EBITDA decreased $3.1 million, due to a higher overhead allocation rate and $0.1 millionloss of other net expense increases.
Segment EBITDA in our Southern segment increased $100.4 million, or 101.5%, to $199.3$22.1 million for the nine months ended September 30, 2017,2023, from $98.9a loss of $19.0 million for the nine months ended September 30, 2016.2022. The increase was due primarily to an increase in revenues of $417.0 million from organic growth and acquisitions, decreases in insurance expense of $2.1 million due to improved incident rates at operations acquired from Progressive Waste, decreases in equipment rental expense of $1.1 million due to the termination of certain short-term equipment leases assumed in the acquisition of Progressive Waste and an increase of $0.4 million from the impact of operations disposed of in 2017, partially offset by a net $308.9 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in direct and administrative labor expenses of $3.4 million due primarily to employee pay rate increases, an increase of $2.2 million from incremental labor and repair expenses resulting from hurricanes impacting our Texas, Louisiana and Florida operations, an increase in truck, container, equipment and facility maintenance and repair expenses of $1.8 million due to variability in the timing and severity of major repairs, an increase in fuel expense of $1.7 million due to increases in the market price of diesel fuel, an increase in corporate overhead expense allocations of $0.8 million due to a higher overhead allocation rate, an increase in employee benefits expenses of $0.7 million due to increased severity of medical claims and $0.7 million of other net expense increases.
Segment EBITDAdecrease in our Western segment increased $0.7 million, or 0.8%, to $84.9 million for the three months ended September 30, 2017, from $84.2 million for the three months ended September 30, 2016. The increase was due primarily to an increase in revenues of $15.0 million from organic growth and acquisitions, partially offset by an increase in direct and administrative labor expenses of $3.0 million due primarily to employee pay rate increases, an increase in taxes on revenues of $3.0 million due to the aforementioned increase in revenues, an increase in third-party disposal expense of $1.5 million due to increased collection volumes and disposal rate increases, an increase in corporate overhead expense allocations of $1.3 million due to a higher overhead allocation rate, an increase in third-party trucking and transportation expenses of $1.2 million due to increased disposal volumes that require transportation to our landfills, a net $0.9 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in expenses associated with the purchase of recyclable commodities of $0.7 million due to increased recyclable commodity values, an increase in fuel expense of $0.7 million due to increases in the market price of diesel fuel, an increase in equipment and facility rental expenses of $0.5 million resulting from new property leases and equipment rented to support growth in our intermodal operations, an increase in truck, container, equipment and facility maintenance and repair expenses of $0.4 million due to variability in the timing and severity of major repairs and $1.1 million of other net expense increases.
Segment EBITDA in our Western segment increased $9.7 million, or 4.1%, to $247.5 million for the nine months ended September 30, 2017, from $237.8 million2023 was due to an increase in executive separation expenses, increased incentive compensation costs, increased equity-based compensation expense associated with our annual recurring grants of restricted share units to our personnel, increased deferred compensation expenses, increased administrative payroll costs primarily driven by wage increases and additional headcount to support continued growth, increased costs due to increased travel and meetings, higher professional fees driven by legal costs and increased expenses associated with information systems and applications, partially offset by lower compensation to non-management personnel associated with the impact of the COVID-19 pandemic that occurred in the first three months of 2022 that did not reoccur in the current year periods, increased allocation of costs to our operating segments driven by overall higher corporate expenses and lower direct acquisition expenses associated with a decrease in acquisition activity in the current year period.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth cash flow information for the nine months ended September 30, 2016. The increase was due primarily2023 and 2022 (in thousands of U.S. dollars):
| | | | | | | |
| | Nine Months Ended | |
| | September 30, | |
| | 2023 | | 2022 | |
Net cash provided by operating activities | | $ | 1,570,876 | | $ | 1,500,137 | |
Net cash used in investing activities | | | (1,185,613) | | | (1,858,586) | |
Net cash provided by (used in) financing activities | | | (366,536) | | | 450,417 | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | | | (1,060) | | | (3,210) | |
Net increase in cash, cash equivalents and restricted cash | | | 17,667 | | | 88,758 | |
Cash, cash equivalents and restricted cash at beginning of period | | | 181,364 | | | 219,615 | |
Cash, cash equivalents and restricted cash at end of period | | $ | 199,031 | | $ | 308,373 | |
Operating Activities Cash Flows
