ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto, and other financial information, included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements and involves numerous risks and uncertainties. Our actual results may differ materially from those contained in any forward-looking statements.
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Discussion and analysis of our financial condition and results of operations for the fiscal year ended December 31, 2024 (“fiscal year 2024”) compared to our financial condition and results of operations for the fiscal year ended December 31, 2023 (“fiscal year 2023”), is included under the heading Item 7. “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the Securities and Exchange Commission on February 18, 2025.
Company Overview
Casella Waste Systems, Inc., a Delaware corporation, and its wholly-owned subsidiaries (collectively, “we”, “us” or “our”), is a regional, vertically integrated solid waste services company. We provide resource management expertise and services to residential, commercial, municipal, institutional and industrial customers, primarily in the areas of solid waste collection and disposal, transfer, recycling and organics services.
We provide integrated solid waste services with operating locations in eleven states: Vermont, New Hampshire, New York, Massachusetts, Connecticut, Maine, Pennsylvania, Delaware, New Jersey, Maryland and West Virginia, 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.
For financial information concerning our reportable operating segments refer to Note 21. Segment Reporting to our consolidated financial statements included under “Item 8. Financial Statements and Supplementary Data ” of this Annual Report on Form 10-K.
As of January 31, 2026, we owned and/or operated 86 solid waste collection operations, 72 transfer stations, 32 recycling and processing facilities, eight Subtitle D landfills, two landfill gas-to-energy facilities and one landfill permitted to accept construction and demolition materials.
Acquisitions and Divestitures
Acquisitions
We have made in the past, and we expect to make in the future, acquisitions to densify existing operations, expand service areas, and grow services for our customers. These acquisitions may include “tuck-in” acquisitions within our existing markets, assets that are adjacent to or outside of our existing markets, or larger, more strategic acquisitions. In addition, from time to time, we may acquire businesses that are complementary to our core business strategy. We face competition for acquisition targets, particularly the larger and more meaningful targets, but we believe that our strong relationships and reputation help to offset this factor.
We have a business development team that identifies acquisition candidates, categorizes the opportunity by strategic fit and financial synergies, establishes contact with the appropriate representative of the acquisition candidate and gathers further information on the acquisition candidate.
In January 2026, we expanded our geographic footprint when we acquired the assets of RGL, Inc. (dba Mountain State Waste), which consists of collection operations in West Virginia and a transfer station operation in southwestern Pennsylvania (the “Mountain State Waste Acquisition”).
In the fiscal year ended December 31, 2025 (“fiscal year 2025”), we acquired nine businesses: five tuck-in collection operations in our Mid-Atlantic region, two tuck-in collection operations in our Western region, a recycling business in our Resource Solutions operating segment, and a tuck-in collection operation and recycling business whose assets and liabilities are allocated between our Eastern region and Resource Solutions operating segments. Total consideration for acquisitions completed in fiscal year 2025 was $229.8 million, including $223.4 million in cash, $7.4 million in holdbacks, contingent consideration and other amounts owed, partially offset by $(1.0) million of open working capital settlements due from sellers.
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In fiscal year 2024, we acquired eight businesses: four of which are in our Mid-Atlantic region, including the purchase of all the equity interests of Whitetail Disposal, Inc. and the assets of LMR Disposal, LLC, which together include collection operations in eastern Pennsylvania and western New Jersey; two of which are in our Western region, including the purchase of all equity interests of Royal Carting and Welsh Sanitation and related real estate assets, which consist of collection and transfer operations in the middle and lower Hudson Valley regions of New York as well as western Connecticut; and two of which are tuck-in operations in our Eastern region. Total consideration for acquisitions completed in fiscal year 2024 was $467.9 million, including $469.2 million in cash, $1.7 million in holdbacks, contingent consideration and other amounts owed, partially offset by $(3.0) million of open working capital settlements due from sellers.
Divestitures
From time to time, we may sell or divest certain investments or other components of our business. These divestitures may be undertaken for a number of reasons, including: to generate proceeds to pay down debt; as a result of a determination that the specified asset will provide inadequate returns to us or that the asset no longer serves a strategic purpose in connection with our business; or as a result of a determination that the asset may be more valuable to a third party. We will continue to look to divest certain activities and investments that no longer enhance or complement our core business if the right opportunity presents itself.
Results of Operations
Revenues
We manage our solid waste operations, which include a comprehensive range of non-hazardous solid waste services, on a geographic basis through three regional operating segments, the Eastern, Western and Mid-Atlantic regions. In fiscal year 2025, we moved certain operations between our regional operating segments, including a landfill that we own from the Western region to the Mid-Atlantic region and a collection and transfer station operation from our Western region to our Eastern region. Throughout this “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” certain prior period amounts have been reclassified between regional operating segments to conform to the current period presentation. For additional information, see Note 21, Segment Reporting, to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data ” of this Annual Report on Form 10-K.
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, electricity capacity and renewable energy credits, along with the rights to, generation and sale of renewable natural gas and related tax credits at certain of our landfill facilities. 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. Revenues associated with our Resource Solutions operations 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. 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.
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The table below shows revenue attributable to services provided (dollars in millions and as a percentage of total revenues) for the following periods:
Fiscal Year Ended December 31,
Change
Collection
Disposal
Landfill gas-to-energy
Processing
Solid waste operations
Processing
National Accounts
Resource Solutions operations
Total revenues
Solid waste revenues
A summary of the period-to-period change in solid waste revenues (dollars in millions and as percentage growth of total solid waste revenues) follows:
Period-to-Period Change For
Fiscal Year 2025 vs Fiscal Year 2024
Amount
% Growth
Price
Volume
Intercompany transfers to National Accounts
Surcharges and other fees
Commodity price and volume
Acquisitions
Solid waste revenues
The most significant items impacting the change in our solid waste revenues during fiscal year 2025 are summarized below:
• Price increased solid waste revenues, including higher collection pricing of $47.9 million, or 5.0% as a percentage of collection revenues, and higher disposal pricing of $12.2 million, or 4.9% as a percentage of disposal revenues, primarily associated with our transfer stations and to a lesser extent landfills;
• Volume decreased solid waste revenues, driven by lower collection volumes of $(7.5) million, or (0.8)% as a percentage of collection revenues, and lower disposal volumes of $(3.6) million, or (1.5)% as a percentage of disposal revenues, related to lower transfer station and transportation volumes; and
• Acquisitions increased solid waste revenues due to the partial year impact of the acquisition of nine businesses in fiscal year 2025, as well as the rollover impact of eight acquisitions completed in fiscal year 2024.
Resource Solutions revenues
See “ Segment Reporting ” below for discussion over the period-to-period change in Resource Solutions revenues.
