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What changed in CASELLA WASTE SYSTEMS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CASELLA WASTE SYSTEMS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+382 added−364 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in CASELLA WASTE SYSTEMS INC's 2023 10-K

382 paragraphs added · 364 removed · 302 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

120 edited+26 added−13 removed138 unchanged
Biggest changeThis professional services business continues to make progress pivoting from the legacy waste and recycling brokerage model to an advisory services organization focused on helping large industrial and institutional customers develop and achieve actionable resource management and sustainability goals. 5 Table of Contents Allocating Capital to Return-Driven Growth Over the last decade, we have made significant progress in simplifying our business structure, improving cash flows and reducing risk exposure by: (1) divesting, or in certain cases, closing underperforming operations that did not enhance or complement our core operations; (2) refinancing debt to lower interest costs and improve financial flexibility; and (3) adhering to strict capital discipline and debt repayment.
Biggest changeThis professional services business continues to make progress pivoting from the legacy waste and recycling brokerage model to an advisory services organization focused on helping large industrial and institutional customers develop and achieve actionable resource management and sustainability goals.
We continue to invest in our people through leadership development, career paths program, technical training for key roles such as drivers and mechanics, and incentive compensation structures that seek to align our employees’ incentives with our long-term goal to improve cash flows and returns on invested capital.
We continue to invest in our people through leadership development, our career paths program, technical training for key roles such as drivers and mechanics, and incentive compensation structures that seek to align our employees’ incentives with our long-term goal to improve cash flows and returns on invested capital.
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.
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.
Clinton County Landfill, which currently consists of approximately 197 acres of permitted or permittable landfill area, portions of which are leased from Clinton County, and other portions owned by us, is permitted to accept up to approximately 0.3 million tons of municipal solid waste, C&D material and certain pre-approved special waste annually.
Clinton County Landfill currently consists of approximately 197 acres of permitted or permittable landfill area, portions of which are leased from Clinton County, and other portions owned by us, is permitted to accept up to approximately 0.3 million tons of municipal solid waste, C&D material and certain pre-approved special waste annually.
In December 2016, EPA designated ten chemical substances for risk evaluations under TSCA, and in December 2019, EPA designated an additional 20 chemical substances for risk evaluation, based on the requirements of the June 2016 Frank R. Lautenberg Chemical Safety for the 21st Century Act.
In December 2016, the EPA designated ten chemical substances for risk evaluations under TSCA, and in December 2019, the EPA designated an additional 20 chemical substances for risk evaluation, based on the requirements of the June 2016 Frank R. Lautenberg Chemical Safety for the 21st Century Act.
We understand the importance of work-life balance for our team and offer eight weeks maternity leave as well as maintain a robust employee assistance program designed to provide support and guidance related to personal life challenges and events. Further, our Employee Life Navigator program is focused on employee retention, career development, and financial stability for at risk employees.
We understand the importance of work-life balance for our employees and offer eight weeks maternity leave as well as maintain a robust employee assistance program designed to provide support and guidance related to personal life challenges and events. Further, our Employee Life Navigator program is focused on employee retention, career development, and financial stability for at risk employees.
The success of our safety programs and the performance of our health and safety and operations teams is measured by our total recordable incident rate, a measure of accidents and injuries compared to hours worked. Our extensive focus on new hire and ongoing training programs also helps us to manage and reduce operational risks for our front-line employees.
Both the success of our safety programs and the performance of our health and safety and operations teams is measured by our total recordable incident rate, a measure of accidents and injuries compared to hours worked. Our extensive focus on new hire and ongoing training programs also helps us to manage and reduce operational risks for our front-line employees.
Compensation and Benefit Programs We strive to provide the necessary resources to support the physical and mental health of our employees and the overall well-being of their families and the communities that we serve. We achieve this through our benefit programs, caring attitude towards our employees, deep engagement in our communities, and adherence to our Core Values.
Compensation and Benefit Programs We strive to provide the necessary resources to support the physical and mental health of our employees and the overall well-being of their families and the communities that we serve. We aim to achieve this through our benefit programs, caring attitude towards our employees, deep engagement in our communities, and adherence to our Core Values.
In order to comply with these regulations, we must incur substantial capital expenditures relating to our vehicles, landfills, transfer stations, and recycling processing centers, and in connection with our capping, closure, post-closure and environmental remediation activities.
In order to comply with these regulations, we must incur substantial capital expenditures relating to our vehicles, landfills, transfer stations, and recycling processing centers, and in connection with our final capping, closure, post-closure and environmental remediation activities.