Net cash provided by operating activities increased $70.7 million to an increase in revenues of $52.4 million from organic growth and acquisitions and a decrease in corporate overhead expense allocations of $0.9 million due to a lower overhead allocation rate, partially offset by an increase in direct and administrative labor expenses of $9.6 million due primarily to employee pay rate increases, an increase in taxes on revenues of $7.4 million due to the aforementioned increase in revenues, an increase in third-party disposal expense of $3.8 million due to increased collection volumes and disposal rate increases, an increase in third-party trucking and transportation expenses of $3.6 million due to increased disposal volumes that require transportation to our landfills, an increase in truck, container, equipment and facility maintenance and repair expenses of $3.5 million due to variability in the timing and severity of major repairs, an increase in employee benefits expenses of $3.1 million due to increased severity of medical claims, an increase in fuel expense of $2.3 million due to increases in the market price of diesel fuel, an increase in expenses associated with the purchase of recyclable commodities of $2.1 million due to increased recyclable commodity values, an increase in expenses for auto and workers’ compensation claims of $1.8 million due to increased claims and higher average rates per claim, an increase in equipment and facility rental expenses of $1.0 million resulting from new property leases and equipment rented to support growth in our intermodal operations, a net $0.9 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in intermodal expenses of $0.9 million resulting from an increase in intermodal cargo volume, an increase in professional fees of $0.6 million due primarily to higher legal expenses at our landfills, an increase in leachate disposal expenses at our landfills of $0.5 million due to heavy precipitation experienced in the first quarter of 2017 and $2.5 million of other net expense increases.
Segment EBITDA in our Eastern segment increased $16.3 million, or 28.3%, to $74.0 million for the three months ended September 30, 2017, from $57.7 million for the three months ended September 30, 2016. The increase was due primarily to an increase in revenues of $66.2 million from organic growth and acquisitions, a decrease in third party disposal expenses of $1.9 million due primarily to increased internal disposal of waste at our transfer stations and landfills in our New York markets and $0.5 million of other net expense decreases, partially offset by a net $40.8 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in corporate overhead expense allocations of $2.6 million due to an increased overhead allocation rate and an increase in budgeted revenues, which is the basis upon which overhead allocations are calculated, an increase in third-party trucking and transportation expenses of $2.4 million due to increased disposal volumes that require transportation to our landfills, a decrease of $1.9 million from the impact of operations disposed of in 2017, an increase in expenses for uncollectible accounts receivable of $1.2 million due primarily to the collection during the three months ended September 30, 2016 of a large receivable balance that was written off as a doubtful account in a prior year, an increase in direct labor expenses of $1.1 million due primarily to employee pay rate increases, an increase in taxes on revenues of $1.1 million resulting from the aforementioned increase in revenues, an increase in truck, container, equipment and facility maintenance and repair expenses of $0.7 million due to variability in the timing and severity of major repairs and an increase in fuel expense of $0.5 million due to increases in the market price of diesel fuel.
Segment EBITDA in our Eastern segment increased $73.8 million, or 54.5%, to $209.3 million$1.571 billion for the nine months ended September 30, 2017,2023, from $135.5 millionnet cash provided by operating activities of $1.500 billion for the nine months ended September 30, 2016.2022. The increase was due primarily to an increase in revenues of $296.2 million from organic growth and acquisitions and a decrease in third party disposal expenses of $4.2 million due primarily to increased internal disposal of waste at our transfer stations and landfills in our New York markets, partially offset by a net $199.9 million increase in cost of operations and SG&A expenses attributable to acquired operations, a decrease of $2.2 million from the impact of at operations disposed of in 2017, an increase in third-party trucking and transportation expenses of $5.4 million due to increased disposal volumes that require transportation to our landfills, an increase in corporate overhead expense allocations of $3.6 million due primarily to an increase in budgeted revenues, which is the basis upon which overhead allocations are calculated, an increase in direct and administrative labor expenses of $3.5 million due primarily to employee pay rate increases, an increase in truck, container, equipment and facility maintenance and repair expenses of $3.0 million due to variability in the timing and severity of major repairs, an increase in taxes on revenues of $2.6 million resulting from the aforementioned increase in revenues, an increase in employee benefits expenses of $1.5 million due to increased severity of medical claims, an increase in expenses for uncollectible accounts receivable of $1.3 million due primarily to the collection during the three months ended September 30, 2016 of a large receivable balance that was written off as a doubtful account in a prior year, an increase in fuel expense of $1.0 million due to increases in the market price of diesel fuel, an increase in leachate disposal expenses at our landfills of $0.7 million and $1.9 million of other net expense increases.
