CASELLA WASTE SYSTEMS INC

Previous wording

•our ability to consummate acquisitions, integrate acquired businesses and operations and achieve the expected benefits, including the expected annualized revenues from such acquired businesses and operations;

Current wording

•our ability to consummate business acquisitions or divestitures, integrate acquired businesses and operations and achieve the expected benefits, including the expected annualized revenues from such acquired businesses and operations;

Previous wording

•general economic factors, such as ongoing or potential geopolitical conflict, pandemics, recessions, or similar national or global events, and general macroeconomic conditions, including, among other things, consumer confidence, global supply chain disruptions, inflation, labor supply, fuel prices, interest rates and access to capital markets that generally are not within our control, and our exposure to credit and counterparty risk.

Current wording

•general economic factors, such as ongoing or potential geopolitical conflict, pandemics, recessions, or similar national or global events, and general macroeconomic conditions, including, among other things, consumer confidence, global supply chain disruptions, inflation, labor supply, fuel prices, tariffs, fluctuations in recycling commodity pricing, interest rates and access to capital markets, that generally are not within our control, and our exposure to credit and counterparty risk.

Previous wording

There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. These risks and uncertainties include, without limitation, those detailed in Item 1A. “Risk Factors” in our 2023 Form 10-K and those included under Part II. Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q.

Current wording

There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. These risks and uncertainties include, without limitation, those detailed in Item 1A. “Risk Factors” in our 2024 Form 10-K.

Previous wording

We provide integrated solid waste services in ten states: Vermont, New Hampshire, New York, Massachusetts, Connecticut, Maine, Pennsylvania, Delaware, New Jersey and Maryland, with our headquarters located in Rutland, Vermont. We manage our solid waste operations on a geographic basis through regional operating segments, the Eastern, Western and Mid-Atlantic regions, each of which provides a comprehensive range of non-hazardous solid waste services. We manage our resource renewal operations through the Resource Solutions operating segment, which leverages our core competencies in materials processing, industrial recycling, organics and 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. Legal, tax, information technology, human resources, certain finance and accounting and other administrative functions are included in our Corporate Entities segment.

Current wording

We provide integrated solid waste services in ten states: Vermont, New Hampshire, New York, Massachusetts, Connecticut, Maine, Pennsylvania, Delaware, New Jersey and Maryland, with our headquarters located in Rutland, Vermont. We manage our solid waste operations on a geographic basis through three regional operating segments, the Eastern, Western and Mid-Atlantic regions, each of which provides a comprehensive range of non-hazardous solid waste services. We manage our resource renewal operations through the Resource Solutions operating segment, which leverages our core competencies in materials processing, industrial recycling, organics and 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. Legal, tax, information technology, human resources, certain finance and accounting and other administrative functions are included in our Corporate Entities segment.

Previous wording

As of October 15, 2024, we owned and/or operated 70 solid waste collection operations, 71 transfer stations, 28 recycling facilities, eight Subtitle D landfills, three landfill gas-to-energy facilities and one landfill permitted to accept construction and demolition (“C&D”) materials. We also housed two landfill gas-to-energy facilities, which are owned and operated by third parties, at landfills we owned and/or operated.

Current wording

As of April 15, 2025, we owned and/or operated 76 solid waste collection operations, 70 transfer stations, 31 recycling facilities, eight Subtitle D landfills, three landfill gas-to-energy facilities and one landfill permitted to accept construction and demolition (“C&D”) materials. We also housed two landfill gas-to-energy facilities, which are owned and operated by third parties, at landfills we owned and/or operated.

Previous wording

We manage our solid waste operations, which include a full range of solid waste services, on a geographic basis through regional operating segments, which we designate as the Eastern, Western and Mid-Atlantic regions. Revenues associated with our solid waste operations are derived mainly from fees charged to customers for solid waste collection and disposal services, including landfill, transfer station and transportation services, landfill gas-to-energy services, and processing services in the eastern United States. 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 property owners or occupants. 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 through the Resource Solutions operating segment, which includes processing services and non-processing services, which we refer to as our National Accounts business. Revenues from processing services are derived from customers in the form of processing fees, tipping fees, commodity sales, primarily comprised of newspaper, corrugated containers, plastics, ferrous and aluminum, and organic materials such as our earthlife® soils products including fertilizers, composts and mulches. Revenues from our National Accounts business are derived from brokerage services and overall resource management services providing a wide range of environmental services and resource management solutions to large and complex organizations, as well as traditional collection, disposal and recycling services provided to large account multi-site customers.

