Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion in conjunction with the unaudited consolidated financial statements and notes thereto included under Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition, you should refer 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, 2022.

Disclosure Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain forward-looking information about us that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as “guidance,” “expect,” “will,” “may,” “anticipate,” “plan,” “estimate,” “project,” “intend,” “should,” “can,” “likely,” “could,” “outlook” and similar expressions are intended to identify forward-looking statements. In particular, information appearing in this “Management's Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. These statements include information about our plans, strategies, and expectations of future financial performance and prospects. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of our management and are subject to significant risk and uncertainties that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that the expectations will prove to be correct. Among the factors that could cause actual results to differ materially from the expectations expressed in the forward-looking statements are our ability to integrate the operations of US Ecology, Inc. (US Ecology) into our operations and to realize the intended benefits of such acquisition, as well as acts of war, riots or terrorism, and the impact of these acts on economic, financial and social conditions in the United States, as well as our dependence on large, long-term collection, transfer and disposal contracts. More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022. Additionally, new risk factors emerge from time to time and it is not possible for us to predict all such risk factors, or to assess the impact such risk factors might have on our business. We undertake no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

Overview

Republic is one of the largest providers of environmental services in the United States, as measured by revenue. As of March 31, 2023, we operated across the United States and Canada through 356 collection operations, 240 transfer stations, 72 recycling centers, 206 active landfills, 3 treatment, recovery and disposal facilities, 20 treatment, storage and disposal facilities (TSDF), 6 salt water disposal wells and 7 deep injection wells. We are engaged in 73 landfill gas-to-energy and renewable energy projects and had post-closure responsibility for 128 closed landfills as of March 31, 2023.

Revenue for the three months ended March 31, 2023 increased by 20.6% to $3,581.1 million compared to $2,970.1 million for the same period in 2022. This change in revenue is due to increased revenue from acquisitions, net of divestitures of 11.0%, increases in average yield of 6.5%, volume of 1.6%, fuel recovery fees of 1.5%, and environmental solutions revenue of 0.5%. Additionally, revenue increased 0.4% due to one additional workday in 2023 as compared to the same period in 2022. These increases were partially offset by a decrease in recycling processing and commodity sales of 0.9%.

The following table summarizes our revenue, expenses and operating income for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

			Three Months Ended March 31,
			2023												2022
Revenue			$	3,581.1					100.0		%				$	2,970.1					100.0		%
Expenses:
Cost of operations			2,169.5						60.6						1,763.6						59.4
Depreciation, amortization and depletion of property and equipment			328.3						9.2						289.6						9.7
Amortization of other intangible assets			15.1						0.4						10.0						0.3
Amortization of other assets			15.3						0.4						10.8						0.4
Accretion			24.1						0.7						21.7						0.7
Selling, general and administrative			379.2						10.6						307.8						10.4
Restructuring charges			5.5						0.1						6.0						0.2
Operating income			$	644.1					18.0		%				$	560.6					18.9		%

Our pre-tax income was $522.1 million for the three months ended March 31, 2023, compared to $472.2 million for the same period in 2022. Our net income attributable to Republic Services, Inc. was $383.9 million for the three months ended March 31, 2023, or $1.21 per diluted share, compared to $352.0 million, or $1.11 per diluted share, for the same period in 2022.

During each of the three months ended March 31, 2023 and 2022, we recorded a number of charges, other expenses and benefits that impacted our pre-tax income, tax expense, net income attributable to Republic Services, Inc. (net income – Republic) and diluted earnings per share as noted in the following table (in millions, except per share data). Additionally, see our Results of Operations discussion in this Management's Discussion and Analysis of Financial Condition and Results of Operations for a discussion of other items that impacted our earnings during the three months ended March 31, 2023 and 2022.

						Three Months Ended March 31, 2023																								Three Months Ended March 31, 2022
																		Net						Diluted																		Net						Diluted
						Pre-tax						Tax						Income -						Earnings						Pre-tax						Tax						Income -						Earnings
						Income						Impact(2)						Republic						per Share						Income						Impact(2)						Republic						per Share
As reported						$	522.1					$	138.2					$	383.9					$	1.21					$	472.2					$	120.3					$	352.0					$	1.11
Loss on extinguishment of debt (1)						0.2						—						0.2						—						—						—						—						—
Restructuring charges						5.5						1.5						4.0						0.01						6.0						1.6						4.4						0.02
US Ecology, Inc. acquisition integration and deal costs						7.6						2.0						5.6						0.02						4.8						0.5						4.3						0.01
Total adjustments						13.3						3.5						9.8						0.03						10.8						2.1						8.7						0.03
As adjusted						$	535.4					$	141.7					$	393.7					$	1.24					$	483.0					$	122.4					$	360.7					$	1.14

(1) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended March 31, 2023.

(2) The income tax effect related to our adjustments includes both current and deferred income tax impact and is individually calculated based on the statutory rates applicable to each adjustment.

We believe that presenting adjusted pre-tax income, adjusted tax impact, adjusted net income – Republic, and adjusted diluted earnings per share, which are not measures determined in accordance with U.S. GAAP, provides an understanding of operational activities before the financial impact of certain items. We use these measures, and believe investors will find them helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges, costs and recoveries in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Our definitions of adjusted pre-tax income, adjusted tax impact, adjusted net income – Republic, and adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies. Further information on each of these adjustments is included below.

Loss on extinguishment of debt. During the three months ended March 31, 2023, we incurred a loss on the early extinguishment of debt related to the early repayment of a portion of our Term Loan Facility. We incurred non-cash charges related to the proportional share of unamortized deferred issuance costs of $0.2 million. During the three months ended March 31, 2022, we did not incur any losses on extinguishment of debt.

Restructuring charges. During the three months ended March 31, 2023 and 2022, we incurred restructuring charges of $5.5 million and $6.0 million, respectively. The 2023 charges primarily related to the redesign of our customer billing and asset management software systems, while the 2022 charges primarily related to the redesign of our general ledger, budgeting and procurement enterprise resource planning systems, which was completed with the systems being placed into production in the fourth quarter of 2022. We paid $5.0 million and $5.9 million during the three months ended March 31, 2023 and 2022, respectively, related to these restructuring efforts.

In 2023, we expect to incur additional restructuring charges of approximately $20 million, primarily related to the continued redesign of certain of our back-office software systems. Substantially all of these restructuring charges will be recorded in Corporate entities and other.

