possible range of loss where such estimate can be made in accordance with FASB ASC 450-20.

Environmental Remediation Liability (including related litigation)

We are subject to liability for environmental damage, including personal injury and property damage, that our solid waste, recycling and power generation facilities may cause to neighboring property owners, particularly as a result of the contamination of drinking water sources or soil, possibly including damage resulting from conditions that existed before we acquired the facilities. We may also be subject to liability for similar claims arising from off-site environmental contamination caused by pollutants or hazardous substances if we or our predecessors arrange or arranged to transport, treat or dispose of those materials. The following matters represent our material outstanding claims.

Southbridge Recycling & Disposal Park, Inc.

In October 2015, our Southbridge Recycling and Disposal Park, Inc. (“SRD”) subsidiary reported to the Massachusetts Department of Environmental Protection (“MADEP”) results of analysis of samples collected pursuant to our existing permit from private drinking water wells located near the Town of Southbridge, Massachusetts (“Town”) Landfill (“Southbridge Landfill”), which was operated by SRD and later closed in November 2018 when Southbridge Landfill reached its final capacity. Those results indicated the presence of contaminants above the levels triggering notice and response obligations under MADEP regulations. In response to those results, we ~~are carrying~~have carried out an Immediate Response Action pursuant to Massachusetts General Law Chapter 21E (the "Charlton 21E Obligations") pursuant to state law. Further, we ~~have~~ implemented a plan to analyze and better understand the groundwater near the Southbridge Landfill and we ~~are investigating~~investigated with the objective of identifying the source or sources of the elevated levels of contamination measured in the well samples. If it is determined that some or all of the contamination originated at the Southbridge Landfill, we will work with the Town (the Southbridge Landfill owner and the former operator of an unlined portion of the Southbridge Landfill, which was used prior to our operation of a double-lined portion of the Southbridge Landfill commencing in 2004) to evaluate and allocate the liabilities related to the Charlton 21E Obligations. In July 2016, we sent correspondence to the Town pursuant to Chapter 21E of Massachusetts General Laws demanding that the Town reimburse us for the environmental response costs we had spent and that the Town be responsible for all such costs in the future, as well as any other costs or liabilities resulting from the release of contaminants from the unlined portion of the Southbridge Landfill. The Town responded in September 2016, denying that the Southbridge Landfill is the source of such contamination, and claiming that if it is, that we may owe an indemnity to the Town pursuant to the Operating Agreement between us and the Town dated May 29, 2007, as amended. We entered into a Tolling Agreement with the Town to delay any further administrative or legal actions until our work with MADEP more specifically defines the parties’ responsibilities for the Charlton 21E Obligations, if any. Please see below for further discussion of our relationship with the Town regarding the Charlton 21E Obligations.

In February 2016, we and the Town received a Notice of Intent to Sue under the Resource Conservation and Recovery Act ("RCRA") from a law firm purporting to represent residents proximate to the Southbridge Landfill (“Residents”), indicating its intent to file suit against us on behalf of the Residents alleging the groundwater contamination originated from the Southbridge Landfill. In February 2017, we received an additional Notice of Intent to Sue from the National Environmental Law Center under the Federal Clean Water Act ("CWA") and RCRA (collectively the “Acts”) on behalf of Environment America, Inc., d/b/a Environment Massachusetts, and Toxics Action Center, Inc., which have referred to themselves as the Citizen Groups. The Citizen Groups alleged that we had violated the Acts, and that they intended to seek appropriate relief in federal court for those alleged violations. On or about June 9, 2017, a lawsuit was filed against us, SRD and the Town in the United States District Court for the District of Massachusetts (the “Massachusetts Court”) by the Citizen Groups and the Residents alleging violations of the Acts (the “Litigation”), and demanding a variety of remedies under the Acts, including fines, remediation, mitigation and costs of litigation, and remedies for violations of Massachusetts civil law related to personal and property damages, including remediation, diminution of property values, compensation for lost use and enjoyment of properties, enjoinment of further operation of the Southbridge Landfill, and costs of litigation, plus interest on any damage award, on behalf of the Residents. We believe the Litigation to be factually inaccurate, and without legal merit, and we and SRD ~~intend to~~are vigorously ~~defend~~defending the Litigation. Nevertheless, we believe it is reasonably possible that a loss will occur as a result of the Litigation although an estimate of loss cannot be reasonably provided at this time. We also continue to believe the Town should be responsible for costs or liabilities associated with the Litigation relative to alleged contamination originating from the unlined portion of the Southbridge Landfill, although there can be no assurance that we will not be required to incur some or all of such costs and liabilities.

In December 2017, we filed a Motion to Dismiss the Litigation, and on October 1, 2018, the Massachusetts Court granted our Motion to Dismiss, and accordingly, dismissed the Citizen Groups claims under the Acts. The Massachusetts Court has retained jurisdiction of the Residents claims. The Citizen Groups intend to appeal the Massachusetts Court’s decision to grant our Motion to Dismiss. The Residents moved for a stay of their case until the Citizen Groups appealed. We opposed the stay and in March 2019, the Massachusetts Court denied the Residents motion for a stay. We are in active discovery in the Residents case.

We entered into an Administrative Consent Order on April 26, 2017 (the “ACO”), with MADEP, the Town, and the Town of Charlton, committing us to equally share the costs with MADEP, of up to $10,000 ($5,000 each) for the Town to install a municipal waterline in the Town of Charlton ("Waterline"). Upon satisfactory completion of that Waterline, and other matters covered by the ACO, we and the Town will be released by MADEP from any future responsibilities for the Charlton 21E Obligations. We also entered into an agreement with the Town on April 28, 2017 entitled the “21E Settlement and Water System Construction Funding Agreement” (the “Waterline Agreement”), wherein we and the Town released each other from claims arising from the Charlton 21E Obligations. Pursuant to the Waterline Agreement, the Town ~~will issue~~has issued a twenty (20) year bond for our portion of the Waterline costs ~~(up to $5,000).~~in the amount of $4,089. We have agreed to reimburse the Town for periodic payments under such bond. Construction of the ~~waterline~~Waterline is ~~near completion~~complete and homeowners are relying on municipal water supply. Remaining aspects of the project are minor and are expected to be completed in 2020. Bond reimbursement to the ~~fiscal year ending December 31, 2019.~~Town commenced in the quarter ended June 30, 2020.

We have recorded an environmental remediation liability related to our obligation associated with the ~~future~~ installation of the Waterline in other accrued liabilities and other long-term liabilities. We inflate the estimated costs in current dollars to the expected time of payment and discount the total cost to present value using a risk-free interest rate of 2.6%. Our expenditures could be significantly higher if costs exceed estimates. ~~The~~

A summary of the changes to the environmental remediation liability associated with the Southbridge Landfill ~~are as~~ follows:


		Nine Months Ended September 30,							Six Months Ended June 30,
		2019		2018			2020		2019
Beginning balance	Beginning balance	$	5,173	$	5,936	Beginning balance	$	4,596	$	5,173
Accretion expense	Accretion expense	94		116		Accretion expense	62		65

Obligations incurred						Obligations incurred	28		—
Revisions in estimates (1)						Revisions in estimates (1)	(188)		—
Obligations settled ~~(1)~~(2)	Obligations settled ~~(1)~~(2)	(556)		(612)		Obligations settled ~~(1)~~(2)	(293)		(392)
Ending balance	Ending balance	$	4,711	$	5,440	Ending balance	$	4,205	$	4,846

(1)The revision of estimate is associated with the completion of the environmental remediation at the site. See Note 13, Other Items and Charges to our consolidated financial statements for further discussion.

(2)Includes amounts that are being processed through accounts payable as a part of our disbursements cycle.

We completed the first phase of landfill capping and closure in the fiscal year ended December 31, 2019 at the Southbridge Landfill and are actively seeking approval from MADEP to close and cap the remainder of the landfill.

The costs and liabilities we may be required to incur in connection with the foregoing Southbridge Landfill matters could be material to our results of operations, our cash flows and our financial condition.

2119

Potsdam Environmental Remediation Liability

On December 20, 2000, the State of New York Department of Environmental Conservation (“DEC”) issued an Order on Consent (“Order”) which named Waste-Stream, Inc. (“WSI”), our subsidiary, General Motors Corporation (“GM”) and Niagara Mohawk Power Corporation (“NiMo”) as Respondents. The Order required that the Respondents undertake certain work on a 25-acre scrap yard and solid waste transfer station owned by WSI in Potsdam, New York, including the preparation of a Remedial Investigation and Feasibility Study (“Study”). A draft of the Study was submitted to the DEC in January 2009 (followed by a final report in May 2009). The Study estimated that the undiscounted costs associated with implementing the preferred remedies would be approximately $10,219. On February 28, 2011, the DEC issued a Proposed Remedial Action Plan for the site and accepted public comments on the proposed remedy through March 29, 2011. We submitted comments to the DEC on this matter. In April 2011, the DEC issued the final Record of Decision (“ROD”) for the site. The ROD was subsequently rescinded by the DEC for failure to respond to all submitted comments. The preliminary ROD, however, estimated that the present cost associated with implementing the preferred remedies would be approximately $12,130. The DEC issued the final ROD in June 2011 with proposed remedies consistent with its earlier ROD. An Order on Consent and Administrative Settlement naming WSI and NiMo as Respondents was executed by the Respondents and DEC with an effective date of October 25, 2013. On January 29, 2016, a Cost-Sharing Agreement was executed between WSI, NiMo, Alcoa Inc. (“Alcoa”) and Reynolds Metal Company (“Reynolds”) whereby Alcoa and Reynolds elected to voluntarily participate in the onsite remediation activities at a combined 15% participant share. The ~~remediation work has commenced and it is expected that the~~ majority of the remediation work ~~will be~~has been completed ~~in the fiscal year ending December 31, 2019.~~as of June 30, 2020. WSI is jointly and severally liable with NiMo, Alcoa and Reynolds for the total cost to remediate.

We have recorded an environmental remediation liability associated with the Potsdam site based on incurred costs to date and estimated costs to complete the remediation in other accrued liabilities and other long-term liabilities. ~~Our expenditures could be significantly higher if costs exceed estimates.~~ We inflate the estimated costs in current dollars to the expected time of payment and discount the total cost to present value using a risk-free interest rate of 1.5%.

~~A summary of the changes to the~~ The environmental remediation liability associated with the Potsdam ~~environmental remediation liability follows:~~site was $1,151 as of both June 30, 2020 and December 31, 2019.

Nine Months Ended
September 30,
2019 2018
Beginning balance $ 5,614 $ 5,758
Obligations settled (1)
(1,764) (98)
Ending balance $ 3,850 $ 5,660

~~(1)Includes amounts that are being processed through accounts payable as a part of our disbursements cycle.~~

Legal Proceedings

North Country Environmental Services

On or about March 8, 2018, the Citizen Groups described above delivered correspondence to our subsidiary, North Country Environmental Services, Inc. ("NCES"), and us, providing notice of the Citizen Groups' intent to sue NCES and us for violations of the CWA in conjunction with NCES's operation of its landfill in Bethlehem, New ~~Hampshire.~~Hampshire ("NCES Landfill"). On May 14, 2018, the Citizen Groups filed a lawsuit against NCES and us in the United States District Court for the District of New Hampshire (the “New Hampshire Court”) alleging violations of the CWA, arguing that ground water discharging into the Ammonoosuc River is a "point source" under the CWA (the "New Hampshire Litigation"). The New Hampshire Litigation seeks remediation and fines under the CWA. On June 15, 2018, we and NCES filed a Motion to Dismiss the New Hampshire Litigation. On July 13, 2018, the Citizen Groups filed objections to our Motion to Dismiss. On July 27, 2018, we filed a reply in support of our Motion to Dismiss. On September 25, 2018, the New Hampshire Court denied our Motion to Dismiss. In March of 2019, we filed a motion in the New Hampshire Litigation asking for a stay of this litigation until certain appeals from discordant federal ~~circuits~~circuit courts were heard by the Supreme Court of the United States (“SCOTUS”)~~. SCOTUS has granted certiorari determining that~~, in the ~~circumstances described are sufficient for SCOTUS to hear such cases.~~case identified as “County of Maui v. Hawaii Wildlife Fund (“MAUI”)". Our motion for a stay was granted in the New Hampshire Litigation, and SCOTUS heard the case in 2019 and issued a ruling on April 23, 2020. SCOTUS remanded the case to the U.S. Court of Appeals for the Ninth Circuit in San Francisco (the “Circuit Court”) ruling that the Circuit Court’s standard as to whether ground water impacts navigable waters is ~~expected to hear~~too broad. We do not believe that the MAUI decision resolves the issues presented in the New Hampshire Litigation, and ~~rule on such cases this calendar year. In any event,~~until the Circuit Court rules in the remanded MAUI case, we intend to continue to vigorously defend against the New Hampshire Litigation, which we believe is without merit.

The Citizens Groups filed a motion with the New Hampshire Court on July 15, 2020 to amend their complaint based on MAUI. We intend to oppose this motion to amend, and our filing is due August 7, 2020.

Ontario County, New York Class Action Litigation

On or about September 17, 2019, Richard Vandemortel and Deb Vandemortel filed a class action complaint against us on behalf of similarly situated citizens in Ontario County, New York. The lawsuit has been filed in Ontario County (the “New York Litigation”). It alleges that over one thousand (1,000) citizens constitute the putative class in the New York Litigation, and it seeks damages for diminution of property values and infringement of the putative class’ rights to live without interference to their daily lives due to odors emanating from the ~~Ontario County Landfill,~~Subtitle D landfill located in Seneca, New York , which is operated by us pursuant to a long-term Operation, Maintenance and Lease Agreement with Ontario County. The New York Litigation was served on us on October 14, 2019. We ~~are reviewing the New York Litigation and~~ intend to present a vigorous defense.

~~10.~~Hakes Landfill Litigation

On or about December 19, 2019, the New York State Department of Environmental Conservation (“Department”) issued certain permits to us to expand the landfill owned and operated by Hakes C&D Disposal Inc. in the Town of Campbell, Steuben County, New York (“Hakes Landfill”). The permits authorize approximately five years of expansion capacity at the Hakes Landfill. The authorizations issued by the Department followed approvals issued by the Town of Campbell Planning Board (“Planning Board”) in January 2019, and the Town Board of the Town of Campbell (“Town Board”) in March 2019, granting site plan review and a zoning change for the project.

Litigation was commenced by the Sierra Club, several other non-governmental organizations, and several individuals (“the Petitioners”), challenging the approvals issued by the Department, the Planning Board and the Town Board in New York State Supreme Court, Steuben County (the “Litigation”). The challenge was based upon allegations that the agencies issuing these approvals did not follow the requirements of Article 8 of the Environmental Conservation Law of the State of New York, the State Environmental Quality Review Act (“SEQRA”), by failing to address certain radioactivity issues alleged by Petitioners to be associated with certain drilling wastes authorized for disposal at the Hakes Landfill. The Petitioners also made a motion for a preliminary injunction to restrain construction and operation of the expansion cell. We filed a motion to dismiss the Litigation filed by the Petitioners, and on July 31, 2020, the motion to dismiss was granted, which also rendered the preliminary injunction motion moot, and confirmed that the Town of Campbell and the Department reviewed scientific evidence, came to a reasoned decision, and all procedural requirements were met in the issuance of the approvals.

Loss Contingency

On January 9, 2019, NCES filed an application for a 1.2 million (cy) expansion of the capacity of the NCES Landfill with the New Hampshire Department of Environmental Services (“NHDES”) (“Stage VI Expansion”). The Stage VI Expansion would provide NCES with over five (5) years of additional capacity beyond the capacity of Stage V.

In January 2020, NHDES informed NCES and us that NHDES had concerns regarding the short-term public benefit need for the Stage VI Expansion, and also in respect of certain technical concerns regarding the Stage VI Expansion. Because we believe that the NHDES reviewed our permit application for the Stage VI Expansion with respect to public benefit determination using a different regulatory framework than used in any of our previous permitting activities at NCES, we informed the NHDES on February 11, 2020, that while we vigorously disagreed with NHDES’ review of our application and the context for the NHDES’ concerns, we would withdraw our application with the expectation of refiling the application with the NHDES as soon as possible. We refiled our application on March 17, 2020. Our application has been deemed administratively complete, and a public hearing is scheduled for August 25, 2020. While the refiling of the application for the Stage VI Expansion could be rejected by the NHDES, and while delay of the Stage VI Expansion will occur, we remain confident that we will receive a permit for the Stage VI Expansion. We believe that a loss of $1,424 is reasonably possible, but not probable.

11. STOCKHOLDERS' EQUITY

~~Recent Developments~~

In the nine months ended September 30, 2019, we completed a public issuance of 3,565 shares of our Class A common stock at a public offering price of $29.50 per share. The offering resulted in net proceeds to us of $100,446, after deducting underwriting discounts and commissions and offering expenses. The net proceeds from the offering were and are to be used for general corporate purposes, including potential acquisitions or development of new operations or assets with the goal of complementing or expanding our business, working capital and capital expenditures.

In the three and nine months ended September 30, 2019, we completed the unregistered sale of 59 shares of our Class A common stock at a price of $44.15 per share. The sale resulted in net proceeds to us of $2,618. The shares were previously held in escrow according to the terms of our acquisition of WSI and released to us for liquidation to offset costs associated with the environmental remediation of the WSI's Potsdam, New York site. We recorded a $2,618 reduction of goodwill in line with business combination standards in place at the time the shares held in escrow were issued. See Note 9, ~~Commitments and Contingencies~~ ~~for additional disclosure.~~

Stock Based Compensation

Shares Available For Issuance

In the fiscal year ended December 31, 2016, we adopted the 2016 Incentive Plan (“2016 Plan”). Under the 2016 Plan, we may grant awards up to an aggregate amount of shares equal to the sum of: (i) 2,250 shares of Class A common stock (subject to adjustment in the event of stock splits and other similar events), plus (ii) such additional number of shares of Class A common stock (up to 2,723 shares) as is equal to the sum of the number of shares of Class A common stock that remained available for grant under the 2006 Stock Incentive Plan (“2006 Plan”) immediately prior to the expiration of the 2006 Plan and the number of shares of Class A common stock subject to awards granted under the 2006 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by us. As of ~~September~~June 30, ~~2019,~~2020, there were ~~1,399~~1,114 Class A common stock equivalents available for future grant under the 2016 Plan.