Operating Expenses
A summary of our cost of operations, general and administration and depreciation and amortization expenses (dollars in millions and as a percentage of total revenues) is as follows:
Fiscal Years Ended December 31,
Change
Cost of operations
General and administration
Depreciation and amortization
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Cost of Operations
Cost of operations includes: (i) direct costs, which consist of the costs of purchased materials and third-party transportation and disposal costs, including third-party tipping fees; (ii) direct labor costs, which include salaries, wages, incentive compensation and related benefit costs such as health and welfare benefits and workers compensation; (iii) direct operational costs, which include landfill operating costs such as accretion expense related to final capping, closure and post-closure obligations, leachate treatment and disposal costs and depletion of landfill operating lease obligations, vehicle insurance costs, host community fees and royalties; (iv) fuel costs used by our vehicles and in conducting our operations; (v) maintenance and repair costs relating to our vehicles, equipment and containers; and (vi) other operational costs including facility costs.
A summary of the major components of our cost of operations (dollars in millions and as a percentage of total revenues) is as follows:
Fiscal Years Ended December 31,
Change
Direct costs
Direct labor costs
Direct operational costs
Fuel costs
Maintenance and repair costs
Other operational costs
Total
These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies.
The most significant items impacting the change in our cost of operations during fiscal year 2025 are summarized below:
• Direct costs increased in aggregate dollars primarily due to acquisitions and higher third-party disposal rates.
• Direct labor costs increased primarily due to acquisitions and higher wage and benefit rates.
• Direct operational costs increased in aggregate dollars primarily due to (i) acquisitions, (ii) higher expense related to insurance claims, (iii) legal penalties associated with leachate management at a landfill we own in our Eastern region, (iv) higher accretion expense associated with changes in the timing and cost estimates of our capping, closure and post-closure obligations, (v) higher landfill operating lease amortization as well as host community fees and royalties primarily related to higher landfill tonnages at a landfill we lease in our Western region, and (vi) general cost inflation; partially offset by (a) lower short-term rental expense primarily in our Western region, counteracting higher short term rental expense in our Mid-Atlantic region related to growth and the timing of the delivery of fleet vehicles and (b) lower leachate disposal costs. See Note 13, Commitments and Contingencies , to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosure regarding the legal penalties accrual.
• Fuel costs increased in aggregate dollars due to acquisitions, partially offset by slightly lower average diesel fuel prices. See Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” of this Annual Report on Form 10-K for additional information regarding our fuel costs.
• Maintenance and repair costs increased due to (i) acquisitions, (ii) higher personnel and parts costs, and (iii) increased costs of repairs performed by third parties.
• Other operational costs increased due to (i) acquisitions, (ii) higher spending associated with supporting acquisition-related growth, and (iii) general cost inflation.
General and Administration
General and administration expense includes: (i) labor costs, which consist of salaries, wages, incentive compensation and related benefit costs such as health and welfare benefits and workers compensation costs related to management, clerical and administrative functions; (ii) professional service fees; (iii) provision for expected credit losses; and (iv) other overhead costs including those associated with marketing, sales and community relations efforts.
A summary of the major components of our general and administration expense (dollars in millions and as a percentage of total revenues) is as follows:
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Fiscal Years Ended December 31,
Change
Labor costs
Professional fees
Provision for expected credit losses
Other
Total
These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies.
General and administration expense increased in aggregate dollars in fiscal year 2025 primarily due to (i) acquisition activity, including increased labor costs, (ii) escalation of salary, wage, and benefit costs, (iii) higher accruals related to incentive compensation, and (iv) higher costs associated with information technology; partially offset by a decreased provision for expected credit losses in our Mid-Atlantic region related to improved expected collection of our accounts receivable and lower legal expense associated with employee separation.
Depreciation and Amortization
Depreciation and amortization expense includes: (i) depreciation of property and equipment (including assets recorded for finance leases) on a straight-line basis over the estimated useful lives of the assets; (ii) amortization of landfill costs (including those costs incurred and all estimated future costs for landfill development and construction, along with asset retirement costs arising from closure and post-closure obligations) on a units-of-consumption method as landfill airspace is consumed over the total estimated remaining capacity of a site, which includes both permitted capacity and unpermitted expansion capacity that meets certain criteria for amortization purposes, and amortization of landfill asset retirement costs arising from final capping obligations on a units-of-consumption method as airspace is consumed over the estimated capacity associated with each final capping event; and (iii) amortization of intangible assets with a definite life, based on the economic benefit provided, or using the sum of years digits or straight-line methods over the definitive terms of the related agreements.
A summary of the major components of depreciation and amortization expense (dollars in millions and as a percentage of total revenues) follows:
Fiscal Year Ended December 31,
Change
Depreciation expense
Landfill amortization expense
Other amortization expense
Total
Depreciation and amortization expense increased in fiscal year 2025 primarily due to (i) acquisitions, including the impact of amortization of acquired 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 and Mid-Atlantic regions, and changes in cost and other assumptions.
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Expense from Acquisition Activities
In fiscal years 2025 and 2024, we recognized expenses of $24.2 million and $24.9 million, respectively, comprised primarily of legal, consulting, rebranding, information technology and other costs associated with the due diligence, acquisition and integration of acquired businesses. Fiscal year 2024 included a charge for an increase in the reserve against accounts receivable of the businesses acquired in our acquisition of the equity interests of four wholly-owned subsidiaries of GFL Environmental Inc. ( “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. See Note 5, Business Combinations, to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for disclosure regarding acquisition activity.
Organics Facility Closure Charge
In fiscal year 2025, we ceased operation of an organic residuals composting facility that we own in Maine related to a change in state law prohibiting land application of biosolids based recycled products.
A summary of our organics facility closure charge (in millions) follows:
Fiscal Year Ended
December 31,
Closure and post-closure charges (1)
Soil remediation charge (2)
Other costs (3)
Organics facility closure charge
(1) We recorded a charge associated with our closure and post-closure obligations related to closing the site.
(2) We recorded an environmental remediation charge associated with an obligation incurred for corrective action linked to soil remediation at the site. See Note 13, Commitments and Contingencies , to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosure.
(3) We recorded other costs as incurred, and expect additional costs, associated with ceasing operations at the facility.
Southbridge Landfill Closure Charge
In the fiscal year ended December 31, 2017, we initiated the plan to cease operations of our landfill located in Southbridge, Massachusetts (“Southbridge Landfill”) and later closed it in November 2018 when the Southbridge Landfill reached its final capacity .
In fiscal year 2024, we recorded a non-cash charge of $8.4 million, which is associated with our receipt of a final closure permit (the “Closure Permit”) from the Massachusetts Department of Environmental Protection related to the Southbridge Landfill. Pursuant to the terms of the Closure Permit, we are required to meet certain general permit conditions and certain specific permit conditions (collectively, the “Conditions”), including environmental monitoring, third-party inspections, inspection of the final cover, leachate sampling, post-closure monitoring, and other post-closure requirements. We revised the accrued post-closure liability for the Southbridge Landfill to reflect the estimated cost of satisfying the expanded Conditions as currently specified in the Closure Permit. See Note 10, Final Capping, Closure and Post-Closure Costs, to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for disclosure regarding our landfill final capping, and post- costs.