Current wording

Revenues associated with our solid waste operations are derived mainly from fees charged to customers for solid waste collection and disposal services, including landfill, transfer station and transportation services, landfill gas-to-energy services, and processing services in the eastern United States. 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 property owners or occupants. 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 through the Resource Solutions operating segment, which includes processing services and services provided by our National Accounts business. Revenues from processing services are derived from customers in the form of processing fees, tipping fees, commodity sales, primarily comprised of newspaper, corrugated containers, plastics, ferrous and aluminum, and organic materials such as our earthlife® soils products including fertilizers, composts and mulches. Revenues from our National Accounts business are derived from brokerage services and overall resource management services providing a wide range of environmental services and resource management solutions to large and complex organizations, as well as traditional collection, disposal and recycling services provided to large account multi-site customers.

Previous wording

The most significant items impacting the change in our solid waste revenues during the three and nine months ended September 30, 2024 as compared to the prior year periods are summarized below:

Current wording

The most significant items impacting the change in our solid waste revenues during the three months ended March 31, 2025 as compared to the prior year period are summarized below:

Previous wording

See “Segment Reporting” below for discussion over the period-to-period changes in Resource Solutions revenues.

Current wording

See “Segment Reporting” below for discussion over the period-to-period change in Resource Solutions revenues.

Previous wording

The most significant items impacting the changes in our cost of operations during the three and nine months ended September 30, 2024 as compared to the prior year periods are summ arized below:

Current wording

The most significant items impacting the changes in our cost of operations during the three months ended March 31, 2025 as compared to the prior year period are summ arized below:

Previous wording

•Direct costs increased in aggregate dollars primarily due to (i) acquisitions and (ii) higher third-party disposal rates reflecting cost inflation; partially offset in year-to-date dollars, and more than offset as a percentage of revenues, by lower hauling and transportation costs in our Resource Solutions segment primarily related to municipal biosolid volumes in our National Accounts business.

Current wording

•Direct costs increased in aggregate dollars primarily due to acquisitions and higher third-party disposal rates.

Previous wording

•Direct labor costs increased primarily due to (i) acquisitions and (ii) higher wages and benefit costs reflecting cost inflation; partially offset by improved routing efficiencies.

Current wording

•Direct labor costs increased primarily due to acquisitions and higher wage and benefit rates.

Previous wording

•Fuel costs increased in aggregate dollars due to acquisitions, partially offset primarily by lower diesel fuel prices. See Item 3. “Quantitative and Qualitative Disclosures about Market Risk” of this Quarterly Report on Form 10-Q for additional information regarding our fuel costs.

Current wording

•Fuel costs increased in aggregate dollars due to acquisitions, partially offset by lower diesel fuel prices. See Item 3. “Quantitative and Qualitative Disclosures about Market Risk” of this Quarterly Report on Form 10-Q for additional information regarding our fuel costs.

Previous wording

•Maintenance and repair costs increased due to (i) acquisitions, (ii) higher personnel and parts costs reflecting cost inflation, and (iii) higher vehicle maintenance costs driven by delays in the delivery of fleet replacements.

Current wording

•Maintenance and repair costs increased due to acquisitions and higher personnel and parts costs.

Previous wording

•Other operational costs increased due to (i) acquisitions, (ii) higher spending associated with supporting acquisition-related growth, and (iii) general cost inflation.

Current wording

•Other operational costs increased in aggregate dollars due to (i) acquisitions, (ii) higher spending associated with supporting acquisition-related growth, and (iii) general cost inflation.

Previous wording

General and administration expense increased in aggregate dollars in the three and nine months ended September 30, 2024 as compared to the prior year periods, primarily due to (i) acquisition activity, including increased labor costs, professional fees and other costs to support our growth and acquisition strategy, (ii) escalation of salary, wage, incentive compensation and benefit costs, (iii) year-to-date legal expenses associated with employee separation, (iv) higher accruals related to insurance claims quarterly, (v) an increased provision for expected credit losses quarterly in our Mid-Atlantic region due to the aging of receivables and (vi) general cost inflation.

Current wording

General and administration expense increased in the three months ended March 31, 2025 as compared to the prior year period, primarily due to (i) acquisition activity, including increased labor costs, professional service fees and other costs to support our growth and acquisition strategy, (ii) escalation of salary, wage, and benefit costs, (iii) higher accruals related to incentive compensation, and (iv) higher costs associated with information technology.