US Ecology, Inc. acquisition integration and deal costs. During the three months ended March 31, 2023 and 2022, we incurred $7.6 million and $4.8 million, respectively, of acquisition integration and deal costs in connection with the acquisition of US Ecology, which included certain costs to close the acquisition and integrate the business, including stock compensation expense for unvested awards at closing as well as severance and change-in-control payments. The acquisition closed on May 2, 2022.

In 2023, we expect to incur additional costs of approximately $25 million to $30 million to integrate the US Ecology business, primarily related to the integration of certain software systems as well as rebranding the business. We expect to be substantially complete with our integration activities by the end of 2023.

Results of Operations

Revenue

We generate revenue by providing environmental services to our customers, including the collection and processing of recyclable materials, the collection, transfer and disposal of solid waste, and other environmental solutions. Our residential, small-container and large-container collection operations in some markets are based on long-term contracts with municipalities. Certain of our municipal contracts have annual price escalation clauses that are tied to changes in an underlying base index such as a consumer price index. We generally provide small-container and large-container collection services to customers under contracts with terms up to three years. Our transfer stations and landfills generate revenue from disposal or tipping fees charged to third parties. Our recycling centers generate revenue from tipping fees charged to third parties and the sale of recycled commodities. Our revenue from environmental solutions consists mainly of fees we charge for disposal of hazardous and non-hazardous solid and liquid material and in-plant services, such as transportation and logistics, including at our TSDFs, and onsite services such as high-pressure cleaning, tank cleaning, decontamination, remediation, transportation, spill cleanup, and emergency response at refineries, chemical, steel, and automotive plants, and other governmental, commercial, and industrial facilities. Other non-core revenue consists primarily of revenue from National Accounts, which represents the portion of revenue generated from nationwide or regional contracts in markets outside our operating areas where the associated material handling is subcontracted to local operators. Consequently, substantially all of this revenue is offset with related subcontract costs, which are recorded in cost of operations.

The following table reflects our revenue by service line for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

			Three Months Ended March 31,
			2023												2022
Collection:
Residential			$	685.1					19.1		%				$	627.9					21.1		%
Small-container			1,056.3						29.5						915.6						30.8
Large-container			701.9						19.6						621.1						20.9
Other			15.1						0.4						12.4						0.4
Total collection			2,458.4						68.6						2,177.0						73.2
Transfer			395.5												362.7
Less: intercompany			(222.2)												(197.8)
Transfer, net			173.3						4.8						164.9						5.6
Landfill			688.7												617.0
Less: intercompany			(296.1)												(267.5)
Landfill, net			392.6						11.0						349.5						11.8
Environmental solutions			430.3												108.9
Less: intercompany			(22.0)												(9.6)
Environmental solutions, net			408.3						11.4						99.3						3.3
Other:
Recycling processing and commodity sales			71.1						2.0						99.8						3.4
Other non-core			77.4						2.2						79.6						2.7
Total other			148.5						4.2						179.4						6.1
Total revenue			$	3,581.1					100.0		%				$	2,970.1					100.0		%

The following table reflects changes in components of our revenue, as a percentage of total revenue, for the three months ended March 31, 2023 and 2022:

			Three Months Ended March 31,
			2023						2022
Average yield			6.5		%				4.2		%
Fuel recovery fees			1.5						1.9
Total price			8.0						6.1
Volume			1.6						3.6
Change in workdays			0.4						—
Recycling processing and commodity sales			(0.9)						0.4
Environmental solutions			0.5						0.4
Total internal growth			9.6						10.5
Acquisitions / divestitures, net			11.0						3.9
Total			20.6		%				14.4		%
Core price			8.2		%				6.0		%

Average yield is defined as revenue growth from the change in average price per unit of service, expressed as a percentage. Core price is defined as price increases to our customers and fees, excluding fuel recovery fees, net of price decreases to retain customers. We also measure changes in core price, average yield and volume as a percentage of related-business revenue, defined as total revenue excluding recycled commodities, fuel recovery fees and environmental solutions revenue, to determine

the effectiveness of our pricing and organic growth strategies. The following table reflects core price, average yield and volume as a percentage of related-business revenue for the three months ended March 31, 2023 and 2022:

			Three Months Ended March 31,
			2023						2022
			As a % of Related Business
Core price			9.3		%				6.5		%
Average yield			7.4		%				4.5		%
Volume			1.8		%				3.9		%

During the three months ended March 31, 2023, we experienced the following changes in our revenue as compared to the same period in 2022:

• Average yield increased revenue by 6.5% during the three months ended March 31, 2023, due to price increases in all lines of business.

• The fuel recovery fee program, which mitigates our exposure to increases in fuel prices, increased revenue by 1.5% during the three months ended March 31, 2023, primarily due to an increase in fuel prices compared to the same period in 2022.

• Volume increased revenue by 1.6% during the three months ended March 31, 2023, primarily due to volume growth in our collection and landfill lines of business. The volume increase in our landfill line of business is primarily attributable to increased special waste, solid waste, and construction and demolition volumes. These increases were partially offset by volume declines in our transfer line of business.

• Revenue increased by 0.4% due to one additional workday during the three months ended March 31, 2023, as compared to the same period in 2022, which drove an increase in volumes in our large-container collection, landfill and transfer lines of business.

• Recycling processing and commodity sales decreased revenue by 0.9% during the three months ended March 31, 2023, primarily due to a decrease in overall commodity prices as compared to the same period in 2022. The average price for recycled commodities, excluding glass and organics, for the three months ended March 31, 2023 was $105 per ton, compared to $201 per ton for the same period in 2022.

Changing market demand for recycled commodities causes volatility in commodity prices. At current volumes and mix of materials, we believe a $10 per ton change in the price of recycled commodities would change both annual revenue and operating income by approximately $10 million.

• Environmental solutions revenue increased by 0.5% during the three months ended March 31, 2023, primarily due to an increase in volumes, including those driven by an increase in rig counts, as well as price increases. This revenue increase excludes the impact from our acquisition of US Ecology.

• Acquisitions, net of divestitures, increased revenue by 11.0% during the three months ended March 31, 2023, reflecting the results of our continued growth strategy of acquiring solid waste, recycling, and environmental services companies, including US Ecology, that complement and expand our existing business platform.