Landfill Capping (Recovery) Charge - Veneer Failure
In fiscal year 2024, we recorded a recovery of $(1.7) million associated with a veneer failure that occurred in fiscal year 2023 at a Subtitle D landfill we operate located in Seneca, New York, consisting of both (i) a partial reversal of historical payments written off after an engineering evaluation determined that a portion of the area affected by the veneer failure was deemed to still be viable as well as (ii) a recovery of operating expenses incurred during the clean-up of the affected capping material as part of a settlement with a third party. See Note 10, Final Capping, Closure and Post-Closure Costs, to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for disclosure over our remaining estimated costs associated with obligations for final capping, closure and post-closure of our landfills.
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Other expenses
Interest Expense, net
Our interest expense, net increased $0.6 million in fiscal year 2025 due to (i) lower interest income related to lower average interest rates combined with lower average cash balances and (ii) interest expense remaining mostly flat due to higher average debt balances being offset by lower average interest rates.
For additional disclosure regarding interest expense, see Note 12, Debt to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Debt Modification Expense
In fiscal year 2024, we recognized debt modification expense of $1.4 million associated with agent fees and other third-party costs we paid during the refinancing of our Credit Agreement (as defined below).
Provision for Income Taxes
Our provision for income taxes was $5.2 million in fiscal year 2025 and $7.5 million in fiscal year 2024. For fiscal year 2025, the provision for income taxes includes $2.4 million of current income taxes and $2.8 million of deferred income taxes. The provision for income taxes in fiscal year 2024 included $0.6 million of current income taxes and $6.9 million of deferred income taxes. The effective rate for the fiscal year 2025 was 39.7% and was computed based on the statutory rate of 21% adjusted primarily for state taxes, non-deductible officer compensation and an increase in the effective state rate due to tax attributes in certain states requiring a valuation allowance, partially offset by tax deductible equity compensation in excess of book expense. This effective rate was greater than the 35.7% effective rate for the fiscal year 2024, primarily due to differences in the valuation allowance of attributes, state income taxes and other discrete items.
On July 4, 2025, H.R.1 – One Big Beautiful Bill Act (the “OBBB Act”) was enacted. The OBBB Act addresses a wide range of changes including reinstating 100% bonus depreciation eligible for qualified assets. The OBBB Act also restores the EBITDA-based computation of interest expense limitations under Section 163(j) of the Internal Revenue Code among other income tax items; any interest expense limited may be carried forward indefinitely and utilized in later years subject to the interest limitation. We have evaluated the impacts of the OBBB Act, both federal and state, for those provisions that impact fiscal year 2025. We will continue to evaluate the impacts of the OBBB Act for any further changes relating to state conformity to OBBB Act for future years.
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 our 2025 federal tax return when filed, we project federal net operating losses generated of $123 million after 2017 and $1 million before 2017, totaling $124 million, to be carried forward to 2026. These will be carried forward indefinitely but generally the amount generated after 2017 may only offset up to 80% of taxable income earned in a tax year.
Segment Reporting
We report selected information about our reportable operating segments in a manner consistent with that used for internal management reporting. We manage our solid waste operations on a geographic basis through regional operating segments, our Eastern, Western and Mid-Atlantic regions. We manage our resource renewal operations through the Resource Solutions operating segment. In fiscal year 2025, we moved certain operations between our regional operating segments to align geographically, including a landfill that we own from the Western region to the Mid-Atlantic region and a collection and transfer station operation from our Western region to our Eastern region. Certain prior period amounts have been reclassified between regional operating segments to conform to the current period presentation, resulting in operating income (loss) by segment reported in fiscal year 2024 to have been updated. Legal, tax, information technology, human resources, certain finance and accounting and other administrative functions are included in our Corporate Entities segment, which is not a reportable operating segment.
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A summary of revenues by reportable operating segment (in millions) follows:
Fiscal Year Ended December 31,
Change
Eastern
Western
Mid-Atlantic
Resource Solutions
Total
A summary of operating income (loss) by operating segment (in millions) follows:
Fiscal Year Ended December 31,
Change
Eastern
Western
Mid-Atlantic
Resource Solutions
Corporate Entities
Total
Eastern Region
A summary of the period-to-period change in solid waste revenues (dollars in millions and as percentage growth of Eastern region solid waste revenues) follows:
Period-to-Period Change For
Fiscal Year 2025 vs Fiscal Year 2024
Amount
% Growth
Price
Volume
Surcharges and other fees
Commodity price and volume
Acquisitions
Solid waste revenues
Solid waste revenues increased in fiscal year 2025 as compared to the prior year, primarily driven by (i) higher collection pricing of $16.5 million, or 5.1% as a percentage of collection revenues, (ii) the contribution from acquisitions, and (iii) higher disposal pricing of $4.3 million, or 3.9% as a percentage of disposal revenues; partially offset by (a) lower disposal volume of $(6.0) million, or (5.4)% as a percentage of disposal revenues, primarily related to transfer stations, and (b) lower collection volume of $(1.1) million, or (0.3)% as a percentage of collection revenues.
Operating income increased in fiscal year 2025 by $9.9 million as compared to the prior year. The year-over-year increase was driven by (i) revenue growth, described above, (ii) fiscal year 2024 including a charge related to the Southbridge Landfill, (iii) lower leachate disposal costs, and (iv) lower accruals related to incentive compensation; partially offset by (a) higher costs associated with operating and supporting acquired businesses, including the impact of amortization of acquired intangibles, (b) higher accretion and landfill amortization expense associated with changes in the timing and cost estimates of our closure, post-closure, and capping obligations, (c) higher expense related to insurance claims, (d) legal penalties associated with leachate management at a landfill we own, (e) higher expense from acquisition activities, (f) increased depreciation expense due to acquisitions and investment in property and equipment, (g) lower contributions related to intercompany subcontracting with our National Accounts business, and (h) general cost inflation, including for disposal, labor, and maintenance costs.
See further discussion about the expense from acquisition activities and the charge related to the Southbridge Landfill above in “ Operating Expenses” .
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Western Region
A summary of the period-to-period change in solid waste revenues (dollars in millions and as percentage growth of Western region solid waste revenues) follows:
Period-to-Period Change For
Fiscal Year 2025 vs Fiscal Year 2024
Amount
% Growth
Price
Volume
Surcharges and other fees
Commodity price and volume
Acquisitions
Solid waste revenues
Revenues increased in fiscal year 2025 as compared to the prior year, primarily driven by (i) the contribution from acquisitions, (ii) higher collection pricing of $23.9 million, or 5.7% as a percentage of collection revenues, (iii) higher disposal pricing of $7.8 million, or 5.9% as a percentage of disposal revenues, and (iv) higher disposal volume of $0.2 million, or 0.1% as a percentage of disposal revenues, related to higher transfer station volumes, counteracted by lower landfill and transportation volumes; partially offset by lower collection volume of $(3.9) million, or (0.9)% as a percentage of collection operations.