Previous wording

Depreciation and amortization expense increased in the three and nine months ended September 30, 2024 as compared to the prior year periods, primarily due to (i) acquisitions, including the impact of accelerated amortization schedules of certain intangibles, (ii) investment in property and equipment in our existing operations, and (iii) higher landfill amortization expense related to changes in cost and other assumptions from the prior year periods, more than offsetting lower landfill volumes.

Current wording

Depreciation and amortization expense increased in the three months ended March 31, 2025 as compared to the prior year period, primarily due to (i) acquisitions, including the impact of accelerated amortization schedules of certain intangibles, (ii) investment in property and equipment in our existing operations, and (iii) higher landfill amortization expense related to higher landfill volumes in our Western region, and changes in cost and other assumptions.

Previous wording

In the three and nine months ended September 30, 2024, we recorded charges of $5.5 million and $18.3 million, respectively, and in the three and nine months ended September 30, 2023, we recorded charges of $3.3 million and $9.8 million, respectively, comprised primarily of legal, consulting, rebranding and other costs associated with the due diligence, acquisition and integration of acquired businesses. The nine months ended September 30, 2024 included a charge for an increase in the reserve against accounts receivable of the businesses acquired in the GFL Acquisition as a result of our inability to pursue collections during the transition services period with the seller, resulting in accounts receivable aged beyond what is typical in our business.

Current wording

In the three months ended March 31, 2025 and March 31, 2024, we recorded charges of $5.5 million and $5.0 million, respectively, comprised primarily of legal, consulting, rebranding and other costs associated with the due diligence, acquisition and integration of acquired businesses.

Previous wording

Our provision for income taxes decreased $(1.4) million and decreased $(2.1) million in the three and nine months ended September 30, 2024, respectively, from the prior year periods. The 43.5% effective rate for the nine months ended September 30, 2024 was computed based on the statutory rate of 21% adjusted primarily for state taxes, nondeductible officer compensation, and an increase in the effective state rate due to tax losses in certain states requiring a valuation allowance; partially offset by tax deductible equity compensation in excess of book expense. This effective rate exceeded the 24.4% effective rate for the nine months ended September 30, 2023 primarily due to the current period rate having lower tax deductible equity compensation in excess of book expense and an increase in the effective state rate for tax losses in certain states requiring valuation losses. The substantial increase in the effective tax rate from the nine months ended September 30, 2023 to the nine months ended September 30th, 2024 is due to the permanent items being more impactful as a result of the decrease in pre-tax income for such periods.

Current wording

Our benefit for income taxes increased $1.6 million in the three months ended March 31, 2025, from the prior year period. The benefit of $(3.3) million for the three months ended March 31, 2025, included zero dollars of current income taxes and $3.3 million of deferred income tax benefit. For the three months ended March 31, 2024, the benefit of $(1.8) million included $0.6 million of current income taxes and $(2.4) million of deferred income tax benefit. The 40.9% effective rate for the three months ended March 31, 2025, was computed based on the statutory rate of 21% adjusted primarily for state taxes, nondeductible officer compensation, and an increase in the effective state rate due to tax losses in certain states requiring a valuation allowance; partially offset by tax deductible equity compensation in excess of book expense. This effective rate exceeded the 30.0% effective rate for the three months ended March 31, 2024, primarily due to a decrease in the effective state rate for tax losses in certain states requiring valuation losses.

Previous wording

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 $7.2 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 2024 and future years. Federal net operating losses generated after 2017, totaling $150.3 million carried forward to 2024, will be carried forward indefinitely, but generally may only offset up to 80% of taxable income earned in a tax year.

Current wording

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. Depending on bonus depreciation and other elections made on the 2024 tax return when filed, we project to carry no pre-2018 net operating losses into 2025. Federal net operating losses generated after 2017, totaling $83.2 million carried forward to 2025, will be carried forward indefinitely, but generally may only offset up to 80% of taxable income earned in a tax year.