Cost of Operations

Cost of operations includes labor and related benefits, which consists of salaries and wages, health and welfare benefits, incentive compensation and payroll taxes. It also includes transfer and disposal costs representing tipping fees paid to third party disposal facilities and transfer stations; maintenance and repairs relating to our vehicles, equipment and containers, including related labor and benefit costs; transportation and subcontractor costs, which include costs for independent haulers that transport our waste to disposal facilities and costs for local operators that provide waste handling services associated with our National Accounts in markets outside our standard operating areas; fuel, which includes the direct cost of fuel used by our vehicles, net of fuel tax credits; disposal fees and taxes, consisting of landfill taxes, host community fees and royalties; landfill operating costs, which includes financial assurance, leachate disposal, remediation charges and other landfill maintenance costs; risk management costs, which include insurance premiums and claims; cost of goods sold, which includes material costs paid to suppliers; and other, which includes expenses such as facility operating costs, equipment rent and gains or losses on sale of assets used in our operations.

The following table summarizes the major components of our cost of operations for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

			Three Months Ended March 31,
			2023												2022
Labor and related benefits			$	738.1					20.6		%				$	608.9					20.5		%
Transfer and disposal costs			249.6						7.0						213.0						7.2
Maintenance and repairs			326.6						9.1						268.9						9.0
Transportation and subcontract costs			285.2						8.0						213.2						7.2
Fuel			144.4						4.0						129.3						4.3
Disposal fees and taxes			83.7						2.3						79.4						2.7
Landfill operating costs			81.6						2.3						61.5						2.1
Risk management			93.1						2.6						68.4						2.3
Other			167.2						4.7						121.0						4.1
Total cost of operations			$	2,169.5					60.6		%				$	1,763.6					59.4		%

These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies. As such, you should take care when comparing our cost of operations by component to that of other companies and of ours for prior periods.

The most significant items impacting our cost of operations during the three months ended March 31, 2023 and 2022 are summarized below:

• Labor and related benefits increased due to higher hourly and salaried wages as a result of annual merit increases, volume-related growth, and one additional workday in 2023. Acquisition-related growth, including US Ecology, also contributed to the increase in labor and related benefits.

• Transfer and disposal costs increased in aggregate dollars primarily due to acquisition-related growth, including US Ecology. Transfer and disposal costs also increased in aggregate dollars as a result of higher collection volumes.

During both the three months ended March 31, 2023 and 2022, approximately 69% of the total solid waste volume we collected was disposed at landfill sites that we owned or operated (internalization).

• Maintenance and repairs expense increased in aggregate dollars due to higher volumes as well as an increase in third party maintenance costs due to inflationary pressures. Acquisition-related growth, including US Ecology, also contributed to the increase in maintenance and repairs expense in aggregate dollars.

• Transportation and subcontract costs increased during the three months ended March 31, 2023 due to increases in transportation rates. Acquisition-related growth, including US Ecology, also contributed to the increase in transportation and subcontract costs in aggregate dollars.

• Our fuel costs increased due to an increase in the average diesel fuel cost per gallon. The national average diesel fuel cost per gallon for the three months ended March 31, 2023 was $4.41, as compared to $4.24, for the same period in 2022.

At current consumption levels, we believe a twenty-cent per gallon change in the price of diesel fuel would change our fuel costs by approximately $27 million per year. Offsetting these changes in fuel expense would be changes in our fuel recovery fee charged to our customers. At current participation rates, a twenty-cent per gallon change in the price of diesel fuel would change our fuel recovery fee by approximately $31 million per year.

• Landfill operating costs increased in aggregate dollars during the three months ended March 31, 2023 primarily due to increased leachate treatment, transportation, and disposal costs due in part to increased rainfall in select geographic regions, as well as certain favorable remediation adjustments recorded during the three months ended March 31, 2022 which did not recur in 2023.

• Risk management expenses increased during the three months ended March 31, 2023 primarily due to unfavorable actuarial developments in our auto liability program as well as higher premium costs.

• Other costs of operations increased during the three months ended March 31, 2023 due to increased occupancy and facility related expenses, acquisition-related activity, and higher third-party truck and equipment rentals to support higher volumes.

Depreciation, Amortization and Depletion of Property and Equipment

The following table summarizes depreciation, amortization and depletion of property and equipment for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

			Three Months Ended March 31,
			2023												2022
Depreciation and amortization of property and equipment			$	215.6					6.1		%				$	192.6					6.5		%
Landfill depletion and amortization			112.7						3.1						97.0						3.2
Depreciation, amortization and depletion expense			$	328.3					9.2		%				$	289.6					9.7		%

Depreciation and amortization of property and equipment increased in aggregate dollars for the three months ended March 31, 2023 primarily due to assets added through acquisitions.

Landfill depletion and amortization expense increased in aggregate dollars due to higher landfill disposal volumes primarily driven by special waste and solid waste volumes coupled with an increase in our overall average depletion rate.

Amortization of Other Intangible Assets

Amortization of other intangible assets primarily relates to customer relationships and, to a lesser extent, non-compete agreements. Expenses for amortization of other intangible assets were $15.1 million, or 0.4% of revenue, for the three months ended March 31, 2023, compared to $10.0 million or 0.3% of revenue, for the same period in 2022. Amortization expense increased due to assets added through acquisitions.

Amortization of Other Assets

Our other assets primarily relate to the prepayment of fees and capitalized implementation costs associated with cloud-based hosting arrangements. Expenses for amortization of other assets were $15.3 million, or 0.4% of revenue, for the three months ended March 31, 2023, compared to $10.8 million, or 0.4% of revenue, for the same period in 2022.

Accretion Expense

Accretion expense was $24.1 million, or 0.7% of revenue, for the three months ended March 31, 2023, compared to $21.7 million, or 0.7% of revenue, for the same period in 2022. Accretion expense increased in aggregate dollars primarily due to acquired asset retirement obligations.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include salaries, health and welfare benefits, and incentive compensation for corporate and field general management, field support functions, sales force, accounting and finance, legal, management information systems, and clerical and administrative departments. Other expenses include rent and office costs, fees for professional services provided by third parties, legal settlements, marketing, investor and community relations services, directors’ and officers’ insurance, general employee relocation, travel, entertainment and bank charges. Restructuring charges are excluded from selling, general and administrative expenses and are discussed separately.

The following table summarizes our selling, general and administrative expenses for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

			Three Months Ended March 31,
			2023												2022
Salaries and related benefits			$	252.5					7.1		%				$	212.9					7.2		%
Provision for doubtful accounts			7.8						0.2						6.6						0.2
Other			111.3						3.1						83.5						2.8
Subtotal			371.6						10.4						303.0						10.2
US Ecology, Inc. acquisition integration and deal costs			7.6						0.2						4.8						0.2
Total selling, general and administrative expenses			$	379.2					10.6		%				$	307.8					10.4		%

These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies. As such, you should take care when comparing our selling, general and administrative expenses by cost component to those of other companies and of ours for prior periods.