Stock Options

Stock options are granted at a price equal to the prevailing fair value of our Class A common stock at the date of grant. Generally, stock options granted have a term not to exceed ten years and vest over a one year to four year period from the date of grant.

The fair value of each stock option granted is estimated using a Black-Scholes option-pricing model, which requires extensive use of accounting judgment and financial estimation, including estimates of the expected term stock option holders will retain their vested stock options before exercising them and the estimated volatility of our Class A common stock price over the expected term.

2321

A summary of stock option activity follows:


		Stock Options (1)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value			Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding, December 31, 2018		669	$	6.37
Outstanding, December 31, 2019								Outstanding, December 31, 2019	98	$	9.20
Granted	Granted	—	$	—				Granted	—	$	—
Exercised	Exercised	(571)	$	5.88				Exercised	(8)	$	12.48
Forfeited	Forfeited	—	$	—				Forfeited	—	$	—
Outstanding, September 30, 2019		98	$	9.20	6.1	$	3,311
Exercisable, September 30, 2019		98	$	9.20	6.1	$	3,311
Outstanding, June 30, 2020								Outstanding, June 30, 2020	90	$	8.91	5.2	$	3,894
Exercisable, June 30, 2020								Exercisable, June 30, 2020	90	$	8.91	5.2	$	3,894

~~Stock-based~~We did 0t record any stock-based compensation expense for stock options ~~was $0 and $0~~ during each of the three and ~~nine~~six months ended ~~September~~June 30, ~~2019, respectively, as compared to $127~~2020 and ~~$377 during the three and nine months ended September~~June 30, ~~2018,~~2019, respectively.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the aggregate intrinsic value of stock options exercised was ~~$7,741~~$296 and ~~$19,475,~~$296, respectively.

Other Stock Awards

Restricted stock awards, restricted stock units and performance stock units, with the exception of market-based performance stock units, are granted at a price equal to the fair value of our Class A common stock at the date of grant. The fair value of each market-based performance stock unit is estimated using a Monte Carlo pricing model, which requires extensive use of accounting judgment and financial estimation, including the estimated share price appreciation plus the value of dividends of our Class A common stock as compared to the Russell 2000 Index over the requisite service period.

Generally, restricted stock awards granted to non-employee directors vest incrementally over a three year period beginning on the first anniversary of the date of grant. Restricted stock units granted to non-employee directors ~~typically~~ vest in full on the first anniversary of the grant date. Restricted stock units granted to employees vest incrementally over an identified service period beginning on the grant date based on continued employment. Performance stock units granted to employees, including market-based performance stock units, vest at a future date following the grant date and are based on the attainment of performance targets and market achievements, as applicable.

A summary of restricted stock, restricted stock unit and performance stock unit activity follows:


		Restricted Stock, Restricted Stock Units, and Performance Stock Units (1)	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value			Restricted Stock, Restricted Stock Units, and Performance Stock Units (1)	Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding, December 31, 2018		686	$	15.56
Outstanding, December 31, 2019								Outstanding, December 31, 2019	393	$	28.23
Granted	Granted	163	$	37.14				Granted	149	$	47.39
Class A Common Stock Vested	Class A Common Stock Vested	(217)	$	12.19				Class A Common Stock Vested	(125)	$	21.95
Forfeited	Forfeited	(7)	$	20.48				Forfeited	(6)	$	35.18
Outstanding, September 30, 2019		625	$	22.36	1.1	$	12,866
Unvested, September 30, 2019		950	$	21.90	1.0	$	19,998
Outstanding, June 30, 2020								Outstanding, June 30, 2020	411	$	37.01	2.0	$	21,414
Unvested, June 30, 2020								Unvested, June 30, 2020	700	$	37.62	1.8	$	36,491

(1)Market-based performance stock unit grants are included at the 100% attainment level. Attainment of the maximum performance targets and market achievements would result in the issuance of an additional ~~325~~289 shares of Class A common stock currently included in unvested.

Stock-based compensation expense related to restricted stock, restricted stock units and performance stock units was ~~$1,858~~$1,763 and ~~$5,084~~$3,277 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, as compared to ~~$2,007~~$1,835 and ~~$5,883~~$3,225 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the total fair value of other stock awards vested was ~~$43~~$872 and ~~$7,764,~~$5,851, respectively.

As of ~~September~~June 30, ~~2019,~~2020, total unrecognized stock-based compensation expense related to outstanding restricted stock ~~and restricted stock units~~ was ~~$3,852,~~$41, which will be recognized over a weighted average period of ~~1.4~~2.5 years. As of ~~September~~June 30, ~~2019, maximum~~2020, total unrecognized stock-based compensation expense related to outstanding restricted stock units was $4,892, which will be recognized over a weighted average period of 2.0 years. As of June 30, 2020, total unrecognized stock-based compensation expense related to outstanding performance stock units ~~assuming the attainment of maximum performance targets,~~ was ~~$6,009~~$6,282 to be recognized over a weighted average period of ~~0.9~~1.9 years.

We also recorded ~~$40~~$56 and ~~$134~~$103 of stock-based compensation expense related to our Amended and Restated 1997 Employee Stock Purchase Plan during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively, as compared to ~~$34~~$54 and ~~$106~~$95 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, respectively.

Accumulated Other Comprehensive Loss

A summary of the changes in the balances of each component of accumulated other comprehensive loss, net of tax follows:

Interest Rate Swaps

Balance, December 31, ~~2018~~2019

~~(1,308)~~(6,041)

Other comprehensive loss before reclassifications

~~(5,479)~~(10,163)

Amounts reclassified from accumulated other comprehensive loss

~~216~~1,293

Income tax ~~provision~~benefit related to items of other comprehensive loss

—112

Net current-period other comprehensive loss

~~(5,263)~~(8,758)

Balance, ~~September~~June 30, ~~2019~~2020

~~(6,571)~~(14,799)

A summary of reclassifications out of accumulated other comprehensive loss, net of tax follows:


		Three Months Ended September 30,						Nine Months Ended September 30,									Three Months Ended June 30,					Six Months Ended June 30,
		2019		2018		2019		2018				2020		2019			2020		2019
Details About Accumulated Other Comprehensive Loss Components	Details About Accumulated Other Comprehensive Loss Components	Amounts Reclassified Out of Accumulated Other Comprehensive Loss														Affected Line Item in the Consolidated Statements of Operations		Details About Accumulated Other Comprehensive Loss Components	Amounts Reclassified Out of Accumulated Other Comprehensive Loss				Affected Line Item in the Consolidated Statements of Operations
Interest rate swaps	Interest rate swaps	$	147	$	156	$	216	$	247	Interest expense	Interest rate swaps	$	990	$	(60)		$	1,293	$	(115)	Interest expense
		147		156		216		247		Income before income taxes		990		(60)			1,293		(115)		Income before income taxes
		—		—		—		—		Provision (benefit) for income taxes		—		—			(112)		—		Provision (benefit) for income taxes
		$	147	$	156	$	216	$	247	Net income		$	990	$	(60)		$	1,405	$	(115)	Net income

~~11.~~12. EARNINGS PER SHARE

Basic earnings per share is computed by dividing ~~the~~ net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated based on the combined weighted average number of common shares and potentially dilutive shares, which include the assumed exercise of employee stock options, unvested restricted stock awards, unvested restricted stock units and unvested performance stock units, including market-based performance units based on the expected achievement of performance targets. In computing diluted earnings per share, we utilize the treasury stock method.

2523

A summary of the numerator and denominators used in the computation of earnings per share follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018			2020		2019		2020		2019
Numerator:	Numerator:									Numerator:
Net income	Net income	$	12,386	$	22,302	$	22,587	$	20,096	Net income	$	12,113	$	11,915	$	13,072	$	10,201
Denominators:	Denominators:									Denominators:
Number of shares outstanding, end of period:	Number of shares outstanding, end of period:									Number of shares outstanding, end of period:
Class A common stock	Class A common stock	46,792		41,932		46,792		41,932		Class A common stock	47,382		46,599		47,382		46,599
Class B common stock	Class B common stock	988		988		988		988		Class B common stock	988		988		988		988
Shares to be issued - acquisition	Shares to be issued - acquisition	36		—		36		—		Shares to be issued - acquisition	—		36		—		36
Unvested restricted stock	Unvested restricted stock	(9)		(32)		(9)		(32)		Unvested restricted stock	(1)		(9)		(1)		(9)
Effect of weighted average shares outstanding	Effect of weighted average shares outstanding	(117)		(109)		(778)		(283)		Effect of weighted average shares outstanding	(21)		(150)		(193)		(921)
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	47,690		42,779		47,029		42,605		Basic weighted average common shares outstanding	48,348		47,464		48,176		46,693
Impact of potentially dilutive securities:	Impact of potentially dilutive securities:									Impact of potentially dilutive securities:
Dilutive effect of stock options and other stock awards	Dilutive effect of stock options and other stock awards	671		1,396		631		1,333		Dilutive effect of stock options and other stock awards	215		757		235		731
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	48,361		44,175		47,660		43,938		Diluted weighted average common shares outstanding	48,563		48,221		48,411		47,424
Anti-dilutive potentially issuable shares	Anti-dilutive potentially issuable shares	2		—		2		2		Anti-dilutive potentially issuable shares	12		—		12		154

~~12.~~13. OTHER ITEMS AND CHARGES

~~Multiemployer Pension Plan~~

We make contributions to a multiemployer defined benefit pension plan, the New England Teamsters and Trucking Industry Pension Fund (the “Pension Plan”), under the terms of a collective bargaining agreement (“CBA”) that covers certain of our union represented employees. The Pension Plan provides retirement benefits to participants based on their service to contributing employers. We do not administer the Pension Plan. The risks of participating in a multiemployer pension plan are different from a single-employer pension plan in that: (i) assets contributed to the multiemployer pension plan by one employer may be used to provide benefits to employees or former employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be required to be assumed by the remaining participating employers; and (iii) if we choose to stop participating in our multiemployer Pension Plan, we may be required to pay the plan a withdrawal amount based on the underfunded status of the plan.

In October 2019, we reached an agreement to withdraw from the Pension Plan by entering into Withdrawal and Re-entry Agreements with the Pension Plan. In accordance with FASB ASC 450 - Contingencies, because of our withdrawal from the Pension Plan, we recorded an obligation of $3,194 as of September 30, 2019 and a charge of $3,591 as pension withdrawal expense, offset by a $397 retroactive contribution credit recorded as cost of operations, in the three and nine months ended September 30, 2019. While the withdrawal generates a fixed yearly contingent liability for us for a period of approximately seventeen (17) years, it caps our gross payments at $4,224 significantly reducing our cash exposure from the potential $18,511 withdrawal liability as determined based on a complete withdrawal. As per the Re-entry Agreements and upon withdrawal, we will re-enter the Pension Plan with certainty from a liability perspective. We have not, however, changed the terms of our CBA with Local 170, which remains in effect until June 30, 2020.

Expense from Acquisition Activities ~~and Other Items~~

In the three and ~~nine~~six months ended ~~September~~June 30, 2020, we recorded charges of $352 and $1,360, respectively, and in the three and six months ended June 30, 2019, we recorded charges of ~~$1,097~~$464 and ~~$2,237,~~$1,140, respectively, ~~associated~~comprised primarily ~~with acquisition activities. In the three~~of legal, consulting and ~~nine months ended September 30, 2018, we recorded charges of $0 and $211, respectively,~~other similar costs associated with the ~~write-off~~acquisition and integration of ~~deferred costs related to the expiration of our shelf registration statement and $581 and $719, respectively, associated with acquisition activities.~~

acquired businesses or select development projects.

Southbridge Landfill Closure Charge ~~(Settlement), Net~~

In ~~June~~ 2017, we initiated the plan to cease operations of the Southbridge Landfill and later closed it in November 2018 when Southbridge Landfill reached its final capacity. Accordingly, in the three and ~~nine~~six months ended ~~September~~June 30, ~~2019 and 2018,~~2020 we recorded charges ~~(settlement) associated with the closure~~ of ~~the Southbridge Landfill as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 2019 2018
Charlton settlement charge (1)
$ — $ — $ — $ 1,216
Legal and other costs (2)
625 502 2,097 1,044
Recovery on insurance settlement (3)
— (10,000) — (10,000)
Southbridge Landfill closure charge (settlement), net $ 625 $ (9,498) $ 2,097 $ (7,740)

~~(1)We established a reserve associated with settlement~~$559 and $1,172, respectively, comprised of ~~the Town~~$595 and $1,208, respectively, of ~~Charlton's claim against us. See Note 9,~~ ~~Commitments~~legal and ~~Contingencies~~ ~~for additional disclosure.~~

~~(2)We incurred legal costs as well as~~ other costs ~~associated with~~in the three and six months ended June 30, 2020 pertaining to various matters as part of the unplanned early closure of the Southbridge Landfill ~~closure. See Note 9,~~ ~~Commitments~~through completion of the closure process, a charge of $152 in the three and ~~Contingencies~~ ~~for additional disclosure.~~

~~(3)We recorded~~six months ended June 30, 2020 due to changes in estimated costs and timing of final capping, closure and post-closure activities at the Southbridge Landfill, and a ~~recovery on an environmental insurance settlement~~charge of $(188) in the three and six months ended June 30, 2020 associated with the completion of the environmental remediation at the site. In the three and six months ended June 30, 2019, we recorded charges of $917 and $1,472, respectively, associated with legal and other costs pertaining to various matters as part of the unplanned early closure of the Southbridge Landfill ~~closure. See Note 9,~~ ~~Commitments and Contingencies~~ ~~for additional disclosure.~~

~~Contract Settlement Charge~~

In the nine months ended September 30, 2018, we recorded a contract settlement charge of $2,100 associated with the termination and discounted buy-out of a commodities marketing and brokerage agreement.

~~Development Project Charge~~

~~In the nine months ended September 30, 2018, we recorded a development project charge of $311 associated with previously deferred costs that were written off as a result~~through completion of the ~~negative vote in a public referendum relating to the NCES landfill.~~closure process.

~~13.~~14. FAIR VALUE OF FINANCIAL INSTRUMENTS

We use a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. These tiers include: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; and Level 3, defined as unobservable inputs that are not corroborated by market data.

We use valuation techniques that maximize the use of market prices and observable inputs and minimize the use of unobservable inputs. In measuring the fair value of our financial assets and liabilities, we rely on market data or assumptions that we believe market participants would use in pricing an asset or a liability.

Assets and Liabilities Accounted for at Fair Value

Our financial instruments include cash and cash equivalents, accounts receivable, restricted investment securities held in trust on deposit with various banks as collateral for our obligations relative to our landfill final capping, closure and post-closure costs, interest rate swaps, trade payables and long-term debt. The carrying values of cash and cash equivalents, accounts receivable and trade payables approximate their respective fair values due to their short-term nature. The fair value of restricted investment securities held in trust, which are valued using quoted market prices, are included as restricted assets in the Level 1 tier below. The fair value of the interest rate swaps included in the Level 2 tier below is calculated using discounted cash flow valuation methodologies based upon the one month LIBOR yield curves that are observable at commonly quoted intervals for the full term of the swaps.

Recurring Fair Value Measurements

Summaries of our financial assets and liabilities that are measured at fair value on a recurring basis follow:

Fair Value Measurement at ~~September~~June 30, ~~2019~~2020 Using:

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Assets:

Restricted investment securities - landfill closure

~~1,410~~1,555

—

Liabilities:

Interest rate swaps

—

~~6,084~~14,598

—

Fair Value Measurement at December 31, 2018 Using:
Quoted Prices in
Active Markets for
Identical Assets
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable Inputs
(Level 3)
Assets:
Restricted investment securities - landfill closure $ 1,248 $ — $ —
Interest rate swaps — 820 —
$ 1,248 $ 820 $ —
Liabilities:
Interest rate swaps $ — $ 1,942 $ —


	Fair Value Measurement at December 31, 2019 Using:
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:


Restricted investment securities - landfill closure	$	1,586	$	—	$	—


Liabilities:
Interest rate swaps	$	—	$	5,427	$	—

Fair Value of Debt

As of ~~September~~June 30, ~~2019,~~2020, the fair value of our fixed rate debt, including our FAME Bonds 2005R-3, FAME Bonds 2015R-1, FAME Bonds 2015R-2, Vermont Bonds, New York Bonds 2014, New York Bonds 2014R-2 and New Hampshire Bonds was approximately ~~$131,557~~$125,942 and the carrying value was $122,000. The fair value of the FAME Bonds 2005R-3, the FAME Bonds 2015R-1, the FAME Bonds 2015R-2, the Vermont Bonds, the New York Bonds 2014, the New York Bonds 2014R-2 and the New Hampshire Bonds is considered to be Level 2 within the fair value hierarchy as the fair value is determined using market approach pricing provided by a third-party that utilizes pricing models and pricing systems, mathematical tools and judgment to determine the evaluated price for the security based on the market information of each of the bonds or securities with similar characteristics.

As of ~~September~~June 30, ~~2019,~~2020, the carrying value of our Term Loan Facility was $350,000 and the carrying value of our Revolving Credit Facility was ~~$43,400.~~$37,700. Their fair values are based on current borrowing rates for similar types of borrowing arrangements, or Level 2 inputs, and approximate their carrying values.

Although we have determined the estimated fair value amounts of FAME Bonds 2005R-3, FAME Bonds 2015R-1, FAME Bonds 2015R-2, Vermont Bonds, New York Bonds 2014, New York Bonds 2014R-2 and New Hampshire Bonds using available market information and commonly accepted valuation methodologies, a change in available market information, and/or the use of different assumptions and/or estimation methodologies could have a material effect on the estimated fair values. These amounts have not been revalued, and current estimates of fair value could differ significantly from the amounts presented.

~~14. INCOME TAXES~~

During the nine months ended September 30, 2019, we recognized a $(2,137) deferred tax benefit due to a reduction of the valuation allowance. In determining the need for a valuation allowance, we have assessed the available means of recovering deferred tax assets, including the existence of reversing temporary differences. The valuation allowance decreased due to the recognition of additional reversing temporary differences from the $2,137 deferred tax liability recorded through goodwill

related to an acquisition of a company in May 2019. The $2,137 deferred tax liability related to the acquisition was based on the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes.