Juniper Ridge Landfill currently consists of approximately 179 acres of permitted or permittable landfill area, which is sufficient to permit the additional airspace required for the term of the 30-year operating and services agreement, and is permitted to accept the following waste originating from the State of Maine: C&D material, ash from municipal solid waste incinerators and fossil fuel boilers, front end processed residuals and bypass municipal solid waste from waste-to-energy facilities and certain pre-approved special waste.
Juniper Ridge Landfill currently consists of approximately 150 acres of permitted or permittable landfill area, which is sufficient to permit the additional airspace required for the term of the 30-year operating and services agreement, and is permitted to accept the following waste originating from the State of Maine: C&D material, ash from municipal solid waste incinerators and fossil fuel boilers, front end processed residuals and bypass municipal solid waste from waste-to-energy facilities and certain pre-approved special waste.
Processing services consist of the receipt of recycled, sludge or other organic materials at one of our materials recovery, processing or disposal facilities, where it is then sorted, mixed and/or processed, and then disposed of or sold.
Processing services consist of the receipt of recycled, sludge or other organic materials at one of our materials recovery, processing or disposal facilities, where it is then sorted, mixed and/or processed, and then repurposed, disposed of or sold.
From 2012 to December 2019, Mr. Ligon led the development of our Solutions business focused on delivering sustainable services to commercial, industrial, and municipal customers. Prior to joining us, Mr.
From 2012 to December 2019, Mr. Ligon led the development of our Resource Solutions business focused on delivering sustainable services to commercial, industrial, and municipal customers. Prior to joining us, Mr.
We conduct market-based surveys to ensure that our employees continue to be paid competitively, and we perform annual reviews to provide feedback and support the growth and development of our team.
We conduct market-based surveys to ensure that our employees continue to be paid competitively, and we perform annual reviews to provide feedback and support the growth and development of members of our team.
Within each geographic region, we organize our solid waste services around smaller areas that we refer to as “wastesheds.” A wasteshed is an area that comprises the complete cycle of activities in the solid waste services process, from collection to transfer operations and recycling to disposal in landfills, some of which may be owned and/or operated by third parties.
Within each geographic region, we organize our solid waste services around smaller market areas that we also refer to as “wastesheds.” A wasteshed is an area that comprises the complete cycle of activities in the solid waste services process, from collection to transfer operations and recycling to disposal in landfills, some of which may be owned and/or operated by third parties.
Through fiscal year 2022, we have successfully implemented: a new Customer Resource Management system to help manage and drive higher sales force effectiveness, a new Case Management system to ensure strong integration between our sales force, customer care group and operating teams, a cloud-based Enterprise Resource Planning system as the financial backbone to our business, and a new digital procurement system to enhance spend category management and drive efficiencies.
Through fiscal year 2023, we have successfully implemented: a new Customer Resource Management system to help manage and drive higher sales force effectiveness; a new Case Management system to ensure strong integration between our sales force, customer care group and operating teams; a cloud-based Enterprise Resource Planning system as the financial backbone to our business; and a new digital procurement system to enhance spend category management and drive efficiencies.
Chemung County Landfill currently consists of approximately 113 acres of permitted or permittable landfill area strategically situated to accept long haul volume from both eastern and downstate New York markets and is permitted to accept up to 0.4 million tons of municipal solid waste and certain pre-approved special waste annually and 20.5 thousand tons of C&D material annually.
Chemung County Landfill currently consists of approximately 132 acres of permitted or permittable landfill area strategically situated to accept long haul volume from both eastern and downstate New York markets and is permitted to accept up to 0.4 million tons of municipal solid waste and certain pre-approved special waste annually and 20.5 thousand tons of C&D material annually.
This seasonality reflects lower volumes of waste in the late fall, winter and early spring months because the volume of waste relating to C&D activities decreases substantially during the winter months in the northeastern United States. Because certain of our operating and fixed costs remain constant throughout the fiscal year, operating income is therefore impacted by a similar seasonality.
This seasonality reflects lower volumes of waste in the late fall, winter and early spring months because the volume of waste relating to C&D activities decreases substantially during the winter months in the eastern United States. Because certain of our operating and fixed costs remain constant throughout the fiscal year, operating income is therefore impacted by a similar seasonality.
The Ontario County Landfill site houses a Zero-Sort materials recovery facility ("MRF"), which is operated by us, and a landfill gas-to-energy facility, which is owned and operated by a third-party, that has the capacity to generate 11.2 MW of energy. Hakes Landfill. Hakes Landfill is a C&D landfill located in Campbell, New York that we purchased in 1998.
The Ontario County Landfill site houses a Zero-Sort MRF, which is operated by us, and a landfill gas-to-energy facility, which is owned and operated by a third-party, that has the capacity to generate 11.2 MW of energy. Hakes Landfill. Hakes Landfill is a C&D landfill located in Campbell, New York that we purchased in 1998.
