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 30, 2021~~March 31, 2022


☐			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 Stock Market LLC

(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~~April 15, ~~2021:~~2022:


Class A common stock, $0.01 par value per share:			~~50,409,773~~50,650,518
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, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
CURRENT ASSETS:	CURRENT ASSETS:					CURRENT ASSETS:
Cash and cash equivalents	Cash and cash equivalents	$	46,481	$	154,342	Cash and cash equivalents	$	12,594	$	33,809
Accounts receivable, net of allowance for credit losses of $3,057 and $2,333, respectively		90,500		74,198
Accounts receivable, net of allowance for credit losses of $2,812 and $3,276, respectively						Accounts receivable, net of allowance for credit losses of $2,812 and $3,276, respectively	93,244		86,979

Refundable income taxes		—		229

Prepaid expenses	Prepaid expenses	16,806		9,289		Prepaid expenses	13,840		12,766
Inventory	Inventory	9,797		7,868		Inventory	11,770		9,729

Other current assets	Other current assets	3,575		1,328		Other current assets	2,537		3,196
Total current assets	Total current assets	167,159		247,254		Total current assets	133,985		146,479
Property, plant and equipment, net of accumulated depreciation and amortization of $952,032 and $900,882, respectively		617,348		510,512
Property, plant and equipment, net of accumulated depreciation and amortization of $997,459 and $973,094, respectively						Property, plant and equipment, net of accumulated depreciation and amortization of $997,459 and $973,094, respectively	646,691		644,604
Operating lease right-of-use assets	Operating lease right-of-use assets	96,712		95,310		Operating lease right-of-use assets	93,961		93,799
Goodwill	Goodwill	227,929		194,901		Goodwill	258,414		232,860
Intangible assets, net	Intangible assets, net	92,908		58,324		Intangible assets, net	100,864		93,723

Restricted assets	Restricted assets	1,948		1,848		Restricted assets	1,985		2,122
Cost method investments	Cost method investments	11,264		11,264		Cost method investments	11,264		11,264
Deferred income taxes	Deferred income taxes	46,777		61,163		Deferred income taxes	41,237		43,957
Other non-current assets	Other non-current assets	18,352		13,322		Other non-current assets	18,570		14,772
Total assets	Total assets	$	1,280,397	$	1,193,898	Total assets	$	1,306,971	$	1,283,580

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, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:	CURRENT LIABILITIES:					CURRENT LIABILITIES:
Current maturities of debt	Current maturities of debt	$	16,751	$	9,240	Current maturities of debt	$	9,873	$	9,901
Current operating lease liabilities	Current operating lease liabilities	7,128		8,547		Current operating lease liabilities	7,125		7,307
Accounts payable	Accounts payable	69,516		49,198		Accounts payable	65,244		63,086
Accrued payroll and related expenses	Accrued payroll and related expenses	19,793		17,282		Accrued payroll and related expenses	10,139		22,210
Accrued interest	Accrued interest	1,960		2,126		Accrued interest	1,949		2,042
Contract liabilities	Contract liabilities	3,422		2,685		Contract liabilities	5,500		3,404
Current accrued capping, closure and post-closure costs	Current accrued capping, closure and post-closure costs	17,848		10,268		Current accrued capping, closure and post-closure costs	8,250		7,915
Other accrued liabilities	Other accrued liabilities	41,951		31,862		Other accrued liabilities	35,467		36,328
Total current liabilities	Total current liabilities	178,369		131,208		Total current liabilities	143,547		152,193
Debt, less current portion	Debt, less current portion	534,752		530,411		Debt, less current portion	560,594		542,503
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	59,001		60,979		Operating lease liabilities, less current portion	58,262		56,375
Accrued capping, closure and post-closure costs, less current portion	Accrued capping, closure and post-closure costs, less current portion	68,425		72,265		Accrued capping, closure and post-closure costs, less current portion	80,577		78,999
Deferred income taxes	Deferred income taxes	879		912		Deferred income taxes	885		868
Other long-term liabilities	Other long-term liabilities	31,020		35,981		Other long-term liabilities	28,056		30,185
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES	0		0		COMMITMENTS AND CONTINGENCIES	0		0
STOCKHOLDERS' EQUITY:	STOCKHOLDERS' EQUITY:					STOCKHOLDERS' EQUITY:

Class A common stock, $0.01 par value per share; 100,000,000 shares authorized; 50,410,000 and 50,101,000 shares issued and outstanding, respectively		504		501
Class A common stock, $0.01 par value per share; 100,000,000 shares authorized; 50,650,000 and 50,423,000 shares issued and outstanding, respectively						Class A common stock, $0.01 par value per share; 100,000,000 shares authorized; 50,650,000 and 50,423,000 shares issued and outstanding, respectively	506		504
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	648,611		639,247		Additional paid-in capital	654,303		652,045
Accumulated deficit	Accumulated deficit	(234,144)		(266,099)		Accumulated deficit	(220,809)		(224,999)
Accumulated other comprehensive loss, net of tax		(7,030)		(11,517)
Accumulated other comprehensive income (loss), net of tax						Accumulated other comprehensive income (loss), net of tax	1,040		(5,103)

Total stockholders' equity	Total stockholders' equity	407,951		362,142		Total stockholders' equity	435,050		422,457
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	1,280,397	$	1,193,898	Total liabilities and stockholders' equity	$	1,306,971	$	1,283,580

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED 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 March 31,
		2021		2020		2021		2020				2022		2021
Revenues	Revenues	$	241,969	$	202,667	$	647,375	$	574,344	Revenues		$	234,027	$	189,532
Operating expenses:	Operating expenses:									Operating expenses:
Cost of operations	Cost of operations	153,892		130,406		419,583		382,386		Cost of operations		162,455		127,139
General and administration	General and administration	30,993		25,014		87,336		74,240		General and administration		29,793		27,131
Depreciation and amortization	Depreciation and amortization	27,491		23,799		74,510		67,281		Depreciation and amortization		29,428		22,682

Expense from acquisition activities	Expense from acquisition activities	1,904		173		3,950		1,533		Expense from acquisition activities		2,043		414
Southbridge Landfill closure charge	Southbridge Landfill closure charge	302		2,642		653		3,815		Southbridge Landfill closure charge		140		157

		214,582		182,034		586,032		529,255				223,859		177,523
Operating income	Operating income	27,387		20,633		61,343		45,089		Operating income		10,168		12,009
Other expense (income):	Other expense (income):									Other expense (income):
Interest income	Interest income	(61)		(107)		(191)		(203)		Interest income		(40)		(64)
Interest expense	Interest expense	5,164		5,406		15,928		16,869		Interest expense		5,204		5,468

Other income	Other income	(178)		(157)		(825)		(606)		Other income		(144)		(138)
Other expense, net	Other expense, net	4,925		5,142		14,912		16,060		Other expense, net		5,020		5,266
Income before income taxes	Income before income taxes	22,462		15,491		46,431		29,029		Income before income taxes		5,148		6,743
Provision for income taxes	Provision for income taxes	6,601		374		14,476		840		Provision for income taxes		958		2,432
Net income	Net income	$	15,861	$	15,117	$	31,955	$	28,189	Net income		$	4,190	$	4,311

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	51,389		48,370		51,312		48,241		Weighted average common shares outstanding		51,490		51,179
Basic earnings per common share	Basic earnings per common share	$	0.31	$	0.31	$	0.62	$	0.58	Basic earnings per common share		$	0.08	$	0.08
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	51,586		48,619		51,506		48,481		Weighted average common shares outstanding		51,657		51,387
Diluted earnings per common share	Diluted earnings per common share	$	0.31	$	0.31	$	0.62	$	0.58	Diluted earnings per common share		$	0.08	$	0.08

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

~~(Unaudited)~~

(in thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Net income	Net income	$	15,861	$	15,117	$	31,955	$	28,189	Net income		$	4,190	$	4,311
Other comprehensive income (loss), before tax:
Other comprehensive income, before tax:										Other comprehensive income, before tax:
Hedging activity:	Hedging activity:									Hedging activity:
Interest rate swap settlements	Interest rate swap settlements	(1,205)		(1,141)		(3,551)		(2,492)		Interest rate swap settlements		(1,163)		(1,160)
Interest rate swap amounts reclassified into interest expense	Interest rate swap amounts reclassified into interest expense	1,204		1,156		3,551		2,513		Interest rate swap amounts reclassified into interest expense		1,128		1,145
Unrealized gain (loss) resulting from changes in fair value of derivative instruments		1,215		145		5,866		(8,731)
Unrealized gain resulting from changes in fair value of derivative instruments										Unrealized gain resulting from changes in fair value of derivative instruments		8,381		4,987

Other comprehensive income (loss), before tax		1,214		160		5,866		(8,710)
Income tax provision (benefit) related to items of other comprehensive income (loss)		322		—		1,379		(112)
Other comprehensive income (loss), net of tax		892		160		4,487		(8,598)
Other comprehensive income, before tax										Other comprehensive income, before tax		8,346		4,972
Income tax provision related to items of other comprehensive income										Income tax provision related to items of other comprehensive income		2,203		1,142
Other comprehensive income, net of tax										Other comprehensive income, net of tax		6,143		3,830
Comprehensive income	Comprehensive income	$	16,753	$	15,277	$	36,442	$	19,591	Comprehensive income		$	10,333	$	8,141

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF

STOCKHOLDERS' EQUITY

~~(Unaudited)~~

(in thousands)


								Casella Waste Systems, Inc. Stockholders' Equity
				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 Income (Loss)
		Total		Shares	Amount		Shares		Amount												Total				Shares		Amount	Shares		Amount
Balance, December 31, 2020		$	362,142	50,101	$	501	988		$	10			$	639,247			$	(266,099)				$	(11,517)
Balance, December 31, 2021																								Balance, December 31, 2021	$	422,457	50,423	$	504	988	$	10	$	652,045			$	(224,999)			$	(5,103)

Issuances of Class A common stock	Issuances of Class A common stock	112		273	3		—		—		109				—				—					Issuances of Class A common stock	19		227	2		—	—		17		—				—
Stock-based compensation	Stock-based compensation	2,941		—	—		—		—		2,941				—				—					Stock-based compensation	2,241		—	—		—	—		2,241		—				—

Comprehensive income:	Comprehensive income:																							Comprehensive income:
Net income	Net income	4,311		—	—		—		—		—				4,311				—					Net income	4,190		—	—		—	—		—		4,190				—
Other comprehensive income:	Other comprehensive income:																							Other comprehensive income:
Hedging activity	Hedging activity	3,830		—	—		—		—		—				—				3,830					Hedging activity	6,143		—	—		—	—		—		—				6,143
Balance, March 31, 2021		373,336		50,374	504		988		10		642,297				(261,788)				(7,687)

Issuances of Class A common stock		492		24	—		—		—		492				—				—
Stock-based compensation		3,116		—	—		—		—		3,116				—				—

Comprehensive income:
Net income		11,783		—	—		—		—		—				11,783				—
Other comprehensive loss:
Hedging activity		(235)		—	—		—		—		—				—				(235)
Balance, June 30, 2021		388,492		50,398	504		988		10		645,905				(250,005)				(7,922)

Issuances of Class A common stock		51		12	—		—		—		51				—				—
Stock-based compensation		2,655		—	—		—		—		2,655				—				—

Comprehensive income:
Net income		15,861		—	—		—		—		—				15,861				—
Other comprehensive income:
Hedging activity		892		—	—		—		—		—				—				892
Balance, September 30, 2021		$	407,951	50,410	$	504	988		$	10	$	648,611			$	(234,144)			$	(7,030)

Balance, March 31, 2022																								Balance, March 31, 2022	$	435,050	50,650	$	506	988	$	10	$	654,303	$	(220,809)			$	1,040



			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, 2020	$	362,142	50,101	$	501	988	$	10	$	639,247	$	(266,099)	$	(11,517)



Issuances of Class A common stock	112		273	3		—	—		109		—		—
Stock-based compensation	2,941		—	—		—	—		2,941		—		—

Comprehensive income:
Net income	4,311		—	—		—	—		—		4,311		—
Other comprehensive income:
Hedging activity	3,830		—	—		—	—		—		—		3,830
Balance, March 31, 2021	$	373,336	50,374	$	504	988	$	10	$	642,297	$	(261,788)	$	(7,687)

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

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

~~STOCKHOLDERS' EQUITY (Continued)~~

~~(Unaudited)~~

(in thousands)

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, 2019 $ 122,753 46,803 $ 468 988 $ 10 $ 485,332 $ (357,016) $ (6,041)
Cumulative effect of new accounting principle (189) — — — — — (189) —
Issuances of Class A common stock 100 517 5 — — 95 — —
Stock-based compensation 1,562 — — — — 1,562 — —
Comprehensive loss:
Net income 959 — — — — — 959 —
Other comprehensive loss:
Hedging activity (7,189) — — — — — — (7,189)
Balance, March 31, 2020 117,996 47,320 473 988 10 486,989 (356,246) (13,230)
Issuance of Class A common stock - acquisition — 36 1 — — (1) — —
Issuances of Class A common stock 387 26 — — — 387 — —
Stock-based compensation 1,818 — — — — 1,818 — —
Comprehensive income:
Net income 12,113 — — — — — 12,113 —
Other comprehensive loss:
Hedging activity (1,569) — — — — — — (1,569)
Balance, June 30, 2020 130,745 47,382 474 988 10 489,193 (344,133) (14,799)
Issuances of Class A common stock — 2 — — — — — —
Stock-based compensation 1,965 — — — — 1,965 — —
Comprehensive income:
Net income 15,117 — — — — — 15,117 —
Other comprehensive income:
Hedging activity 160 — — — — — — 160
Balance, September 30, 2020 $ 147,987 47,384 $ 474 988 $ 10 $ 491,158 $ (329,016) $ (14,639)


	Three Months Ended March 31,
	2022		2021
Cash Flows from Operating Activities:
Net income	$	4,190	$	4,311
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	29,428		22,682

Interest accretion on landfill and environmental remediation liabilities	1,966		1,957
Amortization of debt issuance costs	457		572
Stock-based compensation	2,241		2,941
Operating lease right-of-use assets expense	3,162		3,015
Gain on sale of property and equipment	(77)		(24)



Non-cash expense from acquisition activities	937		146








Deferred income taxes	534		2,300
Changes in assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable	402		7,872
Landfill operating lease contract expenditures	—		(160)
Accounts payable	2,116		1,349
Prepaid expenses, inventories and other assets	(1,060)		(2,077)
Accrued expenses, contract liabilities and other liabilities	(19,582)		(12,737)
Net cash provided by operating activities	24,714		32,147
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired	(49,757)		(4,568)

Additions to property, plant and equipment	(12,910)		(26,832)


Proceeds from sale of property and equipment	145		123


Net cash used in investing activities	(62,522)		(31,277)
Cash Flows from Financing Activities:
Proceeds from debt borrowings	25,600		—
Principal payments on debt	(9,014)		(2,769)
Payments of debt issuance costs	(12)		—

Proceeds from the exercise of share based awards	19		112



Net cash provided by (used in) financing activities	16,593		(2,657)
Net decrease in cash and cash equivalents	(21,215)		(1,787)
Cash and cash equivalents, beginning of period	33,809		154,342
Cash and cash equivalents, end of period	$	12,594	$	152,555
Supplemental Disclosure of Cash Flow Information:

Cash interest payments	$	4,840	$	5,020
Cash income tax payments	$	221	$	238

Non-current assets obtained through long-term financing obligations	$	1,032	$	4,569
Right-of-use assets obtained in exchange for operating lease liabilities	$	2,710	$	512