The most significant items affecting our selling, general and administrative expenses during the three months ended March 31, 2023 and 2022 are summarized below:

• Salaries and related benefits increased in aggregate dollars primarily due to higher wages, benefits, and other payroll related items resulting from annual merit increases. Acquisition-related growth, including US Ecology, also contributed to the growth in salaries and related benefits in aggregate dollars.

• Provision for doubtful accounts increased in aggregate dollars primarily due to acquisition-related activity. As of March 31, 2023, our days sales outstanding were 42.9, or 31.0 days net of deferred revenue, compared to 40.0, or 27.5 days net of deferred revenue, as of March 31, 2022. Excluding our acquisition of US Ecology, our days sales outstanding were 38.8, or 26.7 days net of deferred revenue, as of March 31, 2023.

• Other selling, general and administrative expenses increased for the three months ended March 31, 2023, due to both an increase in meeting and travel costs and acquisition-related growth, including US Ecology.

• In the three months ended March 31, 2023 and 2022, we incurred $7.6 million and $4.8 million, respectively, of acquisition integration and deal costs in connection with the acquisition of US Ecology. The 2023 costs primarily related to the integration of certain software systems as well as rebranding the business, and the 2022 costs included certain costs to close the acquisition.

Restructuring Charges

During the three months ended March 31, 2023 and 2022, we incurred restructuring charges of $5.5 million and $6.0 million, respectively. The 2023 charges primarily related to the redesign of our customer billing and asset management software systems, while the 2022 charges primarily related to the redesign of our general ledger, budgeting and procurement enterprise resource planning systems, which was completed with the systems being placed into production in the fourth quarter of 2022. We paid $5.0 million and $5.9 million during 2023 and 2022, respectively, related to these restructuring efforts.

In 2023, we expect to incur additional restructuring charges of approximately $20 million, primarily related to the continued redesign of certain of our back-office software systems. Substantially all of these restructuring charges will be recorded in Corporate entities and other.

Interest Expense

The following table provides the components of interest expense, including accretion of debt discounts and accretion of discounts primarily associated with environmental and risk insurance liabilities assumed in acquisitions, for the three months ended March 31, 2023 and 2022:

			Three Months Ended March 31,
			2023						2022
Interest expense on debt			$	102.8					$	65.4
Non-cash interest			24.7						18.8
Less: capitalized interest			(0.8)						(0.7)
Total interest expense			$	126.7					$	83.5

Total interest expense for the three months ended March 31, 2023 increased primarily due to additional outstanding debt to fund the purchase of US Ecology and higher interest rates on our floating rate debt.

Cash paid for interest, excluding net swap settlements for our fixed-to-floating and floating-to-fixed interest rate swaps, was $124.0 million and $75.6 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, we had $2,312.1 million of principal floating rate debt including interest rate swap contracts. If interest rates increased or decreased by 100 basis points on our variable rate debt, annualized interest expense and net cash payments for interest would increase or decrease by approximately $23 million.

Loss on Extinguishment of Debt

During the three months ended March 31, 2023, we incurred a loss on the early extinguishment of debt related to the early repayment of a portion of our Term Loan Facility. We incurred non-cash charges related to the proportional share of unamortized deferred issuance costs of $0.2 million. During the three months ended March 31, 2022, we did not incur any losses on extinguishment of debt.

Income Taxes

Our effective tax rate, exclusive of non-controlling interests, for the three months ended March 31, 2023 and 2022 was 26.5% and 25.5%, respectively. Our effective tax rate for the three months ended March 31, 2022 reflects benefits from investments in solar energy assets qualifying for tax credits under Section 48 of the Internal Revenue Code.

Net cash paid for income taxes was $7.7 million and $3.7 million for the three months ended March 31, 2023 and 2022, respectively.

For additional discussion and detail regarding our income taxes, see Note 8, Income Taxes, to our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Reportable Segments

Our senior management evaluates, oversees and manages the financial performance of our operations through three field groups, referred to as Group 1, Group 2 and Group 3. Group 1 is our recycling and solid waste business operating primarily in geographic areas located in the western United States. Group 2 is our recycling and solid waste business operating primarily in geographic areas located in the southeastern and mid-western United States and the eastern seaboard of the United States, and Canada. Group 3 is our environmental solutions business operating primarily in geographic areas located across the United States and Canada. These groups are presented below as our reportable segments, which each provide integrated environmental services, including but not limited to collection, transfer, recycling and disposal. Prior to the third quarter of 2022, our environmental solutions operating segment, now referred to as our Group 3 reportable segment, was aggregated with Corporate entities and other.

Corporate entities and other include legal, tax, treasury, information technology, risk management, human resources, closed landfills, and other administrative functions. National Accounts revenue included in Corporate entities and other represents the portion of revenue generated from nationwide and regional contracts in markets outside our operating areas where the associated material handling is subcontracted to local operators. Consequently, substantially all of this revenue is offset with related subcontract costs, which are recorded in cost of operations.

Summarized financial information regarding our reportable segments for the three months ended March 31, 2023 and 2022 (in millions of dollars and as a percentage of revenue in the case of adjusted EBITDA margin) follows. For totals as well as further detail regarding our reportable segments and the adjustments used to calculate gross Adjusted EBITDA, net Adjusted EBITDA, and adjusted EBITDA margin for each segment, see Note 12, Segment Reporting, of the notes to our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

			Group 1						Group 2												Group 3						Corporate entities and other
Three Months Ended March 31, 2023
Gross Revenue			$	1,840.3					$	1,818.8											$	430.2					$	57.9
Intercompany Revenue			(287.0)						(242.9)												(15.8)						(20.4)
Net Revenue			$	1,553.3					$	1,575.9											$	414.4					$	37.5
Gross Adjusted EBITDA			$	486.2					$	462.0											$	89.8					$	2.0
Adjusted EBITDA allocations			3.2						3.1												(4.3)						(2.0)
Net Adjusted EBITDA			$	489.4					$	465.1											$	85.5					$	—
Adjusted EBITDA margin			31.1		%				29.2		%										20.6		%				—		%
Capital Expenditures			$	112.5					$	83.7											$	23.9					$	158.5
Total Assets			$	12,357.4					$	10,614.3											$	4,027.0					$	2,082.7
Three Months Ended March 31, 2022
Gross Revenue			$	1,671.5					$	1,625.7											$	108.9					$	60.0
Intercompany Revenue			(258.5)						(220.6)												(9.6)						(7.3)
Net Revenue			$	1,413.0					$	1,405.1											$	99.3					$	52.7
Gross Adjusted EBITDA			$	463.4					$	411.3											$	14.2					$	14.6
Adjusted EBITDA allocations			7.5						7.1												—						(14.6)
Net Adjusted EBITDA			$	470.9					$	418.4											$	14.2					$	—
Adjusted EBITDA margin			32.7		%				29.2		%										14.3		%				—		%
Capital Expenditures			$	102.1					$	84.3											$	15.1					$	132.6
Total Assets			$	12,065.7					$	10,023.7											$	1,201.7					$	1,589.0

Significant changes in the revenue, Adjusted EBITDA and Adjusted EBITDA margins of our reportable segments comparing the three months ended March 31, 2023 and 2022 are discussed below.