Ligon holds a MBA from the Tuck School of Business at Dartmouth College and a Bachelor of Science degree in Environmental Science from the University of Vermont.
Ligon holds an MBA from the Tuck School of Business at Dartmouth College and a Bachelor of Science degree in Environmental Science from the University of Vermont.
“ Risk Factors ” of this Annual Report on Form 10-K for further disclosure. We self-insure for automobile and workers’ compensation coverage with reinsurance coverage limiting our maximum exposure. In fiscal year 2022, our maximum exposure per individual event under the workers’ compensation plan was $1.25 million.
“ Risk Factors ” of this Annual Report on Form 10-K for further disclosure. We self-insure for automobile and workers’ compensation coverage with reinsurance coverage limiting our maximum exposure. In fiscal year 2023, our maximum exposure per individual event under the workers’ compensation plan was $1.25 million.
(1) Increasing landfill returns; (2) Driving additional profitability in collection operations; (3) Creating incremental value through Resource Solutions; (4) Allocating capital to return driven growth; and (5) Strengthening four key foundational pillars: • People: Developing a safe, engaged, ready workforce to support growth. • Sustainable Growth: Driving profitable growth through an integrated resource solutions approach. • Technology: Driving profitable growth and efficiencies through technology. • Facilities: Developing necessary long-term infrastructure through facilities planning.
(1) Increasing landfill returns; (2) Driving additional profitability in collection operations; (3) Creating incremental value through Resource Solutions; (4) Allocating capital to return driven growth; and (5) Strengthening four key foundational pillars: • People: Developing a safe, engaged, ready workforce to support growth. • Sustainable Growth: Driving profitable growth through an integrated resource solutions approach. • Technology: Driving profitable growth and efficiencies through technology. 4 Table of Contents • Facilities: Developing necessary long-term infrastructure through facilities planning.
Our comprehensive fleet plan is designed to optimize our fleet and target truck replacements to maximize returns, reduce our operating expenses through lower maintenance costs, improve our service levels through reduced down times, and increase automation and optimization of trucks and service types.
Our comprehensive fleet plan is designed to optimize our fleet and target truck replacements in order to maximize returns, reduce our operating expenses through lower maintenance costs, improve our service levels through reduced down times, and increase automation and optimization of trucks and service types.
Some of those liens may take priority over previously filed instruments. Some states have enacted statutes that impose liability for substances in addition to the “hazardous substances” listed by EPA under CERCLA. 17 Table of Contents Many municipalities in which we currently operate or may operate in the future also have ordinances, laws and regulations affecting our operations.
Some of those liens may take priority over previously filed instruments. Some states have enacted statutes that impose liability for substances in addition to the “hazardous substances” listed by the EPA under CERCLA. Many municipalities in which we currently operate or may operate in the future also have ordinances, laws and regulations affecting our operations.
Our residential collection and disposal services are performed either on a subscription basis (with no underlying contract) with individuals, or through contracts with municipalities, homeowner associations, apartment building owners or mobile home park operators. Transfer Stations.
Our residential collection services are performed either on a subscription basis (with no underlying contract) with individuals, or through contracts with municipalities, homeowner associations, apartment building owners or mobile home park operators. Transfer Stations.
Hyland Landfill currently consists of approximately 180 acres of permitted or permittable landfill area and is permitted to accept up to 0.5 million tons of municipal solid waste, C&D material and certain pre-approved special waste annually.
Hyland Landfill currently consists of approximately 178 acres of permitted or permittable landfill area and is permitted to accept up to 0.5 million tons of municipal solid waste, C&D material and certain pre-approved special waste annually.
These solutions range from professional services to large industrial, institutional or multi-site retail customers, our organics business, which is a leader in organics processing and disposal in the Northeast, and our large scale, technology-driven recycling business.
These solutions range from professional services to large industrial, institutional or multi-site retail customers, our organics business, which is a leader in organics processing and disposal, and our large scale, technology-driven recycling business.
Three of the seven MRFs are leased, three are owned, and one is operated by us under a contract with a municipal third-party. Our MRFs receive, sort, bale and sell recyclable materials originating from the municipal solid waste stream, including newsprint, cardboard, office paper, glass, plastic, steel or aluminum containers and bottles.
Three of the eight MRFs are leased, four are owned, and one is operated by us under a contract with a municipal third-party. Our MRFs receive, sort, bale and sell recyclable materials originating from the municipal solid waste stream, including newsprint, cardboard, office paper, glass, plastic, steel or aluminum containers and bottles.
Prior to joining us, Ms. Sayward held sales and marketing roles with GlaxoSmithKline and Abbott Laboratories, as well as a sales and managerial position with First American Financial Corporation. Ms. Sayward holds a Bachelor of Arts degree from Middlebury College, completed a four-year law clerkship program, and is licensed to practice law in the State of Vermont. Sean M.