~~During the three months ended September 30, 2019, we recognized a $(297) deferred tax benefit due to a reduction of the deferred tax liability related to indefinite lived assets.~~During the quarter, the financial statement value of indefinite lived goodwill was reduced as a result of a settlement of an acquisition contingency that pre-dated the effective date of ASC 805, which resulted in a reduction of the related deferred tax liability.

15. SEGMENT REPORTING

We report selected information about our reportable operating segments in a manner consistent with that used for internal management reporting. We classify our solid waste operations on a geographic basis through regional operating segments, our Western and Eastern regions. Revenues associated with our solid waste operations are derived mainly from solid waste collection and disposal, landfill, landfill gas-to-energy, transfer and recycling services in the northeastern United States. ~~Our revenues~~We classify our resource-renewal services by service in ~~the Recycling segment~~our Resource Solutions segment. Revenues associated with our resource renewal operations are derived from organics services, major account and industrial services, as well as recycling services generated from both municipalities and customers in the form of processing fees, tipping fees and commodity sales. ~~Organics services, ancillary operations, along with major account~~Legal, tax, information technology, human resources, certain finance and ~~industrial services~~accounting and other administrative functions are included in our ~~Other~~Corporate Entities segment.

Three Months Ended ~~September~~June 30, ~~2019~~2020


Segment	Segment	Outside revenues		Inter-company revenues		Depreciation and amortization		Operating income (loss)		Total assets		Segment	Outside revenues		Inter-company revenues		Depreciation and amortization		Operating income (loss)		Total assets
Eastern	Eastern	$	59,675	$	15,156	$	6,386	$	2,121	$	209,123	Eastern	$	53,336	$	13,837	$	6,339	$	4,366	$	211,441
Western	Western	92,871		26,645		12,620		15,148		596,765		Western	87,286		29,020		13,615		11,863		626,329
Recycling		10,726		2,486		1,028		145		57,216
Other		35,275		718		906		1,071		72,676
Resource solutions												Resource solutions	48,145		2,448		1,538		1,801		91,907
Corporate entities												Corporate entities	—		—		584		(586)		37,294
Eliminations	Eliminations	—		(45,005)		—		—		—		Eliminations	—		(45,305)		—		—		—
		$	198,547	$	—	$	20,940	$	18,485	$	935,780		$	188,767	$	—	$	22,076	$	17,444	$	966,971

Three Months Ended ~~September~~June 30, ~~2018~~2019

Segment Outside
revenues Inter-company
revenues Depreciation and
amortization Operating
income (loss) Total
assets
Eastern $ 56,006 $ 14,557 $ 7,267 $ 15,222 $ 180,896
Western 74,425 20,578 8,844 13,927 402,931
Recycling 10,877 1,773 1,131 (516) 48,995
Other 31,524 455 960 251 70,026
Eliminations — (37,363) — — —
$ 172,832 $ — $ 18,202 $ 28,884 $ 702,848


Segment	Outside revenues		Inter-company revenues		Depreciation and amortization		Operating income (loss)		Total assets
Eastern	$	57,076	$	14,678	$	6,368	$	4,227	$	211,891
Western	85,748		24,496		11,413		10,372		531,027
Resource solutions	44,635		2,740		1,303		1,604		88,181
Corporate entities	—		—		631		(659)		34,861
Eliminations	—		(41,914)		—		—		—
	$	187,459	$	—	$	19,715	$	15,544	$	865,960

2926

~~Nine~~

Six Months Ended ~~September~~June 30, ~~2019~~2020


Segment	Segment	Outside revenues		Inter-company revenues		Depreciation and amortization		Operating income (loss)		Total assets		Segment	Outside revenues		Inter-company revenues		Depreciation and amortization		Operating income (loss)		Total assets
Eastern	Eastern	$	163,748	$	40,606	$	18,014	$	5,722	$	209,123	Eastern	$	103,479	$	25,676	$	12,297	$	5,341	$	211,441
Western	Western	251,860		70,960		34,279		30,849		596,765		Western	172,491		54,566		26,847		17,505		626,329
Recycling		32,006		6,820		2,975		(1,010)		57,216
Other		102,056		1,911		2,876		2,910		72,676
Resource Solutions												Resource Solutions	95,706		5,341		3,148		2,804		91,907
Corporate Entities												Corporate Entities	—		—		1,190		(1,194)		37,294
Eliminations	Eliminations	—		(120,297)		—		—		—		Eliminations	—		(85,583)		—		—		—
Total	Total	$	549,670	$	—	$	58,144	$	38,471	$	935,780	Total	$	371,676	$	—	$	43,482	$	24,456	$	966,971

~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019


Segment	Segment	Outside revenues		Inter-company revenues		Depreciation and amortization		Operating income (loss)		Total assets		Segment	Outside revenues		Inter-company revenues		Depreciation and amortization		Operating income (loss)		Total assets
Eastern	Eastern	$	154,099	$	40,432	$	20,276	$	17,675	$	180,896	Eastern	$	104,073	$	25,449	$	11,629	$	3,600	$	211,891
Western	Western	210,208		59,898		25,226		33,104		402,931		Western	159,899		44,714		21,647		15,749		531,027
Recycling		30,634		4,697		3,228		(7,933)		48,995
Other		90,995		1,374		2,842		2,025		70,026
Resource Solutions												Resource Solutions	87,151		5,127		2,597		2,005		88,181
Corporate Entities												Corporate Entities	—		—		1,331		(1,368)		34,861
Eliminations	Eliminations	—		(106,401)		—		—		—		Eliminations	—		(75,290)		—		—		—
Total	Total	$	485,936	$	—	$	51,572	$	44,871	$	702,848	Total	$	351,123	$	—	$	37,204	$	19,986	$	865,960

A summary of our revenues attributable to services provided follows:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018			2020		2019		2020		2019
Collection	Collection	$	98,966	$	79,611	$	274,111	$	220,650	Collection	$	94,008	$	92,066	$	188,584	$	175,145
Disposal	Disposal	50,552		48,737		134,746		136,217		Disposal	43,746		48,139		82,371		84,194
Power generation	Power generation	808		920		2,655		4,014		Power generation	918		711		1,944		1,847
Processing	Processing	2,640		2,079		5,426		5,847		Processing	1,950		1,908		3,071		2,786
Solid waste operations	Solid waste operations	152,966		131,347		416,938		366,728		Solid waste operations	140,622		142,824		275,970		263,972
Organics	Organics	14,166		13,413		42,668		40,259		Organics	15,419		14,905		30,351		28,501
Customer solutions	Customer solutions	20,689		17,195		58,058		48,315		Customer solutions	20,239		19,216		41,902		37,370
Recycling	Recycling	10,726		10,877		32,006		30,634		Recycling	12,487		10,514		23,453		21,280
Resource solutions operations										Resource solutions operations	48,145		44,635		95,706		87,151
Total revenues	Total revenues	$	198,547	$	172,832	$	549,670	$	485,936	Total revenues	$	188,767	$	187,459	$	371,676	$	351,123

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included under Item 1. In addition, reference should be made to our audited consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019 filed with the Securities and Exchange Commission (“SEC”) on February ~~22, 2019.~~21, 2020.

This Quarterly Report on Form 10-Q and, in particular, this Management’s Discussion and Analysis of Financial Condition and Results of Operations, may contain or incorporate a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, including statements regarding:

•the expected and potential direct or indirect impacts of the novel coronavirus (“COVID-19”) pandemic on our business;

•expected liquidity and financing plans;

•expected future revenues, operations, expenditures and cash needs;

•fluctuations in commodity pricing of our recyclables, increases in landfill tipping fees and fuel costs and general economic and weather conditions;

•projected future obligations related to final capping, closure and post-closure costs of our existing landfills and any disposal facilities which we may own or operate in the future;

•our ability to use our net operating losses and tax positions;

•our ability to service our debt obligations;

•the projected development of additional disposal capacity or expectations regarding permits for existing capacity;

•the recoverability or impairment of any of our assets or goodwill;

•estimates of the potential markets for our products and services, including the anticipated drivers for future growth;

•sales and marketing plans or price and volume assumptions;

•the outcome of any legal or regulatory matter;

•potential business combinations or divestitures; and

•projected improvements to our infrastructure and the impact of such improvements on our business and operations.

In addition, any statements contained in or incorporated by reference into this report that are not statements of historical fact should be considered forward-looking statements. You can identify these forward-looking statements by the use of the words “believes”, “expects”, “anticipates”, “plans”, “may”, “will”, “would”, “intends”, “estimates” and other similar expressions, whether in the negative or affirmative. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate, as well as management’s beliefs and assumptions, and should be read in conjunction with our consolidated financial statements and notes thereto. These forward-looking statements are not guarantees of future performance, circumstances or events. The occurrence of the events described and the achievement of the expected results depends on many events, some or all of which are not predictable or within our control. Actual results may differ materially from those set forth in the forward-looking statements.

There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. These risks and uncertainties include, without limitation, those detailed in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018~~2019 and ~~if applicable,~~ those included under Part II, Item 1A of this Quarterly Report on Form 10-Q.

There may be additional risks that we are not presently aware of or that we currently believe are immaterial, which could have an adverse impact on our business. We explicitly disclaim any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as otherwise required by law.

Company Overview

Founded in 1975 with a single truck, Casella Waste Systems, Inc., a Delaware corporation and its wholly-owned subsidiaries (collectively, “we”, “us” or “our”), is a regional, vertically-integrated solid waste services company. We provide resource management expertise and services to residential, commercial, municipal and industrial customers, primarily in the areas of solid waste collection and disposal, transfer, recycling and organics services. We provide integrated solid waste services in six states: Vermont, New Hampshire, New York, Massachusetts, Maine and Pennsylvania, with our headquarters located in Rutland, Vermont. We manage our solid waste operations on a geographic basis through two regional operating segments, the Eastern and Western regions, each of which provides a full range of solid waste ~~services, and~~services. We manage our larger-scale recycling and commodity brokerage operations ~~through~~along with our ~~Recycling segment. Organics~~organics services ~~ancillary operations, along with~~and major account and industrial services ~~are included in~~through our ~~Other~~single resource-renewal focused Resource Solutions segment.

As of ~~October~~July 15, ~~2019,~~2020, we owned and/or operated 4348 solid waste collection operations, 5558 transfer stations, 1820 recycling facilities, eight Subtitle D landfills, four landfill gas-to-energy facilities and one landfill permitted to accept construction and demolition (“C&D”) materials.

Results of Operations

Recent Events

With the global outbreak of COVID-19 and the declaration of a pandemic by the World Health Organization in March 2020, the U.S. Government and all of the states in which we operate have declared the waste services industry as an essential services provider and as a result we are committed to continue to operate and provide our full breadth of services. We have prioritized the safety and well-being of our employees by strictly adhering to recommendations of the Centers for Disease Control and Prevention as well as executive orders of the states in which we operate.

The COVID-19 outbreak has caused, and is likely to continue to cause, significant economic disruption across our geographic footprint and has adversely affected, and is expected to continue to adversely affect, our business. COVID-19 negatively impacted our revenues starting at the end of the quarter ended March 31, 2020 as many collection customers required service level changes and volumes into our landfills declined. We experienced increased demand for services in the quarter ended June 30, 2020 as local economies started to reopen as allowed by state governments. This demand has continued to grow at a fairly steady rate, but our collection and disposal operations remain negatively impacted by lower volumes attributed to COVID-19. We continue to experience increased costs associated with the protection of our employees including costs for additional safety equipment, hygiene products and enhanced facility cleaning. These costs are expected to continue throughout the remainder of the year. We have also taken immediate measures to reduce costs in other areas and preserve liquidity during this period of uncertainty. As of the date of this filing, we are unable to determine or predict the nature, duration or scope of the overall impact that COVID-19 will have on our business, results of operations, liquidity or capital resources. For further information regarding the impact of COVID-19 on us, see Part II, Item 1A, “Risk Factors” included in this Quarterly Report on Form 10-Q.

Revenues

We manage our solid waste operations, which include a full range of solid waste services, on a geographic basis through two regional operating segments, which we designate as the Eastern and Western regions. Revenues in our Eastern and Western regions consist primarily of fees charged to customers for solid waste collection and disposal, landfill, landfill gas-to-energy, transfer and recycling services. We derive a substantial portion of our collection revenues from commercial, industrial and municipal services that are generally performed under service agreements or pursuant to contracts with municipalities. The majority of our residential collection services are performed on a subscription basis with individual households. Landfill and transfer customers are charged a tipping fee on a per ton basis for disposing of their solid waste at our disposal facilities and transfer stations. We also generate and sell electricity at certain of our landfill facilities. We classify our resource-renewal services by service in our Resource Solutions segment. Revenues ~~from~~associated with our ~~Recycling segment consist of revenues~~resource renewal operations are derived from organics services, major account and industrial services, as well as recycling services generated from both municipalities and customers in the form of processing fees, tipping fees and commodity sales. ~~Revenues from organics services, ancillary operations, and major account and industrial services are included in our Other segment. Our revenues are shown net of inter-company eliminations.~~

A summary of revenues attributable to service provided (dollars in millions and as a percentage of total revenues) follows:

Three Months Ended September 30, $
Change Nine Months Ended September 30, $
Change
2019 2018 2019 2018
Collection $ 99.0 49.8 % $ 79.6 46.1 % $ 19.4 $ 274.1 49.9 % $ 220.7 45.4 % $ 53.4
Disposal 50.6 25.5 % 48.7 28.2 % 1.9 134.7 24.5 % 136.2 28.0 % (1.5)
Power 0.8 0.4 % 0.9 0.5 % (0.1) 2.7 0.5 % 4.0 0.8 % (1.3)
Processing 2.6 1.3 % 2.1 1.2 % 0.5 5.4 1.0 % 5.8 1.3 % (0.4)
Solid waste 153.0 77.0 % 131.3 76.0 % 21.7 416.9 75.9 % 366.7 75.5 % 50.2
Organics 14.1 7.2 % 13.4 7.8 % 0.7 42.7 7.7 % 40.3 8.3 % 2.4
Customer solutions 20.7 10.4 % 17.2 9.9 % 3.5 58.1 10.6 % 48.3 9.9 % 9.8
Recycling 10.7 5.4 % 10.9 6.3 % (0.2) 32.0 5.8 % 30.6 6.3 % 1.4
Total revenues $ 198.5 100.0 % $ 172.8 100.0 % $ 25.7 $ 549.7 100.0 % $ 485.9 100.0 % $ 63.8


	Three Months Ended June 30,														$ Change		Six Months Ended June 30,					$ Change
	2020						2019										2020				2019
Collection	$	94.0	49.8	%	$	92.1	49.1	%	$	1.9	$	188.6	50.7	%	$	175.1	49.9	%	$	13.5
Disposal	43.7		23.1	%	48.1		25.7	%	(4.4)		82.4		22.2	%	84.2		24.0	%	(1.8)
Power	0.9		0.5	%	0.7		0.4	%	0.2		1.9		0.5	%	1.8		0.5	%	0.1
Processing	2.0		1.1	%	1.9		1.0	%	0.1		3.1		0.9	%	2.9		0.8	%	0.2
Solid waste	140.6		74.5	%	142.8		76.2	%	(2.2)		276.0		74.3	%	264.0		75.2	%	12.0
Organics	15.5		8.2	%	15.0		7.9	%	0.5		30.3		8.1	%	28.4		8.1	%	1.9
Customer solutions	20.2		10.7	%	19.2		10.3	%	1.0		41.9		11.3	%	37.4		10.6	%	4.5
Recycling	12.5		6.6	%	10.5		5.6	%	2.0		23.5		6.3	%	21.3		6.1	%	2.2
Resource solutions	48.2		25.5	%	44.7		23.8	%	3.5		95.7		25.7	%	87.1		24.8	%	8.6
Total revenues	$	188.8	100.0	%	$	187.5	100.0	%	$	1.3	$	371.7	100.0	%	$	351.1	100.0	%	$	20.6

A summary of the period-to-period changes in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:


		Period-to-Period Change for the Three Months Ended September 30, 2019 vs. 2018						Period-to-Period Change for the Nine Months Ended September 30, 2019 vs. 2018							Period-to-Period Change for the Three Months Ended June 30, 2020 vs. 2019				Period-to-Period Change for the Six Months Ended June 30, 2020 vs. 2019
		Amount		% Growth		Amount		% Growth			Amount		% Growth		Amount		% Growth
Price	Price	$	7.0	5.3	%	$	18.8	5.1	%	Price	$	6.3	4.4	%	$	13.4	5.1	%
Volume (1)	Volume (1)	(0.1)		(0.1)	%	(3.9)		(1.1)	%	Volume (1)	(17.7)		(12.4)	%	(21.0)		(8.0)	%
Surcharges and other fees	Surcharges and other fees	0.6		0.5	%	3.2		0.9	%	Surcharges and other fees	—		—	%	1.2		0.5	%
Commodity price and volume	Commodity price and volume	(0.5)		(0.4)	%	(3.4)		(0.9)	%	Commodity price and volume	0.1		0.1	%	(0.2)		(0.1)	%
Acquisitions	Acquisitions	18.3		14.0	%	45.0		12.3	%	Acquisitions	9.7		6.8	%	20.0		7.6	%
Closed operations		(3.4)		(2.6)	%	(9.2)		(2.5)	%

Solid waste revenues	Solid waste revenues	$	21.9	16.7	%	$	50.5	13.8	%	Solid waste revenues	$	(1.6)	(1.1)	%	$	13.4	5.1	%

(1)Adjusted for ~~$0.3~~$0.6 million in the quarter and $1.4 million year-to-date of inter-company movements between solid waste collection volume and ~~Customer Solutions~~customer solutions associated with the acquisition of a business.

Solid waste revenues

Price.

The price impact on the change ~~component~~ in quarterly solid waste revenues ~~growth~~ is the result of the following:

•$~~4.2~~3.9 million from favorable collection pricing; and

•$~~2.8~~2.4 million from favorable disposal pricing associated ~~primarily~~ with our landfills and transfer stations.

The price impact on the change ~~component~~ in year-to-date solid waste revenues ~~growth~~ is the result of the following:

•$~~12.2~~8.3 million from favorable collection pricing; and

•$~~6.6~~5.1 million from favorable disposal pricing associated ~~primarily~~ with our landfills and transfer stations.

Volume.