Group 1

Revenue for the three months ended March 31, 2023 increased 9.9% due to an increase in average yield in all lines of business and volume in our collection and landfill lines of business, partially offset by volume declines in our transfer line of business. The increase in landfill volume was attributable to an increase in special waste, solid waste and construction and demolition volumes. Revenue also increased due to acquisition-related growth.

Adjusted EBITDA in Group 1 increased in aggregate dollars from $470.9 million for the three months ended March 31, 2022, or a 32.7% adjusted EBITDA margin, to $489.4 million for the three months ended March 31, 2023, or a 31.1% adjusted EBITDA margin.

Adjusted EBITDA margin for the three months ended March 31, 2023 was unfavorably impacted by an increase in labor costs, higher third party maintenance costs due to inflationary pressures, and higher transportation and subcontract costs due to increased transportation rates.

Group 2

Revenue for the three months ended March 31, 2023 increased 12.2% due to an increase in average yield in all lines of business. Additionally, volume increased in our landfill and small- and large-container collection lines of business. The increase in landfill volume was primarily attributable to an increase in special waste volumes. Revenue also increased due to acquisition-related growth.

Adjusted EBITDA margin in Group 2 increased in aggregate dollars from $418.4 million for the three months ended March 31, 2022, or a 29.2% adjusted EBITDA margin, to $465.1 million for the three months ended March 31, 2023, or a 29.2% adjusted EBITDA margin.

Adjusted EBITDA margin for the three months ended March 31, 2023 was unfavorably impacted by an increase in labor costs, transfer and disposal costs due to an increase in volumes, transportation and subcontract costs due to increased transportation rates, and higher third party maintenance costs due to inflationary pressures.

Group 3

Revenue for the three months ended March 31, 2023 increased due to the acquisition of US Ecology.

Adjusted EBITDA in Group 3 increased from $14.2 million for the three months ended March 31, 2022, or a 14.3% adjusted EBITDA margin, to $85.5 million for the three months ended March 31, 2023, or a 20.6% adjusted EBITDA margin.

Adjusted EBITDA margin for the three months ended March 31, 2023 increased primarily due to favorable pricing, acquisition-related growth and realized cost synergies associated with the US Ecology acquisition.

Landfill and Environmental Matters

Available Airspace

As of March 31, 2023, we owned or operated 206 active landfills with total available disposal capacity estimated to be 5.1 billion in-place cubic yards. For these landfills, the following table reflects changes in capacity and remaining capacity, as measured in cubic yards of airspace:

			Balance as of December 31, 2022						New Expansions Undertaken						Landfills Acquired, Net of Divestitures						Permits Granted / New Sites, Net of Closures						Airspace Consumed						Changes in Engineering Estimates						Balance as of March 31, 2023
Cubic yards (in millions):
Permitted airspace			4,816.8						—						—						(0.5)						(20.7)						1.5						4,797.1
Probable expansion airspace			197.5						123.2						—						—						—						—						320.7
Total cubic yards (in millions)			5,014.3						123.2						—						(0.5)						(20.7)						1.5						5,117.8
Number of sites:
Permitted airspace			206						—						—						—																		206
Probable expansion airspace			13						2						—						—																		15

Total available disposal capacity represents the sum of estimated permitted airspace plus an estimate of probable expansion airspace. Engineers develop these estimates at least annually using information provided by annual aerial surveys. Before airspace included in an expansion area is determined to be probable expansion airspace and, therefore, included in our calculation of total available disposal capacity, it must meet all of our expansion criteria.

As of March 31, 2023, 15 of our landfills met all of our criteria for including their probable expansion airspace in their total available disposal capacity. At projected annual volumes, these 15 landfills have an estimated remaining average site life of 46 years, including probable expansion airspace. The average estimated remaining life of all of our landfills is 59 years. We have other expansion opportunities that are not included in our total available airspace because they do not meet all of our criteria for treatment as probable expansion airspace.

Remediation and Other Charges for Landfill Matters

It is reasonably possible that we will need to adjust our accrued landfill and environmental liabilities to reflect the effects of new or additional information, to the extent that such information impacts the costs, timing or duration of the required actions. Future changes in our estimates of the costs, timing or duration of the required actions could have a material adverse effect on our consolidated financial position, results of operations and cash flows.

For a description of our significant remediation matters, see Note 6, Landfill and Environmental Costs, of the notes to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Property and Equipment

The following tables reflect the activity in our property and equipment accounts for the three months ended March 31, 2023:

			Gross Property and Equipment
			Balance as of December 31, 2022						Capital Additions						Retirements						Acquisitions, Net of Divestitures						Non-cash Additions for Asset Retirement Obligations						Adjustments for Asset Retirement Obligations						Impairments, Transfers, Foreign Currency Translation and Other Adjustments						Balance as of March 31, 2023
Land			$	779.7					$	(0.7)					$	(0.3)					$	5.6					$	—					$	—					$	0.4					$	784.7
Landfill development costs			9,574.2						—						—						—						15.0						(8.5)						121.6						9,702.3
Vehicles and equipment			9,465.3						117.0						(46.5)						21.5						—						—						41.8						9,599.1
Buildings and improvements			1,704.6						10.4						(4.2)						4.7						—						—						16.6						1,732.1
Construction-in-progress - landfill			358.3						44.1						—						—						—						—						(122.9)						279.5
Construction-in-progress - other			358.6						37.3						—						—						—						—						(63.2)						332.7
Total			$	22,240.7					$	208.1					$	(51.0)					$	31.8					$	15.0					$	(8.5)					$	(5.7)					$	22,430.4