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,
2021 2020
Cash Flows from Operating Activities:
Net income $ 31,955 $ 28,189
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 74,510 67,281
Interest accretion on landfill and environmental remediation liabilities 5,915 5,324
Amortization of debt issuance costs 1,716 1,597
Stock-based compensation 8,712 5,345
Operating lease right-of-use assets expense 9,981 12,347
(Gain) loss on sale of property and equipment (1) 254
Southbridge Landfill non-cash closure charge 112 2,077
Non-cash expense from acquisition activities 532 549
Deferred income taxes 12,974 1,514
Changes in assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable (10,943) 6,400
Landfill operating lease contract expenditures (3,646) (3,386)
Accounts payable 20,318 (8,585)
Prepaid expenses, inventories and other assets (14,391) (2,908)
Accrued expenses, contract liabilities and other liabilities (3,655) (4,083)
Net cash provided by operating activities 134,089 111,915
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (153,112) (25,379)
Additions to property, plant and equipment (81,577) (77,271)
Proceeds from sale of property and equipment 593 430
Net cash used in investing activities (234,096) (102,220)
Cash Flows from Financing Activities:
Proceeds from debt borrowings 500 154,400
Principal payments on debt (8,517) (145,008)
Payments of debt issuance costs — (1,531)
Proceeds from the exercise of share based awards 163 100
Net cash (used in) provided by financing activities (7,854) 7,961
Net (decrease) increase in cash and cash equivalents (107,861) 17,656
Cash and cash equivalents, beginning of period 154,342 3,471
Cash and cash equivalents, end of period $ 46,481 $ 21,127
Supplemental Disclosure of Cash Flow Information:
Cash interest payments $ 14,378 $ 15,239
Cash income tax payments $ 597 $ (1,650)
Non-current assets obtained through long-term financing obligations $ 18,153 $ 16,937
Right-of-use assets obtained in exchange for operating lease liabilities $ 3,566 $ 3,289

~~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 subsidiaries (collectively, “we”, “us” or “our”), is a regional, vertically integrated solid waste services ~~company that provides~~company. We provide resource management expertise and services to residential, commercial, municipal, institutional and industrial customers, primarily in the areas of solid waste collection ~~transfer,~~and disposal, ~~landfill, landfill gas-to-energy,~~transfer, recycling and organics services. We provide integrated solid waste services in ~~the northeastern United States. We market recyclable metals, aluminum, plastics, paper,~~seven states: Vermont, New Hampshire, New York, Massachusetts, Connecticut, Maine and ~~corrugated cardboard, which have been processed at~~Pennsylvania, with our ~~recycling facilities or purchased from third-parties.~~headquarters located in Rutland, Vermont. We 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. We manage our resource-renewal operations through the Resource Solutions operating segment, which ~~includes~~leverages our ~~larger-scale~~core competencies in materials processing, industrial recycling, organics and ~~commodity brokerage operations along with~~resource management service offerings to deliver a comprehensive solution for our ~~organics services and large scale~~larger commercial, municipal, institutional and industrial ~~services.~~customers that have more diverse waste and recycling needs. Legal, tax, information technology, human resources, certain finance and accounting and other administrative functions are included in our Corporate Entities segment.

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, "Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 ("fiscal year ~~2020"~~2021"), which was filed with the SEC on February ~~19, 2021.~~18, 2022.

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~~ months ended ~~September 30, 2021~~March 31, 2022 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 fiscal year ~~2020.~~

~~Recent Events~~

The global outbreak of the novel coronavirus ("COVID-19") pandemic has caused economic disruption across our geographic footprint and has adversely affected our business. The COVID-19 pandemic negatively impacted our revenues starting at the end of the three months ended March 31, 2020, as many small business and construction collection customers required service level changes and volumes into our landfills declined due to lower economic activity. Demand for services has improved as local economies have reopened as allowed by State Governments and our collection and disposal volumes, as well as overall operations, have been less impacted by the effects of the COVID-19 pandemic in the three and nine months ended September 30, 2021.

The COVID-19 pandemic has negatively impacted and may continue to impact our business in other ways, as we have experienced increased costs as a result of the COVID-19 pandemic, including, but not limited to, higher costs associated with providing a safe working environment for our employees (such as increased costs associated with the protection of our employees, including costs for additional safety equipment, hygiene products and enhanced facility cleaning), employee impacts from illness, supporting a remote administrative workforce, community response measures, the inability of customers to continue to pay for services, and temporary facility closures of our customers. Furthermore, residual macroeconomic effects associated with the pandemic have negatively impacted the global supply chain, labor markets and distribution networks leading to heightened inflation across labor, select services and goods, and capital investments. As of the date of this filing, we are unable to determine or predict the full extent of any possible continuing impact that the COVID-19 pandemic will have on our business, results of operations, liquidity and capital resources. Future developments, such as the possibility of continuing spread of COVID-19 across our geographic footprint, the administration rates and effectiveness of vaccinations, the severity and containment of certain COVID-19 variants along with the pace and extent to which the States in which we operate continue to facilitate a return to normal economic and operation conditions, are uncertain and cannot be predicted at this time.

Subsequent Events

We have evaluated subsequent events or transactions that have occurred after the consolidated balance sheet date of ~~September 30, 2021~~March 31, 2022 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 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”~~("ASC") issued by the Financial Accounting Standards Board (“FASB”) ~~that we adopted and deemed to have a material impact on our consolidated financial statements, or a possible material impact in the future, 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, 2021~~

~~ASU No. 2019-12: Income Taxes (Topic 740)~~

~~Reduces the complexity over accounting for income taxes by removing certain exceptions and amending guidance to improve consistent application of accounting over income taxes.~~

~~This guidance did not have a material impact on our consolidated financial statements and related disclosures upon adoption, but may in the future. This guidance was effective January 1, 2021.~~

~~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), as amended through January 2021

Provides temporary optional guidance to ease the potential burden in applying GAAP to contract modifications and hedging relationships that reference London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued, subject to meeting certain criteria.

We currently have interest rate derivative agreements with hedging relationships that reference ~~LIBOR, which extend past the fiscal year ended December 31, 2021.~~LIBOR. This guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. We are currently assessing the provisions of this guidance, and reviewing and updating our existing contracts, as applicable, for transition or fallback language that specifies how a replacement rate for LIBOR ~~is still in place and~~will be identified. We are also no longer using LIBOR as a reference rate for any new contracts. We do not expect that ~~its~~the adoption of this guidance will have a material impact on our consolidated financial statements and related disclosures. This guidance will be in effect from March 12, 2020 through December 31, 2022. See Note 7, Debt for further disclosure over our interest rate derivative agreements and debt instruments that reference LIBOR.

ASU No. 2021-08: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805)

Requires entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in a business combination. This guidance improves comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination.

We have made in the past, and we may make in the future, acquisitions to densify existing operations, expand service areas, and grow services for our customers, and these acquisitions may include contract assets or contract liabilities. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements and related disclosures. This guidance is effective January 1, 2023 with early adoption permitted.

3. REVENUE RECOGNITION

Revenues associated with our solid waste operations are derived mainly from solid waste collection and disposal services, including landfill, transfer station and transportation services, landfill gas-to-energy services, and processing transfer and recycling services in the northeastern United States. Effective January 1, 2021, we reorganized the Resource Solutions operating segment, which includes our larger-scale recycling and commodity brokerage operations alongservices. Revenues associated with our organics services and large scale commercial and industrial services, from our historical lines-of-service of recycling, organics and customer solutions into two lines-of-service: processing and non-processing.

Processing services consist of the receipt of recycled, sludge or other organic materials at one of our materials recovery, processing or disposal facilities, where it is then sorted, mixed and/or processed, and then disposed of or sold. Revenues from processingresource-renewal services are derived from ~~municipalities~~processing and ~~customers in the form of processing fees, tipping fees, commodity sales, and organic material sales.~~

~~Revenues from~~ non-processing services are derived from brokerage services; overall resource management services providing a wide range of environmental services and zero waste solutions to large and complex organizations; and traditional collection, disposal and recycling services provided to large account multi-site customers. In brokerage arrangements, we act as an agent that facilitates the sale of recyclable materials between an inbound customer and an outbound customer. Revenues from the brokerage of recycled materials are recognized on a net basis at the time of shipment. In general, these fees are variable in nature.

Classification of revenues by service line reported in the three and nine months ended September 30, 2020 has been reclassified to conform with the presentation for the three and nine months ended September 30, 2021.

services.

The following tables set forth revenues disaggregated by service line and timing of revenue recognition by operating segment for each of the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~

~~Three Months Ended September 30, 2021~~
Eastern Western Resource Solutions Total Revenues
Collection $ 48,951 $ 69,921 $ — $ 118,872
Landfill 6,622 18,201 — 24,823
Transfer 16,948 10,375 — 27,323
Transportation 54 3,393 — 3,447
Landfill gas-to-energy 269 984 — 1,253
Processing 2,310 649 27,418 30,377
Non-processing — — 35,874 35,874
Total revenues $ 75,154 $ 103,523 $ 63,292 $ 241,969
Transferred at a point-in-time $ 43 $ 296 $ 19,927 $ 20,266
Transferred over time 75,111 103,227 43,365 221,703
Total revenues $ 75,154 $ 103,523 $ 63,292 $ 241,969

~~Three Months Ended September 30, 2020~~
Eastern Western Resource Solutions Total Revenues
Collection $ 38,659 $ 63,611 $ — $ 102,270
Landfill 5,694 17,880 — 23,574
Transfer 11,861 9,756 — 21,617
Transportation 61 2,348 — 2,409
Landfill gas-to-energy 210 777 — 987
Processing 1,838 356 15,701 17,895
Non-processing — — 33,915 33,915
Total revenues $ 58,323 $ 94,728 $ 49,616 $ 202,667
Transferred at a point-in-time $ 52 $ 347 $ 7,736 $ 8,135
Transferred over time 58,271 94,381 41,880 194,532
Total revenues $ 58,323 $ 94,728 $ 49,616 $ 202,667

~~Nine Months Ended September 30, 2021~~
Eastern Western Resource Solutions Total Revenues
Collection $ 124,389 $ 199,278 $ — $ 323,667
Landfill 18,143 48,336 — 66,479
Transfer 39,847 27,498 — 67,345
Transportation 148 8,646 — 8,794
Landfill gas-to-energy 784 2,873 — 3,657
Processing 5,246 1,508 65,721 72,475
Non-processing — — 104,958 104,958
Total revenues $ 188,557 $ 288,139 $ 170,679 $ 647,375
Transferred at a point-in-time $ 125 $ 1,284 $ 44,964 $ 46,373
Transferred over time 188,432 286,855 125,715 601,002
Total revenues $ 188,557 $ 288,139 $ 170,679 $ 647,375
2021:

108

~~Nine~~Three Months Ended ~~September 30, 2020~~March 31, 2022


		Eastern		Western		Resource Solutions		Total Revenues			Eastern		Western		Resource Solutions		Total Revenues
Collection	Collection	$	110,059	$	180,778	$	—	$	290,837	Collection	$	51,497	$	68,034	$	—	$	119,531
Landfill	Landfill	13,807		49,409		—		63,216		Landfill	5,376		14,190		—		19,566
Transfer	Transfer	32,695		25,429		—		58,124		Transfer	11,613		7,844		—		19,457
Transportation	Transportation	159		8,472		—		8,631		Transportation	1,472		2,658		—		4,130
Landfill gas-to-energy	Landfill gas-to-energy	793		2,138		—		2,931		Landfill gas-to-energy	274		2,380		—		2,654
Processing	Processing	4,290		992		45,724		51,006		Processing	1,087		733		27,395		29,215
Non-processing	Non-processing	—		—		99,599		99,599		Non-processing	—		—		39,474		39,474
Total revenues	Total revenues	$	161,803	$	267,218	$	145,323	$	574,344	Total revenues	$	71,319	$	95,839	$	66,869	$	234,027

Transferred at a point-in-time	Transferred at a point-in-time	$	177	$	949	$	20,428	$	21,554	Transferred at a point-in-time	$	120	$	511	$	15,086	$	15,717
Transferred over time	Transferred over time	161,626		266,269		124,895		552,790		Transferred over time	71,199		95,328		51,783		218,310
Total revenues	Total revenues	$	161,803	$	267,218	$	145,323	$	574,344	Total revenues	$	71,319	$	95,839	$	66,869	$	234,027

Three Months Ended March 31, 2021


	Eastern		Western		Resource Solutions		Total Revenues
Collection	$	36,076	$	61,393	$	—	$	97,469
Landfill	5,403		13,619		—		19,022
Transfer	9,424		7,146		—		16,570
Transportation	48		2,213		—		2,261
Landfill gas-to-energy	268		1,035		—		1,303
Processing	1,126		358		17,272		18,756
Non-processing	—		—		34,151		34,151
Total revenues	$	52,345	$	85,764	$	51,423	$	189,532

Transferred at a point-in-time	$	44	$	501	$	10,092	$	10,637
Transferred over time	52,301		85,263		41,331		178,895
Total revenues	$	52,345	$	85,764	$	51,423	$	189,532

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 ~~$4,341 and $8,440~~$3,794 in the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 and ~~$1,018 and $3,555~~$1,568 in the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2021. 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. We did not record any revenues in the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 or March 31, 2021 ~~or September 30, 2020~~ 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 ~~$91,469~~$94,967 and ~~$74,162~~$89,232 as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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 ~~$3,422~~$5,500 and ~~$2,685~~$3,404 as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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, ~~2020~~2021 and December 31, ~~2019~~2020 was recognized as revenue during the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and September 30, 2020,~~ respectively, when the services were performed.

4. BUSINESS COMBINATIONS

In the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we acquired the following businesses: a ~~residential, commercial~~full service solid-waste collection, recycling and ~~roll-off~~hauling business in our Resource Solutions operating segment; 3 tuck-in solid waste collection businesses in our Western region; a portable toilets business in our Eastern region; and a scrap metal collection business in eastern Connecticut that operates a rail-served construction and demolition processing and waste transfer facility, a waste transfer station, a single-stream recycling facility, and several other recycling operations whose assets ~~and liabilities~~ are allocated between our Eastern region and Resource Solutions operating ~~segments; a solid-waste collection business that operates a~~segments. In the three months ended March 31, 2021, we acquired 1 tuck-in solid waste ~~transfer station, a septic and portable toilet business, and a tuck-in solid-waste~~ collection business in our ~~Eastern region; and a waste composting and food-scrap hauling business, a solid-waste collection business that operates a waste transfer station, and 2 tuck-in solid-waste collection businesses in our~~ Western region. In the nine months ended September 30, 2020, we acquired 6 businesses: 5 tuck-in solid-waste collection businesses in our Western region and 1 recycling operation in our Resource Solutions operating segment.

The operating results of ~~the acquired~~these 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. Purchase price allocations are based on information existing at the acquisition dates or upon closing the transactions, including contingent consideration. Acquired intangible assets other than goodwill that are subject to amortization include ~~client lists,~~customer relationships, trade names and ~~non-compete covenants.~~covenants not-to-compete. Such assets are amortized over a four-year to ten-year period from the date of acquisition. All amounts recorded to goodwill ~~except goodwill related to certain acquisitions,~~ are expected to be deductible for tax purposes.

1110

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


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Purchase Price:	Purchase Price:					Purchase Price:
Cash used in acquisitions, net of cash acquired	Cash used in acquisitions, net of cash acquired	$	150,364	$	23,062	Cash used in acquisitions, net of cash acquired	$	49,747	$	3,465

Contingent consideration		3,000		—

Holdbacks	Holdbacks	1,865		3,387		Holdbacks	3,707		385
Total		155,229		26,449
Total consideration						Total consideration	53,454		3,850
Allocated as follows:	Allocated as follows:					Allocated as follows:
Current assets	Current assets	7,260		227		Current assets	7,584		—
Operating lease right-of-use assets		6,500		—

Property, plant and equipment:						Property, plant and equipment:
Land	Land	803		895		Land	1,940		—
Finance lease right-of-use-assets		31,467		—

Buildings and improvements	Buildings and improvements	8,468		1,908		Buildings and improvements	5,078		—
Equipment	Equipment	42,458		10,006		Equipment	6,655		1,254
Intangible assets		41,759		7,159
Other liabilities, net		(5,120)		(306)
Finance leases		(11,367)		—
Operating lease right-of-use assets						Operating lease right-of-use assets	405		—
Intangible assets:						Intangible assets:

Covenants not-to-compete						Covenants not-to-compete	1,343		331
Customer relationships						Customer relationships	9,637		954
Current liabilities						Current liabilities	(3,573)		(76)

Operating lease liabilities, less current portion						Operating lease liabilities, less current portion	(282)		—
Fair value of assets acquired and liabilities assumed	Fair value of assets acquired and liabilities assumed	122,228		19,889		Fair value of assets acquired and liabilities assumed	28,787		2,463
Excess purchase price allocated to goodwill	Excess purchase price allocated to goodwill	$	33,001	$	6,560	Excess purchase price allocated to goodwill	$	24,667	$	1,387

Certain purchase price allocations are preliminary and are based on information existing at the acquisition dates or upon closing the transaction. ~~This includes purchase price allocations associated with~~Accordingly, the accounting for three acquisitions, acquired during the three months ended September 30, 2021, that have not yet been completed because we have not finalized the valuations of certain tangible and intangible assets, as well as the contingent consideration. 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, ~~2020~~2021 is as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Revenues	Revenues	$	248,981	$	225,580	$	696,391	$	646,004	Revenues		$	238,836	$	218,841
Operating income	Operating income	$	26,996	$	20,100	$	59,526	$	43,660	Operating income		$	10,834	$	12,615
Net income	Net income	$	14,996	$	12,976	$	26,542	$	21,845	Net income		$	4,303	$	2,571

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	51,389		48,370		51,312		48,241		Weighted average common shares outstanding		51,490		51,179
Basic earnings per common share	Basic earnings per common share	$	0.29	$	0.27	$	0.52	$	0.45	Basic earnings per common share		$	0.08	$	0.05
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	51,586		48,619		51,506		48,481		Weighted average common shares outstanding		51,657		51,387
Diluted earnings per common share	Diluted earnings per common share	$	0.29	$	0.27	$	0.52	$	0.45	Diluted earnings per common share		$	0.08	$	0.05

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, ~~2020~~2021 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.