The volume impact on the change ~~component~~ in quarterly solid waste revenues ~~growth~~ is the result of the following:

•$~~(0.8)~~(9.8) million from lower collection ~~volumes; and~~volumes due to the negative impacts of COVID-19;

•$~~(0.1)~~(7.7) million from lower ~~processing volumes; partially offset by~~

•~~$0.8 million from higher~~ disposal volumes (of which ~~$1.2 million relates to higher transfer station volumes, $(0.3)~~$(6.0) million relates to lower landfill volumes due to the negative impacts of COVID-19, $(1.4) million relates to lower transfer station volumes and ~~$(0.1)~~$(0.3) million relates to lower transportation volumes).; and

•$(0.2) million from lower processing volumes.

The volume impact on the change ~~component~~ in year-to-date solid waste revenues ~~growth~~ is the result of the following:

•$~~(2.0)~~(12.5) million from lower collection volumes due to the negative impacts of COVID-19;

•$(8.3) million from lower disposal volumes (of which ~~$(5.2)~~$(7.3) million relates to lower landfill volumes due to the negative impacts of COVID-19, $(0.8) million relates to lower transfer station volumes and $(0.2) million relates to lower transportation volumes primarily associated with a large contaminated soils project that occurred in the prior year, $1.7 million relates to higher transfer station volumes and $1.5 million relates to higher landfill volumes);

•~~$(1.7) million from lower collection volumes;~~ and

•$(0.2) million from lower processing volumes.

Surcharges and other fees.

The surcharges and other fees impact on the change ~~component~~ in ~~quarterly and~~ year-to-date solid waste revenues ~~growth~~ is associated primarily with the Energy component of the Energy and Environmental fee and the ~~portion of the~~ Sustainability Recycling Adjustment ~~fee, respectively, that has anniversaried.~~fee. The Energy component of the fee floats on a monthly basis based on diesel fuel prices. The Sustainability Recycling Adjustment fee floats on a monthly basis based on recycled commodity prices.

Commodity price and volume.

The commodity price and volume impact on the change ~~component~~ in quarterly solid waste revenues ~~growth~~ is the result of the following:

•$~~(0.4)~~0.3 million from ~~lower~~favorable commodity ~~volumes~~and energy pricing; partially offset by

•$(0.2) million due to lower commodity processing ~~volumes and landfill gas-to-energy volumes; and~~volumes.

•~~$(0.1) million from primarily unfavorable commodity pricing.~~

The commodity price and volume impact on the change ~~component~~ in year-to-date solid waste revenues ~~growth~~ is the result of the following:

•$~~(2.6)~~(0.3) million from lower commodity ~~volumes due to lower commodity~~ processing ~~volumes and landfill gas-to-energy~~ volumes; and

•$~~(0.8)~~(0.2) million from unfavorable energy ~~pricing and,~~pricing; partially offset by

•$0.3 million due to ~~a lesser extent, unfavorable commodity pricing.~~higher landfill gas-to-energy volumes.

Acquisitions.

The acquisitions impact on the change ~~component~~ in quarterly and year-to-date solid waste revenues ~~growth~~ is associated with the following acquisition activity:

•the acquisition of ~~eight businesses: six~~three tuck-in solid waste collection business in our Western region; and

•the acquisition of nine businesses throughout the prior year: seven tuck-in solid waste collection businesses, a business comprised of solid waste collection, transfer and recycling operations, and a business comprised of solid waste hauling and transfer ~~assets, in the nine months ended September 30, 2019; and~~

•the acquisition of nine businesses: six solid waste collection businesses, one transfer business and two businesses comprised of solid waste collection and transfer operations, throughout the prior year.assets.

~~Closed operations.~~Resource Solutions revenues

The closed operations change component in quarterly and year-to-date solid waste revenues growth is the result of the closure of the landfill located in Southbridge, Massachusetts ("Southbridge Landfill") in our Eastern region in the quarter ended December 31, 2018 and the closure of a transfer station in our Western region in the quarter ended March 31, 2019.

~~Organics revenues~~Organics.

Organics revenues increased ~~$0.7~~$0.5 million quarterly and ~~$2.4~~$1.9 million year-to-date as a result of higher volumes associated with two large transportation and disposal contracts.

Customer ~~Solutions revenues~~solutions.

Customer solutions revenues increased ~~$3.5~~$0.4 million quarterly and ~~$9.8~~$3.1 million year-to-date as the result of higher volumes mainly due to multi-site retail and industrial services organic growth. The increase was adjusted for $0.6 million quarterly and $1.4 million year-to-date of inter-company movements between solid waste collection volume and customer solutions associated with the acquisition of a business.

~~Recycling revenues~~Recycling.

Quarterly recycling revenues ~~decreased~~increased $2.0 million as a result of the following:

•$~~(2.7)~~1.2 million from ~~unfavorable~~favorable commodity pricing in the ~~marketplace;~~marketplace with higher cardboard pricing, partially offset by lower plastics pricing;

•$~~2.3~~0.6 million from higher recycling processing fees; and

•$0.2 million from ~~higher commodity volumes.~~the acquisition of recycling operations.

Year-to-date recycling revenues increased $2.2 million as a result of the following:

•$~~5.8~~2.6 million from higher recycling processing fees;

•$0.5 million from the acquisition of recycling operations; and

•$~~1.4~~0.1 million from higher commodity volumes; partially offset by

•$~~(5.8)~~(1.0) million from unfavorable commodity pricing in the ~~marketplace.~~marketplace in the first quarter.

3431

Operating Expenses

A summary of cost of operations, general and administration expense, and depreciation and amortization expense (dollars in millions and as a percentage of total revenues) is as follows:


		Three Months Ended September 30,														$ Change		Nine Months Ended September 30,																		$ Change		Three Months Ended June 30,										$ Change	Six Months Ended June 30,			$ Change
		2019						2018										2019								2018								$ Change			2020							2019			$ Change		2020	2019	$ Change
Cost of operations	Cost of operations	$	131.3	66.1	%	$	114.1	66.0	%	$	17.2	$	377.7	68.7	%	$	331.5	68.2	%	$	46.2	Cost of operations	$	123.5	65.4		%	$	128.7	68.6	%	$	(5.2)			252.0		67.8	%	$	246.4	70.2	%		$	5.6
General and administration	General and administration	$	22.5	11.4	%	$	20.5	11.9	%	$	2.0	$	67.4	12.3	%	$	62.4	12.8	%	$	5.0	General and administration	$	24.9	13.2		%	$	22.1	11.8	%	$	2.8		$	49.2		13.2	%	$	44.9	12.8	%		$	4.3
Depreciation and amortization	Depreciation and amortization	$	20.9	10.5	%	$	18.2	10.5	%	$	2.7	$	58.1	10.6	%	$	51.6	10.6	%	$	6.5	Depreciation and amortization	$	22.1	11.7		%	$	19.7	10.5	%	$	2.4		$	43.5		11.7	%	$	37.2	10.6	%		$	6.3

Cost of Operations

Cost of operations includes labor costs, tipping fees paid to third-party disposal facilities, fuel costs, maintenance and repair costs of vehicles and equipment, workers’ compensation and vehicle insurance costs, third-party transportation costs, district and state taxes, host community fees, and royalties. Cost of operations also includes accretion expense related to final capping, closure and post-closure obligations, leachate treatment and disposal costs, and depletion of landfill operating lease obligations.

As a percentage of revenues, cost of operations decreased 320 basis points and 240 basis points during the three and six months ended June 30, 2020, respectively, from the same periods of the prior year. The period-to-period changes in cost of operations can be primarily attributed to the following:

Third-party direct costs ~~increased $9.5~~decreased $(3.2) million quarterly while decreasing 190 basis points as a percentage of revenues, and ~~$23.2~~increased $1.9 million year-to-date, but decreased 100 basis points as a percentage of revenues due to the following:

•lower disposal costs associated with lower volumes, including commercial collection, construction and demolition, and landfills, due to the negative economic impacts of COVID-19 combined with lower organic collection and landfill volumes due to our focus on pricing; more than offset on a year-to-date basis with higher disposal costs associated ~~with:~~with increased disposal pricing in the northeastern United States, additional volumes related to acquisition ~~activity;~~activity in the Western region, and additional volumes ~~related~~within our Resource Solutions segment due to multi-site retail and industrial services organic growth in our ~~Customer Solutions line-of-business; increased disposal pricing in the northeastern United States;~~customer solutions line-of-business and ~~an increased reliance on third-party disposal sites~~organic growth in our ~~Organics line-of-business during the first half of the fiscal year.~~organics line-of-business.

•lower hauling and third-party transportation costs associated with lower volumes due to the negative impacts of COVID-19; more than offset on a year-to-date basis with higher hauling and third-party transportation costs associated ~~with:~~with higher collection volumes related to acquisition ~~activity; higher transportation rates; and~~activity in the Western region; higher brokerage volumes in our ~~Customer Solutions~~customer solutions line-of-business with high pass through direct costs; ~~partially offset by lower hauling and third-party transportation costs year-to-date in the Western region associated with lower transportation~~higher recycling volumes related to ~~a large contaminated soils project completed in the prior year.~~

~~Labor~~acquisition activity; and ~~related benefit costs increased $4.9 million quarterly and $12.5 million year-to-date due to~~ higher ~~labor costs related primarily to acquisition activity and wage increases due to tight labor markets.~~

Maintenance and repair costs increased $4.2 million quarterly and $10.4 million year-to-date due primarily to higher fleet and facility maintenance costs associated with acquisition activity and related business growth.

~~Fuel costs increased $0.9 million quarterly and $2.4 million year-to-date due primarily to higher volumes associated with acquisition activity.~~transportation rates.

Direct operational costs decreased ~~$(2.3)~~$(1.7) million quarterly while decreasing 100 basis points as a percentage of revenues, and ~~$(2.4) million~~remained flat year-to-date while decreasing 60 basis points as a percentage of revenues, due to lower landfill operating lease amortization and lower host royalty fees driven primarily by the closure of the Southbridge Landfill in the Eastern region; lower rent expense associated with operating leases; and lower quarterly landfill operating costs; partiallycosts, offset on a year-to-date basis by higher auto insurance costs, associated primarily with claims activity ~~and higher landfill operating costs~~ in the first ~~half~~quarter, and higher operating costs related to business growth.

Fuel costs decreased $(0.8) million quarterly while decreasing 50 basis points as a percentage of revenues, and decreased $(0.4) million year-to-date while decreasing 40 basis points as a percentage of revenues, due primarily to lower fuel prices and fleet efficiency, partially offset by higher volumes associated with acquisition activity.

Labor and related benefit costs decreased $(0.2) million quarterly while decreasing 20 basis points as a percentage of revenues, and increased $1.0 million year-to-date, but decreased 50 basis points as a percentage of revenues, due to lower labor costs on decreased overtime and lower benefit costs; more than offset on a year-to-date basis with higher labor costs related primarily to acquisition activity in the ~~fiscal year.~~Western region and a discretionary bonus for our front-line employees.

Maintenance and repair costs increased $0.7 million quarterly while increasing 30 basis points as a percentage of revenues, and increased $3.1 million year-to-date while remaining flat as a percentage of revenues, due primarily to higher facility maintenance costs, and to a lesser extent, higher fleet maintenance costs associated with acquisition activity and related business growth, which was partially offset in the quarter associated with less wear and tear based on activity levels and lower volumes as a result of COVID-19.

General and Administration

General and administration expense includes management, clerical and administrative compensation, bad debt expense, as well as overhead costs, professional service fees and costs associated with marketing, sales force and community relations efforts.

The period-to-period changes in general and administration expense can be primarily attributed to higher labor ~~and related benefit~~ costs associated with acquisition activity, ~~and~~higher bad debt expense year-to-date based on the continued economic downturn associated with COVID-19, higher accrued incentive compensation ~~partially offset by lower equity compensation costs~~ and ~~lower professional service fees related to reduced legal costs and consulting fees.~~a discretionary bonus for our hourly back-office employees.

Depreciation and Amortization

Depreciation and amortization expense includes: (i) depreciation of property and equipment (including assets recorded for finance leases) on a straight-line basis over the estimated useful lives of the assets; (ii) amortization of landfill costs (including those costs incurred and all estimated future costs for landfill development and construction, along with asset retirement costs arising from closure and post-closure obligations) on a units-of-consumption method as landfill airspace is consumed over the total estimated remaining capacity of a site, which includes both permitted capacity and unpermitted expansion capacity that meets certain criteria for amortization purposes, and amortization of landfill asset retirement costs arising from final capping obligations on a units-of-consumption method as airspace is consumed over the estimated capacity associated with each final capping event; and (iii) amortization of intangible assets with a definite life, using either an economic benefit provided approach or on a straight-line basis over the definitive terms of the related agreements.

A summary of the components of depreciation and amortization expense (dollars in millions and as a percentage of total revenues) follows:


		Three Months Ended September 30,														$ Change		Nine Months Ended September 30,																		$ Change		Three Months Ended June 30,										$ Change	Six Months Ended June 30,			$ Change
		2019						2018										2019								2018								$ Change			2020							2019			$ Change		2020	2019	$ Change
Depreciation	Depreciation	$	11.6	5.8	%	$	8.6	5.0	%	$	3.0	$	32.8	6.0	%	$	25.4	5.2	%	$	7.4	Depreciation	$	13.5	7.1		%	$	11.0	5.8	%	$	2.5			26.3		7.1	%	$	21.2	6.0	%		$	5.1
Landfill amortization	Landfill amortization	7.4		3.7	%	8.9		5.2	%	(1.5)		20.4		3.7	%	24.4		5.0	%	(4.0)		Landfill amortization	6.4		3.4		%	7.1		3.8	%	(0.7)			12.8			3.4	%	12.9		3.7	%		(0.1)
Other amortization	Other amortization	1.9		1.0	%	0.7		0.4	%	1.2		4.9		0.9	%	1.8		0.4	%	3.1		Other amortization	2.2		1.2		%	1.6		0.9	%	0.6			4.4			1.2	%	3.1		0.9	%		1.3
		$	20.9	10.5	%	$	18.2	10.6	%	$	2.7	$	58.1	10.6	%	$	51.6	10.6	%	$	6.5		$	22.1	11.7		%	$	19.7	10.5	%	$	2.4		$	43.5		11.7	%	$	37.2	10.6	%		$	6.3

The period-to-period changes in depreciation and amortization expense can be primarily attributed to increased investment in our fleet, acquisition activity and higher landfill amortization expense associated with changes in cost estimates and other assumptions, partially offset by lower landfill ~~amortization expense~~volumes associated with ~~lower landfill volumes in our Eastern Region due to~~ the ~~closure~~negative impacts of ~~the Southbridge Landfill.~~COVID-19.

~~Multiemployer Pension Plan~~

In October 2019, we reached an agreement to withdraw from the Pension Plan by entering into Withdrawal and Re-entry Agreements with the Pension Plan. In accordance with Financial Accounting Standards Board Accounting Standards Codification 450 - Contingencies, because of our withdrawal from the Pension Plan, we recorded an obligation of $3.2 million as of September 30, 2019 and a charge of $3.6 million as pension withdrawal expense, offset by a $0.4 million retroactive contribution credit recorded to cost of operations, in the three and nine months ended September 30, 2019. While withdrawal generates a fixed yearly contingent liability for us for a period of approximately seventeen (17) years, it caps our gross payments at $4.2 million significantly reducing our cash exposure from the potential $18.5 million withdrawal liability as determined based on a complete withdrawal. As per the Re-entry Agreements and upon withdrawal, we will re-enter the Pension Plan with certainty from a liability perspective. We have not, however, changed the terms of our CBA with Local 170, which remains in effect until June 30, 2020.

Expense from Acquisition Activities ~~and Other Items~~

In the three and ~~nine~~six months ended ~~September~~June 30, 2020, we recorded charges of $0.4 million and $1.4 million, respectively, and in the three and six months ended June 30, 2019, we recorded charges of $0.5 million and $1.1 million, respectively, comprised primarily of legal, consulting and ~~$2.2 million, respectively, associated primarily with acquisition activities. In the three and nine months ended September 30, 2018, we recorded charges of $0.0 million and $0.2 million, respectively,~~other similar costs associated with the ~~write-off~~acquisition and integration of ~~deferred costs related to the expiration of our shelf registration statement and $0.6 million and $0.7 million, respectively, associated with acquisition activities.~~acquired businesses or select development projects.

Southbridge Landfill Closure Charge ~~(Settlement), Net~~

In ~~June~~ 2017, we initiated the plan to cease operations of the Town of Southbridge, ~~Landfill~~Massachusetts landfill ("Southbridge Landfill") and later closed it in November 2018 when Southbridge Landfill reached its final capacity. Accordingly, in the three and ~~nine~~six months ended ~~September~~June 30, ~~2019 and 2018,~~2020 we recorded charges ~~(settlement) associated with the closure~~ of ~~the Southbridge Landfill as follows (in millions):~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 2019 2018
Charlton settlement charge (1)
$ — $ — $ — $ 1.2
Legal and other costs (2)
0.6 0.5 2.1 1.1
Recovery on insurance settlement (3)
— (10.0) — (10.0)
Southbridge Landfill closure charge (settlement), net $ 0.6 $ (9.5) $ 2.1 $ (7.7)

~~(1)We established a reserve associated with settlement~~$0.6 million and $1.2 million, respectively, comprised of ~~the Town~~$0.6 million and $1.2 million of ~~Charlton's claim against us. See Note 9,~~ ~~Commitments~~legal and ~~Contingencies~~ ~~to our consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q for additional disclosure.~~

~~(2)We incurred legal costs as well as~~ other costs ~~associated with~~pertaining to various matters as part of the ~~Southbridge Landfill closure. See Note 9,~~ ~~Commitments and Contingencies~~ ~~to our consolidated financial statements included under Part I, Item 1~~unplanned early closure of ~~this Quarterly Report on Form 10-Q for additional disclosure.~~

~~(3)We recorded a recovery on an environmental insurance settlement associated with~~ the Southbridge Landfill ~~closure. See Note 9,~~ ~~Commitments and Contingencies~~ ~~to our consolidated financial statements included under Part I, Item 1~~through completion of ~~this Quarterly Report on Form 10-Q for additional disclosure.~~

~~Contract Settlement Charge~~

In the ~~nine months ended September 30, 2018, we recorded~~closure process, a ~~contract settlement~~ charge of ~~$2.1~~$0.2 million due to changes in estimated costs and timing of final capping, closure and post-closure activities at the Southbridge Landfill, and a charge of $(0.2) million associated with the ~~termination and discounted buy-out~~completion of ~~a commodities marketing and brokerage agreement.~~

~~Development Project Charge~~

the environmental remediation at the site. In the ~~nine~~three and six months ended ~~September~~June 30, ~~2018,~~2019 we recorded ~~a development project charge~~charges of ~~$0.3~~$0.9 million and $1.5 million, respectively, associated with ~~previously deferred~~legal and other costs ~~that were written off~~pertaining to various matters as ~~a result~~part of the ~~negative vote in a public referendum relating to~~unplanned early closure of the ~~North Country Environmental Services landfill.~~Southbridge Landfill through completion of the closure process.