			Accumulated Depreciation, Amortization and Depletion
			Balance as of December 31, 2022						Additions Charged to Expense						Retirements						Acquisitions, Net of Divestitures						Adjustments for Asset Retirement Obligations						Impairments, Transfers, Foreign Currency Translation and Other Adjustments						Balance as of March 31, 2023
Landfill development costs			$	(5,058.9)					$	(115.2)					$	—					$	—					$	2.4					$	0.1					$	(5,171.6)
Vehicles and equipment			(5,679.9)						(195.7)						45.5						—						—						3.9						(5,826.2)
Buildings and improvements			(757.9)						(21.0)						4.2						—						—						0.7						(774.0)
Total			$	(11,496.7)					$	(331.9)					$	49.7					$	—					$	2.4					$	4.7					$	(11,771.8)

Liquidity and Capital Resources

Cash and Cash Equivalents

The following is a summary of our cash and cash equivalents and restricted cash and marketable securities balances as of:

			March 31, 2023						December 31, 2022
Cash and cash equivalents			$	132.2					$	143.4
Restricted cash and marketable securities			132.7						127.6
Less: restricted marketable securities			(58.2)						(56.7)
Cash, cash equivalents, restricted cash and restricted cash equivalents			$	206.7					$	214.3

Our restricted cash and marketable securities includes amounts pledged to regulatory agencies and governmental entities as financial guarantees of our performance under certain collection, landfill and transfer station contracts and permits, and relating to our final capping, closure and post-closure obligations at our landfills as well as restricted cash and marketable securities related to our insurance obligations.

The following table summarizes our restricted cash and marketable securities:

			March 31, 2023						December 31, 2022
Capping, closure and post-closure obligations			40.2						39.1
Insurance			92.5						88.5
Total restricted cash and marketable securities			$	132.7					$	127.6

Material Cash Requirements and Intended Uses of Cash

We expect existing cash, cash equivalents, restricted cash and marketable securities, 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. Our known current- and long-term uses of

cash include, among other possible demands: (1) capital expenditures and leases; (2) acquisitions; (3) dividend payments; (4) repayments to service debt and other long-term obligations; (5) payments for asset retirement obligations and environmental liabilities; and (6) share repurchases.

We may choose to voluntarily retire certain portions of our outstanding debt before their maturity dates using cash from operations or additional borrowings. We may also explore opportunities in the capital markets to fund redemptions should market conditions be favorable. Early extinguishment of debt will result in an impairment charge in the period in which the debt is repaid. The loss on early extinguishment of debt relates to premiums paid to effectuate the repurchase and the relative portion of unamortized note discounts and debt issue costs.

Acquisitions

Our acquisition growth strategy focuses primarily on acquiring privately held recycling and solid waste companies and environmental solutions businesses that complement our existing business platform. We continue to invest in value-enhancing acquisitions in existing markets.

We expect to invest at least $500 million in additional acquisitions in 2023.

Senior Notes

In March 2023, we issued $400.0 million of 4.875% senior notes due 2029 (the 4.875% Notes) and $800.0 million of 5.000% senior notes due 2034 (the 5.000% Notes, and together with the 4.875% Notes, the Notes). The Notes are unsecured and unsubordinated and rank equally with our other unsecured obligations. We used the net proceeds from the Notes for general corporate purposes, including the repayment of a portion of amounts outstanding under the Uncommitted Credit Facility, the Commercial Paper Program, the Credit Facility, and the Term Loan Facility.

Commercial Paper Program

In 2022, we entered into a commercial paper program for the issuance and sale of unsecured commercial paper in an aggregate principal amount not to exceed $1.0 billion outstanding at any one time (the Commercial Paper Cap). As of March 31, 2023, we had $370.0 million principal value of commercial paper issued and outstanding under the program, with a weighted average interest rate of 5.778% and weighted average maturity of 27 days. In the event of a failed re-borrowing, we currently have availability under our Credit Facility to fund the commercial paper program until it is re-borrowed successfully. Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of March 31, 2023.

Summary of Cash Flow Activity

The major components of changes in cash flows are discussed in the following paragraphs. The following table summarizes our cash flow from operating activities, investing activities and financing activities for the three months ended March 31, 2023 and 2022:

			Three Months Ended March 31,
			2023						2022
Cash Provided by Operating Activities			$	687.7					$	705.6
Cash Used in Investing Activities			$	(653.3)					$	(399.4)
Cash Used in Financing Activities			$	(42.0)					$	(314.7)

Cash Flows Provided by Operating Activities

We use cash flows from operations to fund capital expenditures and leases, acquisitions, dividend payments, share repurchases, interest payments and repayments of debt and other long-term obligations, and payments for asset retirement obligations and environmental liabilities.

The most significant items affecting the comparison of our cash flows provided by operating activities for the three months ended March 31, 2023 and 2022 are summarized below.

Changes in assets and liabilities, net of effects from business acquisitions and divestitures, decreased our cash flow from operations by $133.8 million during the three months ended March 31, 2023, compared to a decrease of $46.6 million during the same period in 2022, primarily as a result of the following:

• Our accounts receivable, exclusive of the change in allowance for doubtful accounts and customer credits, increased $3.3 million during the three months ended March 31, 2023 due to the timing of billings net of collections, compared to a $38.4 million increase in the same period in 2022. As of March 31, 2023, our days sales outstanding were 42.9, or 31.0 days net of deferred revenue, compared to 40.0, or 27.5 days net of deferred revenue, as of March 31, 2022. Excluding our acquisition of US Ecology, our days sales outstanding were 38.8, or 26.7 days net of deferred revenue, as of March 31, 2023.

• Our prepaid expenses and other assets decreased $87.2 million during the three months ended March 31, 2023, compared to a $54.8 million decrease in the same period in 2022, primarily driven by a decrease of tax receivables due to the timing of our estimated tax payments. Cash paid for incomes taxes was $7.7 million and $3.7 million for the three months ended March 31, 2023 and 2022, respectively.

• Our accounts payable decreased $71.1 million during the three months ended March 31, 2023, compared to a $73.0 million increase in the same period in 2022, due to the timing of payments.

• Cash paid for capping, closure and post-closure obligations was $8.8 million during the three months ended March 31, 2023, compared to $7.1 million in the same period in 2022. The increase in cash paid for capping, closure, and post-closure obligations is primarily due to the timing of capping and post-closure payments at certain of our landfill sites.

• Cash paid for remediation obligations was $1.6 million higher during the three months ended March 31, 2023, compared to the same period in 2022.

• Our other liabilities decreased $126.2 million during the three months ended March 31, 2023, compared to a $118.9 million decrease in the same period in 2022, primarily due to the payment of incentive compensation accruals.