Sayward held sales and marketing roles with GlaxoSmithKline and Abbott Laboratories, as well as a sales and managerial position with First American Financial Corporation. Ms. Sayward holds a Bachelor of Arts degree from Middlebury College, completed a four-year law clerkship program, and is licensed to practice law in the State of Vermont. Sean M.
Approximately 150 of our employees are covered by collective bargaining agreements. Health, Safety and Wellness A top priority across all of our operations is to protect the health and safety of our team and the communities that we serve.
Approximately 180 of our employees are covered by collective bargaining agreements. Health, Safety and Wellness A top priority across all of our operations is to protect the health and safety of our team and the communities that we serve.
The Clinton County Landfill site houses a landfill gas-to-energy facility, which is owned by us and operated by a third party, that has the capacity to generate 6.4 MW of energy. Hyland Landfill. Hyland Landfill is a Subtitle D landfill located in Angelica, New York that we own, and that began accepting waste in 1998.
The Clinton County Landfill site houses a landfill gas-to-energy facility, which we own, but is operated by a third party, that has the capacity to generate 6.4 MW of energy. Hyland Landfill. Hyland Landfill is a Subtitle D landfill located in Angelica, New York that we own, and that began accepting waste in 1998.
Steves has extensive operations experience in the waste industry starting as a transfer station scale operator and has held roles of increasing responsibility, 19 Table of Contents including Operations Supervisor, Operations Manager, and General Manager. Mr. Steves holds a Bachelor of Arts degree from DePaul University with a concentration in Sustainable Management. Kevin J.
Steves has extensive operations experience in the waste industry starting as a transfer station scale operator and has held roles of increasing responsibility, including Operations Supervisor, Operations Manager, and General Manager. Mr. Steves holds a Bachelor of Arts degree from DePaul University with a concentration in Sustainable Management. Kevin J.
A majority of our commercial and industrial collection services are performed under one-to-five year service agreements, and fees are determined by such factors as: professional or management services required; collection frequency and the related operational costs; type of equipment and containers furnished; the type, volume and weight of the solid waste, recyclables or organics collected; the distance to the disposal or processing facility; and the cost of disposal or processing.
A majority of our commercial and industrial collection services are performed under one-to-five year service agreements, and our price for the services performed is determined by such factors as: professional or management services required; collection frequency and the related operational costs; type of equipment and containers furnished; the type, volume and weight of the solid waste, recyclables or organics collected; the distance to the disposal or processing facility; and the cost of disposal or processing.
However, from time to time federal legislation is proposed which would allow individual states to prohibit the disposal of out-of-state waste or to limit the amount of out-of-state waste that could be imported for disposal and would require states, under certain circumstances, to reduce the amounts of waste exported to other states.
However, occasionally federal legislation is proposed which would allow individual states to prohibit the disposal of out-of-state waste or to limit the amount of out-of-state waste that could be imported for disposal and would require states, under certain circumstances, to reduce the amounts of waste exported to other states.
Sayward has served as our Senior Vice President and General Counsel since January 2021, and prior to that in various roles in our legal department since November 2006. She was previously our Vice President and Assistant General Counsel from September 2014 until January 2021 and was our Associate General Counsel from September 2008 to September 2014.
Sayward has served as our Senior Vice President and General Counsel since January 2021, and prior to that in various roles in our legal department since November 2006. She was previously our Vice President and Assistant General Counsel from September 2014 until January 2021 and Associate General Counsel from September 2008 to September 2014. Prior to joining us, Ms.
The EPA and environmental agencies within individual states in which we operate continue to consider and promulgate changes to water quality standards, action levels, remediation goals, and other federal or state regulatory standards for 18 Table of Contents individual compounds or classes of compounds.
The EPA and environmental agencies within individual states in which we operate continue to consider and promulgate changes to water quality standards, action levels, remediation goals, and other federal or state regulatory standards for individual compounds or classes of compounds.
Our Customer Solutions business consists of brokerage services and overall resource management services, which provide 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.
Our National Accounts business consists of brokerage services and overall resource management services, which provide 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.
Mr. Casella has also served on various state task forces, serving in an advisory capacity to the Governors of Vermont, New York, and New Hampshire on solid waste issues. Mr. Casella holds an Associate of Science degree in Business Management from Bryant & Stratton College and a Bachelor of Science degree in Business Education from Castleton University. Edmond “Ned” R.
Mr. Casella has also served on various state task forces, serving in an advisory capacity to the Governors of Vermont, New York, and New Hampshire on solid waste issues. Mr. Casella holds an Associate of Science degree in Business Management from Bryant & Stratton College and a Bachelor of Science degree in Business Education from Vermont State University.