Other Expenses

Interest Expense, net

Our interest expense, net decreased ~~$(0.2)~~$(0.6) million quarterly and ~~$(0.6)~~$(1.0) million year-to-date due primarily to lower average ~~debt balances and the refinancing of our term loan B facility ("Term Loan B Facility")~~interest rates associated with ~~our existing revolving line of credit facility ("Revolving Credit Facility") and our term loan A facility ("Term Loan Facility", together with the Revolving Credit Facility , the "Credit Facility"),~~changes in LIBOR and the remarketing of our ~~Vermont Economic Development Authority~~New York State Environmental Facilities Corporation Solid Waste Disposal ~~Long-Term~~Revenue Bonds Series 2014 (“New York Bonds 2014”) and our Business Finance Authority of the State of New Hampshire Solid Waste Disposal Revenue Bonds Series 2013 ~~("Vermont Bonds"~~(“New Hampshire Bonds”).

~~Loss on Debt Extinguishment~~

We recorded a loss on debt extinguishment of $7.4 million in the nine months ended September 30, 2018 associated with the write-off of debt issuance costs and unamortized discount in connection with the refinancing of our Term Loan B Facility with our existing Credit Facility, and the write-off of debt issuance costs in connection with the remarketing of our Vermont Bonds.

Provision ~~(Benefit)~~ for Income Taxes

Our provision ~~(benefit)~~ for income taxes ~~decreased $(0.2)~~increased $2.3 million quarterly and ~~$(0.6)~~$2.4 million ~~during the three and nine months ended September 30, 2019, respectively,~~year-to-date, as compared to the same periods in the prior year. During the ~~three months~~quarter ended ~~September~~June 30, 2019, we recognized a ~~$(0.3)~~$2.1 million deferred tax benefit due to a reduction of the deferred tax liability related to indefinite lived assets. During the three months ended September 30, 2019, the financial statement value of indefinite lived goodwill was reduced as a result of a settlement of an acquisition contingency that pre-dated the effective date of ASC 805, which resulted in a reduction of the related deferred tax liability.

~~During the nine months ended September 30, 2019 and 2018, we recognized $2.1 million and $1.2 million deferred tax benefits, respectively, due to a reduction of the valuation allowance. The~~ valuation allowance ~~decreased in the periods~~ based ~~upon~~on the recognition of additional reversing temporary differences related to the $2.1 million deferred tax liability recorded through goodwill for the acquisition of a company in May ~~2019 and $1.2 million~~2019. The deferred tax liability ~~recorded through goodwill for the acquisition of two companies in January 2018. The deferred tax liabilities~~ related to the ~~acquisitions were~~acquisition was based on the impact of temporary differences between the amounts of assets and ~~liabilities~~liability recognized for financial reporting purposes and the related tax bases.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted which, among other things, allows the carryback of remaining minimum tax credit carryforwards to tax year 2018. Prior to the CARES Act, the minimum tax credit carryforwards were fully refunded through tax year 2021, if not otherwise used to offset tax liabilities. A ~~$(1.6)~~ current income tax benefit of $(1.0) million, offset by a $1.0 million deferred tax ~~benefit~~provision, was recognized in the quarter ended March 31, 2020 for the remaining minimum tax credit being carried back to tax year 2018 by us. In the six months ended June 30, 2019, we recognized a $(0.5) million current income tax benefit, offset by a $0.5 million deferred tax provision, for the portion of the minimum tax credit carryforward refundable for 2019 based on initial estimates of the acquired temporary differences and was adjusted by $0.4 million in the quarter ended September 30, 2018 based on the availability of better estimates upon the filing of the prior year returns by the sellers in that quarter.law then enacted.

On December 22, 2017, the Tax Cuts and Jobs Act (the ~~“Act”~~“TCJ Act”) was enacted. The TCJ Act ~~which is also commonly referred to as “US tax reform,”~~ significantly changed USU.S. corporate income tax laws by, among other things, reducing the US corporate income tax rate from 35% to 21% starting in 2018. Under the Act, the alternative minimum tax was repealed and minimum tax credit carryforwards become refundable beginning in 2018 and will be fully refunded, if not otherwise used to offset tax liabilities, in tax year 2021. Further, ourchanging carryforward rules for net operating losses. Our $110.6 million in federal net operating loss carryforwards generated as of the end of 2017 continue to be carried forward for 20 years and are expected to be available to fully offset taxable income earned in ~~2019~~2020 and future tax years. Federal net operating losses generated after 2017, ~~including $2.4~~totaling $51.2 million ~~generated in 2018,~~carried forward to 2020, will be carried forward indefinitely, but generally may only offset up to 80% of taxable income earned in a tax year.

The ~~benefit for income taxes for the nine months ended September 30, 2019 and 2018 incorporates the changes under the Act, including use of the 21% US corporate income tax rate and applying the new~~total federal net operating losses generated after 2017 and carried forward to 2020 has been updated from $67.4 million as estimated in the quarter ended December 31, 2019 with corresponding changes to the deferred tax asset and valuation allowance. Although the CARES Act further modifies the net operating loss ~~carryforward rules. We had $3.8 million minimum~~rules to permit net operating losses incurred in tax ~~credit carryforwards of which we anticipate $1.0 million and $1.9 million~~years 2018 through 2020 to be ~~refundable for 2019~~carried back 5 years and ~~2018, respectively. Current~~to temporarily permit such losses to offset 100% of taxable income in tax year 2020, these modifications under the CARES Act are not anticipated to impact us.

We are continuing to evaluate the CARES Act, but other income tax ~~benefits of $0.7 million, offset by~~changes are not expected to have a ~~$0.7 million deferred tax provision in the nine months ended September 30, 2019, were recognized for a portion of the minimum tax credit carryforward refundable for 2019.~~material impact.

Segment Reporting

Revenues

A summary of revenues by reportable operating segment (in millions) follows:


		Three Months Ended September 30,						$ Change		Nine Months Ended September 30,									$ Change		Three Months Ended June 30,								$ Change		Six Months Ended June 30,			$ Change
		2019		2018						2019		2018					$ Change			2020			2019					$ Change				2019	$ Change
Eastern	Eastern	$	59.7	$	56.0	$	3.7	$	163.7	$	154.1	$	9.6	Eastern	$	53.3			57.1		$	(3.8)		$	103.5	$	104.1		$	(0.6)
Western	Western	92.9		74.4		18.5		251.9		210.2		41.7		Western	87.3			85.7			1.6			172.5		159.9			12.6
Recycling		10.7		10.9		(0.2)		32.0		30.6		1.4
Other		35.2		31.5		3.7		102.1		91.0		11.1
Resource solutions														Resource solutions	48.2			44.7			3.5			95.7		87.1			8.6
Corporate entities														Corporate entities	—			—			—			—		—			—
Total revenues	Total revenues	$	198.5	$	172.8	$	25.7	$	549.7	$	485.9	$	63.8	Total revenues	$	188.8		$	187.5		$	1.3		$	371.7	$	351.1		$	20.6

Eastern Region

A summary of the period-to-period changes in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:


		Period-to-Period Change for the Three Months Ended September 30, 2019 vs. 2018						Period-to-Period Change for the Nine Months Ended September 30, 2019 vs. 2018							Period-to-Period Change for the Three Months Ended June 30, 2020 vs. 2019				Period-to-Period Change for the Six Months Ended June 30, 2020 vs. 2019
		Amount		% Growth		Amount		% Growth			Amount		% Growth		Amount		% Growth
Price	Price	$	3.1	5.5	%	$	8.8	5.7	%	Price	$	2.2	3.8	%	$	4.7	4.5	%
Volume	Volume	(0.8)		(1.4)	%	(0.9)		(0.4)	%	Volume	(6.3)		(11.0)	%	(7.3)		(7.0)	%
Surcharges and other fees	Surcharges and other fees	0.3		0.5	%	1.4		0.9	%	Surcharges and other fees	(0.3)		(0.4)	%	—		—	%
Commodity price and volume	Commodity price and volume	(0.1)		(0.2)	%	(0.4)		(0.3)	%	Commodity price and volume	—		—	%	0.1		0.1	%
Acquisitions	Acquisitions	4.4		7.9	%	9.1		5.9	%	Acquisitions	0.6		1.0	%	1.9		1.8	%
Closed landfill		(3.2)		(5.7)	%	(8.4)		(5.5)	%

Solid waste revenues	Solid waste revenues	$	3.7	6.6	%	$	9.6	6.3	%	Solid waste revenues	$	(3.8)	(6.6)	%	$	(0.6)	(0.6)	%

Price.

The price impact on the change ~~component~~ in quarterly solid waste revenues ~~growth~~ is the result of the following:

•$~~2.1~~1.6 million from favorable collection pricing; and

•$~~1.0~~0.6 million from favorable disposal pricing related to transfer stations and landfills.

The price impact on the change ~~component~~ in year-to-date solid waste revenues ~~growth~~ is the result of the following:

•$~~6.3~~3.5 million from favorable collection pricing; and

•$~~2.5~~1.2 million from favorable disposal pricing related to transfer stations and landfills.

Volume.

The volume impact on the change ~~component~~ in quarterly solid waste revenues ~~growth~~ is the result of the following:

•$~~(0.7)~~(4.3) million from lower collection ~~volumes;~~volumes due to the negative impacts of COVID-19;

•$(1.9) million from lower disposal volumes related to landfills and transfer stations due to the negative impacts of COVID-19; and

•$(0.1) million from lower ~~disposal volumes related to landfills.~~processing volumes;

The volume impact on the change ~~component~~ in year-to-date solid waste revenues ~~growth~~ is the result of the following:

•$~~(1.4)~~(4.9) million from lower collection ~~volumes;~~volumes due to the negative impacts of COVID-19;

•$(2.3) million from lower disposal volumes related to landfills and transfer stations due to the negative impacts of COVID-19; and

•$~~(0.2)~~(0.1) million from lower processing ~~volumes; partially offset by~~

•~~$0.7 million from higher disposal volumes related to transfer stations.~~volumes.

Surcharges and other fees.

The surcharge and other fees impact on the change ~~component~~ in quarterly ~~and year-to-date~~ solid waste revenues ~~growth~~ is associated primarily with the Energy component of the Energy and Environmental fee and the ~~portion~~Sustainability Recycling Adjustment fee. The Energy component of the fee floats on a monthly basis based on diesel fuel prices. The Sustainability Recycling Adjustment fee floats on a monthly basis based on recycled commodity prices.

Commodity price and volume.

The commodity price and volume impact on the change in year-to-date solid waste revenues is the result of higher landfill gas-to-energy volumes.

Acquisitions.

The acquisitions change impact on the change in quarterly and year-to-date solid waste revenues is the result of the acquisition of three tuck-in solid waste collection businesses in the prior year.

Western Region

A summary of the period-to-period changes in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:


	Period-to-Period Change for the Three Months Ended June 30, 2020 vs. 2019						Period-to-Period Change for the Six Months Ended June 30, 2020 vs. 2019
	Amount		% Growth		Amount		% Growth
Price	$	4.1	4.8	%	$	8.6	5.4	%
Volume (1)	(11.3)		(13.3)	%	(13.5)		(8.5)	%
Surcharges and other fees	0.2		0.2	%	1.2		0.8	%
Commodity price and volume	0.1		0.2	%	(0.3)		(0.2)	%
Acquisitions	9.1		10.6	%	18.0		11.3	%

Solid waste revenues	$	2.2	2.5	%	$	14.0	8.8	%

(1)Adjusted for $0.6 million quarterly and $1.4 million year-to-date of inter-company movements between solid waste collection volume and customer solutions associated with the acquisition of a business.

Price.

The price impact on the change in quarterly solid waste revenues is the result of the following:

•$2.3 million from favorable collection pricing; and

•$1.8 million from favorable disposal pricing related to landfills and transfer stations.

The price impact on the change in year-to-date solid waste revenues is the result of the following:

•$4.7 million from favorable collection pricing; and

•$3.9 million from favorable disposal pricing related to landfills and transfer stations.

Volume.

The volume impact on the change in quarterly solid waste revenues is the result of the following:

•$(5.5) million from lower collection volumes due to the negative impacts of COVID-19; and

•$(5.8) million from lower disposal volumes related to landfills due to the negative impacts of COVID-19, which more than offset higher disposal volumes related to transfer stations and transportation.

The volume impact on the change in year-to-date solid waste revenues is the result of the following:

•$(5.9) million from lower disposal volumes related to landfills, transfer stations and transportation due to the negative impacts of COVID-19; and

•$(7.6) million from lower collection volumes due to the negative impacts of COVID-19.

Surcharges and other fees.

The surcharge and other fees impact on the change in quarterly and year-to-date solid waste revenues is associated primarily with the Energy component of the Energy and Environmental fee and the Sustainability Recycling Adjustment ~~fee, respectively, that has anniversaried.~~fee. The Energy component of the fee floats on a monthly basis based on diesel fuel prices. The Sustainability Recycling Adjustment fee floats on a monthly basis based on recycled commodity prices.

Commodity price and volume.

The commodity price and volume change ~~component~~impact on the change in quarterly and year-to-date solid waste revenues ~~growth~~ is the result of ~~$(0.1) million~~favorable energy and ~~$(0.4) million, respectively, from lower~~commodity pricing in the quarter and higher landfill gas-to-energy volumes, more than offset on a year-to-date basis by lower commodity processing volumes.

Acquisitions.

The acquisitions impact on the change ~~component~~ in quarterly and year-to-date solid waste revenues ~~growth~~ is ~~primarily~~ the result of the acquisition of three tuck-in solid waste collection ~~businesses~~business in the ~~quarter~~six months ended June 30, ~~2019~~2020 and ~~two businesses comprised~~the acquisition of four tuck-in solid waste collection ~~and transfer operations throughout the prior year.~~

~~Closed landfill.~~

~~The closed landfill change component in quarterly and year-to-date solid waste revenues growth is the result of the closure of the Southbridge Landfill in the quarter ended December 31, 2018.~~

~~Western Region~~

~~A summary of the period-to-period changes in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:~~

Period-to-Period Change for the Three Months Ended September 30, 2019 vs. 2018 Period-to-Period Change for the Nine Months Ended September 30, 2019 vs. 2018
Amount % Growth Amount % Growth
Price $ 3.9 5.2 % $ 10.0 4.8 %
Volume (1)
1.2 1.5 % (2.0) (1.0) %
Surcharges and other fees 0.3 0.4 % 1.8 0.8 %
Commodity price and volume (0.4) (0.5) % (3.0) (1.4) %
Acquisitions 13.9 18.7 % 35.9 17.1 %
Closed operations (0.2) (0.2) % (0.8) (0.4) %
Solid waste revenues $ 18.7 25.1 % $ 41.9 19.9 %

~~(1)Adjusted for $0.3 million of inter-company movements between solid waste collection volume and Customer Solutions associated with the acquisition of a business.~~

~~Price.~~

~~The price change component in quarterly solid waste revenues growth is the result of the following:~~

•~~$2.1 million from favorable collection pricing; and~~

•~~$1.8 million from favorable disposal pricing related to landfills and transfer stations.~~

~~The price change component in year-to-date solid waste revenues growth is the result of the following:~~

•~~$5.9 million from favorable collection pricing; and~~

•~~$4.1 million from favorable disposal pricing related to landfills and transfer stations.~~

~~Volume.~~

~~The volume change component in quarterly solid waste revenues growth is the result of the following:~~

•~~$1.3 million from higher disposal volumes related to higher transfer station and transportation volumes; partially offset by~~

•~~$(0.1) million from lower collection volumes.~~

~~The volume change component in year-to-date solid waste revenues growth is the result of the following:~~

•$(1.6) million from lower transportation volumes associated with a large contaminated soils project that occurred in the prior year; partially offset by higher transfer station and landfill volumes; and

•~~$(0.4) million from lower collection volumes.~~

~~Surcharges and other fees.~~

The surcharge and other fees change component in quarterly and year-to-date solid waste revenues growth is associated primarily with the Energy component of the Energy and Environmental fee and the portion of the Sustainability Recycling Adjustment fee, respectively, that has anniversaried. The Energy component of the fee floats on a monthly basis based on diesel fuel prices. The Sustainability Recycling Adjustment fee floats on a monthly basis based on recycled commodity prices.

~~Commodity price and volume.~~

The commodity price and volume change component in quarterly and year-to-date solid waste revenues growth of $(0.4) million and $(3.0) million, respectively, is the result of lower commodity processing volumes, lower landfill gas-to-energy volumes year-to-date, unfavorable energy pricing and unfavorable commodity pricing.

~~Acquisitions.~~

~~The acquisitions change component in quarterly and year-to-date solid waste revenues growth is primarily the result of the acquisition of~~businesses, a business comprised of solid waste collection, transfer and recycling operations ~~in the quarter ended June 30, 2019; the acquisition of three tuck-in solid waste collection businesses~~ and a business comprised of solid waste hauling and transfer assets in the ~~three months ended September 30, 2019; and six solid waste collection businesses and one transfer business throughout the~~ prior year.