Operating income increased in fiscal year 2025 by $9.5 million as compared to the prior year. The year-over-year increase was due to (i) revenue growth, described above, (ii) higher contributions related to intercompany subcontracting with our National Accounts business, (iii) lower leachate disposal costs, (iv) lower expense from acquisition activities, and (v) lower short-term equipment rental costs related to the timing of the delivery of fleet vehicles; partially offset by (a) higher directs costs associated with increased transfer station volumes, (b) higher costs associated with operating and supporting acquired businesses, including the impact of amortization of acquired intangibles, (c) higher accretion and landfill amortization expense associated with changes in the timing and cost estimates of our closure, post-closure, and capping obligations, as well as higher landfill volumes, (d) higher landfill operating lease amortization as well as host community fees and royalties primarily related to higher landfill tonnages at a landfill we lease, (e) higher expense related to insurance claims, (f) increased depreciation expense due to acquisitions and investment in property and equipment, (g) general cost inflation, including for disposal, labor, and maintenance costs, and (h) the recovery in fiscal year 2024 related to the landfill capping veneer failure.
See further discussion about the expense from acquisition activities and the landfill capping (recovery) charge - veneer failure above in “ Operating Expenses” .
Mid-Atlantic Region
A summary of the period-to-period change in solid waste revenues (dollars in millions and as percentage growth of Mid-Atlantic region solid waste revenues) follows:
Period-to-Period Change For
Fiscal Year 2025 vs Fiscal Year 2024
Amount
% Growth
Price
Volume
Intercompany transfers to National Accounts
Surcharges and other fees
Acquisitions
Solid waste revenues
Revenues increased in fiscal year 2025 as compared to the prior year, primarily driven by (i) the contribution from acquisitions, (ii) higher collection pricing of $7.5 million, or 3.5% as a percentage of collection revenues, (iii) higher surcharges and other fees due to higher revenues associated with legacy fuel cost recovery programs from acquired businesses, and (iv) higher disposal volume of $2.2 million, or 50.4% as a percentage of disposal revenues, primarily related to landfill operations; partially offset by (a) the internal transfer of customers and associated revenues previously managed under the Mid-Atlantic operating segment to the Resource Solutions operating segment, and (b) lower collection volume of $(2.5) million, or (1.1)% as a percentage of collection operations.
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The operating loss increased by $(0.8) million in fiscal year 2025 as compared to the prior year. The year-over-year increase was due to (i) higher costs associated with operating and supporting acquired businesses, including the impact of amortization of acquired intangibles, (ii) increased depreciation expense due to acquisitions and investment in property and equipment, (iii) higher short-term equipment rental costs related to growth and the timing of the delivery of fleet vehicles, (iv) higher landfill amortization expense primarily due to higher landfill volumes, (v) higher expense related to insurance claims, and (vi) general cost inflation, including for disposal, labor, and maintenance costs; partially offset by (a) revenue growth, described above, (b) higher contributions related to intercompany subcontracting with our National Accounts business, (c) a decreased provision for expected credit losses related to improved expected collection of our accounts receivable, and (d) lower expense from acquisition activities, partly due to fiscal year 2024 including 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.
See further discussion about the expense from acquisition activities above in “ Operating Expenses” .
Resource Solutions
A summary of the period-to-period change in Resource Solutions revenues (dollars in millions and as percentage growth of Resource Solutions revenues) follows:
Period-to-Period Change For
Fiscal Year 2025 vs Fiscal Year 2024
Amount
% Growth
Price
Volume
Intercompany transfers from solid waste
Facility closure
Surcharges and other fees
Acquisitions
Resource Solutions revenues
Resource Solutions revenues increased in fiscal year 2025 as compared to the prior year, primarily driven by (i) higher tipping fees of $14.2 million, or 13.1% as a percentage of related revenues, primarily related to contract structures that work to offset recycled commodity price movements, (ii) higher National Accounts business volumes related to new business growth of $13.2 million, or 6.6% as a percentage of National Accounts revenues, (iii) National Accounts business pricing growth of $8.7 million, or 4.4% as a percentage of National Accounts revenues, (iv) higher recycling volumes of $8.6 million, or 8.0% as a percentage of related revenues, (v) the internal transfer of customers and associated revenues previously managed under the Mid-Atlantic operating segment to the Resource Solutions operating segment, (vi) the contribution from acquisitions and (vii) higher other processing price of $0.6 million, or 2.8% as a percentage of related revenues; partially offset by (a) lower recycled commodity price of $(20.4) million, or (18.9)% as a percentage of related revenues, (b) lower other processing revenues associated with an organic residuals composting facility in Maine that ceased operations in fiscal year 2025, and (c) lower other processing volumes of $(0.9) million, or (3.9)% as a percentage of related revenues.
Operating income increased in fiscal year 2025 by $0.8 million as compared to the prior year. The year-over-year increase was due to (i) revenue growth, described above and (ii) lower expense from acquisition activities; partially offset by (a) higher costs associated with operating and supporting acquired businesses, including the impact of amortization of acquired intangibles, (b) increased depreciation expense due to acquisitions and investment in property and equipment, (c) a charge associated with the ceasing of operations in fiscal year 2025 of an organic residuals composting facility in Maine, (d) higher intercompany expenses related to the subcontracting of our National Accounts business, and (e) general cost inflation, including for disposal, labor, and maintenance costs.
See further discussion about the expense from acquisition activities and the organics facility closure charge above in “ Operating Expenses” .
Corporate Entities
Corporate Entities operating loss reflects costs, including legal, tax, information technology, human resources, certain finance and accounting and other administrative functions, depreciation and amortization expense and certain expense from acquisition activities, which are not allocated to our reportable operating segments.
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Operating loss increased in fiscal year 2025 by $(28.5) million from the prior year due primarily to (i) higher costs associated with supporting acquired businesses, (ii) general cost inflation for salaries, wages, benefits and other overhead costs including those associated with information technology, marketing, sales and community relations efforts, (iii) higher accruals related to incentive compensation, (iv) higher depreciation expense associated with back office financial system infrastructure and (v) higher expense from acquisition activities; partially offset by lower legal expense associated with employee separation. See further discussion about the expense from acquisition activities above in “ Operating Expenses” .
Liquidity and Capital Resources
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 December 31, 2025, we had $673.4 million of undrawn capacity under our $700.0 million revolving credit facility (“Revolving Credit Facility”) and $123.8 million of cash and cash equivalents to help meet our short-term and long-term liquidity needs, as well as $93.1 million of restricted cash to be used for the Mountain State Waste Acquisition. We expect existing cash, cash equivalents and restricted cash non-current, 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.