In addition, the EPA has issued standards regulating the disposal of asbestos-containing materials under the Clean Air Act. 16 Table of Contents The EPA is also focusing on the emissions of greenhouse gases ("GHG"), including carbon dioxide and methane.
In addition, the EPA has issued standards regulating the disposal of asbestos-containing materials under the Clean Air Act. The EPA is also focusing on the emissions of greenhouse gases ("GHG"), including carbon dioxide and methane.
Public sector facilities may have certain advantages over us due to the availability of user fees, charges or tax revenues. From time to time, competitors may reduce the price of their services in an effort to expand market share or to win a competitively bid municipal contract.
Public sector facilities may have certain advantages over us due to the availability of user fees, charges or tax revenues. From time to time, competitors may reduce the price of their services in an effort to expand market share or to win a competitively bid solid waste or recycling contract.
Our Western region includes wastesheds located in Vermont, southwestern New Hampshire, eastern, western and upstate New York, western Massachusetts, and in Pennsylvania around our Subtitle D landfill located in Mount Jewett, Pennsylvania ("McKean Landfill"). We began entering into these wastesheds in 1997 and have expanded primarily through tuck-in acquisitions and organic growth.
Our Western region consists of wastesheds located in Vermont, southwestern New Hampshire, eastern, western and upstate New York, western Massachusetts, and in Pennsylvania around our Subtitle D landfill located in Mount Jewett, Pennsylvania ("McKean Landfill"). We began entering into these wastesheds in 1997 and have expanded primarily through tuck-in acquisitions and organic growth since.
Our business strategy generally focuses on operating in secondary or tertiary markets where we have a leading market presence.
Our business strategy generally focuses on operating in secondary or tertiary markets where we have a strong market presence.
Annually, we complete a comprehensive strategic planning process to assess and refine our strategic objectives in the context of our asset mix, the current market environment and opportunity set for growth. This process helps the management team allocate resources to a range of business opportunities with the goal to maximize long-term financial returns and competitive positioning.
We utilize a comprehensive strategic planning process to assess and refine our strategic objectives in the context of our asset mix, the current market environment, opportunity set for growth and capital allocation. This process helps the management team allocate resources to a range of business opportunities with the goal to maximize long-term financial returns and competitive positioning.
Operational Overview We manage our solid waste operations, which are vertically integrated and include a full range of solid waste services, on a geographic basis through two regional operating segments, which we designate as the Eastern and Western regions.
Operational Overview We manage our solid waste operations, which are vertically integrated and include a full range of solid waste services, on a geographic basis through three regional operating segments, which we designate as the Eastern, Western and Mid-Atlantic regions.
We are committed to offering high quality benefits at affordable rates, competitive compensation based on role, experience and performance, and a career paths program to encourage our team to advance throughout their employment with us.
We are committed to offering high quality benefits at affordable rates, competitive compensation based on role, experience and performance, and a career path program to encourage members of our team to advance throughout their employment with us.
We typically operate several divisions within each wasteshed, each of which provides a particular service, such as collection, recycling, disposal or transfer. Each division operates interdependently with the other divisions within the wasteshed. Each wasteshed generally operates autonomously from adjoining wastesheds.
We typically operate several divisions within each market area, or wasteshed, each of which provides a particular service, such as collection, recycling, disposal or transfer. Each division operates interdependently with the other divisions within the market area. Each market area generally operates autonomously from adjoining market areas.
In fiscal year 2022, our minimum and maximum exposure per individual event under the automobile plan were up to $1.50 million and $3.65 million, respectively. Municipal solid waste collection contracts and landfill closure and post-closure obligations may require performance or surety bonds, letters of credit or other means of financial assurance to secure contractual performance.
In fiscal year 2023, our minimum and maximum exposure per individual event under the automobile plan were up to $1.75 million and $3.88 million, respectively. Municipal solid waste collection contracts and landfill closure and post-closure obligations may require performance or surety bonds, letters of credit or other means of financial assurance to secure contractual performance.
We also provide brokerage services and overall resource management services providing a wide range of environmental services to large and complex organizations, as well as traditional collection, disposal and recycling services provided to large account multi-site customers. Seasonality and Severe Weather Our transfer and disposal revenues historically have been higher in the late spring, summer and early fall months.
We also provide brokerage services and overall resource management services, through a wide range of environmental service offerings, to large and complex organizations, as well as traditional collection, disposal and recycling services to large account multi-site customers. Seasonality and Severe Weather Our revenues historically have been higher in the late spring, summer and early fall months.
Driving Additional Profitability in Collection Operations Collection pricing was up 7.0% for fiscal year 2022, as compared to fiscal year 2021, with sustained execution against our strategic pricing programs, which helped to offset inflationary pressures.