~~Closed operations.~~

~~The closed operations change component in quarterly and year-to-date solid waste revenues growth is the result of the closure of a transfer station.~~

Operating Income

A summary of operating income (loss) by operating segment (in millions) follows:


		Three Months Ended September 30,						$ Change		Nine Months Ended September 30,									$ Change		Three Months Ended June 30,								$ Change		Six Months Ended June 30,			$ Change
		2019		2018						2019		2018					$ Change			2020			2019					$ Change				2019	$ Change
Eastern	Eastern	$	2.1	$	15.2	$	(13.1)	$	5.7	$	17.7	$	(12.0)	Eastern	$	4.4			4.2		$	0.2		$	5.3	$	3.6		$	1.7
Western	Western	15.1		13.9		1.2		30.8		33.1		(2.3)		Western	11.9			10.4			1.5			17.5		15.7			1.8
Recycling		0.1		(0.5)		0.6		(1.0)		(7.9)		6.9
Other		1.2		0.3		0.9		3.0		2.0		1.0
Resource solutions														Resource solutions	1.8			1.6			0.2			2.8		2.0			0.8
Corporate entities														Corporate entities	(0.7)			(0.7)			—			(1.1)		(1.3)			0.2
Operating income	Operating income	$	18.5	$	28.9	$	(10.4)	$	38.5	$	44.9	$	(6.4)	Operating income	$	17.4		$	15.5		$	1.9		$	24.5	$	20.0		$	4.5

Eastern Region

Operating results ~~declined $(13.1)~~improved $0.2 million quarterly and ~~$(12.0)~~$1.7 million year-to-date. Excluding the impact of the Southbridge Landfill closure charge ~~(settlement), net, which included a $(10.0) million insurance recovery in prior year, the multiemployer pension plan withdrawal costs, the development project charge~~ and the expense from acquisition activities, ~~and other items,~~ our operating performance in the three and ~~nine~~six months ended ~~September~~June 30, ~~2019 improved year-over-year~~2020 was driven by lower revenues due to the negative impact of COVID-19 on volumes in the quarter and, to a lesser extent, year-to-date and the following cost changes:

Cost of operations: Cost of operations decreased $(4.7) million quarterly and $(2.3) million year-to-date due to the following:

•lower disposal costs associated with lower volumes due to the negative impacts of COVID-19 and to a lesser extent our focus on pricing;

•lower hauling and third-party transportation costs associated with lower collection volumes in the quarter due to the negative impacts of COVID-19, which offset additional costs related to acquisition activity and higher transportation rates;

•lower labor and related benefit costs due to decreased overtime and lower benefit costs more than offsetting a discretionary bonus for our front-line employees;

•lower direct operational costs in the quarter associated with landfill operations and lower equipment costs;

•lower fuel costs due primarily to lower fuel prices and fleet efficiency; and

•lower fleet maintenance costs due to less wear and tear in the quarter based on activity levels and lower volumes as a result of COVID-19; partially offset by

•higher facility maintenance costs associated with acquisition activity and related business growth.

General and administration: General and administration expense increased $0.4 million quarterly and $0.1 million year-to-date due to higher accrued incentive compensation and professional fees in the quarter combined with higher bad debt expense year-to-date based on the continued economic downturn associated with COVID-19 and a discretionary bonus for our hourly back-office employees.

Depreciation and amortization: Depreciation and amortization expense remained flat quarterly and increased $0.7 million year-to-date due to higher depreciation and amortization expense associated with the timing of acquisition activity in prior year.

Western Region

Operating results improved $1.5 million quarterly and $1.8 million year-to-date. Excluding the impact of the expense from acquisition activities, our operating performance in the three and six months ended June 30, 2020 was driven by revenue growth and the following cost changes:

Cost of operations: Cost of operations increased ~~$4.1~~$1.5 million quarterly and ~~$10.2~~$12.9 million year-to-date due to the following:

•lower disposal costs associated with lower volumes, including commercial collection, construction and demolition, and landfills, due to thenegative impacts of COVID-19 combined with lower volumes due to our focus on pricing; more than offset on a year-to-date basis with higher disposal costs associated with increased disposal pricing in the northeastern United Sates and additional volumes related to acquisition activity;

•higher hauling and third-party transportation costs associated with higher collection volumes related to acquisition activity and higher transportation rates;

•higher ~~disposal~~maintenance and repair costs associated with higher facility maintenance costs, and to a lesser extent, higher fleet maintenance costs associated with acquisition activity and ~~increased disposal pricing~~related business growth, which was partially offset in the ~~northeastern United States;~~quarter associated with less wear and tear based on activity levels and lower volumes as a result of COVID-19; and

•higher labor costs associated with acquisition activity and ~~wage increases due to tight labor markets;~~

•~~higher fuel costs associated with higher volumes on acquisition activity; and~~

•~~higher maintenance and repair costs associated with higher fleet and facility maintenance costs due to acquisition activity and related business growth;~~a discretionary bonus for our front-line employees, partially offset by lower labor costs on decreased overtime and lower benefit costs; partially offset by

•lower direct operational costs associated ~~with: lower landfill operating landfill lease amortization, lower host royalty fees and~~with lower landfill operating costs, ~~driven~~offset on a year-to-date basis by higher auto insurance costs, associated primarily bywith claims activity in the ~~closure of the Southbridge Landfill,~~first quarter, and higher operating costs related to business growth; and

•lower ~~rent expense~~fuel costs associated with ~~operating leases.~~lower fuel prices and fleet efficiency, partially offset by higher volumes associated with acquisition activity.

General and administration: General and administration expense increased $0.4 million quarterly, but remained flat year-to-date as higher labor and related benefit costs associated with acquisition activity was offset year-to-date by lower shared overhead costs and lower professional service fees related to reduced legal and consulting costs.

~~Depreciation and amortization: Depreciation and amortization expense decreased $(0.9)~~$0.8 million quarterly and $(2.3) million year-to-date due to lower landfill amortization expense associated primarily with the closure of Southbridge Landfill, partially offset by higher depreciation and amortization expense associated with acquisition activity.

~~Western Region~~

Operating results improved $1.2 million quarterly and declined $(2.3) million year-to-date. Excluding the impact of the expense from acquisition activities and other items, our operating performance in the three and nine months ended September 30, 2019 was driven by revenue growth and the following cost changes:

~~Cost of operations: Cost of operations increased $17.7 million quarterly and $40.3 million year-to date due to the following:~~

•higher hauling and third-party transportation costs associated with higher collection volumes related to acquisition activity and higher transportation rates, partially offset by a reduction of hauling and third-party transportation costs year-to-date associated with lower transportation volumes related to a large contaminated soils project that occurred in prior year;

•~~higher disposal costs associated with additional volumes related to acquisition activity and increased disposal pricing in the northeastern United States;~~

•~~higher labor costs related to acquisition activity and wage increases due to tight labor markets;~~

•~~higher direct operational costs related to higher landfill operating costs and higher auto insurance costs associated primarily with claims activity;~~

•~~higher fuel costs due to higher volumes associated with acquisition activity; and~~

•~~higher fleet and facility maintenance costs due to acquisition activity and related business growth.~~

~~General and administration: General and administration expense increased $1.6 million quarterly and $4.9~~$2.1 million year-to-date due to higher labor ~~and related benefit~~ costs associated with acquisition activity, higher accrued incentive compensation and ~~an increased allocation of shared overhead costs based on business growth.~~a discretionary bonus for our hourly back-office employees.

Depreciation and amortization: Depreciation and amortization expense increased ~~$3.8~~$2.2 million quarterly and ~~$9.1~~$5.2 million year-to-date due primarily to acquisition ~~activity.~~activity and higher landfill amortization expense associated with changes in cost estimates and other assumptions, partially offset by lower landfill volumes associated with the negative impacts of COVID-19.

~~Recycling~~Resource Solutions

Operating results improved ~~$0.6~~$0.2 million quarterly and ~~$6.9~~$0.8 million ~~year-to-date. Excluding~~year-to-date due to the ~~impact of the contract settlement charge, our~~following:

Recycling.

Our operating performance in the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 improved primarily due to revenue growth ~~year-to-date~~ on higher ~~commodity volumes and~~ recycling processing fees ~~offset quarterly by unfavorable commodity pricing,~~and acquisition activity combined with lower operating costs on a year-to-date basis, including lower ~~third-party disposal~~maintenance costs and lower ~~purchased material~~direct operational costs, ~~year-to-date on reduced commodity pricing~~partially offset by higher depreciation expense.

Organics.

Our operating performance in the ~~marketplace.~~three and six months ended June 30, 2020 improved as revenue growth on higher volumes outpaced higher operating costs driven by two large lower margin transportation and disposal contracts.

Customer solutions.

~~Other~~

~~Operating results improved $0.9 million quarterly and $1.0 million year-to-date based on the following:~~

•~~improved~~Our operating performance ~~of our Customer Solutions line-of-business,~~in the three and six months ended June 30, 2020 declined as revenue growth associated with increased volumes was outpaced by higher cost of operations associated with the corresponding increase in hauling, transportation and disposal ~~costs;~~costs and

•improved operating performance of our Organics line-of-business, specifically in the quarter, as new disposal volumes that were previously directed to third-party sites for the first half of the year were internalized in the three months ended September 30, 2019, therefore, reducing third-party transportation higher labor and disposal costs in the quarter. This offset.the impact of intercompany profits in our Organics line-of-business passing through to landfill disposal sites, declining margins as higher revenues, which were driven by two large transportation and disposal contracts, also resulted in higher third-party transportation and disposal costs year-to-date.personnel costs.

Liquidity and Capital Resources

Recent Events

We ~~continually~~continue to monitor the impact that the COVID-19 pandemic has had and will continue to have on our actual and forecasted cash flows, our liquidity, and our capital requirements in order to properly manage our ~~cash~~liquidity needs ~~based on~~as we move forward. Because of the ~~capital intensive~~ nature of ~~our business. Our capital requirements include fixed asset purchases (including~~the services we provide, we expect to continue to generate positive operating cash flows through stable revenue sources. To counter the impact of expected revenue declines, we have initiated steps to reduce discretionary spending and delay certain capital expenditures ~~for vehicles), debt servicing, landfill development~~ and ~~cell construction, landfill site and cell closure,~~can further scale down these expenditures to meet liquidity needs.

We have $135.9 million of undrawn capacity from our $200.0 million revolving line of credit facility ("Revolving Credit Facility") as ~~well as acquisitions. We generally~~of June 30, 2020 to help meet our liquidity needs, ~~from operating cash flows~~ and ~~borrowings from~~ our ~~$200.0 million~~next significant debt maturity, which is comprised of our Revolving Credit ~~Facility.~~Facility and term loan A facility ("Term Loan Facility", together with the Revolving Credit Facility, the "Credit Facility"), is in May 2023. We believe that we will remain in compliance with all necessary covenants of our Credit Facility over the remaining term of this facility.

A summary of cash and cash equivalents, restricted assets and ~~long-term~~ debt balances, excluding any ~~unamortized debt discount and~~ debt issuance costs (in millions), follows:


		September 30, 2019		December 31, 2018			June 30, 2020		December 31, 2019
Cash and cash equivalents	Cash and cash equivalents	$	5.0	$	4.0	Cash and cash equivalents	$	3.1	$	3.5
Restricted assets:	Restricted assets:					Restricted assets:

Restricted investment securities - landfill closure	Restricted investment securities - landfill closure	$	1.4	$	1.2	Restricted investment securities - landfill closure	$	1.6	$	1.6

Long-term debt:
Debt:						Debt:
Current portion	Current portion	$	3.6	$	2.3	Current portion	$	6.9	$	4.3
Long-term portion		533.2		552.9
Total long-term debt		$	536.8	$	555.2
Non-current portion						Non-current portion	536.2		518.4
Total debt						Total debt	$	543.1	$	522.7

Summary of Cash Flow Activity

A summary of cash flows (in millions) follows:

Nine Months Ended September 30, $
Change
2019 2018
Net cash provided by operating activities $ 71.5 $ 89.9 $ (18.4)
Net cash used in investing activities $ (148.6) $ (109.9) $ (38.7)
Net cash provided by financing activities $ 78.1 $ 21.1 $ 57.0


	Six Months Ended June 30,						$ Change
	2020		2019
Net cash provided by operating activities	$	62.5	$	38.3	$	24.2
Net cash used in investing activities	$	(71.5)	$	(74.0)	$	2.5
Net cash provided by financing activities	$	8.6	$	34.9	$	(26.3)

4338

Cash flows from operating activities.

A summary of operating cash flows (in millions) follows:


		Nine Months Ended September 30,							Six Months Ended June 30,
		2019		2018			2020		2019
Net income	Net income	$	22.6	$	20.1	Net income	$	13.1	$	10.2
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	58.1		51.6		Depreciation and amortization	43.5		37.2
Depletion of landfill operating lease obligations	Depletion of landfill operating lease obligations	5.6		7.8		Depletion of landfill operating lease obligations	3.5		3.6
Interest accretion on landfill and environmental remediation liabilities	Interest accretion on landfill and environmental remediation liabilities	5.3		4.3		Interest accretion on landfill and environmental remediation liabilities	3.5		3.6
Amortization of debt issuance costs and discount on long-term debt		1.7		1.9
Amortization of debt issuance costs						Amortization of debt issuance costs	1.1		1.2
Stock-based compensation	Stock-based compensation	5.2		6.4		Stock-based compensation	3.4		3.3
Right-of-use asset - operating lease expense	Right-of-use asset - operating lease expense	7.3		—		Right-of-use asset - operating lease expense	4.6		4.9
Gain on sale of property and equipment		(0.8)		(0.4)
Loss (gain) on sale of property and equipment						Loss (gain) on sale of property and equipment	0.1		(0.3)
Southbridge Landfill non-cash closure charge	Southbridge Landfill non-cash closure charge	0.1		1.4		Southbridge Landfill non-cash closure charge	—		0.2
Southbridge Landfill insurance recovery for investing activities		—		(3.5)
Development project charge		—		0.3
Non-cash expense from acquisition activities and other items		0.1		0.2
Withdrawal cost - multiemployer pension plan		3.6		—
Loss on debt extinguishment		—		7.4

Non-cash expense from acquisition activities						Non-cash expense from acquisition activities	0.6		(0.1)

Deferred income taxes	Deferred income taxes	(1.3)		0.1		Deferred income taxes	1.3		(1.6)
		107.5		97.6			74.7		62.2
Changes in assets and liabilities, net	Changes in assets and liabilities, net	(36.0)		(7.7)		Changes in assets and liabilities, net	(12.2)		(23.9)
Net cash provided by operating activities	Net cash provided by operating activities	$	71.5	$	89.9	Net cash provided by operating activities	$	62.5	$	38.3

A summary of the most significant items affecting the change in our operating cash flows follows:

~~Improved~~Net cash provided by operating activities increased $24.2 million in the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. This was the result of improved operational performance combined with the favorable cash flow impact associated with the changes in our assets and liabilities, net of effects of acquisitions and divestitures. For discussion of our improved operational performance in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018 was due to~~2019, see "Results of Operations" above. The $(11.7) million decrease in the ~~following:~~

•increased revenues of $63.8 million associated with higher collection and transfer station revenues on higher pricing and acquisition activity, higher landfill revenues on higher pricing and volumes, and higher revenues on volumes in our Customer Solutions, Organics and Recycling lines-of-business; partially mitigated by lower disposal revenues on lower transportation volumes and the closure of our Southbridge Landfill and lower landfill gas-to-energy and processing commodity revenues on lower volumes and pricing; partially offset by

•higher cost of operations of $46.2 million driven by business growth resulting in higher third-party direct costs, higher labor costs, higher fuel costs and higher fleet maintenance and facility costs; and

•~~higher general and administration expense of $5.0 million attributed primarily to higher labor and related benefit costs associated with acquisition activity.~~

~~The~~unfavorable cash flow impact associated with the changes in our assets and liabilities, net of effects of acquisitions and divestitures, which are affected by both cost changes and the timing of payments, in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 was due to the following:

•~~an unfavorable~~a $20.3 million favorable impact to operating cash flows associated with the change in accounts receivable due to increased collection efforts;

•a $3.9 million favorable impact to operating cash flows associated with the change in prepaid expenses, inventories and other assets;

•a $2.4 million favorable impact to operating cash flows associated with the change in accrued expenses and other ~~liabilities associated with higher final capping, closure~~liabilities; and post-closure payments, higher payments associated with the environmental remediation of our Potsdam site, and higher payroll and related costs. The cash flow impact associated with the changes in our assets and liabilities, net of effects of acquisitions and divestitures was also impacted by changes to the accounting for operating leases as a result of the implementation of Accounting Standards Update No. 2016-02, as amended through March 2019: Leases (~~Topic 842~~)~~effective January 1, 2019, which are now accounted for as operating lease liabilities on our consolidated balance sheets;~~

•~~an unfavorable~~a $0.8 million favorable impact to operating cash flows associated with lower landfill operating lease contract expenditures being reclassified from investing activities to operating activities within our consolidated statements of cash flows as a result of the implementation of Accounting Standards Update No. 2016-02, as amended through March 2019: Leases (~~Topic 842~~)~~effective January 1, 2019;~~expenditures; partially offset by

•~~an unfavorable impact to operating cash flows associated with cash outflows associated with prepaid expenses, inventories and other assets;~~

•ana $(13.6) million unfavorable impact to operating cash flows associated with the change in accounts ~~payable; and~~payable.

•
~~an unfavorable impact to operating cash flows associated with the change in accounts receivable.~~

Cash flows from investing activities.

A summary of investing cash flows (in millions) follows:


		Nine Months Ended September 30,							Six Months Ended June 30,
		2019		2018			2020		2019
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	$	(73.5)	$	(58.2)	Acquisitions, net of cash acquired	$	(20.1)	$	(27.7)

Additions to property, plant and equipment	Additions to property, plant and equipment	(76.0)		(51.8)		Additions to property, plant and equipment	(51.6)		(46.7)
Payments on landfill operating lease contracts		—		(5.0)

Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	0.6		0.6		Proceeds from sale of property and equipment	0.2		0.4
Proceeds from Southbridge Landfill insurance recovery for investing activities		—		3.5
Proceeds from property insurance settlement		0.3		1.0

Net cash used in investing activities	Net cash used in investing activities	$	(148.6)	$	(109.9)	Net cash used in investing activities	$	(71.5)	$	(74.0)

A summary of the most significant items affecting the change in our investing cash flows follows:

Acquisitions, net of cash acquired. In the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we acquired ~~six~~four businesses: three tuck-in solid waste collection ~~businesses, a~~ business ~~comprised of solid waste collection, transfer~~in our Western region and one recycling ~~operations and a business comprised of solid waste hauling and transfer assets~~operation in our Resource Solutions segment for total consideration of ~~$81.0~~$22.0 million, including ~~$71.0~~$19.2 million in cash, and paid ~~$2.5~~$0.9 million in holdback payments on businesses previously acquired, as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019 during which we ~~acquired one~~paid $28.9 million in total consideration, including $25.5 million in cash, to acquire three tuck-in solid waste collection businessses and a busines comprised of solid waste collection, transfer and ~~processing business~~recycling operations and ~~three solid waste collection businesses, including a transfer station, for total consideration of $67.1 million, including $57.8 million in cash and $0.4~~paid $2.2 million in holdback payments on businesses previously acquired.