Our known current and long-term uses of cash include, among other possible demands: (i) acquisitions, (ii) capital expenditures and leases, (iii) repayments to service debt and other long-term obligations and (iv) payments for final capping, closure and post-closure asset retirement obligations and environmental remediation liabilities. We have made in the past, and plan to make in the future, acquisitions to expand service areas, densify existing operations, and grow services for our customers. Future acquisitions may include larger acquisitions that may be inside or outside of our existing market, which could require additional financing either in the form of debt or equity.
A summary of balance sheet items relevant to our liquidity (in millions) follows:
December 31,
$ Change
Cash, cash equivalents and restricted cash
Current assets, excluding cash, cash equivalents and restricted cash
Restricted cash and assets
Total current liabilities:
Current liabilities, excluding current maturities of debt
Current maturities of debt
Total current liabilities
Debt, less current portion, excluding unamortized debt issuance costs
Current assets, excluding cash, cash equivalents and restricted cash, increased $15.5 million, and current liabilities, excluding current maturities of debt, increased $3.5 million in fiscal year 2025, resulting in a $12.0 million increase in working capital, net (defined as current assets, excluding cash, cash equivalents and restricted cash, minus current liabilities, excluding current maturities of debt) from $(34.7) million as of December 31, 2024 to $(22.7) million as of December 31, 2025.
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Summary of Cash Flow Activity
Cash, cash equivalents and restricted cash, including non-current, decreased $(166.4) million in fiscal year 2025. A summary of cash flows (in millions) follows:
Fiscal Year Ended
December 31,
Change
Net cash provided by operating activities
Net cash used in investing activities
Net cash (used in) provided by financing activities
Cash flows from operating activities.
A summary of operating cash flows (in millions) follows:
Fiscal Year Ended
December 31,
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Interest accretion on landfill and environmental remediation liabilities
Amortization of debt issuance costs
Stock-based compensation
Operating lease right-of-use assets expense
Other items and charges, net
Landfill capping recovery - veneer failure
Deferred income taxes
Changes in assets and liabilities, net
Net cash provided by operating activities
Net cash provided by operating activities increased $48.4 million in fiscal year 2025 as compared to fiscal year 2024. This was the result of business growth, including from acquisition activity; partially offset by an increase in the unfavorable cash flow impact associated with the changes in our assets and liabilities, net of effects of acquisitions and divestitures. For discussion of our operational performance in fiscal year 2025 as compared to fiscal year 2024, see “ Results of Operations” included in this Item 7. “ Management's Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K.
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Cash flows from investing activities .
A summary of investing cash flows (in millions) follows:
Fiscal Year Ended
December 31,
Acquisitions, net of cash acquired
Additions to property and equipment
Additions to intangible assets
Proceeds from sale of property and equipment
Proceeds from property insurance settlement
Net cash used in investing activities
A summary of the most significant items affecting the change in our investing cash flows follows:
Acquisitions, net of cash acquired . In fiscal year 2025, we acquired nine businesses, which included $(223.4) million of cash consideration, and made $(0.8) million in payments on businesses previously acquired, as compared to fiscal year 2024 during which we acquired eight businesses, which included $(469.2) million of cash consideration, and received $0.6 million, net in cash after working capital settlements, holdbacks and other consideration owed payments.
Capital expenditures . Capital expenditures were $(41.8) million higher in fiscal year 2025 as compared to fiscal year 2024 primarily due to acquisition activity and increased investment in our fleet and facilities; partially offset by lower landfill development spend.
Cash flows from financing activities .
A summary of financing cash flows (in millions) follows:
Fiscal Year Ended
December 31,
Proceeds from debt borrowings
Principal payments on debt
Payments of debt issuance costs
Proceeds from the exercise of share-based awards
Proceeds from the public offering of Class A Common Stock
Payments of debt modification costs
Net cash (used in) provided by financing activities
A summary of the most significant items affecting the change in our financing cash flows follows:
Debt activity . Net cash associated with debt activity decreased $(88.0) million in fiscal year 2025 compared to fiscal year 2024 primarily due to the timing of financing activities related to our industrial revenue bonds and entering into a second amended and restated credit agreement (the “Credit Agreement”), which amended and restated in its entirety our amended and restated credit agreement (the “Prior Credit Agreement”) in fiscal year 2024, and debt payments, including quarterly debt repayments on the term loan facilities associated with the Prior Credit Agreement in fiscal year 2024. See Note 12, Debt , to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosure regarding financing activities.
Payments of debt issuance costs. We paid $(2.2) million of debt issuance costs in fiscal year 2025 related to financing activities associated with our industrial revenue bonds as compared to $(6.6) million of debt issuance costs in fiscal year 2024 primarily related to refinancing activities associated with entering into the Credit Agreement.
Payment of debt modification costs . We paid $(1.4) million of agent fees and other third-party costs in fiscal year 2024 associated with refinancing the Credit Agreement.
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Proceeds from the public offering of Class A Common Stock. In fiscal year 2024, we completed a public offering of 5.2 million shares of our Class A common stock at a public offering price of $100.00 per share. After deducting stock issuance costs, including underwriting discounts, commissions and offering expenses, the offering resulted in net proceeds of $496.2 million. The net proceeds from this offering were used to repay borrowings under our Revolving Credit Facility, to fund acquisition activity and for general corporate purposes.
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Outstanding Long-Term Debt
Credit Facility
As of December 31, 2025, we are party to 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:
Term SOFR Loans
Base Rate Loans
Credit Facility
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 0.200% to 0.400% 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 0.250% per annum. Interest under the Credit Agreement is subject to increase by 2.000% per annum during the continuance of a payment default and may be subject to increase by 2.000% 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 December 31, 2025, further advances were available under the Credit Facility in the amount of $673.4 million. The available amount is net of outstanding irrevocable letters of credit totaling $26.6 million, and as of December 31, 2025, no amount had been drawn.
The Credit Agreement requires us to maintain a minimum interest coverage ratio and a maximum consolidated net leverage ratio, to be measured at the end of each fiscal quarter. As of December 31, 2025, we were in compliance with all financial covenants contained in the Credit Agreement as follows (in millions):
Credit Facility Covenant
Fiscal Year Ended December 31, 2025
Covenant Requirements at December 31, 2025
Maximum consolidated net leverage ratio (1)
Minimum interest coverage ratio
(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 $1,068.6 million as of December 31, 2025, or $1,168.6 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 December 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 (“GAAP”). A reconciliation of net cash provided by operating activities to Consolidated EBITDA is as follows (in millions):
Twelve Months Ended December 31, 2025
Net cash provided by operating activities
Changes in assets and liabilities, net of effects of acquisitions and divestitures
Stock based compensation
Operating lease right-of-use assets expense
Other items and charges, net
Interest expense, less amortization of debt issuance costs
Provision for income taxes, net of deferred income taxes
Adjustments as allowed by the Credit Agreement (1)
Consolidated EBITDA
(1) Adjustments as allowed by the Credit Agreement includes the estimated annual pro forma impact of acquisitions on Consolidated EBITDA.