Previous wording

Operating income decreased in the three and nine months ended September 30, 2024 by $(5.6) million and $(1.0) million, respectively, as compared to the prior year periods. The period-over-period decreases were driven by (i) the charge related to the Southbridge Landfill, (ii) higher costs associated with operating and supporting acquired businesses, (iii) increased depreciation expense due to acquisitions and investment in property and equipment, (iv) general cost inflation, including for disposal, labor, and maintenance costs, (v) higher leachate disposal costs, (vi) higher accretion and landfill amortization expense associated with changes in the timing and cost estimates of our closure, post-closure, and capping obligations, (vii) higher accruals related to insurance claims quarterly and (viii) the allocation of higher corporate costs; partially offset by (a) revenue growth, described above, (b) higher intercompany related operating income, (c) lower costs due to improved routing efficiencies and (d) a charge for the FLSA-related legal settlement recorded during the nine months ended September 30, 2023. See further discussion about the charge related to the Southbridge Landfill above in “Operating Expenses”.

Current wording

Operating loss increased in the three months ended March 31, 2025 by $(0.5) million as compared to the prior year period. The period-over-period increase was due to (i) higher costs associated with operating and supporting acquired businesses, including the impact of accelerated amortization schedules of certain intangibles, (ii) increased depreciation expense due to acquisitions and investment in property and equipment, (iii) higher accruals related to insurance claims, and (iv) general cost inflation, including for disposal, labor, and maintenance costs; partially offset by (a) revenue growth, described above, (b) higher intercompany related operating income, and (c) lower expense from acquisition activities.

Previous wording

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

Current wording

A summary of the period-to-period change in Resource Solutions revenues (dollars in millions and as percentage growth of Resource Solutions revenues) follows:

Previous wording

We continually monitor our actual and forecasted cash flows, our liquidity, and our capital requirements in order to properly manage our liquidity needs as we move forward based on the capital intensive nature of our business and our growth acquisition strategy. As of September 30, 2024, we had $678.5 million of available and undrawn capacity under our $700.0 million revolving credit facility (“Revolving Credit Facility”) and $519.0 million of cash and cash equivalents to help meet our short-term and long-term liquidity needs. We expect existing cash and cash equivalents combined with available cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future.

Current wording

We continually monitor our actual and forecasted cash flows, our liquidity, and our capital requirements in order to properly manage our liquidity needs as we move forward based on the capital intensive nature of our business and our growth acquisition strategy. As of March 31, 2025, we had $675.4 million of available and undrawn capacity under our $700.0 million revolving credit facility (“Revolving Credit Facility”) and $267.7 million of cash and cash equivalents to help meet our short-term and long-term liquidity needs. We expect existing cash and cash equivalents combined with available cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future.

Previous wording

Current assets, excluding cash and cash equivalents, increased $18.7 million and current liabilities, excluding current maturities of debt, increased $9.8 in the nine months ended September 30, 2024, resulting in a $8.9 million increase in working capital, net (defined as current assets, excluding cash and cash equivalents, minus current liabilities, excluding current maturities of debt), from $(37.7) million as of December 31, 2023 to $(28.8) million as of September 30, 2024. We strive to minimize net working capital by driving shorter days sales outstanding as compared to days payable outstanding.

Current wording

Current assets, excluding cash, cash equivalents and restricted cash - current, decreased $(6.0) million and current liabilities, excluding current maturities of debt, decreased $(34.3) in the three months ended March 31, 2025, resulting in a $28.3 million increase in working capital, net (defined as current assets, excluding cash, cash equivalents and restricted cash - current, minus current liabilities, excluding current maturities of debt), from $(34.7) million as of December 31, 2024 to $(6.4) million as of March 31, 2025.

Previous wording

Cash and cash equivalents increased $298.1 million in the nine months ended September 30, 2024. A summary of cash flows (in millions) follows:

Current wording

A summary of cash flows (in millions) follows:

Previous wording

Net cash provided by operating activities increased $13.8 million in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. This was the result of revenue growth driven by acquisition activity, partially offset by higher interest expense and 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 operational performance in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, see “Results of Operations” above.

Current wording

Net cash provided by operating activities increased $42.4 million in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. This was the result of business growth, including from acquisition activity, and a decrease 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 operational performance in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, see “Results of Operations” above.

Previous wording

Acquisitions, net of cash acquired. In the nine months ended September 30, 2024, we acquired five businesses for total consideration of $(260.2) million, including $(261.2) million in cash, made $(0.9) million in payments on businesses previously acquired and received a $2.9 million working capital settlement on a business previously acquired, as compared to the nine months ended September 30, 2023 during which we acquired five businesses, including the GFL Acquisition, for total consideration of $845.1 million, including $842.6 million in cash and paid $5.2 million in holdback payments on businesses previously acquired.