1211

5. GOODWILL AND INTANGIBLE ASSETS

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


		December 31, 2020		Acquisitions		September 30, 2021			December 31, 2021		Acquisitions		March 31, 2022
Eastern region	Eastern region	$	30,873	$	18,984	$	49,857	Eastern region	$	52,072	$	330	$	52,402
Western region	Western region	149,984		10,156		160,140		Western region	163,728		3,906		167,634
Resource solutions	Resource solutions	14,044		3,888		17,932		Resource solutions	17,060		21,318		38,378

Total	Total	$	194,901	$	33,028	$	227,929	Total	$	232,860	$	25,554	$	258,414

Summaries of intangible assets by type follows:


		Covenants Not-to-Compete		Client Lists		Trade Names		Total			Covenants Not-to-Compete		Customer Relationships		Trade Names		Total
Balance, September 30, 2021
Balance, March 31, 2022										Balance, March 31, 2022
Intangible assets	Intangible assets	$	29,514	$	109,676	$	8,350	$	147,540	Intangible assets	$	30,120	$	124,592	$	8,350	$	163,062
Less accumulated amortization	Less accumulated amortization	(21,752)		(32,298)		(582)		(54,632)		Less accumulated amortization	(22,614)		(37,322)		(2,262)		(62,198)
		$	7,762	$	77,378	$	7,768	$	92,908		$	7,506	$	87,270	$	6,088	$	100,864


		Covenants Not-to-Compete		Client Lists		Total			Covenants Not-to-Compete		Customer Relationships		Trade Names		Total
Balance, December 31, 2020
Balance, December 31, 2021								Balance, December 31, 2021
Intangible assets	Intangible assets	$	26,971	$	78,809	$	105,780	Intangible assets	$	28,777	$	115,005	$	8,350	$	152,132
Less accumulated amortization	Less accumulated amortization	(20,547)		(26,909)		(47,456)		Less accumulated amortization	(22,148)		(34,809)		(1,452)		(58,409)
		$	6,424	$	51,900	$	58,324		$	6,629	$	80,196	$	6,898	$	93,723

Intangible amortization expense was ~~$3,133 and $7,175~~$3,789 during the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 and ~~$2,265 and $6,580~~$2,028 during the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2021.

A summary of intangible amortization expense estimated for the five fiscal years following fiscal year ~~2020~~2021 and thereafter follows:



Estimated Future Amortization Expense as of ~~September 30, 2021~~March 31, 2022
~~Fiscal year ending December 31, 2021~~	$	~~3,694~~
Fiscal year ending December 31, 2022	$	~~14,007~~12,404
Fiscal year ending December 31, 2023	$	~~12,970~~15,574
Fiscal year ending December 31, 2024	$	~~12,634~~14,855
Fiscal year ending December 31, 2025	$	~~11,945~~13,736
Fiscal year ending December 31, 2026	$	12,102
Thereafter	$	~~37,658~~32,193

6. 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.

1312

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


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Beginning balance	Beginning balance	$	82,533	$	71,927	Beginning balance	$	86,914	$	82,533
Obligations incurred	Obligations incurred	3,638		2,820		Obligations incurred	966		1,038
Revision in estimates (1)		—		152

Accretion expense	Accretion expense	5,496		4,826		Accretion expense	1,873		1,811

Obligations settled ~~(2)~~(1)	Obligations settled ~~(2)~~(1)	(5,394)		(2,706)		Obligations settled ~~(2)~~(1)	(926)		(357)
Ending balance	Ending balance	$	86,273	$	77,019	Ending balance	$	88,827	$	85,025

(1)~~Relates to changes in estimated costs and timing of final capping, closure and post-closure activities at the Town of Southbridge, Massachusetts landfill. See Note 8,~~ ~~Commitments and Contingencies~~ ~~and Note 11,~~ ~~Other Items and Charges~~ ~~for further discussion.~~

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

7. DEBT

A summary of debt is as follows:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
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 1.50%		$	—	$	—
Term loan A facility ("Term Loan Facility") due May 2023; bearing interest at LIBOR plus 1.50%		347,375		350,000

Term loan A facility ("Term Loan Facility") due December 2026; bearing interest at LIBOR plus 1.375%						Term loan A facility ("Term Loan Facility") due December 2026; bearing interest at LIBOR plus 1.375%	350,000		350,000
Revolving Credit Facility due December 2026 ("Revolving Credit Facility"); bearing interest at LIBOR plus 1.375%						Revolving Credit Facility due December 2026 ("Revolving Credit Facility"); bearing interest at LIBOR plus 1.375%	19,000		—
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 2014R-1") due December 2044 - fixed rate interest period through 2029; bearing interest at 2.875%	New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014 ("New York Bonds 2014R-1") due December 2044 - fixed rate interest period through 2029; bearing interest at 2.875%	25,000		25,000		New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014 ("New York Bonds 2014R-1") due December 2044 - fixed rate interest period through 2029; 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
New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2020 ("New York Bonds 2020") due September 2050 - fixed rate interest period through 2025; bearing interest at 2.750%	New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2020 ("New York Bonds 2020") due September 2050 - fixed rate interest period through 2025; bearing interest at 2.750%	40,000		40,000		New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2020 ("New York Bonds 2020") due September 2050 - fixed rate interest period through 2025; bearing interest at 2.750%	40,000		40,000
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 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		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 3.6%		44,804		31,486
Notes payable maturing through June 2027; bearing interest at a weighted average of 3.4%		4,377		4,933
Finance leases maturing through December 2107; bearing interest at a weighted average of 3.5%						Finance leases maturing through December 2107; bearing interest at a weighted average of 3.5%	44,783		45,724
Notes payable maturing through June 2027; bearing interest at a weighted average of 3.1%						Notes payable maturing through June 2027; bearing interest at a weighted average of 3.1%	4,405		4,846
Principal amount of debt	Principal amount of debt	558,556		548,419		Principal amount of debt	580,188		562,570
Less—unamortized debt issuance costs (1)	Less—unamortized debt issuance costs (1)	7,053		8,768		Less—unamortized debt issuance costs (1)	9,721		10,166
Debt less unamortized debt issuance costs	Debt less unamortized debt issuance costs	551,503		539,651		Debt less unamortized debt issuance costs	570,467		552,404
Less—current maturities of debt	Less—current maturities of debt	16,751		9,240		Less—current maturities of debt	9,873		9,901
		$	534,752	$	530,411		$	560,594	$	542,503

1413

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


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Revolving Credit Facility and Term Loan Facility (collectively, the "Credit Facility")	Revolving Credit Facility and Term Loan Facility (collectively, the "Credit Facility")	$	2,609	$	3,839	Revolving Credit Facility and Term Loan Facility (collectively, the "Credit Facility")	$	5,601	$	5,884
New York Bonds 2014R-1	New York Bonds 2014R-1	950		1,000		New York Bonds 2014R-1	916		933
New York Bonds 2014R-2	New York Bonds 2014R-2	283		329		New York Bonds 2014R-2	249		268
New York Bonds 2020	New York Bonds 2020	1,328		1,461		New York Bonds 2020	1,239		1,283
FAME Bonds 2005R-3	FAME Bonds 2005R-3	283		347		FAME Bonds 2005R-3	240		262
FAME Bonds 2015R-1	FAME Bonds 2015R-1	430		482		FAME Bonds 2015R-1	396		413
FAME Bonds 2015R-2	FAME Bonds 2015R-2	287		343		FAME Bonds 2015R-2	253		268
Vermont Bonds	Vermont Bonds	446		487		Vermont Bonds	419		433
New Hampshire Bonds	New Hampshire Bonds	437		480		New Hampshire Bonds	408		422
		$	7,053	$	8,768		$	9,721	$	10,166

Credit Facility

As of ~~September 30, 2021,~~March 31, 2022, we are party to aan amended and restated credit agreement ("Credit Agreement"), which provides for a $350,000 aggregate principal amount Term Loan Facility and a ~~$200,000~~$300,000 Revolving Credit ~~Facility.~~Facility, with a $75,000 sublimit for letters of credit. 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~~December 2026 and bears interest at a rate of LIBOR plus ~~1.50%~~1.375% per annum, which will be reduced to a rate of LIBOR plus as low as ~~1.25%~~1.125% upon us reaching a consolidated net leverage ratio of less than 2.25x. The Credit Facility contains customary benchmark replacement provisions pursuant to which, upon certain triggering events, the LIBOR benchmark used to calculate the LIBOR rate will be replaced with a secured overnight financing rate, as adjusted, on the terms and conditions in the Credit Facility. 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 30, 2021,~~March 31, 2022, further advances were available under the Credit Facility in the amount of ~~$172,030.~~$252,805. The available amount is net of outstanding irrevocable letters of credit totaling ~~$27,970,~~$28,195, and as of ~~September 30, 2021~~March 31, 2022 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 30, 2021, 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.

Cash Flow Hedges

Our strategy to reduce exposure to interest rate risk involves entering into interest rate derivative agreements to hedge against adverse movements in interest rates related to the variable rate portion of our long-term debt. 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~~income (loss), net of tax 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.

As of ~~September 30, 2021~~both March 31, 2022 and December 31, ~~2020,~~2021, our active interest rate derivative agreements had total notional amounts of ~~$195,000 and $190,000, respectively.~~$195,000. According to the terms of the agreements, we receive interest based on the 1-month LIBOR index, in some instances restricted by a 0.0% floor, and pay interest at a weighted average rate of approximately ~~2.51% as of September 30, 2021.~~2.48%. The agreements mature between June 2022 and February 2027.

Additionally, as of March 31, 2022 and December ~~2026. As of September 30,~~31, 2021, ~~and December 31, 2020,~~ we ~~had~~have forward starting interest rate derivative agreements with total notional amounts of $60,000 and $85,000, ~~and $125,000, respectively.~~respectively, after considering any forward starting interest rate derivative agreements that have become effective in the current period. According to the terms of the agreements, we will 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 ~~1.55%~~1.44%. The agreements mature between ~~February~~June 2027 and May 2028.

1514

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, 2021		December 31, 2020			Balance Sheet Location	March 31, 2022		December 31, 2021

Interest rate swaps							Interest rate swaps	Other current assets	$	785	$	—
Interest rate swaps	Interest rate swaps	Other non-current assets	$	228	$	—	Interest rate swaps	Other non-current assets	4,084		424
									$	4,869	$	424

Interest rate swaps	Interest rate swaps	Other accrued liabilities	$	4,612	$	4,774	Interest rate swaps	Other accrued liabilities	$	1,270	$	3,796
Interest rate swaps	Interest rate swaps	Other long-term liabilities	2,992		8,463		Interest rate swaps	Other long-term liabilities	—		1,380
			$	7,604	$	13,237			$	1,270	$	5,176

Interest rate swaps	Interest rate swaps	Accumulated other comprehensive loss, net of tax	$	(7,568)	$	(13,434)	Interest rate swaps	Accumulated other comprehensive income (loss), net of tax	$	3,412	$	(4,935)
Interest rate swaps - tax effect	Interest rate swaps - tax effect	Accumulated other comprehensive loss, net of tax	538		1,917		Interest rate swaps - tax effect	Accumulated other comprehensive income (loss), net of tax	(2,372)		(168)
			$	(7,030)	$	(11,517)			$	1,040	$	(5,103)

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Statement of Operations Location	Statement of Operations Location	2021		2020		2021		2020		Statement of Operations Location		2022		2021
Interest expense	Interest expense	$	1,204	$	1,156	$	3,551	$	2,513	Interest expense		$	1,128	$	1,145

8. 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. The plaintiffs in some actions seek unspecified damages or injunctive relief, or both. These actions fall within various procedural stages at any point in time, and some are covered in part by insurance.

In accordance with FASB ASC 450 - Contingencies, we accrue for legal proceedings, inclusive of legal costs, when losses become probable and reasonably estimable. We have recorded an aggregate accrual of $1,241 relating to our outstanding legal proceedings as of March 31, 2022. 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.

~~Legal Proceedings~~

~~North Country Environmental Services vs. New Hampshire Citizens Group~~

On or about March 8, 2018, NELC and the Conservation Law Foundation ("CLF") (the "NH Citizen Groups") delivered correspondence to our subsidiary, North Country Environmental Services, Inc. ("NCES"), and us, providing notice of the NH 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 ("NCES Landfill"). On May 14, 2018, the NH 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 We disclose outstanding matters 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 and an order requiring NCES to seek a Federal National Pollutant Discharge Elimination System permit for the operation of the NCES Landfill. On June 15, 2018, we and NCES filed a Motion to Dismiss the New Hampshire Litigation. On July 13, 2018, the NH 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 circuit courts were heard by the Supreme Court of the United States (“SCOTUS”), in the 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 to navigable waters is too broad. We do not believe that the MAUI decision resolves the issues presented in the New Hampshire Litigation, and 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 NH Citizens Groups filed~~could have a ~~motion with the New Hampshire Court~~material adverse effect on July 15, 2020 to amend their complaint based on MAUI. The New Hampshire Court granted the NH Citizen Groups' motion on September 2, 2020 and encouraged the parties to file motions for summary judgment. We filed our Motion for Summary Judgment on November 20, 2020 and the NH Citizens Groups filed a Motion for Summary Judgment on February 19, 2021. A hearing on motions for summary judgment was held on May 14, 2021. On May 24, 2021 the NH Citizens Group submitted a post-hearing filing requesting that the New Hampshire Court consider purported supplemental material facts discovered after the hearing, and to provide a response to questions posed by the Court at the hearing, in response to which we filed a Motion to Strike on June 2, 2021. The NH Citizens Group filed an Objection to the Motion to Strike on June 8, 2021. We filed a response on June 25, 2021. On August 11, 2021, the New Hampshire Court denied the parties’ Motions for Summary Judgment and denied as moot the NH Citizens Groups’ request that the Court consider purported supplemental material facts and NCES’s Motion to Strike. We filed a Motion for Partial Reconsideration on September 7, 2021, and on September 22, 2021 we filed a Motion to Temporarily Suspend the Procedural Schedule (assented to by the NH Citizens Groups) to allow the parties the opportunity to engage in settlement negotiations, which was granted by the New Hampshire Court on October 5, 2021.financial condition, results of operations or cash flows.