Segment EBITDA in our Canada segment increased $8.2 million, or 12.3%, to $74.4 million for the three months ended September 30, 2017, from $66.2 million for the three months ended September 30, 2016. The $8.2 million increase was comprised of an increase of $2.8 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods and a $5.4 million increase assuming foreign currency parity during the comparable reporting periods. The $5.4 million increase, which assumes foreign currency parity, was due primarily to an increase in revenues of $8.9 million and $0.9 million of other net expense decreases, partially offset by an increase in truck, container, equipment and facility maintenance and repair expenses of $1.5 million due to variability in the timing and severity of major repairs, an increase in expenses associated with the purchase of recyclable commodities of $1.3 million due to increased recyclable commodity values, an increase in corporate overhead charges of $0.7 million due to a higher allocation rate, an increase in third-party disposal expense of $0.4 million due to disposal rate increases and an increase in fuel expense of $0.5 million due to increases in the market price of diesel fuel.
Segment EBITDA in our Canada segment increased $108.8 million, or 119.0%, to $200.3 million for the nine months ended September 30, 2017, from $91.5 million for the nine months ended September 30, 2016. The $108.8 million increase was comprised of an increase of $2.2 million resulting from an increase in the average foreign currency exchange rate in effect during the comparable reporting periods and a $106.6 million increase assuming foreign currency parity during the comparable reporting periods. The $106.6 million increase, which assumes foreign currency parity, was due primarily to EBITDA contribution of $99.2 million from the five month period of January to May 2017, an increase in revenues from organic growth of $14.8 million and $1.1 million other net expense decreases, partially offset by an increase in corporate overhead charges of $2.6 million due to the Canada segment not receiving an allocation of corporate overhead for the month of June 2016, an increase in truck, container, equipment and facility maintenance and repair expenses of $2.1 million due to variability in the timing and severity of major repairs, an increase in third-party disposal expense of $1.4 million due to disposal rate increases, an increase in expenses associated with the purchase of recyclable commodities of $1.2 million due to increased recyclable commodity values, an increase in taxes on revenues of $0.7 million due to an increase in revenues and an increase in fuel expense of $0.5 million due to increases in the market price of diesel fuel.
Segment EBITDA in our Central segment increased $6.5 million, or 11.2%, to $64.6 million for the three months ended September 30, 2017, from $58.1 million for the three months ended September 30, 2016. The increase was due primarily to an increase in revenues of $11.1 million and a decrease in third party disposal expenses of $1.1 million due primarily to increased internal disposal of waste at our transfer stations and landfills in our Nebraska markets, partially offset by an increase in third-party trucking and transportation expenses of $1.6 million due to increased disposal volumes that require transportation to our landfills, an increase in taxes on revenues of $1.5 million resulting from the aforementioned increase in revenues, an increase in direct and administrative labor expenses of $1.3 million due primarily to employee pay rate increases and a decrease in unfilled positions, an increase in truck, container, equipment and facility maintenance and repair expenses of $0.7 million due to variability in the timing and severity of major repairs, and an increase in corporate overhead expense allocations of $0.6 million due to a higher overhead allocation rate.
Segment EBITDA in our Central segment increased $23.4 million, or 15.2%, to $177.9 million for the nine months ended September 30, 2017, from $154.5 million for the nine months ended September 30, 2016. The increase was due primarily to an increase in revenues of $55.2 million and a decrease in third party disposal expenses of $1.5 million due primarily to increased internal disposal of waste at our transfer stations and landfills in our Nebraska markets and a decrease in corporate overhead expense allocations of $0.9 million due to a lower overhead allocation rate, partially offset by a net $19.6 million increase in cost of operations and SG&A expenses attributable to acquired operations, an increase in direct and administrative labor expenses of $4.1 million due primarily to employee pay rate increases and a decrease in unfilled positions, an increase in truck, container, equipment and facility maintenance and repair expenses of $2.8 million due to variability in the timing and severity of major repairs, an increase in employee benefits expenses of $1.4 million due to increased severity of medical claims, an increase in taxes on revenues of $3.0 million resulting from the aforementioned increase in revenues, an increase in third-party trucking and transportation expenses of $2.6 million due to increased disposal volumes that require transportation to our landfills, an increase in fuel expense of $0.5 million due to increases in the market price of diesel fuel and $0.2 million of other net expense increases.