Current wording

Acquisitions, net of cash acquired. In the three months ended March 31, 2025, we acquired three businesses for total consideration of $(103.5) million, all of which was cash consideration, and made $(0.1) million in payments on businesses previously acquired, as compared to the three months ended March 31, 2024 during which we paid $(0.3) million on businesses previously acquired.

Previous wording

Capital expenditures. Capital expenditures were $36.0 million higher in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to higher capital spend driven by (i) acquisition activity, (ii) spend related to the retrofitting of our Willimantic, Connecticut materials recovery facility, (iii) landfill development and (iv) the timing of spend and increased investment in our fleet.

Current wording

Capital expenditures. Capital expenditures were $25.2 million higher in the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to acquisition activity and investment in our fleet; partially offset by lower landfill development spend, including the development of rail side infrastructure at our Subtitle D landfill located in Mount Jewitt, Pennsylvania in the prior year period.

Previous wording

Payment of debt issuance costs. We paid $6.4 million of debt issuance costs in the nine months ended September 30, 2024 primarily related to refinancing activities associated with entering into the Credit Agreement as compared to $12.8 million in the nine months ended September 30, 2023, which included $8.7 million related to bridge financing activities associated with the GFL Acquisition and the Twin Bridges Acquisition.

Current wording

Payment of debt issuance costs. We paid $0.7 million of debt issuance costs in the three months ended March 31, 2025 primarily related to the issuance of Vermont Bonds 2022A-2.

Previous wording

As of September 30, 2024, we are party to the Credit Agreement, which provides for a $800.0 million aggregate principal amount Term Loan Facility and a $700.0 million Revolving Credit Facility, with a $155.0 million 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 $200.0 million, subject to further increase based on the terms and conditions set forth in the Credit Agreement. The Credit Facility has a 5-year term that matures in September 2029. The Credit Facility shall bear interest, at our election, at term secured overnight financing rate (“Term SOFR”) or at a base rate, in each case plus or minus any sustainable rate adjustment of up to positive or negative 4.0 basis points per annum, plus an applicable interest rate margin based upon our consolidated net leverage ratio as follows:

Current wording

As of March 31, 2025, we are party to the second amended and rested credit agreement (the “Credit Agreement”), which provides for a $800.0 million aggregate principal amount term loan A facility and a $700.0 million Revolving Credit Facility, with a $155.0 million sublimit for letters of credit (“collectively, the “Credit Facility”). We have the right to request, at our discretion, an increase in the amount of loans under the Credit Facility by an aggregate amount of $200.0 million, subject to further increase based on the terms and conditions set forth in the Credit Agreement. The Credit Facility has a 5-year term that matures in September 2029. The Credit Facility shall bear interest, at our election, at term secured overnight financing rate (“Term SOFR”) or at a base rate, in each case plus or minus any sustainable rate adjustment of up to positive or negative 4.0 basis points per annum, plus an applicable interest rate margin based upon our consolidated net leverage ratio as follows:

Previous wording

A commitment fee will be charged on undrawn amounts of our Revolving Credit Facility based upon our consolidated net leverage ratio in the range of 0.20% to 0.40% per annum, plus a sustainability adjustment of up to positive or negative 1.0 basis point per annum. The Amended and Restated Credit Agreement provides that Term SOFR is subject to a zero percent floor. We are also required to pay a fronting fee for each letter of credit of 0.25% per annum. Interest under the Credit Agreement is subject to increase by 2.00% per annum during the continuance of a payment default and may be subject to increase by 2.00% per annum during the continuance of any other event of default. 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, 2024, further advances were available under the Revolving Credit Facility in the amount of $678.5 million. The available amount is net of outstanding irrevocable letters of credit totaling $21.5 million, and as of September 30, 2024 no amount had been drawn.

Current wording

A commitment fee will be charged on undrawn amounts of our Revolving Credit Facility based upon our consolidated net leverage ratio in the range of 0.20% to 0.40% per annum, plus a sustainability adjustment of up to positive or negative 1.0 basis point per annum. The Credit Agreement provides that Term SOFR is subject to a zero percent floor. We are also required to pay a fronting fee for each letter of credit of 0.25% per annum. Interest under the Credit Agreement is subject to increase by 2.00% per annum during the continuance of a payment default and may be subject to increase by 2.00% per annum during the continuance of any other event of default. 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 March 31, 2025, further advances were available under the Revolving Credit Facility in the amount of $675.4 million. The available amount is net of outstanding irrevocable letters of credit totaling $24.6 million, and as of March 31, 2025 no amount had been drawn.