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In addition to the financial covenants, the Credit Agreement contains a number of important customary affirmative and negative covenants which restrict, among other things, our ability to sell assets, incur additional debt, create liens, make investments, and pay dividends. We do not believe that these restrictions impact our ability to meet future liquidity needs. As of December 31, 2025, we were in compliance with all covenants contained in the Credit Agreement.
An event of default under any of our debt agreements could permit some of our lenders, including the lenders under the Credit Facility, to declare all amounts borrowed from them to be immediately due and payable, together with accrued and unpaid interest, or, in the case of the Credit Facility, terminate the commitment to make further credit extensions thereunder, which could, in turn, trigger cross-defaults under other debt obligations. If we were unable to repay debt to our lenders or were otherwise in default under any provision governing our outstanding debt obligations, our secured lenders could proceed against us and against the collateral securing that debt.
Based on the seasonality of our business, operating results in the late fall, winter and early spring months are generally lower than the remainder of our fiscal year. Given the cash flow impact that this seasonality, the capital intensive nature of our business and the timing of debt payments has on our business, we could incur higher debt borrowings in order to meet our liquidity needs during these times. Consequently, our availability and performance against our financial covenants may tighten during these times as well.
Tax-Exempt Financings and Other Debt
As of December 31, 2025, we had outstanding $273.5 million aggregate principal amount of tax-exempt bonds, $94.0 million aggregate principal amount of finance leases and $1.1 million aggregate principal amount of notes payable.
See Note 12, Debt to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for disclosure regarding our debt.
Contractual Obligations
The following table sets forth a summary of our significant contractual cash obligations (in thousands) as of December 31, 2025. These obligations are reflected in our consolidated balance sheet and include obligations with scheduled maturities, as well as significant obligations pertaining to accrued environmental remediation liabilities, accrued closure and post-closure obligations relating to an organic residuals composting facility that ceased operations in fiscal year 2025 and final capping, closure and post-closure asset retirement obligations at our landfills. Accordingly, this table is not meant to represent a forecast of our total cash expenditures for any of the periods presented (in thousands).
Less than
one year
1 - 3 years
3 - 5 years
More than 5
years
Total
Debt
Interest (1)
Non-cancellable operating leases
Landfill operating lease contracts
Pension plan contributions
Organics facility closure and post-closure
Environmental remediation
Final capping, closure and post-closure
Total contractual cash obligations (2)
(1) Based on debt balances as of December 31, 2025. Interest obligations related to variable rate debt were calculated using variable rates in effect at December 31, 2025.
(2) Contractual cash obligations do not include accounts payable or accrued liabilities, which will be paid in the fiscal year ending December 31, 2026.
We have no contractual obligations related to unrecognized tax benefits at December 31, 2025. For further description regarding contractual obligations, see Note 8, Leases , Note 10, Final Capping, Closure and Post-Closure Costs, Note 12, Debt, Note 13, Commitments and Contingencies , Note 16, Employee Benefit Plans and Note 18, Other Items and Charges to our consolidated financial statements included in Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
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Inflation
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 energy and environmental fee (“E&E Fee(s)”), 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. See Item 7A. “ Quantitative and Qualitative Disclosures about Market Risk” of this Annual Report on Form 10-K for additional information regarding our fuel cost recovery programs. Additionally, management’s estimates associated with inflation have had, and will continue to have, an impact on our accounting for landfill and environmental remediation liabilities.
Regional Economic Conditions
Our business is primarily located in the eastern United States. Therefore, our business, financial condition and operational results 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.
Critical Accounting Estimates and Assumptions
Our consolidated financial statements have been prepared in accordance with GAAP and necessarily include certain estimates and judgments made by management. On an on-going basis, management evaluates its estimates and judgments which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances. The results of their evaluation form the basis for making judgments about the carrying values of assets and liabilities. However, even under optimal circumstances, estimates routinely require adjustments based on changing assumptions and circumstances, or new or better information becoming available. Accordingly, actual results may differ from these estimates under different assumptions and circumstances.
The following is a list of accounting policies that we believe are the most critical in understanding our consolidated financial position, results of operations and cash flows and that may require management to make subjective or complex judgments about matters that are inherently uncertain. Our significant accounting policies are more fully discussed in Note 3, Summary of Significant Accounting Policies of our consolidated financial statements included in Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Landfill Accounting
Landfill Development Costs. We estimate the total cost to develop each of our landfill sites to its remaining permitted and expansion capacity (see landfill development costs discussed within the “ Property and Equipment ” accounting policy more fully discussed in Note 3, Summary of Significant Accounting Policies of our consolidated financial statements included in Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K). The projection of these landfill costs is dependent, in part, on future events. The remaining amortizable basis of each landfill includes costs to develop a site to its remaining permitted and expansion capacity and includes amounts previously expended and capitalized, net of accumulated airspace amortization, and projections of future purchase and development costs including capitalized interest. The interest capitalization rate is based on our weighted average interest rate incurred on borrowings outstanding during the period.
Under life-cycle accounting, all costs related to acquisition and construction of landfill sites are capitalized and charged to expense based on tonnage placed into each site. Landfill permitting, acquisition and preparation costs are amortized on the units-of-consumption method as landfill airspace is consumed. In determining the amortization rate for each of our landfills, preparation costs include the total estimated costs to complete construction of the landfills’ permitted and expansion capacity. The average amortization rate per ton for our landfills during fiscal years 2025 and 2024 was $7.87 and $7.52, respectively.
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Final Capping, Closure and Post-Closure Costs. The cost estimates for final capping, closure and post-closure activities at landfills for which we have responsibility are estimated based on our interpretations of current requirements and proposed or anticipated regulatory changes. Our investment in final capping, closure and post-closure activities is focused on meeting these regulations, therefore, reducing emissions of air pollutants from our landfills.
We also estimate additional costs based on the amount a third party would charge us to perform such activities even when we expect to perform these activities internally. We estimate the airspace to be consumed related to each final capping event and the timing of construction related to each final capping event and of closure and post-closure activities. Because landfill final capping, closure and post-closure obligations are measured at estimated fair value using present value techniques, changes in the estimated timing of construction of future landfill final capping and closure and post-closure activities would have an effect on these liabilities, related assets and results of operations.