North Country Environmental Services Expansion Permit

On October 9, 2020, ~~NCES~~our subsidiary, North Country Environmental Services, Inc. ("NCES"), received a Type I-A Permit Modification (the "Permit") for Expansion in the Stage VI area of the NCES ~~Landfill (the “Permit”).~~landfill located in Bethlehem, New Hampshire. On

November 9, 2020, ~~CLF~~the Conservation Law Foundation ("CLF") filed an appeal of the Permit to the New Hampshire Waste Management Council (the “Council”) on the grounds it failed to meet the public benefit criteria. On January 19, 2021, CLF filed a Complaint for Injunctive Relief with the Grafton Superior Court to enjoin NCES from accepting waste pursuant to the new Permit until such a time as CLF has exhausted its appeal rights. A hearing on the Complaint for Injunctive Relief was held on March 10, 2021; the Grafton Superior Court denied the motion on May 14, 2021. CLF did not appeal this decision. The Council denied NCES’s Motion to Dismiss CLF’s appeal for lack of standing by Order dated March 17, 2021. NCES filed a Motion to Reconsider on March 26, 2021, which was denied by the Council on May 11, 2021. A prehearing conference was held and a schedule for the case was established on June 8, 2021. NCES filed a Motion to Dismiss on the merits of the appeal on June 30, ~~2021, and will continue to vigorously defend against this litigation pending the Council’s ruling.~~2021. On July 16, 2021, CLF filed its objection to the Motion to Dismiss, and NCES filed its reply on July 26, 2021. The Council issued an Order on September 3, 2021 granting NCES’s Motion to Dismiss, in part. CLF filed a Motion for Reconsideration on September 23, 2021, and NCES filed its objection on September 28, 2021 and CLF filed a reply on September 30, 2021. ACLF’s Motion for Reconsideration was granted on November 19, 2021, and its dismissed claims reinstated. On January 14, 2022, NCES filed a Motion in Limine seeking to exclude from evidence four potential evidentiary items on the basis that those items were either not directly related, or were not included in CLF’s Notice of Appeal. On January 21, 2022, CLF filed an objection to NCES’s motion, and NCES filed a reply on January 26, 2022. On January 31, 2022, the Court issued an Order granting NCES’s Motion in Limine with respect to three of the four items it sought to exclude from evidence, and denying its motion with respect to the remaining item. The hearing on the ~~merits is expected to take place in February 2022.~~

~~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 “Hakes 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, 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 Department opposed the Hakes Litigation on procedural grounds. We and the Town of Campbell opposed the Hakes Litigation on the merits, and on July 31, 2020, the Court dismissed the Hakes Litigation on the merits. The Petitioners filed a notice of appeal. The time to appeal expired on February 10, 2021, and the attorney for the Petitioners confirmed that they are not pursuing the appeal. Accordingly, all approvals issued for the expansion project are now final and binding.

~~Ontario County, New York Class Action Litigation~~

On or about September 17, 2019, Richard Vandemortel and Deb Vandemortel ("Named Plaintiffs") filed a class action complaint against us in Ontario County Supreme Court (the "New York Court") on behalf of similarly situated citizens ("Class Members") in Ontario County, New York (the "New York Litigation"). The New York Litigation 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 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, and the parties commenced settlement negotiations in early 2020. On December 1, 2020, the parties entered into a settlement agreement (the "Settlement Agreement") and thereafter the Named Plaintiffs and Class Members' counsel ("Counsel") moved the New York Court for entry of the Order on Notice/Preliminary Approvals. A settlement fairness hearing was held on ~~July 7, 2021,~~February 18 and the judge issued an Order and Final Judgment that was filed on July 8, 2021. The settlement includes a $750 payment to a Qualified Settlement Fund for the benefit of Counsel and one-time lump sum payments to the Named Plaintiffs and Class Members who opt into the Settlement Agreement. We also committed $900 in expenses and capital improvements for remediation measures to be completed by December 31,February 22, 2022.

~~Conservation Law Foundation, Inc. v Robert R. Scott, Commissioner, New Hampshire Department of Environmental Services~~

On or about February 11, 2021, the CLF filed a complaint against Robert R. Scott, Commissioner of the New Hampshire Department of Environmental Services (“DES”), in the Merrimac County Superior Court. The complaint alleges that DES has failed to comply with the duty to establish and update a solid waste plan for the State of New Hampshire, and the duty to rely on that solid waste plan in determining whether to grant permits for proposed waste disposal facilities, and seeks a declaratory judgment that DES is violating statutory solid waste planning and regulatory requirements; a writ of mandamus ordering DES to achieve compliance with the statutory solid waste plan requirement; and an order enjoining DES from reviewing, and issuing decisions on, permit applications for new or expanded waste facilities, including a landfill under development by us in Dalton, New Hampshire, as well as any further review and decision-making required for permits it has already granted, including our NCES Landfill, until it has a legally valid state solid waste plan. On or about February 16, 2021, our subsidiary, Granite State Landfill, LLC, filed a Motion to Intervene in the action, which was granted by the Merrimac County Superior Court Council deliberations concluded on February ~~17, 2021. A~~22, 2022, ruling in favor of NCES on all motions concerning questions of fact. The hearing ~~on CLF's request for preliminary injunctive relief and the parties' motions~~officer’s decision with regard to ~~dismiss was held April 9, 2021. The Court issued a decision on May 14, 2021 granting the defendants’ Motions~~questions of law remains pending. NCES will continue to ~~Dismiss. CLF filed a Motion for Reconsideration which was denied by the Court on July 13, 2021.~~vigorously defend against this litigation.

Environmental Remediation ~~Liability~~Liabilities

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~~

We accrue for costs associated with environmental remediation obligations when such costs become both probable and reasonably estimable. Determining the method and ultimate cost of remediation requires that a number of assumptions be made. There can sometimes be a range of reasonable estimates of the costs associated with remediation of a site. In these cases, we use the amount within the range that constitutes our ~~material outstanding claims.~~

~~Southbridge Recycling & Disposal Park, Inc.~~

best estimate. In ~~October 2015, our Southbridge Recycling and Disposal Park, Inc. (“SRD”) subsidiary reported~~the early stages of the remediation process, particular components of the overall liability may not be reasonably estimable; in this instance we use the components of the liability that can be reasonably estimated as a surrogate for the liability. It is reasonably possible that we will need to adjust the liabilities recorded for remediation to reflect the effects of new or additional information, to the ~~Massachusetts Department~~extent such information impacts the costs, timing or duration of ~~Environmental Protection (“MADEP”)~~the required actions. Future changes in our estimates of the cost, timing or duration of the required actions could have a material adverse effect on our consolidated financial position, 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 SRDoperations 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 carried out an Immediate Response Action pursuant to Massachusetts General Law Chapter 21E (the "Charlton 21E Obligations"). Further, we implemented a plan to analyze and better understand the groundwater near the Southbridge Landfill and we investigated with the objective of identifying the sourcecash flows. We disclose outstanding environmental remediation matters that remain unsettled or ~~sources of the elevated levels of contamination measured~~are settled in the ~~well samples.~~reporting period that we believe could have a material adverse effect on our financial condition, results of operations or cash flows.

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 issued a twenty (20) year bond for our portion of the Waterline costs in the amount of $4,089. We have agreed to reimburse the Town for periodic payments under such bond. Construction of the Waterline is complete and homeowners are relying on municipal water supply. Bond reimbursement to the Town commenced in the quarter ended June 30, 2020.

~~We have recorded an environmental remediation liability related to our obligation associated with 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. The weighted average risk-free interest rate associated with our environmental remediation liabilities as of March 31, 2022 ranges between 1.5% and 2.6%. ~~Our expenditures could be significantly higher if costs exceed estimates.~~

A summary of the changes to the aggregate environmental remediation ~~liability associated with~~liabilities for the ~~Southbridge Landfill~~three months ended March 31, 2022 and 2021 follows:
Nine Months Ended
September 30,
2021 2020
Beginning balance $ 4,261 $ 4,596
Accretion expense 82 90
Obligations incurred — 28
Revision in estimates (1)
— (188)
Obligations settled (2)
(281) (293)
Ending balance $ 4,062 $ 4,233


	Three Months Ended March 31,
	2022		2021
Beginning balance	$	5,887	$	5,200
Accretion expense	26		28


Obligations settled (1)	(49)		—
Ending balance	5,864		5,228
Less: current portion	304		376
Long-term portion	$	5,560	$	4,852

(1)~~The revision in estimates is associated with the completion of the environmental remediation at the site. See Note 11,~~ ~~Other Items and Charges~~ ~~to our consolidated financial statements for further discussion.~~

~~(2)~~May include amounts paid and amounts that are being processed through accounts payable as a part of our ~~disbursements~~disbursement cycle.

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.

~~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 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 majority of the remediation work has been completed as of September 30, 2021. 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. 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 1.9%. The environmental remediation liability associated with the Potsdam site was $939 as of both September 30, 2021 and December 31, 2020.

9. STOCKHOLDERS' EQUITY

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 30, 2021,~~March 31, 2022, there were ~~932~~811 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.

A summary of stock option activity follows:


		Stock Options	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, 2020		90	$	8.91
Outstanding, December 31, 2021								Outstanding, December 31, 2021	77	$	15.68
Granted	Granted	8	$	68.78				Granted	—	$	—
Exercised	Exercised	(19)	$	8.36				Exercised	(4)	$	4.85
Forfeited	Forfeited	—	$	—				Forfeited	—	$	—
Outstanding, September 30, 2021		79	$	15.41	4.6	$	4,779
Exercisable, September 30, 2021		71	$	9.06	4.0	$	4,719
Outstanding, March 31, 2022								Outstanding, March 31, 2022	73	$	16.28	4.3	$	5,207
Exercisable, March 31, 2022								Exercisable, March 31, 2022	65	$	9.45	3.6	$	5,048

Stock-based compensation expense related to stock options was ~~$11 and $11~~$16 during the three ~~and nine~~ months ended ~~September 30, 2021, respectively.~~March 31, 2022. We did not record any stock-based compensation expense for stock options during the three ~~and nine~~ months ended ~~and September 30, 2020.~~March 31, 2021. As of ~~September 30, 2021,~~March 31, 2022, we had ~~$188~~$155 of unrecognized stock-based compensation expense related to outstanding stock options to be recognized over a weighted average period of ~~2.8~~2.3 years.

During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the aggregate intrinsic value of stock options exercised was ~~$733 and $1,181, respectively.~~$311.

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, if applicable, 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 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, 2020		307	$	41.55
Outstanding, December 31, 2021								Outstanding, December 31, 2021	249	$	55.40
Granted	Granted	108	$	67.65				Granted	70	$	97.77
Class A Common Stock Vested	Class A Common Stock Vested	(82)	$	35.44				Class A Common Stock Vested	(51)	$	45.42
Forfeited	Forfeited	(8)	$	51.22				Forfeited	(1)	$	57.55
Outstanding, September 30, 2021		325	$	51.56	1.8	$	24,647
Unvested, September 30, 2021		590	$	51.26	1.5	$	44,796
Outstanding, March 31, 2022								Outstanding, March 31, 2022	267	$	68.41	2.1	$	23,374
Unvested, March 31, 2022								Unvested, March 31, 2022	487	$	68.66	1.8	$	42,694

(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 ~~265~~221 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 ~~$2,576 and $8,505~~$2,151 during the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022, as compared to ~~$1,898 and $5,175~~$2,884 during the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2021.

During the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, the total fair value of other stock awards vested was ~~$71 and $5,364, respectively.~~

$4,545.

As of ~~September 30, 2021,~~March 31, 2022, total unrecognized stock-based compensation expense related to outstanding restricted stock was ~~$96,~~$71, which will be recognized over a weighted average period of ~~2.1~~1.7 years. As of ~~September 30, 2021,~~March 31, 2022, total unrecognized stock-based compensation expense related to outstanding restricted stock units was ~~$4,931,~~$6,015, which will be recognized over a weighted average period of ~~1.9~~2.2 years. As of ~~September 30, 2021,~~March 31, 2022, total expected unrecognized stock-based compensation expense related to outstanding performance stock units was ~~$8,137~~$9,779 to be recognized over a weighted average period of ~~1.8~~2.0 years.

We also recorded ~~$67 and $196~~$73 of stock-based compensation expense related to our Amended and Restated 1997 Employee Stock Purchase Plan during the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022, as compared to ~~$67 and $171~~$57 during the three ~~and nine~~ months ended ~~September 30, 2020, respectively.~~March 31, 2021.

Accumulated Other Comprehensive ~~Loss,~~Income (Loss), Net of Tax

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



	Interest Rate Swaps
Balance, December 31, ~~2020~~2021	$	~~(11,517)~~(5,103)

Other comprehensive income before reclassifications	~~2,315~~7,218
Amounts reclassified from accumulated other comprehensive ~~loss~~income (loss)	~~3,551~~1,128
Income tax provision related to items of other comprehensive income	~~(1,379)~~(2,203)
Net current-period other comprehensive income	~~4,487~~6,143
Balance, ~~September 30, 2021~~March 31, 2022	$	~~(7,030)~~1,040

A summary of reclassifications out of accumulated other comprehensive ~~loss,~~income (loss), net of tax follows:


		Three Months Ended September 30,				Nine Months Ended September 30,						Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
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 Income (Loss), Net of Tax Components											Details About Accumulated Other Comprehensive Income (Loss), Net of Tax Components	Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss), Net of Tax				Affected Line Item in the Consolidated Statements of Operations
Interest rate swaps	Interest rate swaps	$	1,204	$	1,156	$	3,551	$	2,513	Interest expense	Interest rate swaps	$	1,128	$	1,145	Interest expense
		(1,204)		(1,156)		(3,551)		(2,513)		Income before income taxes		(1,128)		(1,145)		Income before income taxes
		(496)		—		(765)		112		Provision for income taxes		(190)		(127)		Provision for income taxes
		$	(708)	$	(1,156)	$	(2,786)	$	(2,625)	Net income		$	(938)	$	(1,018)	Net income

10. EARNINGS PER SHARE

Basic earnings per share is computed by dividing 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.

2219

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 March 31,
		2021		2020		2021		2020			2022		2021
Numerator:	Numerator:									Numerator:
Net income	Net income	$	15,861	$	15,117	$	31,955	$	28,189	Net income	$	4,190	$	4,311
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	50,410		47,384		50,410		47,384		Class A common stock	50,650		50,374
Class B common stock	Class B common stock	988		988		988		988		Class B common stock	988		988

Unvested restricted stock	Unvested restricted stock	(2)		(2)		(2)		(2)		Unvested restricted stock	(2)		(2)
Effect of weighted average shares outstanding	Effect of weighted average shares outstanding	(7)		—		(84)		(129)		Effect of weighted average shares outstanding	(146)		(181)
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	51,389		48,370		51,312		48,241		Basic weighted average common shares outstanding	51,490		51,179
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	197		249		194		240		Dilutive effect of stock options and other stock awards	167		208
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	51,586		48,619		51,506		48,481		Diluted weighted average common shares outstanding	51,657		51,387
Anti-dilutive potentially issuable shares	Anti-dilutive potentially issuable shares	12		—		12		1		Anti-dilutive potentially issuable shares	78		88

11. OTHER ITEMS AND CHARGES

Expense from Acquisition Activities

In the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, we recorded charges of ~~$1,904~~$2,043 and ~~$3,950, respectively, and in the three and nine months ended September 30, 2020 we recorded charges of $173 and $1,533,~~$414, respectively, comprised primarily of legal, consulting and other similar costs associated with the acquisition and integration of acquired businesses or select development projects.

~~Southbridge Landfill Closure Charge~~

~~In 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 months ended September 30, 2021, we recorded charges of $302 and $653, respectively, associated with legal and other costs pertaining to various matters as part of the unplanned early closure of the Southbridge Landfill through completion of the closure process. In the three and nine months ended September 30, 2020, we recorded charges of $2,642 and $3,815, respectively, comprised of the following: $642 and $1,851, respectively, of legal and other costs pertaining to various matters as part of the unplanned early closure of the Southbridge Landfill through completion of the closure process, a charge of $2,000 in both the three and nine months ended September 30, 2020 associated with a settlement pertaining to the Southbridge Landfill, a charge of $152 in the nine months ended September 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 of $(188) in the nine months ended September 30, 2020 associated with the completion of the environmental remediation at the site.

12. 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,~~derivatives, contingent consideration related to acquisitions, 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~~derivatives 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. We recognize all derivatives accounted for on the balance sheet at fair value.