Driving Additional Profitability in Collection Operations Collection pricing was up 7.9% for fiscal year 2023, as compared to fiscal year 2022, with sustained execution against our strategic pricing programs, which helped to offset inflationary pressures.
“ Quantitative and Qualitative Disclosure About Market Risk ” of this Annual Report on Form 10-K for further discussion over commodity price volatility. 12 Table of Contents Customer Solutions.
“ Quantitative and Qualitative Disclosure About Market Risk ” of this Annual Report on Form 10-K for further discussion over commodity price volatility. 12 Table of Contents National Accounts.
Our vision is to draw on our Core Values to achieve diversity throughout our workforce, including our leadership, through the following initiatives: • directing recruiting efforts to new talent pools, promoting diversity in our training and development programs, and encouraging diversity within our process for advancing our next cohort of leaders; 7 Table of Contents • launching a cultural awareness and competency training program for managers that emphasizes diversity, equity, and inclusion; and • incorporating diversity, equity, and inclusion practices as part of our ongoing efforts to upgrade our procurement system and practices.
Our vision is to draw on our Core Values to achieve diversity throughout our workforce, including our leadership, through the following: • directing recruiting efforts to new talent pools, promoting diversity in our training and development programs, and encouraging diversity within our process for advancing our next cohort of leaders; • focusing on ongoing cultural awareness and competency training program for managers that emphasize people, culture and belonging; and 7 Table of Contents • incorporating diversity, equity, and inclusion practices as part of our ongoing efforts to upgrade our procurement system and practices.
Coletta served as the Chief Financial Officer and was a member of the Board of Directors of Avedro, Inc. (FKA ThermalVision, Inc.), an early-stage medical device company that he co-founded. From 1997 to 2001, he served as a research and development engineer for Lockheed Martin Michoud Space Systems. Mr.
From 2002 until he joined us, Mr. Coletta served as the Chief Financial Officer and was a member of the Board of Directors of Avedro, 19 Table of Contents Inc. (FKA ThermalVision, Inc.), an early-stage medical device company that he co-founded. From 1997 to 2001, he served as a research and development engineer for Lockheed Martin Michoud Space Systems. Mr.
Our team consists of drivers, vehicle technicians, equipment operators, recycling facility sorters, engineers, accountants, customer care specialists, and many other key roles. As of January 31, 2023, we employed approximately 3,200 employees, including approximately 640 managerial, sales, clerical, information systems or other administrative employees and approximately 2,560 employees involved in collection, transfer, disposal, recycling, organics or other operations.
Our team consists of drivers, vehicle technicians, equipment operators, recycling facility sorters, engineers, accountants, customer care specialists, and many other key roles. As of January 31, 2024, we employed approximately 4,200 employees, including approximately 800 managerial, sales, clerical, information systems or other administrative employees and approximately 3,400 employees involved in collection, transfer, disposal, recycling, organics or other operations.
Growth Strategy Our goal is to maintain and build lasting shareholder value by providing exemplary service to our customers, while operating safe and environmentally sound facilities.
Growth Strategy Our goal is to maintain and build lasting shareholder value by providing exemplary service to our customers, while operating in a safe and environmentally sound manner.
The Hyland Landfill site houses a landfill gas-to-energy facility, which is owned by us and operated by a third-party, that has the capacity to generate 4.8 MW of energy. Ontario County Landfill. Ontario County Landfill is a Subtitle D landfill located in Seneca, New York.
The Hyland Landfill site houses a landfill gas-to-energy facility, which we own, but is operated by a third-party, that has the capacity to generate 4.8 MW of energy. Ontario County Landfill. Ontario County Landfill is a Subtitle D landfill located in Seneca, New York.
The estimated capacity at our landfills is subject to change based on engineering factors, requirements of regulatory authorities, our ability to continue to operate our landfills in compliance with applicable regulations and our ability to successfully renew operating permits and obtain expansion permits at our sites. 9 Table of Contents The following table (in thousands) reflects the aggregate landfill capacity and airspace changes, in tons, for landfills we operated during fiscal years 2022, 2021 and 2020: Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Estimated Remaining Permitted Capacity (1) Estimated Additional Permittable Capacity (1)(2) Estimated Total Capacity Estimated Remaining Permitted Capacity (1) Estimated Additional Permittable Capacity (1)(2) Estimated Total Capacity Estimated Remaining Permitted Capacity (1) Estimated Additional Permittable Capacity (1)(2) Estimated Total Capacity Balance, beginning of year 58,705 47,251 105,956 42,681 31,239 73,920 44,434 34,139 78,573 New expansions pursued (3) — 4,494 4,494 19,607 16,200 35,807 — — — Permits granted (4) — — — — — — 993 (993) — Airspace consumed (3,672) — (3,672) (3,675) — (3,675) (3,594) — (3,594) Changes in engineering estimates (5) 2,514 (2,113) 401 92 (188) (96) 848 (1,907) (1,059) Balance, end of year 57,547 49,632 107,179 58,705 47,251 105,956 42,681 31,239 73,920 (1) We convert estimated remaining permitted capacity and estimated additional permittable capacity from cubic yards to tons generally by assuming a compaction factor derived from historical average compaction factors, with modification for future anticipated changes.