In addition, cash paid for interest, excluding net swap settlements for our fixed-to-floating and floating-to-fixed interest rate swaps, was $124.0 million and $75.6 million for the three months ended March 31, 2023 and 2022, respectively.

Cash Flows Used in Investing Activities

The most significant items affecting the comparison of our cash flows used in investing activities for the three months ended March 31, 2023 and 2022 are summarized below:

• Capital expenditures during the three months ended March 31, 2023 were $378.6 million, compared with $334.1 million for the same period in 2022.

• During the three months ended March 31, 2023 and 2022, we paid $290.9 million and $81.6 million, respectively, for acquisitions and investments.

We intend to finance future capital expenditures and acquisitions through cash on hand, restricted cash held for capital expenditures, cash flows from operations, our revolving credit facilities, and tax-exempt bonds and other financings. We expect to primarily use cash, and borrowings under our revolving credit facilities to pay for future business acquisitions.

Cash Flows Used in Financing Activities

The most significant items affecting the comparison of our cash flows used in financing activities for the three months ended March 31, 2023 and 2022 are summarized below:

• Net proceeds from notes payable and long-term debt and senior notes were $129.6 million during the three months ended March 31, 2023, compared to net proceeds of $48.0 million in the same period in 2022.

• During the three months ended March 31, 2023, we did not repurchase any shares of our common stock, compared to repurchases of 1.6 million shares for $203.5 million during the same period in 2022.

• Dividends paid were $156.4 million and $145.9 million during the three months ended March 31, 2023 and 2022, respectively.

Financial Condition

Debt Obligations

As of March 31, 2023, we had $457.1 million of principal debt maturing within the next 12 months, which includes certain finance lease obligations. All of our tax-exempt financings are remarketed either quarterly or semiannually by remarketing agents to effectively maintain a variable yield. The holders of the bonds can put them back to the remarketing agents at the end of each interest period. If the remarketing agent is unable to remarket our bonds, the remarketing agent can put the bonds to us. In the event of a failed remarketing, as of March 31, 2023, we had availability under our $3.0 billion unsecured revolving credit facility to fund these bonds until they are remarketed successfully. In the event of a failed re-borrowing, we currently have availability under our Credit Facility to fund the commercial paper program until it is re-borrowed successfully. Accordingly, we have classified these tax-exempt financings and commercial paper program borrowings as long-term in our consolidated balance sheet as of March 31, 2023.

For further discussion of the components of our overall debt, see Note 7, Debt, of the notes to our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Credit Facilities

The Credit Facility

In August 2021, we entered into a $3.0 billion unsecured revolving credit facility (the Credit Facility). Borrowings under the Credit Facility mature in August 2026. As permitted by the Credit Facility, we have the right to request two one-year extensions of the maturity date, but none of the lenders are committed to participate in such extension. The Credit Facility also includes a feature that allows us to increase availability, at our option, by an aggregate amount of up to $1.0 billion through increased commitments from existing lenders or the addition of new lenders.

In February 2023, we entered into Amendment No. 1 to the Credit Facility (the Credit Facility Amendment) to add our subsidiary, USE Canada Holdings, Inc. (the Canadian Borrower), as an additional borrower under the Credit Facility. The Credit Facility Amendment provides that the aggregate of (i) all loans to the Canadian Borrower and (ii) all loans denominated in Canadian dollars cannot exceed $500 million (the Canadian Sublimit). The Canadian Sublimit is part of, and not in addition to, the aggregate commitments under the Credit Facility.

The Canadian dollar-denominated loans bear interest based on the Canadian Prime Rate or the Canadian Dollar Offered Rate plus a current applicable margin of 0.910% based on our Debt Ratings. Borrowings under the Credit Facility in United States dollars bear interest at a Base Rate, a daily floating SOFR or a term SOFR plus a current applicable margin of 0.910% based on our Debt Ratings (all as defined in the Credit Facility agreement). As of March 31, 2023, C$180 million is outstanding against the Canadian Sublimit, with an interest rate of 5.933%.

The Credit Facility is subject to facility fees based on applicable rates defined in the Credit Facility agreement and the aggregate commitment, regardless of usage. Availability under our Credit Facility totaled $2,151.8 million and $1,402.4 million as of March 31, 2023 and December 31, 2022, respectively. The Credit Facility can be used for working capital, capital expenditures, acquisitions, letters of credit and other general corporate purposes. The Credit Facility agreement requires us to comply with financial and other covenants. We may pay dividends and repurchase common stock if we are in compliance with these covenants.

We had $133.0 million and $250.0 million in borrowings outstanding under our Credit Facility as of March 31, 2023 and December 31, 2022, respectively. We had $345.2 million and $347.6 million of letters of credit outstanding under our Credit Facility as of March 31, 2023 and December 31, 2022, respectively.

Uncommitted Credit Facility

In January 2022, we entered into a $200.0 million unsecured uncommitted revolving credit facility (the Uncommitted Credit Facility), which replaced the prior $135.0 million uncommitted credit facility. The Uncommitted Credit Facility bears interest at an annual percentage rate to be agreed upon by both parties. Borrowings under the Uncommitted Credit Facility can be used for working capital, letters of credit, and other general corporate purposes. The agreement governing our Uncommitted Credit Facility requires us to comply with certain covenants. The Uncommitted Credit Facility may be terminated by either party at any time. As of March 31, 2023 and December 31, 2022, we had no borrowings outstanding under our Uncommitted Credit Facility.

Financial and Other Covenants

The Credit Facility requires us to comply with financial and other covenants. To the extent we are not in compliance with these covenants, we cannot pay dividends or repurchase common stock. Compliance with covenants also is a condition for any incremental borrowings under the Credit Facility, and failure to meet these covenants would enable the lenders to require repayment of any outstanding loans (which would adversely affect our liquidity). The Credit Facility provides that our total debt to EBITDA ratio may not exceed 3.75 to 1.00 as of the last day of any fiscal quarter. In the case of an "elevated ratio period", which may be elected by us if one or more acquisitions during a fiscal quarter involve aggregate consideration in excess of $200.0 million (the Trigger Quarter), the total debt to EBITDA ratio may not exceed 4.25 to 1.00 during the Trigger Quarter and for the three fiscal quarters thereafter. The Credit Facility also provides that there may not be more than two elevated ratio periods during the term of the Credit Facility agreement. During the second quarter of 2022, we exercised the elevated ratio clause in conjunction with our acquisition of US Ecology; as a result, we are subject to a 4.25 to 1.00 total debt to EBITDA ratio through March 31, 2023. As of March 31, 2023, our total debt to EBITDA ratio was 3.05 compared to the 4.25 maximum allowed by the covenants. As of March 31, 2023, we were in compliance with the covenants under our Credit Facility, and we expect to be in compliance throughout the remainder of 2023.