Segment EBITDA in our E&P segment increased $19.0 million, or 212.6%, to $27.9 million for the three months ended September 30, 2017, from $8.9 million for the three months ended September 30, 2016. The increase was due primarily to an increase in revenues of $24.1 million and a decrease in corporate overhead expense allocations of $0.4 million due primarily to a decrease in budgeted revenues, which is the basis upon which overhead allocations are calculated, partially offset by the following increases attributable to higher disposal volumes in the current period: an increase in equipment and facility maintenance and repair expenses of $1.7 million; an increase in third party trucking expenses of $1.0 million; an increase in taxes on revenues of $0.6 million; an increase in direct labor expenses of $0.5 million, an increase in equipment rental expenses of $0.5 million and $1.2 million of other expense increases.
Segment EBITDA in our E&P segment increased $41.5 million, or 189.3%, to $63.5 million for the nine months ended September 30, 2017, from $22.0 million for the nine months ended September 30, 2016. The increase was due primarily to an increase in revenues of $48.9 million and a decrease in corporate overhead expense allocations of $1.6 million due primarily to a decrease in budgeted revenues, which is the basis upon which overhead allocations are calculated, partially offset by the following increases attributable to higher disposal volumes in the current period: an increase in equipment and facility maintenance and repair expenses of $3.1 million; an increase in equipment rental expenses of $1.4 million; an increase in taxes on revenues of $1.3 million; an increase in third party trucking expenses of $1.2 million; an increase in processing cell remediation expenses of $1.1 million and $0.9 million of other expense increases.
Segment EBITDA at Corporate increased $12.5 million, to a loss of $5.8 million for the three months ended September 30, 2017, from a loss of $18.3 million for the three months ended September 30, 2016. The decrease in the loss was due to a decrease of $7.4 million in integration-related professional fees and severance-related expenses incurred in the prior year period for Progressive Waste personnel who were not permanently retained as employees of New Waste Connections following the closesignificant components of the Progressive Waste acquisition, an increase in corporate overhead allocated to our segments of $5.6 million due to an increase in total corporate expenses to support the operations acquired in the Progressive Waste acquisition, a decrease of $5.3 million resulting from the nonrecurring prior year accrual of incentive compensation expenses to certain of our executive officers and key employees related to the achievement of defined synergy goals realized by New Waste Connections from the Progressive Waste acquisition and a decrease in share-based compensation expenses of $2.1 million due to less outstanding shares in the current period for equity awards accounted for as liabilities that were granted to employees of Progressive Waste prior to June 1, 2016 which are subject to valuation adjustments each period based on changes in fair value, partially offset by an increase in accrued recurring cash incentive compensation expense to our management of $2.0 million due to the achievement of interim financial targets during the three months ended September 30, 2017, an increase in direct acquisition costs of $1.8 million resulting from an increase in acquisition activity and legal costs incurred related to divested operations, an increase in equity-based compensation expenses of $1.6 million associated with our annual recurring grant of restricted share units to our personnel, an increase in payroll and employee benefits expenses of $1.2 million due to increased corporate headcount to support the operations of Progressive Waste and annual compensation increases, an increase in software license fees of $0.6 million to support our new payroll processing application, an increase in corporate travel, meetings and training expenses of $0.5 million resulting primarily from the integration of employees of Progressive Waste into New Waste Connections and $0.2 million of other net expense increases.
Segment EBITDA at Corporate increased $70.2 million, to a loss of $32.5 million for the nine months ended September 30, 2017, from a loss of $102.7 million for the nine months ended September 30, 2016. The decrease in the loss was due to an increase in corporate overhead allocated to our segments of $29.5 million due to an increase in total corporate expenses to support the operations acquired in the Progressive Waste acquisition, a decrease in direct acquisition costs of $27.9 million resulting from amounts incurred in the prior year period related to the Progressive Waste acquisition, a decrease of $21.7 million in integration-related professional fees and severance-related expenses incurred in the prior year period for Progressive Waste personnel who were not permanently retained as employees of New Waste Connections following the close of the Progressive Waste acquisition, a decrease of $14.5 million from New Waste Connections paying excise taxes in the prior year period on the unvested or vested and undistributed equity-compensation holdings of our corporate officers and members of our Board of Directors resulting from the Progressive Waste acquisition, a decrease of $5.3 million resulting from the nonrecurring prior year accrual of incentive compensation expenses to certain of our executive officers and key employees related to the achievement of defined synergy goals realized by New Waste Connections from the Progressive Waste acquisition, a decrease in share-based compensation expenses of $4.9 million related to awards granted to employees of Progressive Waste prior to June 1, 2016 for