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 30, 2021 Using:							Fair Value Measurement at March 31, 2022 Using:
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:	Assets:							Assets:
Restricted investment securities - landfill closure	Restricted investment securities - landfill closure	$	1,948	$	—	$	—	Restricted investment securities - landfill closure	$	1,985	$	—	$	—
Interest rate swaps	Interest rate swaps	—		228		—		Interest rate swaps	—		4,869		—

		$	1,948	$	228	$	—		$	1,985	$	4,869	$	—
Liabilities:	Liabilities:							Liabilities:
Interest rate swaps	Interest rate swaps	$	—	$	7,604	$	—	Interest rate swaps	$	—	$	1,270	$	—

~~Fair Value Measurement at December 31, 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~~

~~1,848~~

—

~~Liabilities:~~

~~Interest rate swaps~~

—

~~13,237~~

—


	Fair Value Measurement at December 31, 2021 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	$	2,122	$	—	$	—
Interest rate swaps	—		424		—
	$	2,122	$	424	$	—
Liabilities:
Interest rate swaps	$	—	$	5,176	$	—

Fair Value of Debt

As of ~~September 30, 2021,~~March 31, 2022, 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 2014R-1, New York Bonds 2014R-2, New York Bonds 2020 and New Hampshire Bonds was approximately ~~$177,501~~$165,864 and the carrying value was $162,000. 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 2014R-1, the New York Bonds 2014R-2, New York Bonds 2020 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 30, 2021,~~March 31, 2022, the carrying value of our Term Loan Facility was ~~$347,375~~$350,000 and the carrying value of our Revolving Credit Facility was ~~$0.~~$19,000. 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 2014R-1, New York Bonds 2014R-2, New York Bonds 2020 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.

2421

13. 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, transfer, transportation and disposal, landfill gas-to-energy, processing, and recycling services in the northeastern United States. ~~Effective January 1, 2021, we reorganized the~~Our Resource Solutions operating segment ~~which includes~~leverages our ~~larger-scale recycling and commodity brokerage operations along with our organics services and large scale commercial and~~core competencies in materials processing, industrial ~~services, from our historical lines-of-service of~~ recycling, organics and ~~customer solutions into~~resource management service offerings to deliver a comprehensive solution for our larger commercial, municipal, institutional and industrial customers that have more diverse waste and recycling needs. Revenues associated with our Resource Solutions operations are derived from two lines-of-service: processing and non-processing. Revenues from processing services are derived from municipalities and customers in the form of processing fees, tipping fees, commodity sales, and organic material sales. Revenues from non-processing services are derived from brokerage ~~services;~~services and overall resource management services providing a wide range of environmental services and zero waste solutions to large and complex ~~organizations; and~~organizations, as well as traditional collection, disposal and recycling services provided to large account multi-site customers. Revenues classification by service line reported in the three and nine months ended September 30, 2020 has been reclassified to conform with the presentation for the three and nine months ended September 30, 2021. Legal, tax, information technology, human resources, certain finance and accounting and other administrative functions are included in our Corporate Entities segment, which is not a reportable operating segment. Corporate Entities results reflect those costs not allocated to our reportable operating segments.

Three Months Ended ~~September 30, 2021~~March 31, 2022


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	$	75,154	$	18,768	$	9,407	$	5,374	$	352,067	Eastern	$	71,319	$	16,668	$	11,450	$	(2,229)	$	355,371
Western	Western	103,523		35,523		15,710		15,805		673,608		Western	95,839		32,493		14,659		9,263		684,969
Resource solutions	Resource solutions	63,292		156		1,903		6,679		126,529		Resource solutions	66,869		778		2,762		3,691		176,128
Corporate entities	Corporate entities	—		—		471		(471)		128,193		Corporate entities	—		—		557		(557)		90,503
Eliminations	Eliminations	—		(54,447)		—		—		—		Eliminations	—		(49,939)		—		—		—
		$	241,969	$	—	$	27,491	$	27,387	$	1,280,397		$	234,027	$	—	$	29,428	$	10,168	$	1,306,971

Three Months Ended ~~September 30, 2020~~March 31, 2021


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	$	58,323	$	14,261	$	6,659	$	3,683	$	215,639	Eastern	$	52,345	$	12,426	$	6,622	$	2,245	$	221,200
Western	Western	94,728		31,692		15,000		15,344		635,153		Western	85,764		28,682		14,039		7,756		646,381
Resource solutions	Resource solutions	49,616		2,806		1,544		2,204		89,870		Resource solutions	51,423		1,903		1,568		2,462		88,759
Corporate entities	Corporate entities	—		—		596		(598)		53,593		Corporate entities	—		—		453		(454)		237,906
Eliminations	Eliminations	—		(48,759)		—		—		—		Eliminations	—		(43,011)		—		—		—
		$	202,667	$	—	$	23,799	$	20,633	$	994,255		$	189,532	$	—	$	22,682	$	12,009	$	1,194,246

~~Nine Months Ended September 30, 2021~~
Segment Outside
revenues Inter-company
revenues Depreciation and
amortization Operating
income (loss) Total assets
Eastern $ 188,557 $ 47,322 $ 23,342 $ 11,401 $ 352,067
Western 288,139 97,771 44,838 38,462 673,608
Resource solutions 170,679 3,337 5,020 12,792 126,529
Corporate entities — — 1,310 (1,312) 128,193
Eliminations — (148,430) — — —
$ 647,375 $ — $ 74,510 $ 61,343 $ 1,280,397

~~Nine Months Ended September 30, 2020~~
Segment Outside
revenues Inter-company
revenues Depreciation and
amortization Operating
income (loss) Total assets
Eastern $ 161,803 $ 39,936 $ 18,956 $ 9,023 $ 215,639
Western 267,218 86,259 41,847 32,849 635,153
Resource solutions 145,323 8,147 4,692 5,008 89,870
Corporate entities — — 1,786 (1,791) 53,593
Eliminations — (134,342) — — —
$ 574,344 $ — $ 67,281 $ 45,089 $ 994,255

A summary of our revenues attributable to services provided follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Collection	Collection	$	118,872	$	102,270	$	323,667	$	290,837	Collection	$	119,531	$	97,469
Disposal	Disposal	55,593		47,600		142,618		129,971		Disposal	43,153		37,853
Power generation	Power generation	1,253		987		3,657		2,931		Power generation	2,654		1,303
Processing	Processing	2,959		2,194		6,754		5,282		Processing	1,820		1,484
Solid waste operations	Solid waste operations	178,677		153,051		476,696		429,021		Solid waste operations	167,158		138,109
Processing	Processing	27,418		15,701		65,721		45,724		Processing	27,395		17,272
Non-processing	Non-processing	35,874		33,915		104,958		99,599		Non-processing	39,474		34,151
Resource solutions operations	Resource solutions operations	63,292		49,616		170,679		145,323		Resource solutions operations	66,869		51,423
Total revenues	Total revenues	$	241,969	$	202,667	$	647,375	$	574,344	Total revenues	$	234,027	$	189,532

2622

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, ~~2020~~2021 filed with the Securities and Exchange Commission (“SEC”) on February ~~19, 2021.~~18, 2022.

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

•the outcome of any legal or regulatory matter;

•~~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 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;

•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”~~“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

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.

2723

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~~vertically integrated solid waste services company. We provide resource management expertise and services to residential, commercial, municipal, institutional 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~~seven states: Vermont, New Hampshire, New York, Massachusetts, Connecticut, 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. We manage our resource-renewal operations through the Resource Solutions operating segment, which ~~includes~~leverages our ~~larger-scale~~core competencies in materials processing, industrial recycling, organics and ~~commodity~~resource management service offerings to deliver a comprehensive solution for our larger commercial, municipal, institutional and industrial customers that have more diverse waste and recycling needs. Our Resources Solutions operations consist of two lines-of-service: processing and non-processing. Processing services consist of the receipt of recycled, sludge or other organic materials at one of our materials recovery, processing or disposal facilities, where it is then sorted, mixed and/or processed, and then disposed of or sold. Non-processing services consist of brokerage ~~operations along with our organics~~ services and overall resource management services, which provide a wide range of environmental services and zero waste solutions to large ~~scale commercial~~ and ~~industrial services.~~complex organizations, as well as traditional collection, disposal and recycling services provided to large account multi-site customers.

As of ~~October~~April 15, ~~2021,~~2022, we owned and/or operated 5149 solid waste collection operations, 6563 transfer stations, 2325 recycling facilities, eight Subtitle D landfills, three landfill gas-to-energy facilities and one landfill permitted to accept construction and demolition (“C&D”) materials.

Results of Operations

~~Recent Events~~

~~COVID-19~~

The global outbreak of the COVID-19 pandemic has caused economic disruption across our geographic footprint and has adversely affected our business. The COVID-19 pandemic negatively impacted our revenues starting at the end of the three months ended March 31, 2020, as many small business and construction collection customers required service level changes and volumes into our landfills declined due to lower economic activity. Demand for services has improved as local economies have reopened as allowed by State Governments and our collection and disposal volumes, as well as overall operations, have been less impacted by the effects of the COVID-19 pandemic in the three and nine months ended September 30, 2021.

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 ~~transfer, transportation~~ and disposal services, including landfill, transfer and transportation, landfill gas-to-energy, ~~processing,~~ and ~~recycling~~processing 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 manage our resource-renewal operations ~~as either processing or non-processing services in our~~through the Resource Solutions operating ~~segment.~~segment, which includes processing and non-processing services. Revenues from processing services ~~consist of revenues~~are derived from municipalities and customers in the form of processing fees, tipping fees, and commodity sales, primarily comprised of newspaper, corrugated containers, plastics, ferrous and aluminum, and organic ~~material sales.~~materials such as our earthlife® soils products including fertilizers, composts and mulches. Revenues from non-processing services ~~consist of~~are derived from brokerage ~~services;~~services and overall resource management services providing a wide range of environmental services and zero waste solutions to large and complex ~~organizations; and~~organizations, as well as traditional collection, disposal and recycling services provided to large account multi-site customers.

2824

A summary of revenues attributable to ~~service~~services provided (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 March 31,								$ Change
		2021				2020						2021				2020							2022				2021
Collection	Collection	$	118.9	49.1	%	$	102.3	50.5	%	$	16.6	$	323.7	50.0	%	$	290.8	50.6	%	$	32.9	Collection	$	119.5	51.1	%	$	97.5	51.4	%	$	22.0
Disposal	Disposal	55.6		23.0	%	47.6		23.5	%	8.0		142.6		22.0	%	130.0		22.6	%	12.6		Disposal	43.2		18.4	%	37.9		20.0	%	5.3
Power	Power	1.3		0.5	%	1.0		0.5	%	0.3		3.7		0.6	%	2.9		0.5	%	0.8		Power	2.7		1.1	%	1.3		0.7	%	1.4
Processing	Processing	2.9		1.2	%	2.2		1.0	%	0.7		6.7		1.0	%	5.3		1.0	%	1.4		Processing	1.8		0.8	%	1.4		0.8	%	0.4
Solid waste	Solid waste	178.7		73.8	%	153.1		75.5	%	25.6		476.7		73.6	%	429.0		74.7	%	47.7		Solid waste	167.2		71.4	%	138.1		72.9	%	29.1
Processing	Processing	27.4		11.4	%	15.7		7.8	%	11.7		65.7		10.2	%	45.7		8.0	%	20.0		Processing	27.3		11.7	%	17.2		9.1	%	10.1
Non-processing	Non-processing	35.9		14.8	%	33.9		16.7	%	2.0		105.0		16.2	%	99.6		17.3	%	5.4		Non-processing	39.5		16.9	%	34.2		18.0	%	5.3
Resource solutions	Resource solutions	63.3		26.2	%	49.6		24.5	%	13.7		170.7		26.4	%	145.3		25.3	%	25.4		Resource solutions	66.8		28.6	%	51.4		27.1	%	15.4
Total revenues	Total revenues	$	242.0	100.0	%	$	202.7	100.0	%	$	39.3	$	647.4	100.0	%	$	574.3	100.0	%	$	73.1	Total revenues	$	234.0	100.0	%	$	189.5	100.0	%	$	44.5

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, 2021 vs. 2020				Period-to-Period Change for the Nine Months Ended September 30, 2021 vs. 2020					Period-to-Period Change for the Three Months Ended March 31, 2022 vs. 2021
		Amount		% Growth		Amount		% Growth			Amount		% Growth
Price	Price	$	6.2	4.1	%	$	16.4	3.8	%	Price	$	7.8	5.6	%
Volume	Volume	4.3		2.8	%	10.1		2.3	%	Volume	0.7		0.5	%
Surcharges and other fees	Surcharges and other fees	(0.2)		(0.2)	%	(2.2)		(0.5)	%	Surcharges and other fees	1.8		1.3	%
Commodity price and volume	Commodity price and volume	0.5		0.3	%	1.2		0.3	%	Commodity price and volume	1.6		1.1	%
Acquisitions	Acquisitions	14.8		9.7	%	22.3		5.2	%	Acquisitions	17.2		12.5	%
Closed operations		—		—	%	(0.1)		—	%

Solid waste revenues	Solid waste revenues	$	25.6	16.7	%	$	47.7	11.1	%	Solid waste revenues	$	29.1	21.0	%

Solid waste revenues

Price.

The price change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is the result of the following:

•$~~4.7~~6.3 million ~~quarterly and $11.9 million year-to-date~~ from favorable collection pricing; and

•$1.5 million ~~quarterly and $4.5 million year-to-date~~ from favorable disposal pricing associated with our landfills and transfer stations.

Volume.

The volume change component in quarterly solid waste revenues growth from the prior year period is the result of the following:

•$3.5 million from higher disposal volumes (of which $2.3 million relates to higher transfer station volumes, $0.9 million relates to higher transportation volumes associated primarily with one of our larger customers, and $0.3 million relates to higher third-party landfill volumes); and

•$0.5 million from higher collection volumes as a result of increased activity and new customer acquisition; and

•$0.3 million from higher ~~processing volumes.~~

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

•~~$4.7 million from higher~~ disposal volumes (of which ~~$4.4~~$0.3 million relates to higher transportation volumes and $0.3 million relates to higher transfer station volumes, ~~and $0.8~~partially offset by $(0.3) million relates to higher third-party landfill volumes as a result of increased activity and an increased demand for services due to economic recovery from the prior year, which was negatively impacted by the COVID-19 pandemic, and $(0.5) millionthat relates to lower ~~transportation~~third-party landfill volumes);

•$4.6 million from higher collection volumes as a result of increased activity, new customer acquisition and an increased demand for services due to economic recovery from the prior year, which was negatively impacted partially offset by ~~the COVID-19 pandemic; and~~

•$~~0.8~~(0.1) million from ~~higher~~lower processing volumes.

Surcharges and other fees.

The surcharges and other fees change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is ~~associated with~~ the result of higher energy ~~component of the energy and environmental~~ fee ~~and the sustainability recycling adjustment fee. The sustainability recycling adjustment fee floats~~revenues on ~~a monthly basis conversely with recycled commodity~~higher diesel fuel prices, ~~which were higher as compared to the prior year periods, resulting in~~partially offset by lower sustainability recycling adjustment ~~fee revenues. This was partially offset by the impact of the energy component of the energy and environmental fee, which floats~~fees ("SRA Fee") on ~~a monthly basis in conjunction with diesel fuel prices, that were~~ higher ~~as compared to the prior year periods, resulting in higher energy fee revenues.~~recycled commodity prices.

Commodity price and volume.

The commodity price and volume change component in quarterly solid waste revenues growth from the prior year period is the result of ~~$0.5~~$1.3 million primarily from favorable energy pricing and $0.3 million from ~~favorable~~higher landfill gas-to-energy and commodity ~~and energy pricing.~~processing volumes.

Acquisitions.