Capital expenditures. Capital expenditures were ~~$24.2~~$4.9 million higher in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 primarily due toto:

•$3.2 million in additional capital expenditures from the integration of newly acquired operations, which includes planned capital expenditures following an acquisition, as well as non-routine development investments that are expected to provide long-term returns; and

•$3.5 million in additional capital expenditures from phase VI construction and development costs related to long-term infrastructure at the Subtitle D landfill in Coventry, Vermont ("Waste USA Landfill") to facilitate future landfill airspace construction which will significantly enhance the economic useful life of the Waste USA Landfill once construction is finished; partially offset by

•$(2.0) million from lower capital expenditures primarily associated with ~~timing differences, business growth~~replacement costs for vehicles, machinery equipment and ~~acquisition activities.~~

~~Payments on landfill operating lease contracts. As a result of the implementation of Topic 842, payments on landfill operating lease contracts are classified as operating cash outflows in the nine months ended September 30, 2019 as compared~~containers due to ~~investing cash outflows in the nine months ended September 30, 2018.~~

~~Proceeds from Southbridge Landfill insurance recovery for investing activities.~~ In the nine months ended September 30, 2018, we recorded a recovery on environmental insurance settlement associated with the Southbridge Landfill closure, of which $3.5 million related to the recovery of net cash previously used in investing activities.age or obsolescence.

Cash flows from financing activities.

A summary of financing cash flows (in millions) follows:


		Nine Months Ended September 30,							Six Months Ended June 30,
		2019		2018			2020		2019
Proceeds from long-term borrowings	Proceeds from long-term borrowings	$	121.5	$	566.8	Proceeds from long-term borrowings	$	91.2	$	41.4
Principal payments on long-term debt	Principal payments on long-term debt	(149.8)		(540.6)		Principal payments on long-term debt	(82.7)		(109.2)
Payments of debt issuance costs		—		(5.6)

Proceeds from the exercise of share based awards	Proceeds from the exercise of share based awards	3.4		0.5		Proceeds from the exercise of share based awards	0.1		2.3
Proceeds from the public issuance of Class A Common Stock	Proceeds from the public issuance of Class A Common Stock	100.4		—		Proceeds from the public issuance of Class A Common Stock	—		100.4
Proceeds from the unregistered sale of Class A Common Stock		2.6		—

Net cash provided by financing activities	Net cash provided by financing activities	$	78.1	$	21.1	Net cash provided by financing activities	$	8.6	$	34.9

A summary of the most significant items affecting the change in our financing cash flows follows:

Debt activity. Debt borrowings ~~decreased~~increased by ~~$(445.3)~~$49.8 million and our debt payments decreased by ~~$(390.8)~~$(26.5) million in the ~~nine~~six months ended ~~September~~June 30, 2020 as compared to the six months ended June 30, 2019. The ~~decrease~~increase in financing cash flows related to debt activity is associated with ~~our efforts to paydown our Revolving Credit Facility in~~ the ~~nine months ended September 30, 2019 combined with the changes in our capital structure in the nine months ended September 30, 2018, including the refinancing~~use of ~~our Term Loan B Facility with our existing Credit Facility, the remarketing of our Vermont Bonds and~~proceeds from the issuance of ~~$15.0 million aggregate principal amount of Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015R-2 (“FAME Bonds 2015R-2”).~~

~~Payments of debt issuance costs.~~ ~~We made $5.6 million of debt issuance cost payments~~Class A Common Stock in the ~~nine months ended September 30, 2018 related primarily to the issuance of FAME Bonds 2015R-2 and the refinancing of our Credit Facility.~~prior year offset by higher net cash provided by operating activities.

Proceeds from the exercise of share based awards. We received ~~$3.4~~$2.3 million of cash receipts associated with the exercise of stock options in the ~~nine~~six months ended ~~September~~June 30, 2019 ~~as compared to $0.5 million in the nine months ended September 30, 2018~~ due primarily to the appreciation of our stock ~~price.~~price in the prior year.

Proceeds from the public issuance of Class A Common Stock. In the ~~nine~~six months ended ~~September~~June 30, 2019, we completed a public issuance of 3.6 million shares of our Class A common stock at a public offering price of $29.50 per share. The offering resulted in net proceeds to us of $100.4 million, after deducting underwriting discounts, commissions and offering expenses. The net proceeds from the offering were and are to be used for general corporate purposes, including potential acquisitions or development of new operations or assets with the goal of complementing or expanding our business, working capital and capital expenditures.

~~Proceeds from the unregistered sale of Class A Common Stock~~. In the nine months ended September 30, 2019, we completed the unregistered sale of 59,307 shares of our Class A common stock at a price of $44.15 per share. The sale resulted in net proceeds to us of $2.6 million. The shares were previously held in escrow according to the terms of our acquisition of Waste-Stream Inc. ("WSI") and released to us for liquidation to offset costs associated with the environmental remediation of WSI's Potsdam, New York site. See Note 9, ~~Commitments and Contingencies~~ ~~to our consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q for additional disclosure.~~

Outstanding Long-Term Debt

Credit Facility

As of ~~September~~June 30, ~~2019,~~2020, we had outstanding $350.0 million aggregate principal amount of borrowings under our Term Loan Facility and ~~43.4~~$37.7 million aggregate principal amount of borrowings under our $200.0 million Revolving Credit Facility. The Credit Facility has a 5-year term that matures in May 2023 and bears interest at a rate of LIBOR plus 1.75% per annum, which will be reduced to a rate of LIBOR plus as low as 1.25% upon us reaching a consolidated net leverage ratio of less than 2.25x.

Our Credit Facility is guaranteed jointly and severally, fully and unconditionally by all of our significant wholly-owned subsidiaries and secured by substantially all of our assets. As of ~~September~~June 30, ~~2019,~~2020, further advances were available under the Revolving Credit Facility in the amount of ~~$132.0~~$135.9 million. The available amount is net of outstanding irrevocable letters of credit totaling ~~$24.6~~$26.4 million, at which date no amount had been drawn. We have the right to request, at our discretion, an increase in the amount of loans under the Credit Facility by an aggregate amount of $125.0 million, subject to the terms and conditions set forth in the credit agreement ("Credit Agreement").


		Twelve Months Ended September 30, 2019	Covenant Requirement at September 30, 2019		Twelve Months Ended June 30, 2020	Covenant Requirement at June 30, 2020
Maximum consolidated net leverage ratio (1)	Maximum consolidated net leverage ratio (1)	3.24	4.50	Maximum consolidated net leverage ratio (1)	3.08	4.00
Minimum interest coverage ratio	Minimum interest coverage ratio	6.87	3.00	Minimum interest coverage ratio	7.98	3.00

(1)The maximum consolidated net leverage ratio is calculated as consolidated funded debt, net of unencumbered cash and cash equivalents in excess of $2.0 million (calculated at ~~$533.7~~$542.0 million as of ~~September~~June 30, ~~2019,~~2020, or ~~$536.8~~$543.1 million of consolidated funded debt less ~~$2.9~~$1.1 million of cash and cash equivalents in excess of $2.0 million as of ~~September~~June 30, ~~2019)~~2020), divided by consolidated EBITDA. Consolidated EBITDA is based on operating results for the twelve months preceding the measurement date of ~~September~~June 30, ~~2019.~~2020. Consolidated funded debt, net of unencumbered cash and cash equivalents in excess of $2.0 million, and consolidated EBITDA as defined by the Credit Agreement ("Consolidated EBITDA") are non-GAAP financial measures that should not be considered an alternative to any measure of financial performance calculated and presented in accordance with generally accepted accounting principles in the United States. A reconciliation of net cash provided by operating activities to minimum consolidated EBITDA is as follows (in millions):


	Twelve Months Ended ~~September~~June 30, ~~2019~~2020
Net cash provided by operating activities	$	~~102.4~~141.1
Changes in assets and liabilities, net of effects of acquisitions and divestitures	~~33.9~~16.6

Gain on sale of property and equipment	~~0.9~~0.4
Non-cash expense from acquisition activities ~~and other items~~	~~(0.6)~~(0.7)



Withdrawal costs - multiemployer pension plan	~~(3.6)~~(2.2)
Southbridge Landfill non-cash closure charge	~~(14.9)~~0.1
~~Impairment of investment~~	~~(1.1)~~
Operating lease right-of-use assets expense	~~(7.3)~~(9.2)
~~Stock based~~Stock-based compensation	(7.3)
Interest expense, less amortization of debt issuance costs	~~23.5~~21.8
Benefit for income taxes, net of deferred income taxes	~~(0.8)~~(1.1)
Adjustments as allowed by the Credit Agreement	~~39.6~~16.6
Consolidated EBITDA	$	~~164.7~~176.1

In addition to the financial covenants described above, the Credit Agreement also contains a number of important customary affirmative and negative covenants which restrict, among other things, our ability to sell assets, incur additional debt, create liens, make investments, and pay dividends. We do not believe that these restrictions impact our ability to meet future liquidity needs. As of ~~September~~June 30, ~~2019,~~2020, we were in compliance with the covenants contained in the Credit Agreement.

An event of default under any of our debt agreements could permit some of our lenders, including the lenders under the Credit Facility, to declare all amounts borrowed from them to be immediately due and payable, together with accrued and unpaid interest, or, in the case of the Credit Facility, terminate the commitment to make further credit extensions thereunder, which could, in turn, trigger cross-defaults under other debt obligations. If we were unable to repay debt to our lenders or were otherwise in default under any provision governing our outstanding debt obligations, our secured lenders could proceed against us and against the collateral securing that debt.

Based on the seasonality of our business, operating results in the late fall, winter and early spring months are generally lower than the remainder of our fiscal year. Given the cash flow impact that this seasonality, the capital intensive nature of our business and the timing of debt payments has on our business, we typically incur higher debt borrowings in order to meet our liquidity needs during these times. Consequently, our availability and performance against our financial covenants may tighten during these times as well.

Tax-Exempt Financings

New York Bonds. As of ~~September~~June 30, ~~2019,~~2020, we had outstanding $25.0 million aggregate principal amount of ~~Solid Waste Disposal Revenue Bonds Series 2014 ("~~New York Bonds ~~2014")~~2014 and $15.0 million aggregate principal amount of New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014R-2 ("New York Bonds 2014R-2") issued by the New York State Environmental Facilities Corporation under the indenture dated December 1, 2014 (collectively, the “New York Bonds”). The New York Bonds 2014 accrue interest at ~~3.75%~~2.875% per annum through December ~~1, 2019,~~2, 2029, at which time they may be converted from a fixed rate to a variable rate. The New York Bonds 2014R-2 accrue interest at 3.125% per annum through May 31, 2026, at which time they may be converted from a fixed rate to a variable rate. The New York Bonds, which are unsecured and guaranteed jointly and severally, fully and unconditionally by all of our significant wholly-owned subsidiaries, require interest payments on June 1 and December 1 of each year and mature on December 1, 2044. We borrowed the proceeds of the New York Bonds to finance or refinance certain capital projects in the state of New York and to pay certain costs of issuance of the New York Bonds.

Maine Bonds. As of ~~September~~June 30, ~~2019,~~2020, we had outstanding $25.0 million aggregate principal amount of Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series ~~2015R-3~~2005 (“FAME Bonds ~~2005R-3”~~2005R-3"), $15.0 million aggregate principal amount of Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015 (“FAME Bonds 2015R-1”), and $15.0 million aggregate principal amount of Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015R-2 (“("FAME Bonds ~~2015R-2”) (collectively,~~2015R-2", collectively with the FAME Bonds 2005R-3 and the FAME Bonds 2015R-1 the "FAME Bonds"). The FAME Bonds 2005R-3 accrue interest at 5.25% per annum, and interest is payable semiannually ~~in arrears~~ on February 1 and August 1 of each year until such bonds mature on January 1, 2025. The FAME Bonds 2015R-1 accrue interest at 5.125% per annum through August 1, 2025, at which time they may be converted from a fixed to a variable rate, and interest is payable semiannually ~~in arrears~~ on February 1 and August 1 of each year until the FAME Bonds 2015R-1 mature on August 1, 2035. The FAME Bonds 2015R-2 accrue interest at 4.375% per annum through July 31, 2025, at which time they may be converted from a fixed to a variable rate, and interest is payable semiannually ~~each year~~ on May 1 and November 1 of each year until the FAME Bonds 2015R-2 mature on August 1, 2035. The FAME Bonds are unsecured and guaranteed jointly and severally, fully and unconditionally by all of our significant wholly-owned subsidiaries. We borrowed the proceeds of the offering of the FAME Bonds to finance or refinance the costs of certain of our solid waste landfill facilities and solid waste collection, organics and transfer, recycling and hauling facilities, and to pay certain costs of the issuance of the FAME Bonds.

Vermont Bonds. As of ~~September~~June 30, ~~2019,~~2020, we had outstanding $16.0 million aggregate principal amount of Vermont Economic Development Authority Solid Waste Disposal Long-Term Revenue Bonds Series 2013 (“("Vermont ~~Bonds”~~Bonds"). The Vermont Bonds, which are guaranteed jointly and severally, fully and unconditionally by all of our significant wholly-owned subsidiaries, accrue interest at ~~4.63%~~4.625% per annum through April 2, 2028, after which time there is a mandatory ~~tender.~~tender, and interest is payable semiannually on May 1 and November 1 of each year. The Vermont Bonds mature on April 1, 2036. We borrowed the proceeds of the Vermont Bonds to finance or refinance certain qualifying property, plant and equipment assets purchased in the state of Vermont.

New Hampshire Bonds. As of ~~September~~June 30, ~~2019,~~2020, we had outstanding $11.0 million aggregate principal amount of ~~unsecured Solid Waste Disposal Revenue Bonds Series 2013 issued by the Business Finance Authority of the State of~~ New Hampshire ~~(“New Hampshire Bonds”).~~Bonds. The New Hampshire Bonds, which are guaranteed jointly and severally, fully and unconditionally by all of our significant wholly-owned subsidiaries, ~~accrued~~accrue interest at ~~4.00%~~2.95% per annum through ~~October~~maturity on April 1, ~~2019.~~2029. During the fixed interest rate period, the New Hampshire Bonds are not ~~to be~~ supported by a letter of credit. Interest is payable ~~in arrears~~ on April 1 and October 1 of each year. ~~The New Hampshire Bonds mature on April 1, 2029.~~ We borrowed the proceeds of the New Hampshire Bonds to finance or refinance certain qualifying property, plant and equipment assets purchased in the state of New Hampshire.

In October 2019, we completed the remarketing of $11.0 million aggregate principal amount of New Hampshire Bonds. The New Hampshire Bonds accrue interest at 2.95% per annum from October 1, 2019 through final maturity on April 1, 2029.

Inflation

Although inflationary increases in costs have affected our historical operating margins, we believe that inflation generally has not had a significant impact on our operating results. Consistent with industry practice, most of our contracts provide for a pass-through of certain costs to our customers, including increases in landfill tipping fees and in some cases fuel costs, intended to

mitigate the impact of inflation on our operating results. We have also implemented a number of operating efficiency programs that seek to improve productivity and reduce our service costs, and a fuel surcharge, which is designed to recover escalating fuel price fluctuations above an annually reset floor. Based on these implementations, we believe we should be able to sufficiently offset most cost increases resulting from inflation. However, competitive factors may require us to absorb at least a portion of these cost increases. Additionally, management’s estimates associated with inflation have had, and will continue to have, an impact on our accounting for landfill and environmental remediation liabilities.

Regional Economic Conditions

Our business is primarily located in the northeastern United States. Therefore, our business, financial condition and results of operations are susceptible to downturns in the general economy in this geographic region and other factors affecting the region, such as state regulations and severe weather conditions. ~~We are unable to forecast or determine~~There can be no assurance that the ~~timing and/or~~northeastern United States will recover from the ~~future~~ impact of ~~a sustained~~COVID-19 mandated economic ~~slowdown.~~shutdowns at the same time as, or at the same rate as, other areas of the United States.

Seasonality and Severe Weather

Our transfer and disposal revenues historically have been higher in the late spring, summer and early fall months. This seasonality reflects lower volumes of waste in the late fall, winter and early spring months because:

•the volume of waste relating to C&D activities decreases substantially during the winter months in the northeastern United States; and

•decreased tourism in Vermont, New Hampshire, Maine and eastern New York during the winter months tends to lower the volume of waste generated by commercial and restaurant customers, which is partially offset by increased volume from the ski industry.

Because certain of our operating and fixed costs remain constant throughout the fiscal year, operating income is therefore impacted by a similar seasonality. Our operations can be adversely affected by periods of inclement or severe weather, which could increase our operating costs associated with the collection and disposal of waste, delay the collection and disposal of waste, reduce the volume of waste delivered to our disposal sites, increase the volume of waste collected under our existing contracts (without corresponding compensation), decrease the throughput and operating efficiency of our materials recycling facilities, or delay construction or expansion of our landfill sites and other facilities. Our operations can also be favorably affected by severe weather, which could increase the volume of waste in situations where we are able to charge for our additional services provided.

Our ~~Recycling~~recycling line of business in the Resource Solutions segment experiences increased volumes of fiber in November and December due to increased ~~shipping boxes and~~ retail activity during the holiday season.

Critical Accounting Policies and Estimates

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities, as applicable, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions and circumstances. Except for the adoption of the new accounting standards discussed in Note 2, Accounting Changes to our consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q, there were no material changes in the three months ended ~~September~~June 30, ~~2019~~2020 to the application of critical accounting policies and estimates as described in Item 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019.

New Accounting Pronouncements

For a description of the new accounting standards that may affect us, see Note 2, Accounting Changes to our consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q. ~~For a description of the impact of Accounting Standards Update No. 2016-02, as amended through March 2019: Leases (Topic 842), effective January 1, 2019 see Note 5,~~ ~~Leases~~ ~~to our consolidated financial statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q.~~

4943

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business we are exposed to market risks, including changes in interest rates and certain commodity prices. We have a variety of strategies to mitigate these market risks, including at times using derivative instruments to hedge some portion of these risks.