EBITDA, which is a non-U.S. GAAP measure, is calculated as defined in our Credit Facility agreement. In this context, EBITDA is used solely to provide information regarding the extent to which we are in compliance with debt covenants and is not comparable to EBITDA used by other companies or used by us for other purposes.

Failure to comply with the financial and other covenants under the Credit Facility, as well as the occurrence of certain material adverse events, would constitute defaults and would allow the lenders under the Credit Facility to accelerate the maturity of all indebtedness under the Credit Facility. This could have an adverse effect on the availability of financial assurances. In addition,

maturity acceleration on the Credit Facility constitutes an event of default under our other debt and derivative instruments, including our senior notes, and, therefore, our senior notes would also be subject to acceleration of maturity. If such acceleration were to occur, we would not have sufficient liquidity available to repay the indebtedness. We would likely have to seek an amendment under the Credit Facility for relief from the financial covenant or repay the debt with proceeds from the issuance of new debt or equity, or asset sales, if necessary. We may be unable to amend the Credit Facility or raise sufficient capital to repay such obligations in the event the maturity is accelerated.

Term Loan Facility

On April 29, 2022, we entered into the $1.0 billion Term Loan Facility. The Term Loan Facility will mature on April 29, 2025 and bears interest at a base rate or a forward-looking SOFR, plus an applicable margin based on our debt ratings. The current weighted average interest rate is 5.707%. We may prepay, without penalty, all or any part of the borrowings under the Term Loan Facility at any time.

On May 2, 2022, we completed the acquisition of US Ecology using proceeds from the Term Loan Facility and borrowings under the Credit Facility.

During the three months ended March 31, 2023, we used a portion of the proceeds from our senior note issuance described below under Senior Notes and Debentures to pay down a portion of the Term Loan Facility. As a result, we incurred a non-cash loss on the early extinguishment of debt related to the ratable portion of unamortized deferred issuance costs of $0.2 million.

We had $700.0 million and $1.0 billion in borrowings outstanding under the Term Loan Facility as of March 31, 2023 and December 31, 2022, respectively.

Commercial Paper Program

In May 2022, we entered into a commercial paper program for the issuance and sale of unsecured commercial paper in an aggregate principal amount not to exceed the Commercial Paper Cap. As of March 31, 2023, we had $370.0 million principal value of commercial paper issued and outstanding under the program, with a weighted average interest rate of 5.778% and weighted average maturity of 27 days. In the event of a failed re-borrowing, we currently have availability under our Credit Facility to fund the commercial paper program until it is re-borrowed successfully. Accordingly, we have classified these borrowings as long-term in our consolidated balance sheet as of March 31, 2023.

Senior Notes and Debentures

In March 2023, we issued $400.0 million of 4.875% senior notes due 2029 (the 4.875% Notes) and $800.0 million of 5.000% senior notes due 2034 (the 5.000% Notes, and together with the 4.875% Notes, the Notes). The Notes are unsecured and unsubordinated and rank equally with our other unsecured obligations. We used the net proceeds from the Notes for general corporate purposes, including the repayment of a portion of amounts outstanding under the Uncommitted Credit Facility, the Commercial Paper Program, the Credit Facility, and the Term Loan Facility.

Our senior notes and debentures are general unsecured obligations. Interest is payable semi-annually.

Derivative Instruments and Hedging Relationships

Our ability to obtain financing through the capital markets is a key component of our financial strategy. Historically, we have managed risk associated with executing this strategy, particularly as it relates to fluctuations in interest rates, by using a combination of fixed and floating rate debt. From time to time, we also have entered into interest rate swap and lock agreements to manage risk associated with interest rates, either to effectively convert specific fixed rate debt to a floating rate (fair value hedges), or to lock interest rates in anticipation of future debt issuances (cash flow hedges).

Additionally, we amended certain interest rate lock agreements, extending the mandatory maturity date and dedesignated them as cash flow hedges (the Extended Interest Rate Locks). In addition, we entered into offsetting interest rate swaps to offset future exposures to fair value fluctuations of the Extended Interest Rate Locks.

For a description of our derivative contracts and hedge accounting, see Note 7, Debt, to our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Tax-Exempt Financings

As of March 31, 2023 and December 31, 2022 we had $1,182.2 million and $1,182.0 million of certain variable rate tax-exempt financings outstanding, respectively, with maturities ranging from 2023 to 2051.

Finance Leases

We had finance lease liabilities of $244.6 million and $247.5 million as of March 31, 2023 and December 31, 2022, respectively, with maturities ranging from 2023 to 2063.

Credit Ratings

Our continued access to the debt capital markets and to new financing facilities, as well as our borrowing costs, depend on multiple factors, including market conditions, our operating performance and maintaining strong credit ratings. As of March 31, 2023, our credit ratings were BBB+, Baa2 and BBB+ by Standard & Poor’s Ratings Services, Moody’s Investors Service and Fitch Ratings, Inc., respectively. If our credit ratings were downgraded, especially any downgrade to below investment grade, our ability to access the debt markets with the same flexibility that we have experienced historically, our cost of funds and other terms for new debt issuances, could be adversely impacted.

Off-Balance Sheet Arrangements

We have no off-balance sheet debt or similar obligations, other than short-term operating leases and financial assurances, which are not classified as debt. We have no transactions or obligations with related parties that are not disclosed, consolidated into or reflected in our reported financial position or results of operations. We have not guaranteed any third-party debt.

Seasonality and Severe Weather

Our operations can be adversely affected by periods of inclement or severe weather, which could increase the volume of waste collected under our existing contracts (without corresponding compensation), delay the collection and disposal of waste, reduce the volume of waste delivered to our disposal sites, or delay the construction or expansion of our landfills and other facilities. Our operations also can 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.

Contingencies

For a description of our commitments and contingencies, see Note 6, Landfill and Environmental Costs, Note 8, Income Taxes, and Note 14, Commitments and Contingencies, to our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Critical Accounting Judgments and Estimates

We identified and discussed our critical accounting judgments and estimates in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Although we believe our estimates and judgments are reasonable, they are based upon information available at the time the judgment or estimate is made. Actual results may differ significantly from estimates under different assumptions or conditions.

New Accounting Pronouncements

For a description of new accounting standards that may affect us, see Note 1, Basis of Presentation, to our unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.