Previous wording

(1)The maximum consolidated net leverage ratio is calculated as consolidated funded debt, net of up to $100.0 million of unencumbered cash and cash equivalents (calculated at $999.7 million as of September 30, 2024, or $1,099.7 million of consolidated funded debt less $100.0 million total of unencumbered cash and cash equivalents), divided by consolidated EBITDA. Consolidated EBITDA is based on operating results for the twelve months preceding the measurement date of September 30, 2024. Consolidated funded debt, net and consolidated EBITDA as defined by the Credit Agreement (“Consolidated EBITDA”) are non-GAAP financial measures that should not be considered an alternative to any measure of financial performance calculated and presented in accordance with generally accepted accounting principles in the United States. A reconciliation of net cash provided by operating activities to Consolidated EBITDA is as follows (in millions):

Current wording

(1)The maximum consolidated net leverage ratio is calculated as consolidated funded debt, net of up to $100.0 million of unencumbered cash and cash equivalents (calculated at $1,051.2 million as of March 31, 2025, or $1,151.2 million of consolidated funded debt less $100.0 million total of unencumbered cash and cash equivalents), divided by consolidated EBITDA. Consolidated EBITDA is based on operating results for the twelve months preceding the measurement date of March 31, 2025. Consolidated funded debt, net and consolidated EBITDA as defined by the Credit Agreement (“Consolidated EBITDA”) are non-GAAP financial measures that should not be considered an alternative to any measure of financial performance calculated and presented in accordance with generally accepted accounting principles in the United States. A reconciliation of net cash provided by operating activities to Consolidated EBITDA is as follows (in millions):

Previous wording

As of September 30, 2024, we had outstanding $232.0 million aggregate principal amount of tax exempt bonds; $66.2 million aggregate principal amount of finance leases; and $1.5 million aggregate principal amount of notes payable.

Current wording

As of March 31, 2025, we had outstanding $277.0 million aggregate principal amount of tax exempt bonds; $72.7 million aggregate principal amount of finance leases; and $1.5 million aggregate principal amount of notes payable.

Previous wording

Inflationary increases in costs, including current cost inflation associated primarily with labor, certain other cost categories and capital items, have materially affected, and may continue to materially affect, our operating margins and cash flows. While inflation negatively impacted operating results and margins during the three and nine months ended September 30, 2024 and 2023, we believe that our flexible pricing structures and cost recovery fees are allowing us to recover and will continue to allow us to recover certain inflationary costs from our customer base. Consistent with industry practice, most of our contracts and service agreements provide for a pass-through of certain costs to our customers, including increases in landfill tipping fees and in most 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 our fuel cost recovery programs, primarily the energy component of our E&E Fee, which is designed to recover escalating fuel price fluctuations above a periodically reset floor. Despite these 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.

Current wording

Inflationary increases in costs have materially affected, and may continue to materially affect, our operating margins and cash flows. However, we believe that our flexible pricing structures and cost recovery fees are allowing us to recover and will continue to allow us to recover certain inflationary costs from our customer base. Consistent with industry practice, most of our contracts and service agreements provide for a pass-through of certain costs to our customers, including increases in landfill tipping fees and in most 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 our fuel cost recovery programs, primarily the energy component of our E&E Fee, which is designed to recover escalating fuel price fluctuations above a periodically reset floor. Despite these 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.

Previous wording

Our business is primarily located in the eastern United States. Therefore, our business, financial condition and results of operations are susceptible to downturns in the general economy in these geographic regions and other factors affecting these regions, such as state regulations, labor availability and severe weather conditions. We are unable to forecast or determine the timing and/or the future impact of a sustained economic slowdown or other factors affecting these regions.

Current wording

Our business is primarily located in the eastern 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 and local regulations, labor availability and severe weather conditions. We are unable to forecast or determine the timing and/or the future impact of a sustained economic slowdown or other factors affecting the region.

Previous wording

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 may increase with the physical impacts of climate change and 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.

Current wording

Our operations can be adversely affected by periods of inclement or severe weather, which may increase with the physical impacts of climate change and 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.