Interest Rate Volatility

Our strategy to ~~hedge against fluctuations in variable~~reduce exposure to interest ~~rates~~rate risk involves entering into interest rate derivative agreements to hedge against adverse movements in interest ~~rates. As~~rates related to the variable rate portion of ~~September~~our long-term debt. In the six months ended June 30, ~~2019,~~2020, we ~~are party~~entered into three forward starting interest rate derivative agreements with a total notional amount of $60.0 million that will serve to ~~nine~~replace existing interest rate derivative agreements upon their expiration between June 2022 and May 2023. In the six months ended June 30, 2020, we also amended three interest rate derivative agreements to ~~hedge~~settle each of the 1.0% floors and replace each with a 0.0% floor in line with our Term Loan Facility, which resulted in us dedesignating the original hedging relationships. We subsequently designated new hedging relationships between the three interest rate ~~risk~~derivative agreements and the variable rate interest payments related to the Term Loan Facility based on a quantitative assessment that was performed using regression analysis, which indicated that the hedging relationships were highly effective. Because the interest rate payments associated with the variable rate portion of our long-term ~~debt. The~~debt will still occur, the net loss of $(0.8) million associated with the dedesignated interest rate derivative agreements and the $0.4 million cash settlement received in exchange for settling the 1.0% floors in accumulated other comprehensive loss were not reclassified into earnings. Instead, this loss and settlement amount will continue to be reclassified from accumulated other comprehensive loss into interest expense as the interest payments affect earnings.

As of both June 30, 2020 and December 31, 2019, our interest rate derivative agreements have a total notional amount of ~~these hedging instruments is~~ $190.0 ~~million and~~million. According to the terms of the agreements, we receive interest based on the 1-month LIBOR index ~~restricted by a 1.00% floor in certain instances,~~ and pay interest at a weighted average ~~fixed~~ rate of approximately 2.54%. The agreements mature between February 2021 and May 2023.

Additionally, we have forward starting interest rate derivative agreements with a total notional amount of $125.0 million that mature between February 2026 and May 2028. We receive interest based on the 1-month LIBOR index, restricted by a 0.0% floor, and will pay interest at a weighted average rate of approximately 1.63%.

We have designated these derivative instruments as highly effective cash flow hedges, and therefore the change in fair value is recorded in our stockholders’ equity ~~(deficit)~~ as a component of accumulated other comprehensive loss and included in interest expense at the same time as interest expense is affected by the hedged transactions. Differences paid or received over the life of the agreements are recorded as additions to or reductions of interest expense on the underlying ~~debt.~~debt and included in cash flows from operating activities.

WeAs of June 30, 2020, we have ~~$143.4~~$155.4 million of fixed rate debt ~~as of September 30, 2019~~ in addition to the $190.0 million fixed through our interest rate derivative agreements. We had interest rate risk relating to approximately ~~$203.4~~$197.7 million of long-term debt ~~at September~~as of June 30, ~~2019.~~2020. The weighted average interest rate on the variable rate portion of long-term debt was approximately ~~3.8%~~2.0% at ~~September~~June 30, ~~2019.~~2020. Should the average interest rate on the variable rate portion of long-term debt change by 100 basis points, we estimate that our ~~quarterly~~annual interest expense would change by up to approximately ~~$0.5~~$2.0 million. ~~The remainder of our long-term debt is at fixed rates and not subject to interest rate risk.~~

Commodity Price Volatility

~~Should~~Information about commodity ~~prices change by $10 per ton, we estimate~~price market volatility market risk as of June 30, 2020 does not differ materially from that discussed in Part II, Item 7A of our annual operating income would change by approximately $0.3 million annually, or less than $0.1 million quarterly. Our sensitivity to changes in commodity prices is complex because each customer contract is unique relative to revenue sharing, tipping or processing fees and other arrangements. The above operating income impact may not be indicative of future operating results and actual results may vary materially.Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~September~~June 30, ~~2019.~~2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of ~~September~~June 30, ~~2019,~~2020, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal controls over financial reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended ~~September~~June 30, ~~2019~~2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.

ITEM 1. LEGAL PROCEEDINGS

Legal Proceedings

Environmental Remediation Liability (including related litigation)

Southbridge Recycling & Disposal Park, Inc.

remediation, diminution of property values, compensation for lost use and enjoyment of properties, enjoinment of further operation of the Southbridge Landfill, and costs of litigation, plus interest on any damage award, on behalf of the Residents. We believe the Litigation to be factually inaccurate, and without legal merit, and we and SRD ~~intend to~~are vigorously ~~defend~~defending the Litigation. Nevertheless, we believe it is reasonably possible that a loss will occur as a result of the Litigation although an estimate of loss cannot be reasonably provided at this time. We also continue to believe the Town should be responsible for costs or liabilities associated with the Litigation relative to alleged contamination originating from the unlined portion of the Southbridge Landfill, although there can be no assurance that we will not be required to incur some or all of such costs and liabilities.

We entered into an Administrative Consent Order on April 26, 2017 (the “ACO”), with MADEP, the Town, and the Town of Charlton, committing us to equally share the costs with MADEP, of up to $10.0 million ($5.0 million each) for the Town to install a municipal waterline in the Town of Charlton ("Waterline"). Upon satisfactory completion of that Waterline, and other matters covered by the ACO, we and the Town will be released by MADEP from any future responsibilities for the Charlton 21E Obligations. We also entered into an agreement with the Town on April 28, 2017 entitled the “21E Settlement and Water System Construction Funding Agreement” (the “Waterline Agreement”), wherein we and the Town released each other from claims arising from the Charlton 21E Obligations. Pursuant to the Waterline Agreement, the Town ~~will issue~~has issued a twenty (20) year bond for our portion of the Waterline costs ~~(up to $5.0 million).~~in the amount of $4.1 million. We have agreed to reimburse the Town for periodic payments under such bond. Construction of the ~~waterline~~Waterline is ~~near completion~~complete and homeowners are relying on municipal water supply. Remaining aspects of the project are minor and are expected to be completed in 2020. Bond reimbursement to the ~~fiscal year ending December 31, 2019.~~Town commenced in the quarter ended June 30, 2020.


		Nine Months Ended September 30,							Six Months Ended June 30,
		2019		2018			2020		2019
Beginning balance	Beginning balance	$	5.2	$	5.9	Beginning balance	$	4.6	$	5.2
Accretion expense	Accretion expense	0.1		0.1		Accretion expense	0.1		0.1

Revisions in estimates (1)						Revisions in estimates (1)	(0.2)		—
Obligations settled ~~(1)~~(2)	Obligations settled ~~(1)~~(2)	(0.6)		(0.6)		Obligations settled ~~(1)~~(2)	(0.3)		(0.4)
Ending balance	Ending balance	$	4.7	$	5.4	Ending balance	$	4.2	$	4.9

(2)Includes amounts that are being processed through accounts payable as a part of our disbursements cycle.

5247

Potsdam Environmental Remediation Liability

On December 20, 2000, the State of New York Department of Environmental Conservation (“DEC”) issued an Order on Consent (“Order”) which named Waste-Stream, Inc. (“WSI”), our subsidiary, General Motors Corporation (“GM”) and Niagara Mohawk Power Corporation (“NiMo”) as Respondents. The Order required that the Respondents undertake certain work on a 25-acre scrap yard and solid waste transfer station owned by WSI in Potsdam, New York, including the preparation of a Remedial Investigation and Feasibility Study (“Study”). A draft of the Study was submitted to the DEC in January 2009 (followed by a final report in May 2009). The Study estimated that the undiscounted costs associated with implementing the preferred remedies would be approximately $10.2 million. On February 28, 2011, the DEC issued a Proposed Remedial Action Plan for the site and accepted public comments on the proposed remedy through March 29, 2011. We submitted comments to the DEC on this matter. In April 2011, the DEC issued the final Record of Decision (“ROD”) for the site. The ROD was subsequently rescinded by the DEC for failure to respond to all submitted comments. The preliminary ROD, however, estimated that the present cost associated with implementing the preferred remedies would be approximately $12.1 million. The DEC issued the final ROD in June 2011 with proposed remedies consistent with its earlier ROD. An Order on Consent and Administrative Settlement naming WSI and NiMo as Respondents was executed by the Respondents and DEC with an effective date of October 25, 2013. On January 29, 2016, a Cost-Sharing Agreement was executed between WSI, NiMo, Alcoa Inc. (“Alcoa”) and Reynolds Metal Company (“Reynolds”) whereby Alcoa and Reynolds elected to voluntarily participate in the onsite remediation activities at a combined 15% participant share. The ~~remediation work has commenced and it is expected that the~~ majority of the remediation work ~~will be~~has been completed ~~in the fiscal year ending December 31, 2019.~~as of June 30, 2020. WSI is jointly and severally liable with NiMo, Alcoa and Reynolds for the total cost to remediate.

~~A summary of the changes to the~~ The environmental remediation liability associated with the Potsdam ~~environmental remediation liability follows (in millions):~~site was $1.2 million as of both June 30, 2020 and December 31, 2019.

Nine Months Ended September 30,
2019 2018
Beginning balance $ 5.6 $ 5.8
Obligations settled (1)
(1.8) (0.1)
Ending balance $ 3.8 $ 5.7

~~(1)Includes amounts that are being processed through accounts payable as a part of our disbursements cycle.~~

Legal Proceedings

North Country Environmental Services

On or about March 8, 2018, the Citizen Groups described above delivered correspondence to our subsidiary, North Country Environmental Services, Inc. ("NCES") and us, providing notice of the Citizen Groups' intent to sue NCES and us for violations of the CWA in conjunction with NCES's operation of its landfill in Bethlehem, New ~~Hampshire.~~Hampshire ("NCES Landfill"). On May 14, 2018, the Citizen Groups filed a lawsuit against NCES and us in the United States District Court for the District of New Hampshire (the “New Hampshire Court”) alleging violations of the CWA, arguing that ground water discharging into the Ammonoosuc River is a "point source" under the CWA (the "New Hampshire Litigation"). The New Hampshire Litigation seeks remediation and fines under the CWA. On June 15, 2018, we and NCES filed a Motion to Dismiss the New Hampshire Litigation. On July 13, 2018, the Citizen Groups filed objections to our Motion to Dismiss. On July 27, 2018, we filed a reply in support of our Motion to Dismiss. On September 25, 2018, the New Hampshire Court denied our Motion to Dismiss. In March of 2019, we filed a motion in the New Hampshire Litigation asking for a stay of this litigation until certain appeals from discordant federal ~~circuits~~circuit courts were heard by the Supreme Court of the United States (“SCOTUS”)~~. SCOTUS has granted certiorari determining that~~, in the ~~circumstances described are sufficient for SCOTUS to hear such cases.~~case identified as “County of Maui v. Hawaii Wildlife Fund (“MAUI”)”. Our motion for a stay was granted in the New Hampshire Litigation, and SCOTUS heard the case in 2019 and issued a ruling on April 23, 2020. SCOTUS remanded the case to the U.S. Court of Appeals for the Ninth Circuit in San Francisco (the “Circuit Court”) ruling that the Circuit Court’s standard as to whether ground water impacts navigable waters is ~~expected to hear~~too broad. We do not believe that the MAUI decision resolves the issues presented in the New Hampshire Litigation, and ~~rule on such cases this calendar year. In any event,~~until the Circuit Court rules in the remanded MAUI case, we intend to continue to vigorously defend against the New Hampshire Litigation, which we believe is without merit.

The Citizens Groups filed a motion with the New Hampshire Court on July 15, 2020 to amend their complaint based on MAUI.

We intend to oppose this motion to amend, and our filing is due August 7, 2020.

Ontario County, New York Class Action Litigation

On or about September 17, 2019, Richard Vandemortel and Deb Vandemortel filed a class action complaint against us on behalf of similarly situated citizens in Ontario County, New York. The lawsuit has been filed in Ontario County (the “New York Litigation”). It alleges that over one thousand (1,000) citizens constitute the putative class in the New York Litigation, and it seeks damages for diminution of property values and infringement of the putative class’ rights to live without interference to their daily lives due to odors emanating from the ~~Ontario County Landfill,~~Subtitle D landfill located in Seneca, New York, which is operated by us pursuant to a long-term Operation, Maintenance and Lease Agreement with Ontario County. The New York Litigation was served on us on October 14, 2019. We ~~are reviewing the New York Litigation and~~ intend to present a vigorous defense.

5448

Hakes Landfill Litigation

ITEM 1A. RISK FACTORS

Our business is subject to a number of risks, including those identified in Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019 ("2019 10-K"), that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. AsThe novel coronavirus ("COVID-19") pandemic has heightened, and in some cases manifested, certain of ~~September 30,~~the risks we normally face in operating our business, including those disclosed in the 2019 ~~there~~10-K, and the risk factor disclosures in the 2019 10-K are qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q, including the risk factor set forth below. There have been no other material changes to the risk factors disclosed in ~~our Annual Report on Form 10-K for~~ the ~~fiscal year ended December 31, 2018.~~2019 10-K. We may disclose additional changes to our risk factors or disclose additional factors from time to time in our future filings with the Securities and Exchange Commission.

~~ITEM 2.~~ ~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

~~On September 5, 2019,~~The COVID-19 pandemic and related decline in economic activity is adversely affecting, and will continue to adversely affect, our business, outlook, liquidity and results of operations, and we ~~sold 59,307 shares~~have experienced and expect to continue to experience reductions in demand for certain of our ~~Class A common stock~~services.

The COVID-19 pandemic has caused, and will continue to ~~Raymond James & Associates, Inc.~~cause, significant economic disruption across our geographic footprint. Although as an essential service provider we have continued our operations, the COVID-19 pandemic negatively impacted our revenue at the end of the first quarter of 2020 and through the second quarter of 2020 as many of our commercial collection customers requested service level decreases and volumes into our landfills declined. The decline in our customers’ demand for our services and reduced volumes into our landfills has had, and is likely to continue to have, an ~~aggregate purchase price~~adverse impact on our financial condition, results of ~~$2.6 million. The shares were previously held in escrow according~~operations and cash flows.

We are closely monitoring and evaluating the potential impacts that the COVID-19 pandemic may have on our business as well as our customers and employees. Due to the ~~terms~~uncertain and evolving nature of economic conditions, we are unable to predict accurately the full extent of the impact and effects that the COVID-19 pandemic will have on our ~~acquisition of Waste-Stream, Inc. (“WSI”) and released~~business going forward. We currently expect, however, that the COVID-19 pandemic will continue to ~~us for liquidation~~negatively impact our financial performance going forward. We expect that the COVID-19 pandemic will negatively impact our business in other ways, including, but not limited to, ~~offset~~higher costs associated with providing a safe working environment for our employees, potential employee layoffs or furloughs, employee impacts from illness, supporting a remote administration workforce, community response measures, the ~~environmental remediation~~inability of ~~WSI’s Potsdam, New York site. Such shares were issued~~customers to continue to pay for services, temporary closures of our facilities or the facilities of our customers, and an increase in ~~reliance upon the exemption from registration provided by Section 4(a)(2)~~borrowing costs.

The extent of the ~~Securities Act~~effects of ~~1933, as amended.~~

~~ITEM 5. OTHER INFORMATION~~

~~On June 13, 2019, Casella Waste Management, Inc.,~~the COVID-19 pandemic on our ~~wholly-owned subsidiary, entered into an Asset Purchase Agreement (the “Agreement”) with Allied Waste Services~~business, results of ~~North America, LLC, Browning-Ferris Industries of New York, Inc., Allied Waste Services of Massachusetts, LLC~~operations and ~~Menands Environmental Solutions, LLC (collectively, the “Subsidiaries”), all of which~~cash flows will ultimately depend on future developments. These include, but are ~~subsidiaries of Republic Services, Inc. Pursuant~~not limited to, the ~~terms~~severity, extent and duration of the ~~Agreement, on September 3, 2019,~~outbreak; actions taken by national, state and local governments to contain the outbreak or treat its impact; the speed and effectiveness of responses to combat the outbreak; the effect of the changes in hiring levels and remote working arrangements that we ~~completed the acquisition of solid waste hauling~~ and transfer assets in Albany, New York and Cheshire, Massachusetts from the Subsidiaries for total consideration of approximately $46.6 million, which included $41.8 million in cash consideration and $4.8 million in non-cash consideration. We paid the purchase price for such assets with a combination of available cash on hand and borrowings under our ~~existing revolving credit facility with Bank of America, N.A., as administrative agent,~~customers have implemented; and the ~~other lenders party thereto.~~

~~We obtained from the SEC, pursuant~~impact on our contracts with customers and vendors. The COVID-19 pandemic may also materially adversely affect our operating and financial results in a manner that is not currently known to ~~its authority under Rule 3-13 under Regulation S-X, a waiver from the requirements of Rule 3-05 and Article 11 of Regulation S-X~~us or that we do not currently consider to provide certain financial statements and pro forma financial information in connection with the acquisition. As a result, we will not provide such financial statements and information required under Item 9.01(a) and (b) of Form 8-K.

present significant risks to our operations.

5550

ITEM 6. EXHIBITS


Exhibit No.						Description





































































































































31.1 +						Certification of John W. Casella, Principal Executive Officer, pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.

31.2 +						Certification of Edmond R. Coletta, Principal Financial Officer, pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.

32.1 ++						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

32.2 ++						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

101.INS						The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document.**

101.CAL						Inline XBRL Taxonomy Calculation Linkbase Document.**

101.LAB						Inline XBRL Taxonomy Label Linkbase Document.**

101.PRE						Inline XBRL Taxonomy Presentation Linkbase Document.**

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.**

104						Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)


**						Submitted Electronically Herewith. Attached as Exhibit 101 to this report are the following formatted in inline XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, (ii) Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, (iii) Consolidated Statements of Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, (iv) Consolidated ~~Statement~~Statements of Stockholders’ Equity (Deficit) for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, (v) Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, and (vi) Notes to Consolidated Financial Statements.
+						Filed Herewith
++						Furnished Herewith

SIGNATURES

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


			Casella Waste Systems, Inc.

Date: ~~November 1, 2019~~August 4, 2020			By: /s/ Christopher B. Heald
			Christopher B. Heald
			Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

Date: ~~November 1, 2019~~August 4, 2020			By: /s/ Edmond R. Coletta
			Edmond R. Coletta
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)

5651


	December 31, 2018		Acquisitions		Other (1)		September 30, 2019
Eastern region	$	28,154	$	2,566	$	—	$	30,720
Western region	120,536		21,614		(2,619)		139,531
Recycling	12,315		—		—		12,315
Other	1,729		—		—		1,729
Total	$	162,734	$	24,180	$	(2,619)	$	184,295