The estimated capacity at our landfills is subject to change based on engineering factors, requirements of regulatory authorities, our ability to continue to operate our landfills in compliance with applicable regulations and our ability to successfully renew operating permits and obtain expansion permits at our sites. 9 Table of Contents The following table (in thousands) reflects the aggregate landfill capacity and airspace changes, in tons, for landfills we operated during fiscal years 2023, 2022 and 2021: Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Estimated Remaining Permitted Capacity (1) Estimated Additional Permittable Capacity (1)(2) Estimated Total Capacity Estimated Remaining Permitted Capacity (1) Estimated Additional Permittable Capacity (1)(2) Estimated Total Capacity Estimated Remaining Permitted Capacity (1) Estimated Additional Permittable Capacity (1)(2) Estimated Total Capacity Balance, beginning of year 57,547 49,632 107,179 58,705 47,251 105,956 42,681 31,239 73,920 New expansions pursued (3) — — — — 4,494 4,494 19,607 16,200 35,807 Permits granted — — — — — — — — — Airspace consumed (3,615) — (3,615) (3,672) — (3,672) (3,675) — (3,675) Changes in engineering estimates (4) 703 783 1,486 2,514 (2,113) 401 92 (188) (96) Balance, end of year 54,635 50,415 105,050 57,547 49,632 107,179 58,705 47,251 105,956 (1) We convert estimated remaining permitted capacity and estimated additional permittable capacity from cubic yards to tons by assuming a compaction factor derived from historical average compaction factors, with modification for future anticipated changes.
Over the last decade, we have worked with many of our key customers to improve their environmental footprint and to meet sustainability goals by increasing their recycling rates, diverting organic materials out of the waste stream into beneficial use processes, and partnering to develop resource solutions within their organizations.
Throughout our history we have worked with many of our key customers to improve their environmental footprint and to help meet sustainability goals by increasing their recycling rates, diverting organic materials out of the waste stream into beneficial use processes, and partnering to develop resource solutions within their organizations or communities.
We are one of the largest processors and marketers of recycled materials in the northeastern United States with facilities located in Vermont, New York, Maine, Connecticut, and Massachusetts, including our seven large-scale, high volume MRFs, one of which is located in New York, two of which are located in Vermont, two of which are located in Massachusetts, one of which is located in Connecticut, and one of which is located in Maine.
We are one of the largest processors and marketers of recycled materials in the northeastern United States with facilities located in Vermont, New York, Maine, Connecticut, Massachusetts, and Pennsylvania, including our eight large-scale, high volume MRFs, which utilize sophisticated processing operations, two of which are located in New York, two of which are located in Vermont, two of which are located in Massachusetts, one of which is located in Connecticut and one of which is located in Maine.
In addition, we compete with operators of alternative disposal facilities, including incinerators; with certain municipalities, counties and districts that operate their own solid waste collection and disposal facilities; and with rail-serviced transfer stations that use rail to transport waste to disposal sites outside of northeastern markets.
In addition, we compete with operators of alternative disposal facilities, including incinerators; with certain municipalities, counties and districts that operate their own solid waste collection and disposal facilities; and with rail-serviced transfer stations that use rail to transport waste to disposal sites primarily located outside of our operational footprint.
Our processing operations consist of our recycling and biosolids facilities where we receive inbound materials, process the volume, and sell the resulting products into end markets. We have worked to reshape our recycling business model to drive higher returns in all market cycles and reduce exposure to recycling commodity price volatility.
Our processing operations consist of our recycling and biosolids facilities where we receive inbound materials, process the volume, and sell the resulting products into end markets. A focus of our recycling business model is to reduce exposure to recycling commodity price volatility and drive adequate returns in all market cycles.
We are in the process of pursuing the development of rail infrastructure to expand the market reach for the landfill to rail capable transfer facilities.
We are actively in the process of investing capital in the development of rail infrastructure to expand the market reach for the landfill to rail capable transfer facilities.
State and Local Regulations Each state in which we now operate or may operate in the future has laws and regulations governing (1) water and air pollution, and the generation, storage, treatment, handling, processing, transportation, incineration and disposal of solid waste and hazardous waste; (2) in most cases, the siting, design, operation, maintenance, closure and post-closure maintenance of solid waste management facilities; and (3) in some cases, vehicle emissions limits or fuel types, which impact our collection operations.