The ~~commodity price and volume~~acquisitions change component in ~~year-to-date~~quarterly solid waste revenues growth from the prior year period is the result of ~~the following:~~

•~~$1.1 million from favorable commodity and energy pricing; and~~

•~~$0.1 million due to higher landfill gas-to-energy volumes.~~

~~Acquisitions.~~

~~The acquisitions change component~~increased acquisition activity in ~~quarterly and year-to-date solid waste revenues~~line with our growth ~~from the prior year periods is the result of~~strategy, including the following:

•the timing and acquisition ~~of:~~of six businesses in the three months ended March 31, 2022: a full service solid-waste collection, recycling and hauling business in our Resource Solutions operating segment; three tuck-in solid waste collection businesses in our Western region; a portable toilets business in our Eastern region; and a scrap metal collection business whose assets are allocated between our Eastern region and Resource Solutions operating segments; and

•the timing and acquisition of ten businesses in the fiscal year ended December 31, 2021: a residential, commercial and roll-off collection business in eastern Connecticut that operates a rail-served ~~construction and demolition~~C&D processing and waste transfer facility, ~~and~~ a waste transfer station, a single-stream recycling facility, and several other recycling operations whose assets and liabilities are allocated tobetween our Eastern ~~region;~~region and Resource Solutions operating segments; a solid-waste collection business that operates a waste transfer station, a septic and portable toilet business, and atwo tuck-in solid-waste collection ~~business~~businesses in our Eastern region; and a solid-waste transfer station business, a waste composting and food-scrap hauling business, a solid-waste collection business that operates a waste transfer station, and two tuck-in solid-waste collection businesses in our Western ~~region in the nine months ended September 30, 2021; and~~

•~~the timing and acquisition of seven tuck-in solid-waste collection businesses and a solid-waste collection business in our Western region in the prior year.~~region.

Resource Solutions revenues

The change component in quarterly ~~and year-to-date~~ resource solutions revenues growth of ~~$13.7~~$15.4 million ~~and $25.4 million, respectively,~~ from the prior year ~~periods~~period is the result of the following:

•$~~6.0~~9.3 million ~~quarterly~~from acquisition activity;

•$3.4 million from higher non-processing revenues due to higher volumes on organic business growth and ~~$12.7~~favorable pricing;

•$2.2 million ~~year-to-date~~ from the favorable impact of commodity pricing in the marketplace (not including the negative impact of lower intercompany tipping fees that were reduced due to higher commodity pricing);

•$4.2 million quarterly and $4.2 million year-to-date from an acquisition, which operates a single stream recycling facility and several other recycling operations, in the three months ended September 30, 2021;

•~~$2.0 million quarterly and $5.4 million year-to-date from higher non-processing revenues primarily due to higher volumes;~~ and

•$~~1.5~~0.5 million ~~quarterly and $3.1 million year-to-date~~ from higher processing volumes driven by higher recycling commodity volumes and other processing volumes.

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 March 31,								$ Change
		2021				2020						2021				2020							2022				2021
Cost of operations	Cost of operations	$	153.9	63.6	%	$	130.4	64.3	%	$	23.5	$	419.6	64.8	%	$	382.4	66.6	%	$	37.2	Cost of operations	$	162.5	69.4	%	$	127.1	67.1	%	$	35.4
General and administration	General and administration	$	31.0	12.8	%	$	25.0	12.3	%	$	6.0	$	87.3	13.5	%	$	74.2	12.9	%	$	13.1	General and administration	$	29.8	12.7	%	$	27.1	14.3	%	$	2.7
Depreciation and amortization	Depreciation and amortization	$	27.5	11.4	%	$	23.8	11.7	%	$	3.7	$	74.5	11.5	%	$	67.3	11.7	%	$	7.2	Depreciation and amortization	$	29.4	12.6	%	$	22.7	12.0	%	$	6.7

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, the cost of purchasing materials to be recycled, 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 approximately (70) basis points and (180)~~increased 230 basis points during the three ~~and nine~~ months ended ~~September 30, 2021, respectively,~~March 31, 2022 from the same ~~periods~~period of the prior year. The period-to-period ~~changes~~change in cost of operations can be primarily attributed to the following:

Third-party direct costs increased ~~$9.5~~$12.7 million quarterly, while ~~decreasing approximately (20) basis points as a percentage of revenues, and increased $13.4 million year-to-date while decreasing approximately (90)~~increasing 70 basis points as a percentage of revenues, due to the following:

•higher third-party disposal costs associated with increased solid waste volumes ~~including higher~~on acquisition activity, and to a lesser extent, organic ~~collection and transfer station volumes; higher third-party landfill volumes; higher collection volumes related to acquisition activity;~~growth, and higher ~~non-processing volumes,~~fuel surcharges from third-party transporters;

•higher purchased material costs associated with acquisition activity and ~~the internalization of more non-processing volumes,~~higher recycling commodity prices in our Resource Solutions operating segment; and

•higher hauling and third-party transportation costs associated primarily with increased solid waste volumes ~~including~~on acquisition activity, and to a lesser extent, organic growth, higher ~~organic collection and transfer station volumes; higher~~fuel surcharges from third-party ~~landfill volumes driven by our Eastern region; higher collection and transportation volumes related to acquisition activity;~~transporters, and higher ~~brokerage,~~non-processing, commodity and other processing ~~and non-processing~~ volumes in our Resource Solutions operating ~~segment; partially offset by lower third-party transportation~~segment.

Labor and related benefit costs increased $8.6 million quarterly, while increasing 100 basis points as a percentage of revenues, due primarily to wage inflation in our markets and increased overtime on higher solid waste volumes associated with an increased demand for services and acquisition activity, higher health insurance costs and higher workers compensation costs on ~~a year-to-date basis associated with lower transportation volumes in the Western region on less drill cutting~~claim activity.

Maintenance and repair costs increased ~~$4.4~~$7.3 million quarterly, while ~~decreasing approximately (50) basis points as a percentage of revenues, and increased $10.3 million year-to-date while decreasing approximately (10)~~increasing 10 basis points as a percentage of revenues, due primarily to higher fleet, facility and container maintenance costs ~~higher facility maintenance costs, and higher resource renewal facility operational support costs in our Resource Solutions operating segment~~ associated with inflation, acquisition activity, and an increased demand for services.

~~Direct labor~~Fuel costs increased ~~$5.6~~$4.3 million quarterly, while increasing approximately 20 basis points as a percentage of revenues, and increased $9.3 million year-to-date while remaining flat as a percentage of revenues, due primarily to: higher labor costs due to wage inflation in our markets and increased overtime on higher collection, disposal and processing volumes associated with an increased demand for services and acquisition activity; and higher health insurance costs; partially offset on a year-to-date basis by lower labor costs within our Resource Solutions operating segment.—

~~Fuel costs increased $1.6 million quarterly while increasing approximately 30 basis points as a percentage of revenues, and increased $2.9 million year-to-date while increasing approximately 10~~130 basis points as a percentage of revenues, due to higher fuel prices and higher volumes ~~primarily associated with~~driven by acquisition activity ~~along with higher fuel prices.~~and an increased demand for services.

Direct operational costs increased ~~$2.4~~$2.5 million quarterly while decreasing ~~approximately (50) basis points as a percentage of revenues, and increased $1.3 million year-to-date while decreasing approximately (90)~~(70) basis points as a percentage of revenues due ~~primarily to:~~to higher landfill operating costs ~~including~~in our Western region due to severe winter weather and construction delays, higher ~~leachate~~vehicle insurance costs ~~in the quarter,~~ and higher ~~variable operating~~repair and replacement part costs, ~~on increased activity;~~ partially offset by lower ~~equipment operating lease expense.~~host community and royalty fees.

General and Administration

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

The period-to-period ~~changes~~change in general and administration expense can be primarily attributed ~~to:~~to increased overhead costs associated with wage inflation ~~human resources costs to attract, train and retain employees~~ and business ~~growth; higher professional fees and quarterly bad debt expense on business growth; and higher~~growth, partially offset by lower equity compensation costs and ~~higher accrued incentive compensation on improved performance; partially offset by~~ lower bad debt ~~expense year-to-date attributed to the timing of the COVID-19 pandemic, which resulted in a large increase in the allowance for credit losses in prior periods.~~expense.

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 March 31,								$ Change
		2021				2020						2021				2020							2022				2021
Depreciation	Depreciation	$	16.3	6.7	%	$	13.9	6.9	%	$	2.4	$	45.1	7.0	%	$	40.2	7.0	%	$	4.9	Depreciation	$	19.6	8.4	%	$	14.3	7.5	%	$	5.3
Landfill amortization	Landfill amortization	8.1		3.3	%	7.6		3.8	%	0.5		22.3		3.4	%	20.5		3.6	%	1.8		Landfill amortization	6.1		2.6	%	6.4		3.4	%	(0.3)
Other amortization	Other amortization	3.1		1.4	%	2.3		1.1	%	0.8		7.1		1.1	%	6.6		1.1	%	0.5		Other amortization	3.7		1.6	%	2.0		1.1	%	1.7
		$	27.5	11.4	%	$	23.8	11.8	%	$	3.7	$	74.5	11.5	%	$	67.3	11.7	%	$	7.2		$	29.4	12.6	%	$	22.7	12.0	%	$	6.7

The period-to-period ~~increases~~increase in depreciation and other amortization expense can be primarily attributed to increased investments in our fleet and acquisition ~~activity.~~activity, which included $1.5 million of additional depreciation and other amortization expense related to a purchase price allocation adjustment in the three months ended March 31, 2022. Landfill amortization expense ~~increased in the three and nine months ended September 30, 2021~~decreased primarily due ~~primarily~~ to ~~higher~~lower third-party and overall landfill ~~volumes and changes to cost estimates and other assumptions from prior year periods.~~volumes.

Expense from Acquisition Activities

In the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, we recorded charges of ~~$1.9~~$2.0 million and ~~$4.0 million, respectively, and in the three and nine months ended September 30, 2020 we recorded charges of $0.2 million and $1.5~~$0.4 million, respectively, comprised primarily of legal, consulting and other similar costs associated with the acquisition and integration of acquired businesses or select development projects.

~~Southbridge Landfill Closure Charge~~

In 2017, we initiated the plan to cease operations of our landfill located in Southbridge, Massachusetts ("Southbridge Landfill") and later closed it in November 2018 when Southbridge Landfill reached its final capacity. Accordingly, in the three and nine months ended September 30, 2021, we recorded charges of $0.3 million and $0.7 million, respectively, associated with legal and other costs pertaining to various matters as part of the unplanned early closure of the Southbridge Landfill through completion of the closure process. In the three and nine months ended September 30, 2020, we recorded charges of $2.6 million and $3.8 million, respectively, comprised of the following: $0.6 million and $1.9 million, respectively, of legal and other costs pertaining to various matters as part of the unplanned early closure of the Southbridge Landfill through completion of the closure process, a charge of $2.0 million in both the three and nine months ended September 30, 2020 associated with a settlement pertaining to the Southbridge Landfill, a charge of $0.2 million in the nine months ended September 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 of $(0.2) million in the nine months ended September 30, 2020 associated with the completion of the environmental remediation at the site.

Other Expenses

Interest Expense, net

Our interest expense, net decreased $(0.2) million quarterly ~~and $(0.9) million year-to-date~~ due primarily to lower average interest rates on our debt associated with ~~changes in London Inter-Bank Offered Rate~~a lower interest rate spread associated with our amended and restated credit agreement ("~~LIBOR"~~Credit Agreement"), partially offset by higher average debt balances associated with borrowings against our amended and restated revolving credit facility ("Revolving Credit Facility").

Provision for Income Taxes

Our provision for income taxes ~~increased $6.2~~decreased $(1.5) million quarterly ~~and $13.6 million year-to-date,~~ as compared to the same ~~periods~~period in the prior ~~year.~~year, primarily due to the lower income from operations and the difference in the one-time adjustments for the tax benefit on equity compensation awards between the periods. The provision for income taxes in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 included ~~$1.5~~$0.5 million of current income taxes and ~~$13.0~~$0.5 million of deferred income taxes. For the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, the provision included a ~~$(0.7)~~$(0.1) million current income tax benefit and ~~$1.5~~$2.3 million of deferred income taxes. The effective rate for the three months ended ~~September 30, 2021~~March 31, 2022 was 31%, before the one-time adjustments primarily related to tax effects of accumulated other comprehensive losses and equity compensation, and is computed based on the statutory rate of 21%, adjusted primarily for state taxes and nondeductible officer compensation.

An increase of $11.5 million in the year-to-date deferred tax provision between the periods relates to the release of a significant portion of our valuation allowance in the fourth quarter ended December 31, 2020. On a periodic basis, we reassess the valuation allowance on our deferred income tax assets, weighing positive and negative evidence to assess the recoverability of the deferred tax assets. In the quarter ended December 31, 2020, we assessed the valuation allowance and considered positive evidence, including significant cumulative consolidated income over the three years ended December 31, 2020, revenue growth and expectations of future profitability, and negative evidence, including the impact of a negative change in the economic climate, significant risks and uncertainties in the business and restrictions on tax loss utilization in certain state jurisdictions. After assessing both the positive evidence and the negative evidence, we determined it was more likely than not that the majority of our deferred tax assets would be realized in the future and released the valuation allowance on the majority of our net operating loss carryforwards and other deferred tax assets as of December 31, 2020, resulting in a benefit from income taxes of $61.3 million. We continue to maintain a valuation allowance related to deferred tax assets that would generate capital losses when realized and deferred tax assets related to certain state jurisdictions.

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 current income tax benefit of $(1.0) million, offset by a $1.0 million deferred tax provision, was recognized in the three months ended March 31, 2020 for the remaining minimum tax credit carried back to tax year 2018.

On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJ Act”) was enacted. The TCJ Act significantly changed U.S. corporate income tax laws by, among other things, changing carryforward rules for net operating losses. Our ~~$92.5~~$52.4 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 ~~2021~~the fiscal year ending December 31, 2022 ("fiscal year 2022") and future tax years. Federal net operating losses generated after 2017, totaling $46.5 million carried forward to ~~2021,~~fiscal year 2022, will be carried forward indefinitely, but generally may only offset up to 80% of taxable income earned in a tax year.

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 March 31,				$ Change
		2021		2020				2021		2020					2022		2021
Eastern	Eastern	$	75.2	$	58.3	$	16.9	$	188.6	$	161.8	$	26.8	Eastern	$	71.3	$	52.3	$	19.0
Western	Western	103.5		94.7		8.8		288.1		267.2		20.9		Western	95.8		85.8		10.0
Resource solutions	Resource solutions	63.3		49.7		13.6		170.7		145.3		25.4		Resource solutions	66.9		51.4		15.5

Total revenues	Total revenues	$	242.0	$	202.7	$	39.3	$	647.4	$	574.3	$	73.1	Total revenues	$	234.0	$	189.5	$	44.5

Eastern Region

A summary of the period-to-period ~~changes~~change 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, 2021 vs. 2020				Period-to-Period Change for the Nine Months Ended September 30, 2021 vs. 2020					Period-to-Period Change for the Three Months Ended March 31, 2022 vs. 2021
		Amount		% Growth		Amount		% Growth			Amount		% Growth
Price	Price	$	2.3	4.0	%	$	6.4	3.9	%	Price	$	3.5	6.7	%
Volume	Volume	3.6		6.1	%	10.2		6.4	%	Volume	0.6		1.1	%
Surcharges and other fees	Surcharges and other fees	(0.2)		(0.3)	%	(0.9)		(0.6)	%	Surcharges and other fees	0.7		1.2	%
Commodity price and volume		0.1		0.2	%	0.1		—	%

Acquisitions	Acquisitions	11.1		19.0	%	11.1		6.9	%	Acquisitions	14.2		27.2	%
Closed landfill		—		(0.1)	%	(0.1)		(0.1)	%

Solid waste revenues	Solid waste revenues	$	16.9	28.9	%	$	26.8	16.5	%	Solid waste revenues	$	19.0	36.2	%

Price.

The price change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is the result of the following:

•$~~1.6~~2.8 million ~~quarterly and $4.3 million year-to-date~~ from favorable collection pricing; and

•$0.7 million ~~quarterly and $2.1 million year-to-date~~ from favorable disposal pricing related to transfer stations and landfills.

Volume.

The volume change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is the result of the following:

•$2.7 million quarterly and $6.8 million year-to-date from higher disposal volumes related to transfer stations and landfills as a result of increased activity and an increased demand for services due to economic recovery from the prior year, which was negatively impacted by the COVID-19 pandemic;

•$0.5 million ~~quarterly and $2.6 million year-to-date~~ from higher collection volumes as a result of increased activity and new customer ~~acquisition and an increased demand for services due to economic recovery from the prior year, which was negatively impacted by the COVID-19 pandemic;~~acquisition; and

•$~~0.4~~0.2 million ~~quarterly and $0.8~~from higher disposal volumes related to transfer stations, partially offset by lower landfill volumes; partially offset by

•$(0.1) million ~~year-to-date~~ from ~~higher~~lower processing volumes.