which vesting was accelerated in the prior year period due to plan provisions regarding a change in control followed by termination of employment and resulting from less outstanding shares in the current period which are subject to valuation adjustments each period based on changes in fair value and a decrease in equity-based compensation expenses of $2.3 million resulting from the acceleration of vesting in the prior year period of performance share units granted to Old Waste Connections’ management in 2014 and 2015, partially offset by an increase in accrued recurring cash incentive compensation expense to our management of $9.5 million due to the achievement of interim financial targets during the nine months ended September 30, 2017 and the addition of accrued cash incentive compensation expense for the retained Progressive Waste employees, an increase in legal, accounting and information technology professional fee expenses of $5.4 million due to increased support required as a result of growth from the Progressive Waste acquisition, an increase in payroll and employee benefits expenses of $4.9 million due to increased corporate headcount to support the operations of Progressive Waste and annual compensation increases, an increase in equity-based compensation expenses of $3.6 million associated with our annual recurring grant of restricted share units to our personnel, an increase in corporate travel, meetings and training expenses of $3.3 million resulting from the integration of employees of Progressive Waste into New Waste Connections, an increase in software license fees of $3.0 million to support our new payroll processing application and computer applications acquired in the Progressive Waste acquisition, an increase in employee relocation expenses of $2.1 million associated with corporate personnel added to support the additional administrative oversight resulting from the Progressive Waste acquisition, an increase in deferred compensation expense of $1.4 million resulting from deferred compensation liabilities to employees increasing as a result of increases in the market value of investments to which employee deferred compensation balances are tracked and $2.7 million of other net expense increases.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth certain cash flow information for thenine month periods ended September 30, 2017 and 2016 (in thousands of U.S. dollars):
| | | Nine Months Ended
September 30, | |
| | | 2017 | | | 2016 | |
| Net cash provided by operating activities | | $ | 888,375 | | | $ | 538,831 | |
| Net cash used in investing activities | | | (683,562 | ) | | | (153,047 | ) |
| Net cash provided by (used in) financing activities | | | 135,159 | | | | (276,940 | ) |
| Effect of exchange rate changes on cash and equivalents | | | 927 | | | | (483 | ) |
| Net increase in cash and equivalents | | | 340,899 | | | | 108,361 | |
| Cash and equivalents at beginning of period | | | 154,382 | | | | 10,974 | |
| Less: change in cash held for sale | | | (27 | ) | | | - | |
| Cash and equivalents at end of period | | $ | 495,254 | | | $ | 119,335 | |
Operating Activities Cash Flows
For the nine months ended September 30, 2017, net cash provided by operating activities was $888.4 million. For the nine months ended September 30, 2016, net cash provided by operating activities was $538.8 million. The $349.6 million increase was due primarily toincluded the following:
| 1) | AnIncrease in earnings — Our increase in net cash provided by operating activities was favorably impacted by $136.5 million from an increase in net income, excluding depreciation, amortization of $100.7 million, adjusted forintangibles, share-based compensation, adjustments to and payments of contingent consideration recorded in earnings and loss on disposal of assets and impairments, due primarily to price increases, earnings from acquisitions closed during, or subsequent to, the nine months ended September 30, 2022, a decrease in compensation to non-management personnel associated with the impact of the COVID-19 pandemic that occurred in the nine months ended September 30, 2022 that did not reoccur in the current period, and an increase in earnings at our E&P waste operations. |
| 2) | Accounts receivable— Our increase in net cash provided by operating activities was favorably impacted by $58.7 million from accounts receivable as changes in accounts receivable resulted in a decrease to operating cash flows from operating assets and liabilities, net of effects from closed acquisitions, of $4.2 million. Cash flows from changes in operating assets and liabilities, net of effects from acquisitions, was a cash outflow of $23.8$31.9 million for the nine months ended September 30, 2017 and2023, compared to a decrease to operating cash outflowflows of $19.6$90.6 million for the nine months ended September 30, 2016.2022. The significant components of the $23.8 million in net cash outflows from changes in operating assets and liabilities, net of effects from closed acquisitions,decreases for the nine months ended September 30, 2017, include2023 and September 30, 2022 were due to increases in revenue, which remained as outstanding receivables at the following: end of the period. |
| a)3) | Prepaid expenses— Our increase in net cash provided by operating activities was favorably impacted by $47.8 million from prepaid expenses as changes in prepaid expenses resulted in an increase to operating cash flows of $24.9 million for the nine months ended September 30, 2023, compared to a decrease to operating cash flows of $22.9 million for the nine months ended September 30, 2022. The increase for the nine months ended September 30, 2023 was due primarily to decreased prepaid income tax payments. The decrease for the nine months ended September 30, 2022 was due primarily to increases in prepaid income tax payments and prepaid vendor payments. |