Final capping activities include the installation of liners, drainage, compacted soil layers and topsoil over areas of a landfill where total airspace has been consumed and waste is no longer being received. Final capping activities occur throughout the life of the landfill. Our engineering personnel estimate the cost for each final capping event based on the acreage to be capped, along with the final capping materials and activities required. The estimates also consider when these costs would actually be paid and factor in inflation and discount rates. The engineers then quantify the landfill capacity associated with each final capping event and the costs for each event are amortized over that capacity as waste is received at the landfill.
Closure and post-closure costs represent future estimated costs related to monitoring and maintenance of a solid waste landfill after a landfill facility ceases to accept waste and closes. We estimate, based on input from our engineers, accountants, lawyers, managers and others, our future cost requirements for closure and post-closure monitoring and maintenance based on our interpretation of the technical standards of the Subtitle D regulations and the air emissions standards under the Clean Air Act of 1970, as amended, as they are being applied on a state-by-state basis. Closure and post-closure accruals for the cost of monitoring and maintenance include site inspection, groundwater monitoring, leachate management, methane gas control and recovery, and operation and maintenance costs to be incurred for a period which is generally for a term of 30 years after final closure of a landfill. In determining estimated future closure and post-closure costs, we consider costs associated with permitted and permittable airspace. See Note 10, Final Capping, and Post- Costs to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosure about final capping, and post- asset retirement costs, including revisions in estimates.
Remaining Permitted Airspace. Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills. The remaining permitted airspace is determined by an annual survey, which is then used to compare the existing landfill topography to the expected final landfill topography.
Expansion Airspace. We currently include unpermitted expansion airspace in our estimate of remaining permitted and expansion airspace in certain circumstances. To be considered expansion airspace all of the following criteria must be met:
• we control the land on which the expansion is sought;
• all technical siting criteria have been met or a variance has been obtained or is reasonably expected to be obtained;
• we have not identified any legal or political impediments which we believe will not be resolved in our favor;
• we are actively working on obtaining any necessary permits and we expect that all required permits will be received; and
• senior management has approved the project based on a review of the engineering design and determination that the financial return profile meets our investment criteria.
For unpermitted airspace to be included in our estimate of remaining permitted and expansion airspace, the expansion effort must meet all of the criteria listed above. These criteria are evaluated annually by our engineers, accountants, lawyers, managers and others to identify potential obstacles to obtaining the permits. Once the remaining permitted and expansion airspace is determined in cubic yards, an airspace utilization factor (“AUF”) is established to calculate the remaining permitted and expansion capacity in tons. The AUF is established using a process that considers the measured density obtained from annual surveys. When we include the expansion airspace in our calculation of remaining permitted and expansion airspace, we include the projected costs for development, as well as the projected asset retirement costs related to final capping, closure and post-closure of the expansion airspace in the amortization basis of the landfill. See Part I. Item 1. “ Business ” of this Annual Report on Form 10-K for more disclosure about permitted and permittable capacity at our landfills.
After determining the costs and the remaining permitted and expansion capacity at each of our landfills, we determine the per ton rates that will be expensed as waste is received and deposited at each of our landfills by dividing the costs by the corresponding number of tons. We calculate per ton amortization rates for assets associated with each final capping event, for assets related to closure and post-closure activities, and for all other costs capitalized or to be capitalized in the future for each landfill. These rates per ton are updated annually, or more frequently, as significant facts change.
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It is possible that actual results, including the amount of costs incurred, the timing of final capping, closure and post-closure activities, our airspace utilization or the success of our expansion efforts could ultimately turn out to be significantly different from our estimates and assumptions. To the extent that such estimates or related assumptions prove to be significantly different than actual results, lower profitability may be experienced due to higher amortization rates, higher final capping, closure or post-closure rates, or higher expenses. Higher profitability may result if the opposite occurs. Most significantly, if it is determined that the expansion capacity should no longer be considered in calculating the recoverability of the landfill asset, we may be required to recognize an asset impairment. If it is determined that the likelihood of receiving an expansion permit has become remote, the capitalized costs related to the expansion effort are expensed immediately.
Accounts Receivable, Net of Allowance for Credit Losses
Accounts receivable represent receivables from customers for collection, transfer, recycling, disposal and other services. Our accounts receivable are recorded when billed or when related revenue is earned, if earlier, and represent claims against third parties that will be settled in cash. The carrying value of our accounts receivable, net of allowance for credit losses represents its estimated net realizable value. Estimates are used in determining our allowance for credit losses based on, among other things, our historical loss trends, the age of outstanding accounts receivable, and current and expected economic conditions. Additions charged to expense in fiscal year 2025 consider the current economic conditions and the potential impact to our customers’ ability to pay for services that we have provided. Our reserve is evaluated and revised on a quarterly basis. Past due accounts receivable are written off when deemed to be uncollectible. See Note 6, Accounts Receivable, Net of Allowance for Credit Losses to our consolidated financial statements under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosure about changes to the allowance for credit .
Goodwill and Other Intangibles
In testing for goodwill impairment, we estimate the fair value of each reporting unit, which we have determined to be our geographic operating segments and our Resource Solutions operating segment and compare the fair value with the carrying value of the net assets of each reporting unit. If the fair value is less than its carrying value, then we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, noting that the amount is not to exceed the total amount of goodwill allocated to that reporting unit.
To determine the fair value of each of our reporting units as a whole, we use discounted cash flow analyses, which require significant assumptions and estimates about the future operations of each reporting unit. Significant judgments inherent in this analysis include the determination of appropriate discount rates, the amount and timing of expected future cash flows and growth rates. The cash flows employed in our discounted cash flow analyses are based on financial forecasts developed internally by management. Our discount rate assumptions are based on an assessment of our risk adjusted discount rate, applicable for each reporting unit. In assessing the reasonableness of our determined fair values of our reporting units, we evaluate our results against our current market capitalization.
We elected to perform a quantitative analysis as part of our annual goodwill impairment test for fiscal year 2025. As of October 1, 2025, our Eastern, Western, Mid-Atlantic and Resource Solutions reporting units indicated that the fair value of each reporting unit exceeded its carrying amount, including goodwill. The fair value of our Eastern, Western, Mid-Atlantic and Resource Solutions reporting units exceeded its carrying value by in excess of 35%. We incurred no impairment of goodwill as a result of our annual goodwill impairment tests in fiscal years 2025 or 2024. However, there can be no assurance that goodwill will not be impaired at any time in the future.
Intangible assets consist primarily of covenants not-to-compete, customer relationships and trade names. Intangible assets are recorded at fair value as of the date of each acquisition, primarily using discounted cash flow analyses, and are amortized based on the economic benefit provided or using the sum of years digits or straight-line methods over their estimated useful lives. Significant judgments inherent in these analyses include the determination of appropriate discount rates and the amount and timing of expected future cash flows. Covenants not-to-compete, customer relationships, and trade names are typically amortized over a term of no more than 10 years. See Note 5, Business Combinations and Note 9, Goodwill and Intangible Assets to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosure.