Surcharges and other fees.

The surcharges and other fees change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is ~~associated with~~ the result of higher energy ~~component of the energy and environmental~~ fee ~~and the sustainability recycling adjustment fee. The sustainability recycling adjustment fee floats~~revenues on ~~a monthly basis conversely with recycled commodity~~higher diesel fuel prices, ~~which were higher as compared to the prior year periods, resulting in lower sustainability recycling adjustment fee revenues. This was~~ partially offset by ~~the impact of the energy component of the energy and environmental fee, which floats~~lower SRA Fees, on ~~a monthly basis in conjunction with diesel fuel prices, that were~~ higher ~~as compared to the prior year periods, resulting in higher energy fee revenues.~~recycled commodity prices.

Acquisitions.

The acquisitions change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is ~~associated~~a result of increased acquisition activity in line with our growth strategy, including the following:

•the timing and acquisition ~~of:~~of a portable toilets business and a scrap metal collection business whose assets are partially allocated to our Eastern region; and

•the timing and prior year acquisition of a residential, commercial and roll-off collection business in eastern Connecticut that operates a rail-served ~~construction and demolition~~C&D processing and waste transfer facility, ~~and~~ a waste transfer station, a single-stream recycling facility, and several other recycling operations whose assets and liabilities are partially allocated to our Eastern region; a solid-waste collection business that operates a waste transfer station; a septic and portable toilet business; and atwo tuck-in solid-waste collection ~~business in the nine months ended September 30, 2021.~~businesses.

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, 2021 vs. 2020				Period-to-Period Change for the Nine Months Ended September 30, 2021 vs. 2020					Period-to-Period Change for the Three Months Ended March 31, 2022 vs. 2021
		Amount		% Growth		Amount		% Growth			Amount		% Growth
Price	Price	$	3.9	4.1	%	$	10.1	3.8	%	Price	$	4.3	5.0	%
Volume	Volume	0.9		0.9	%	(0.3)		(0.1)	%	Volume	—		0.1	%
Surcharges and other fees	Surcharges and other fees	(0.1)		(0.1)	%	(1.3)		(0.5)	%	Surcharges and other fees	1.1		1.3	%
Commodity price and volume	Commodity price and volume	0.4		0.5	%	1.2		0.4	%	Commodity price and volume	1.6		1.8	%
Acquisitions	Acquisitions	3.7		3.9	%	11.2		4.2	%	Acquisitions	3.0		3.5	%

Solid waste revenues	Solid waste revenues	$	8.8	9.3	%	$	20.9	7.8	%	Solid waste revenues	$	10.0	11.7	%

Price.

The price change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is the result of the following:

•$~~3.1~~3.5 million ~~quarterly and $7.6 million year-to-date~~ from favorable collection pricing; and

•$0.8 million ~~quarterly and $2.5 million year-to-date~~ from favorable disposal pricing related to landfills and transfer stations.

~~Volume.~~

The volume change component in quarterly solid waste revenues growth from the prior year is the result of $0.9 million from higher disposal volumes related to transportation, associated with a large customer, and higher transfer station volumes, partially offset by lower landfill volumes on lower drill cuttings activity).

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

•$(2.2) million from lower disposal volumes, despite higher volumes at transfer stations, related to transportation and landfills on lower drill cuttings activity, combined with timing around the negative impacts and recent recovery from the COVID-19 pandemic; partially offset by

•$1.9 million from higher collection volumes as a result of increased activity, new customer acquisition and an increased demand for services due to economic recovery from the prior year, which was negatively impacted by the COVID-19 pandemic.

Surcharges and other fees.

The surcharges and other fees change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is ~~associated with~~ the result of higher energy ~~component of the energy and environmental~~ fee ~~and the sustainability recycling adjustment fee. The sustainability recycling adjustment fee floats~~revenues on ~~a monthly basis conversely with recycled commodity~~higher diesel fuel prices, ~~which were higher as compared to the prior year periods, resulting in lower sustainability recycling adjustment fee revenues. This was~~ partially offset by ~~the impact of the energy component of the energy and environmental fee, which floats~~lower SRA Fees, on ~~a monthly basis in conjunction with diesel fuel prices, that were~~ higher ~~as compared to the prior year periods, resulting in higher energy fee revenues.~~recycled commodity prices.

Commodity price and volume.

The commodity price and volume change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is primarily the result of favorable energy pricing and higher landfill gas-to-energy and commodity ~~pricing, combined with higher commodity volumes and year-to-date landfill gas-to-energy~~processing volumes.

Acquisitions.

The acquisitions change component in quarterly ~~and year-to-date~~ solid waste revenues growth from the prior year ~~periods~~period is the result of increased acquisition activity in line with our growth strategy, including the following:

•the timing and acquisition ~~of: two~~of three tuck-in solid waste collection businesses; and

•the timing and prior year acquisition of a ~~solid~~solid-waste transfer station business, a waste composting and food-scrap hauling business, a solid-waste collection business that operates a waste transfer ~~station;~~station, and ~~a waste composting and food-scrap hauling business in the nine months ended September 30, 2021; along with the timing and acquisition of seven~~two tuck-in ~~solid waste~~solid-waste collection ~~businesses and a solid waste collection business during the prior year.~~businesses.

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 March 31,				$ Change
		2021		2020				2021		2020					2022		2021
Eastern	Eastern	$	5.4	$	3.7	$	1.7	$	11.4	$	9.0	$	2.4	Eastern	$	(2.2)	$	2.2	$	(4.4)
Western	Western	15.8		15.3		0.5		38.5		32.8		5.7		Western	9.3		7.8		1.5
Resource solutions	Resource solutions	6.7		2.2		4.5		12.8		5.0		7.8		Resource solutions	3.7		2.5		1.2
Corporate entities	Corporate entities	(0.5)		(0.6)		0.1		(1.4)		(1.7)		0.3		Corporate entities	(0.6)		(0.5)		(0.1)
Operating income	Operating income	$	27.4	$	20.6	$	6.8	$	61.3	$	45.1	$	16.2	Operating income	$	10.2	$	12.0	$	(1.8)

Eastern Region

Operating income ~~increased $1.7~~declined $(4.4) million quarterly ~~and increased $2.4 million year-to-date.~~from the prior year period. Excluding the impact of the Southbridge Landfill closure charge and the expense from acquisition activities, our operating performance in the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 was driven by the following cost impacts discussed below more than offsetting revenue growth, inclusive of inter-company ~~revenues, more than offsetting the following cost changes:~~revenues.

Cost of operations: Cost of operations increased ~~$16.0~~$20.4 million quarterly ~~and $23.5 million year-to-date~~from the prior year period due to:

•higher third-party disposal costs and higher hauling and third-party transportation costs associated with increased solid waste volumes ~~including~~on acquisition activity ~~as well as~~and, to a lesser extent, organic growth, and higher ~~organic collection, transfer station and landfill volumes;~~ fuel surcharges from third-party transporters;

•higher labor and related benefit costs due primarily to wage inflation in our markets and increased overtime ~~and increased health insurance costs; higher landfill operating costs on increased volumes; higher fleet and facility maintenance costs; and higher fuel costs~~ on higher solid waste volumes ~~and higher fuel prices. Volume increases and related costs were~~ associated with acquisition activity and an increased demand for services, higher health insurance costs, and higher workers compensation costs on claim activity;

•higher maintenance and repair costs due primarily to higher fleet, facility and container maintenance costs associated with inflation, acquisition activity, and an increased demand for services;

•higher fuel costs due to higher fuel prices and higher volumes driven by acquisition activity and an increased demand for services; and

•higher direct operational costs due to increased ~~activity associated with the economic recovery from the prior year~~vehicle insurance costs and ~~acquisition activity.~~higher repair and replacement part costs.

General and administration: General and administration expense increased ~~$2.2~~$1.7 million quarterly ~~and $4.8 million year-to-date~~from the prior year period due to ~~higher accrued incentive compensation on a year-to-date basis, higher~~increased overhead costs associated with ~~improved performance~~wage inflation and ~~acquisition activity,~~business growth; partially offset by lower equity compensation costs and ~~higher quarterly~~lower bad debt ~~expense on business growth.~~expense.

Depreciation and amortization: Depreciation and amortization expense increased ~~$2.7~~$4.8 million quarterly ~~and $4.3 million year-to-date~~from the prior year period due to ~~higher depreciation and amortization expense associated with~~ increased investments in our fleet and acquisition activity, ~~and higher landfill amortization primarily on higher landfill volumes and changes to cost estimates~~which included additional depreciation and other ~~assumptions from prior year periods.~~amortization expense related to a purchase price allocation adjustment in the three months ended March 31, 2022. Landfill amortization expense decreased primarily due to lower third-party and overall landfill volumes.

Western Region

Operating income increased ~~$0.5~~$1.5 million quarterly ~~and $5.7 million year-to-date.~~from the prior year period. Excluding the impact of the expense from acquisition activities, our improved operating performance in the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 was driven by revenue growth, inclusive of inter-company revenues, more than offsetting the following cost ~~changes:~~changes.

Cost of operations: Cost of operations increased ~~$8.0~~$10.8 million quarterly ~~and $17.4 million year-to-date~~from the prior year period due to:

•higher third-party disposal costs and higher hauling and third-party transportation costs associated with increased solid waste volumes ~~including~~on acquisition activity, ~~as well as~~and higher ~~organic collection volumes and transfer station volumes;~~ fuel surcharges from third-party transporters;

•higher labor and related benefit costs due primarily to wage inflation in our markets and increased overtime ~~and~~on higher solid waste volumes associated with acquisition activity, higher health insurance ~~costs;~~costs, and higher workers compensation costs on claim activity;

•higher maintenance and repair costs due primarily to higher fleet and facility maintenance ~~costs;~~costs associated with inflation and acquisition activity;

•higher fuel costs ondue to higher fuel prices and higher volumes driven by acquisition activity and an increased demand for services; and

•higher direct operational costs due to higher landfill operating costs due to severe winter weather and construction delays, higher vehicle insurance costs and higher ~~fuel prices;~~repair and replacement part costs, partially offset by lower ~~third-party transportation costs on a year-to-date basis associated with lower transportation volumes on lower drill cuttings activity;~~host community and lower equipment operating lease expense. Volume increases and related costs were associated with increased demand for services due to increased activity associated with the economic recovery from the prior year and acquisition activity.royalty fees.

General and administration: General and administration expense increased ~~$3.2~~$0.3 million quarterly ~~and $7.0 million year-to-date~~from the prior year period due to ~~higher accrued incentive compensation and higher~~increased overhead costs associated with ~~improved performance~~wage inflation and ~~acquisition activity,~~business growth and higher ~~quarterly~~ bad debt ~~expense on business growth;~~expense; partially offset by lower ~~bad debt expense year-to-date attributed to the timing of the COVID-19 pandemic, which resulted in a large increase in the allowance for credit losses in prior periods.~~equity compensation costs.

Depreciation and amortization: Depreciation and amortization expense increased ~~$0.7~~$0.6 million quarterly ~~and $3.0 million year-to-date primarily~~from the prior year period due to ~~higher depreciation and amortization expense associated with~~ increased investments in our fleet and acquisition ~~activity,~~activity. Landfill amortization expense decreased primarily due to lower third-party and ~~higher~~overall landfill ~~amortization on higher landfill volumes at certain of our landfills and changes to cost estimates and other assumptions from prior year periods.~~volumes.

Resource Solutions

Operating income increased ~~$4.5~~$1.2 million quarterly ~~and $7.8 million year-to-date~~from the prior year period driven primarily by the operating performance of processing services. Excluding the impact of the expense from acquisition activities, our improved operating performance in the three months ended March 31, 2022 was driven by revenue growth, inclusive of inter-company revenues, more than offsetting the following cost ~~changes:~~changes.

Cost of operations: Cost of operations increased ~~$5.2~~$11.3 million quarterly ~~and $10.3 million year-to-date~~from the prior year period due to:

•higher purchased material costs associated with acquisition activity and higher recycling commodity prices;

•higher hauling and third-party transportation costs associated primarily with higher ~~brokerage~~non-processing and other processing volumes, ~~with high pass through direct costs~~ and higher fuel surcharges from third-party transporters;

•higher labor and related benefit costs due primarily to wage inflation in our markets and increased overtime on higher commodity, non-processing and other processing volumes onassociated with acquisition ~~activity;~~activity, and higher ~~disposal~~health insurance costs; and

•higher maintenance and repair costs due primarily to higher facility and container maintenance costs associated with ~~internalizing more non-processing volumes;~~inflation, acquisition activity, and ~~higher resource renewal facility operation support costs; partially offset by lower salaries and labor costs on a year-to-date basis.~~an increased demand for services.

General and administration: General and administration expense increased ~~$0.6~~$0.3 million quarterly ~~and increased $1.4 million year-to-date~~from the prior year period due to ~~higher accrued incentive compensation~~increased overhead costs ~~on improved performance,~~associated with wage inflation and ~~higher quarterly~~business growth; partially offset by lower bad debt expense and ~~higher labor costs on business growth.~~lower equity compensation costs.

Depreciation and amortization: Depreciation and amortization expense increased $1.2 million quarterly from the prior year period due to acquisition activity, which included additional depreciation and other amortization expense related to a purchase price allocation adjustment in the three months ended March 31, 2022.

Liquidity and Capital Resources

We ~~continue to~~continually monitor ~~the impact that the COVID-19 pandemic has had and may continue to have on~~ our actual and forecasted cash flows, our liquidity, and our capital requirements in order to properly manage our liquidity needs as we move ~~forward. Because of~~forward based on the capital intensive nature of ~~the services we provide, we expect to continue to generate positive operating cash flows through stable revenue sources.~~

our business and our growth acquisition strategy. We ~~had $172.0~~have $252.8 million of undrawn capacity from our ~~$200.0~~$300.0 million ~~revolving line of credit facility ("~~Revolving Credit ~~Facility") and $46.5 million of cash and cash equivalents~~Facility as of ~~September 30, 2021~~March 31, 2022 to help meet our short-term and long-term liquidity needs, and our next significant debt maturity, which is comprised of our Revolving Credit Facility and term loan A facility ("Term Loan Facility", and 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.needs.

A summary of cash and cash equivalents, restricted assets and debt balances, excluding any debt issuance costs (in millions) follows:


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	46.5	$	154.3	Cash and cash equivalents	$	12.6	$	33.8
Restricted assets:	Restricted assets:					Restricted assets:

Restricted investment securities - landfill closure	Restricted investment securities - landfill closure	$	1.9	$	1.8	Restricted investment securities - landfill closure	$	2.0	$	2.1

Debt:	Debt:					Debt:
Current portion	Current portion	$	16.8	$	9.2	Current portion	$	9.9	$	9.9
Non-current portion	Non-current portion	541.8		539.2		Non-current portion	570.3		552.7
Total debt	Total debt	$	558.6	$	548.4	Total debt	$	580.2	$	562.6

Summary of Cash Flow Activity

A summary of cash flows (in millions) follows:


		Nine Months Ended September 30,				$ Change			Three Months Ended March 31,				$ Change
		2021		2020					2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	134.1	$	111.9	$	22.2	Net cash provided by operating activities	$	24.7	$	32.1	$	(7.4)
Net cash used in investing activities	Net cash used in investing activities	$	(234.1)	$	(102.2)	$	(131.9)	Net cash used in investing activities	$	(62.5)	$	(31.3)	$	(31.2)
Net cash (used in) provided by financing activities		$	(7.9)	$	8.0	$	(15.9)
Net cash provided by (used in) financing activities								Net cash provided by (used in) financing activities	$	16.6	$	(2.7)	$	19.3

Cash flows from operating activities.

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


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Net income	Net income	$	32.0	$	28.2	Net income	$	4.2	$	4.3
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	74.5		67.3		Depreciation and amortization	29.4		22.7

Interest accretion on landfill and environmental remediation liabilities	Interest accretion on landfill and environmental remediation liabilities	5.9		5.3		Interest accretion on landfill and environmental remediation liabilities	2.0		2.0
Amortization of debt issuance costs	Amortization of debt issuance costs	1.7		1.6		Amortization of debt issuance costs	0.5		0.6
Stock-based compensation	Stock-based compensation	8.7		5.3		Stock-based compensation	2.2		2.9
Operating lease right-of-use assets expense	Operating lease right-of-use assets expense	10.0		12.3		Operating lease right-of-use assets expense	3.2		3.0
(Gain) loss on sale of property and equipment		—		0.3
Southbridge Landfill non-cash closure charge		0.1		2.1
Gain on sale of property and equipment						Gain on sale of property and equipment	(0.1)		—

Non-cash expense from acquisition activities	Non-cash expense from acquisition activities	0.5		0.5		Non-cash expense from acquisition activities	0.9		0.1

Deferred income taxes	Deferred income taxes	13.0		1.5		Deferred income taxes	0.5		2.3
		146.4		124.4			42.8		37.9
Changes in assets and liabilities, net	Changes in assets and liabilities, net	(12.3)		(12.5)		Changes in assets and liabilities, net	(18.1)		(5.8)
Net cash provided by operating activities	Net cash provided by operating activities	$	134.1	$	111.9	Net cash provided by operating activities	$	24.7	$	32.1

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

Net cash provided by operating activities ~~increased $22.2~~decreased $(7.4) million in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 as compared to the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. This was the result of improved operational performance ~~combined with a decline~~being more than offset by an increase in the unfavorable 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~~three months ended ~~September 30, 2021~~March 31, 2022 as compared to the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, see "Results of Operations" above. The ~~decline~~increase in 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~~three months ended ~~September 30, 2021~~March 31, 2022 as compared to the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 was primarily due to the following:

•a ~~$28.9 million favorable impact to operating cash flows associated with the change in accounts payable; partially offset by~~

•~~a $(17.3)~~$(7.5) million unfavorable impact to operating cash flows associated with the change in accounts ~~receivable;~~receivable associated with acquisition activity; and

•a ~~$(11.5)~~$(6.8) million unfavorable impact to operating cash flows associated with the change in ~~prepaid~~accrued expenses ~~inventories~~ and other ~~assets.~~liabilities associated with lower incentive compensation.

Cash flows from investing activities.

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


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	$	(153.1)	$	(25.4)	Acquisitions, net of cash acquired	$	(49.8)	$	(4.6)

Additions to property, plant and equipment	Additions to property, plant and equipment	(81.6)		(77.3)		Additions to property, plant and equipment	(12.9)		(26.8)

Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	0.6		0.5		Proceeds from sale of property and equipment	0.2		0.1

Net cash used in investing activities	Net cash used in investing activities	$	(234.1)	$	(102.2)	Net cash used in investing activities	$	(62.5)	$	(31.3)

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

Acquisitions, net of cash acquired. In the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, we acquired six businesses for total consideration of $53.5 million, including $49.8 million in cash, as compared to the following businesses: a residential, commercial and roll-off collection business in eastern Connecticut that operates a rail-served construction and demolition processing and waste transfer facility, a waste transfer station, a single stream recycling facility, and several other recycling operations whose assets and liabilities are allocated between our Eastern region and Resource Solutions operating segments; a solid-waste collection business that operates a transfer station, a septic and portable toilet business, and athree months ended March 31, 2021 during which we acquired one tuck-in solid waste collection ~~business in our Eastern region;~~ and ~~a waste composting and food-scrap hauling~~recycling business ~~a solid waste collection business that operates a waste transfer station, and two tuck-in solid waste collection businesses~~ in our Western region for total consideration of ~~$155.2~~$3.9 million, including ~~$150.4~~$3.5 million in cash, and paid $2.7 million in holdback payments on businesses previously acquired, as compared to the nine months ended September 30, 2020 during which we paid $26.4 million in total consideration, including $23.1 million in cash, to acquire six businesses, including five tuck-in solid waste collection business in our Western region and one recycling operation in our Resource Solutions operating segment, and paid $2.3$1.1 million in holdback payments on businesses previously acquired.

Capital expenditures. Capital expenditures were ~~$4.3~~$13.9 million ~~higher~~lower in the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 as compared to the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 primarily due ~~to:~~

•~~$3.5 million in higher~~to the timing of capital ~~expenditures from phase VI~~spend pertaining to our fleet, which has been delayed due to supply issues, and completion of construction and development ~~costs related to long-term infrastructure~~of phase VI at ~~the~~our Subtitle D landfill in Coventry, Vermont ~~("Waste USA Landfill") to facilitate future landfill airspace construction, which will significantly enhance~~in the ~~economic useful life of the Waste USA Landfill once construction is finished; and~~

•~~$3.1 million in higher growth capital expenditures related primarily to other landfill development; partially offset by~~

•$(0.9) million in lower replacement capital expenditures as lower capital spend on landfill development more than offset additional capital spend, including vehicles, machinery, equipment and containers, associated with business growth; and

•$(1.4) million in lower capital expenditures associated with 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.fiscal year ended December 31, 2021.

Cash flows from financing activities.

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


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Proceeds from long-term borrowings	Proceeds from long-term borrowings	$	0.5	$	154.4	Proceeds from long-term borrowings	$	25.6	$	—
Principal payments on debt	Principal payments on debt	(8.6)		(145.0)		Principal payments on debt	(9.0)		(2.8)
Payments of debt issuance costs		—		(1.5)

Proceeds from the exercise of share based awards	Proceeds from the exercise of share based awards	0.2		0.1		Proceeds from the exercise of share based awards	—		0.1

Net cash (used in) provided by financing activities		$	(7.9)	$	8.0
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	$	16.6	$	(2.7)

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

Debt activity. Net cash associated with debt activity ~~decreased $(17.5)~~increased $19.4 million. The ~~decrease~~increase in financing cash flows ~~is related to our strong cash position~~ in the ~~nine~~three months ended ~~September 30, 2021, combined with prior year~~March 31, 2022 is due to increased borrowings ~~against~~on our Revolving Credit Facility ~~which was subsequently paid down in the prior year.~~associated with acquisition activity.

~~Payments of debt issuance costs.~~ We recorded $1.5 million of debt issuance cost payments in the nine months ended September 30, 2020 related to the issuance of $40.0 million aggregate principal amount of New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2020.

Outstanding Long-Term Debt

Credit Facility

As of ~~September 30, 2021,~~March 31, 2022, we had outstanding ~~$347.4~~$350.0 million aggregate principal amount of borrowings under our term loan A facility ("Term Loan Facility") and $19.0 million in borrowings under our $300.0 million Revolving Credit Facility, with a $75.0 million sublimit for letters of credit.(the Term Loan Facility and ~~no borrowings under our $200.0 million~~the Revolving Credit ~~Facility.~~Facility together, the “Credit Facility”). The Credit Facility has a 5-year term that matures in ~~May 2023~~December 2026 and bears interest at a rate of LIBOR plus ~~1.50%~~1.375% per annum, which will be reduced to a rate of LIBOR plus as low as ~~1.25%~~1.125% upon us reaching a consolidated net leverage ratio of less than 2.25x. ~~Our~~The Credit Facility contains customary benchmark replacement provisions pursuant to which, upon certain triggering events, the LIBOR benchmark used to calculate the LIBOR rate will be replaced with a secured overnight financing rate, as adjusted, on the terms and conditions in the Credit Facility. 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 30, 2021,~~March 31, 2022, further advances were available under the ~~Revolving~~ Credit Facility in the amount of ~~$172.0~~$252.8 million. The available amount is net of outstanding irrevocable letters of credit totaling ~~$28.0~~$28.2 million, ~~at which date~~and as of March 31, 2022 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").~~Agreement.

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 30, 2021, financial covenant requirements included a minimum interest coverage ratio of 3.00 times and a maximum consolidated net leverage ratio of 4.00 times.~~ In addition to ~~the~~these 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. As of March 31, 2022, we were in compliance with the covenants contained in the Credit Agreement. We do not believe that these restrictions impact our ability to meet future liquidity needs. AsAn event of ~~September 30, 2021,~~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 ~~compliance with all covenants contained in~~default under any provision governing our outstanding debt obligations, our secured lenders could proceed against us and against the ~~Credit Agreement.~~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 and Other Debt

As of ~~September 30, 2021,~~March 31, 2022, we had outstanding $162.0 million aggregate principal amount of tax exempt bonds, $44.8 million aggregate principal amount of finance leases and $4.4 million aggregate principal amount of notes payable. See Note 7, Debt to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further disclosure over debt.

Inflation

Inflationary increases in costs, ~~have affected our historical operating margins,~~ including current inflationary pressures associated primarily with fuel, labor and certain capital ~~items. We~~items, have affected, and may continue to affect, our operating margins. While rapid inflation negatively impacted operating results and margins during the three months ended March 31, 2022, we believe that our flexible pricing structures and mature cost recovery fees will allow us to recover certain of the cost of inflation ~~generally has not had a significant impact on~~from our ~~operating results.~~customer base. 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~~Despite these ~~implementations, we believe we should be able to sufficiently offset most cost increases resulting from inflation. However,~~programs, 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. ~~There can be no assurance that~~We are unable to forecast or determine the ~~economic conditions in~~timing and/or the ~~northeastern United States will recover from the~~future impact of ~~the COVID-19 pandemic at the same time as, or at the same rate as, other areas of the United States.~~a sustained economic slowdown.

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:~~

•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.States.

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 processing line-of-business in the Resource Solutions operating segment experiences increased volumes of fiber in November and December due to increased retail activity during the holiday season.

Critical Accounting ~~Policies~~Estimates and ~~Estimates~~Assumptions

~~The preparation of our~~Our financial statements ~~requires management to make~~have been prepared in accordance with generally accepted accounting principles in the United States and necessarily include certain 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.judgments made by management. 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. Our ~~significant~~critical accounting ~~policies~~estimates are more fully discussed in Item 87, "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

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.

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 reduce exposure to interest rate risk involves entering into interest rate derivative agreements to hedge against adverse movements in interest rates related to the variable rate portion of our long-term debt. 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.

As of ~~September 30, 2021 and December~~March 31, ~~2020,~~2022, our active interest rate derivative agreements had a total notional ~~amount~~amounts of $195.0 ~~million and $190.0 million, respectively.~~million. According to the terms of the agreements, we receive interest based on the 1-month LIBOR index, in some instances restricted by a 0.0% floor, and pay interest at a weighted average rate of approximately ~~2.51%~~2.48% as of ~~September 30, 2021.~~March 31, 2022. The agreements mature between ~~February~~June 2022 and ~~December 2026. As~~February 2027. Additionally, as of ~~September 30, 2021 and December~~March 31, ~~2020,~~2022, we ~~had~~have forward starting interest rate derivative agreements with a total notional ~~amount~~amounts of ~~$85.0~~$60.0 million that mature between June 2027 and ~~$125.0 million, respectively. According to the terms of the agreements, we~~May 2028. We will 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 ~~1.55%~~1.44%. ~~The agreements mature between February 2027 and May 2028.~~

As of ~~September 30, 2021,~~March 31, 2022, we had $211.2 million of fixed rate debt in addition to the $195.0 million fixed through our interest rate derivative agreements. We had interest rate risk relating to approximately ~~$152.4~~$174.0 million of long-term debt as of ~~September 30, 2021.~~March 31, 2022. The weighted average interest rate on the variable rate portion of long-term debt was approximately ~~1.6%~~1.8% at ~~September 30, 2021.~~March 31, 2022. Should the average interest rate on the variable rate portion of long-term debt change by 100 basis points, we estimate that our annual interest expense would change by up to approximately ~~$1.5~~$1.7 million.

Commodity Price Volatility

~~Our sensitivity to changes~~Information about commodity price volatility market risk as of March 31, 2022 does not differ materially from that discussed in ~~commodity prices is complex because each customer contract is unique relative to revenue sharing, tipping or processing fees~~Item 7A, "Quantitative and ~~other arrangements. Many~~Qualitative Disclosures About Market Risk" of our ~~recycling contracts are structured with customer pricing based~~Annual Report on certain thresholds that limit our exposure should market prices decline. Based on current market pricing, should commodity prices change by $10 per ton, we estimate that our annual operating income margin would change by up to $2.0 million annually, or up to $0.5 million quarterly. The above operating income impact may not be indicative of future operating results and actual results may vary materially.Form 10-K for the fiscal year ended December 31, 2021.

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 30, 2021.~~March 31, 2022. 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 30, 2021,~~March 31, 2022, 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 30, 2021~~March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II.

ITEM 1. LEGAL PROCEEDINGS

General Legal Proceedings

The information required by this Item is provided in Note 8, Commitments and Contingencies to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Legal Proceedings over Certain Environmental Matters Involving Governmental Authorities with Possible Sanctions of $1,000,000 or More

Item 103 of the SEC's Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions unless we reasonably believe the monetary sanctions will not equal or exceed a specified threshold which we determine is reasonably designed to result in disclosure of any such proceeding that is material to our business or financial condition. Pursuant to Item 103, we have determined such disclosure threshold to be $1,000,000. We have no matters to disclose in accordance with that requirement.

ITEM 1A. RISK FACTORS

Our business is subject to a number of risks, including those identified in Item 1A, ~~“Risk Factors”~~“Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, 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. 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 5. OTHER INFORMATION~~

On October 25, 2021, we entered into an Amended and Restated Employment (the “Amended Agreement”) with Christopher B. Heald, our Vice President and Chief Accounting Officer, which amends and restates in their entirety the terms of Mr. Heald’s Employment Agreement, dated as of March 1, 2016 (the “Original Agreement”). The Amended Agreement will be effective on March 31, 2022 (the “Effective Date”), provided that Mr. Heald remains employed by us as of the Effective Date. Until the Effective Date, the Original Agreement will remain in full force and effect.

Pursuant to the terms of the Amended Agreement, following his resignation as Vice President and Chief Accounting Officer effective as of the Effective Date, Mr. Heald will serve as Finance Advisor for a period beginning on the Effective Date and ending on March 31, 2023 (the “End Date”) unless sooner terminated in accordance with the Amended Agreement (as applicable, the “Term”). Mr. Heald will receive an annual base salary of $100,000. In the event of a termination of Mr. Heald’s employment without “cause” (as such term is defined in the Amended Agreement) prior to the End Date, Mr. Heald will be entitled to (i) the amount of base salary payments he would have received between his termination date and the End Date had he remained employed by us through the End Date; (ii) group medical and dental insurance benefits for the period of time from his termination date through the End Date; and (iii) the accelerated vesting of the time-based vesting of any remaining unvested portion of restricted stock unit awards granted to him in 2020 and 2021 and the performance-based restricted stock unit award granted to him in 2020 (the “2020 PSU”), with the 2020 PSU remaining subject to the performance vesting requirements of such grant and with the number of shares of our stock that Mr. Heald ultimately vests in with respect to the 2020 PSU determined in the same manner and on the same terms as are applicable to other senior executive holders of such grant.

If not earlier terminated, Mr. Heald’s employment will end on the End Date and upon such event he will be entitled to accelerated vesting of the restricted stock unit award granted to him in 2021. The Amended Agreement also provides that Mr. Heald is subject to covenants not to compete and not to solicit during the Term and for a period of one year thereafter.

The foregoing description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement, a copy of which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q and is incorporated in this Part II, Item 5, “Other Information” by reference.

ITEM 6. EXHIBITS


Exhibit No.						Description













































































































































10.1 +						~~Amendment to~~ Employment Agreement ~~by and~~ between Casella Waste Systems, Inc. and ~~Christopher B. Heald dated~~Kevin Drohan effective as of ~~October~~ April 1, 2022 (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Casella as filed on March 31, 2022 (file no. 000-23211)).25 ~~, 2021~~.

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~~C ertification 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 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, (ii) Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (iii) Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (iv) Consolidated Statements of Stockholders’ Equity for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (v) Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and (vi) Notes to Consolidated Financial Statements.
+						Filed Herewith
++						Furnished Herewith

4538

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: ~~October~~April 29, ~~2021~~2022			By: /s/ ~~Christopher B. Heald~~Kevin Drohan
			~~Christopher B. Heald~~Kevin Drohan
			Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

Date: ~~October~~April 29, ~~2021~~2022			By: /s/ Edmond R. Coletta
			Edmond R. Coletta
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)

4639