Recovery of Long-Lived Assets
We continually assess whether events or changes in circumstances have occurred that may warrant revision of the estimated useful lives of our long-lived assets (other than goodwill) or whether the remaining balances of those assets should be evaluated for possible impairment. Long-lived assets include, for example, capitalized landfill costs, property and equipment, identifiable intangible assets, and operating lease right-of-use assets. Events or changes in circumstances that may indicate that an asset may be impaired include the following:
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• a significant decrease in the market price of an asset or asset group;
• a significant adverse change in the extent or manner in which an asset or asset group is being used or in its physical condition;
• a significant adverse change in legal factors or in the business climate that could affect the value of an asset or asset group, including an adverse action or assessment by a regulator;
• an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset;
• a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group;
• a current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life; or
• an impairment of goodwill at a reporting unit.
There are certain indicators listed above that require significant judgment and understanding of the waste industry when applied to landfill development or expansion. For example, a regulator may initially deny a landfill expansion permit application although the expansion permit is ultimately granted. In addition, management may periodically divert waste from one landfill to another to conserve remaining permitted landfill airspace. Therefore, certain events could occur in the ordinary course of business and not necessarily be considered indicators of impairment due to the unique nature of the waste industry.
If an impairment indicator occurs, we perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. We group our long-lived assets for this purpose at the lowest level for which identifiable cash flows are primarily independent of the cash flows of other assets or asset groups. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset or asset group to its carrying value.
To determine fair value, we use discounted cash flow analyses and estimates about the future cash flows of the asset or asset group. This analysis includes a determination of an appropriate discount rate, the amount and timing of expected future cash flows and growth rates. The cash flows employed in our discounted cash flow analyses are typically based on financial forecasts developed internally by management. The discount rate used is commensurate with the risks involved. We may also rely on third-party valuations and or information available regarding the market value for similar assets.
If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or asset group, impairment in the amount of the difference is recorded in the period that the impairment occurs. Estimating future cash flows requires significant judgment and projections may vary from the cash flows eventually realized. We incurred no impairment of long-lived assets in fiscal years 2025 or 2024. However, there can be no assurance that long-lived assets will not be impaired at any time in the future.
Business Combinations
We acquire businesses in the waste industry, including non-hazardous waste collection, transfer station, recycling and disposal operations, as part of our growth strategy. Businesses are included in the consolidated financial statements from the date of acquisition.
We recognize, separately from goodwill, the identifiable assets acquired and liabilities assumed at their estimated acquisition-date fair values. We measure and recognize goodwill as of the acquisition date as the excess of: (a) the aggregate of the fair value of consideration transferred, the fair value of any noncontrolling interest in the acquiree (if any) and the acquisition date fair value of our previously held equity interest in the acquiree (if any), over (b) the fair value of assets acquired and liabilities assumed. If information about facts and circumstances existing as of the acquisition date is incomplete by the end of the reporting period in which a business combination occurs, we will report provisional amounts for the items for which the accounting is incomplete. The measurement period ends once we receive the information we were seeking; however, this period will not extend beyond one year from the acquisition date. Any material adjustments recognized during the measurement period will be recognized in the consolidated financial statements in the reporting period in which the adjustment amounts are determined. All acquisition-related transaction and restructuring costs are to be expensed as incurred. See Note 5, Business Combinations to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosure.
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Self-Insurance Liabilities and Related Costs
We are self-insured for vehicles and workers’ compensation with reinsurance coverage limiting our maximum exposure. In fiscal year 2025, our maximum exposure per individual event under the workers’ compensation plan was $1.5 million. In fiscal year 2025, our minimum and maximum exposure per individual event under the automobile plan were up to $2.5 million and $4.5 million, respectively. The liability for unpaid claims and associated expenses, including incurred but not reported losses, is determined by management with the assistance of a third-party actuary and reflected in our consolidated balance sheets as an accrued liability. We use a third party to track and evaluate actual claims experience for consistency with the data used in the annual actuarial valuation. The actuarial-determined liability is calculated based on historical data, which considers both the frequency and settlement amount of claims. Our self-insurance reserves totaled $31.6 million and $24.9 million as of December 31, 2025 and December 31, 2024, respectively. Our estimated accruals for these liabilities could be significantly different than our ultimate obligations if variables such as the frequency or severity of future events differ significantly from our assumptions.
Income Taxes
We use estimates to determine our provision for income taxes and related assets and liabilities and any valuation allowance recorded against our net deferred tax assets. Valuation allowances have been established for the possibility that tax benefits may not be realized for certain deferred tax assets. Deferred income taxes are recognized based on the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using currently enacted tax rates. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making this determination, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In the event we determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we will make an adjustment to the valuation allowance which would reduce the provision for income taxes.
We account for income tax uncertainties according to guidance on the recognition, derecognition and measurement of potential tax benefits associated with tax positions. We recognize interest and penalties relating to income tax matters as a component of income tax expense.
See Note 17, Income Taxes to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosure.
Contingent Liabilities
We are subject to various legal proceedings, claims and regulatory matters, the outcomes of which are subject to significant uncertainty. We determine whether to disclose or accrue for loss contingencies based on an assessment of whether the risk of loss is remote, reasonably possible or probable, and whether it can be reasonably estimated. We analyze our litigation and regulatory matters based on available information to assess the potential liabilities. Management’s assessment is developed based on an analysis of possible outcomes under various strategies. We accrue for loss contingencies when such amounts are probable and reasonably estimable. If a contingent liability is only reasonably possible, we will disclose the potential range of the loss, if estimable. We record losses related to contingencies in cost of operations or general and administration expenses, depending on the nature of the underlying transaction leading to the loss contingency. See Note 13, Commitments and Contingencies to our consolidated financial statements included under Item 8. “ Financial Statement and Supplementary Data” of this Annual Report on Form 10-K for disclosure about contingencies, as applicable.
Stock-Based Compensation
Our equity awards granted generally consist of stock options, restricted stock awards, restricted stock units and market-based performance stock units. The fair value of each stock option grant is estimated using a Black-Scholes option-pricing model. The fair value of restricted stock award and restricted stock unit grants is at a price equal to the fair market value of our Class A common stock at the date of grant. Compensation expense associated with our stock options, restricted stock awards and restricted stock units is recognized as expense in general and administration expense over the employee’s requisite service period. The fair value of market-based performance stock unit grants is valued using a Monte Carlo pricing model and compensation expense is recognized as expense in general and administration expense ratably over the performance period based on our estimated achievement of the established performance criteria. For purposes of calculating stock-based compensation expense, forfeitures are accounted for as they occur. See Note 14, Stockholders' Equity to our consolidated financial statements included under Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further disclosure.
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New Accounting Standards
For a description of the new accounting standards that may affect us, see Note 2, Accounting Changes to our consolidated financial statements included in Item 8. “ Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