Our landfill gas-to-energy facilities are self-certified as “qualifying facilities”. 17 Table of Contents State and Local Regulations Each state in which we now operate or may operate in the future has laws and regulations governing (1) water and air pollution, and the generation, storage, treatment, handling, processing, transportation, incineration and disposal of solid waste and hazardous waste; (2) in most cases, the siting, design, operation, maintenance, closure and post-closure maintenance of solid waste management facilities; and (3) in some cases, vehicle emissions limits or fuel types, which impact our collection operations.
Where implemented, our risk mitigation programs offset most recycling commodity price decline and also allow us to return value to our customers with higher recycling commodity prices through lower tipping fees and a lower SRA fee. We expect these programs to continue to reduce our commodity risk exposure.
Where implemented, our risk mitigation programs offset most recycling commodity price decline and allow us to return value to our customers with higher recycling commodity prices through lower tipping fees and a lower SRA Fee.
We are party to an agreement for the construction of a landfill renewable natural gas ("RNG") facility, which will be constructed, owned and operated by a third-party. We expect this RNG facility to be operational at some point in fiscal year 2023. Juniper Ridge Landfill. Juniper Ridge Landfill is a Subtitle D landfill located in West Old Town, Maine.
We are party to an agreement for the construction of a landfill renewable natural gas ("RNG") facility, which will be constructed, owned and operated by a third-party. Juniper Ridge Landfill. Juniper Ridge Landfill is a Subtitle D landfill located in West Old Town, Maine.
Diversity, Equity and Inclusion Our commitment to workplace diversity and equity, and to fostering a culture of inclusion is rooted in our Core Values.
People, Culture & Belonging Our commitment to workplace diversity, equity, and a culture of inclusion is rooted in our Core Values and our People, Culture & Belonging initiatives.
The Resource Solutions operating segment is not specific to a geography, and is organized to leverage our core competencies across our entire business footprint. 8 Table of Contents The following table provides information about each reportable segment (as of January 31, 2023 except revenue information, which is for fiscal year 2022): Eastern Region Western Region Resource Solutions Revenues (in millions) $340.0 $445.2 $299.9 Number of Properties: Solid waste collection facilities 20 29 — Transfer stations 29 36 — Recycling and processing facilities 3 6 17 Subtitle D landfills 2 6 — Construction and demolition ("C&D") landfills — 1 — For financial information concerning our reportable segments, refer to “Item 7.
The Resource Solutions operating segment is not specific to a geography and is organized to leverage our core competencies across our entire business footprint. 8 Table of Contents The following table provides information about each reportable segment (as of January 31, 2024 except revenue information, which is for fiscal year 2023): Eastern Western Mid-Atlantic Resource Solutions Revenues (in millions) $374.5 $511.6 $85.6 $292.8 Number of Properties: Solid waste collection facilities 23 32 9 — Transfer stations 29 41 1 — Recycling and processing facilities 3 6 — 20 Subtitle D landfills 2 6 — — Landfill gas-to-energy facilities 1 2 — — Construction and demolition ("C&D") landfills — 1 — — For financial information concerning our reportable segments, refer to “Item 7.
Information about our Executive Officers Our executive officers and their respective ages are as follows: Name Age Position John W. Casella 72 Chairman of the Board of Directors, Chief Executive Officer and Secretary Edmond “Ned” R. Coletta 47 President and Chief Financial Officer Shelley E. Sayward 48 Senior Vice President and General Counsel Sean M.
Information about our Executive Officers Our executive officers and their respective ages are as follows: Name Age Position John W. Casella 73 Chairman of the Board of Directors, Chief Executive Officer and Secretary Edmond “Ned” R. Coletta 48 President Bradford J. Helgeson 47 Executive Vice President and Chief Financial Officer Shelley E.
The pricing for recyclable materials can fluctuate based upon market conditions. We have actively worked to reduce our risk exposure to commodity pricing volatility through our efforts to shift customers to a processing fee model and other risk management programs. We effectively manage commodity pricing volatility through our long-term revenue sharing (or processing fee) contracts with customers.
We have actively worked to reduce our risk exposure to commodity pricing volatility through our efforts to shift customers to a processing fee model and other risk management programs. We effectively manage commodity pricing volatility through our long-term revenue sharing (or processing fee) contracts with customers.
Resource solutions services are comprised of processing services and our Customer Solutions business. We also work to develop and/or partner with firms that have developed innovative approaches to deriving incremental value from the organic portion of the waste stream. Processing.
We also work to develop and/or partner with firms that have developed innovative approaches to deriving incremental value from the organic portion of the waste stream. Processing.
We are focused on acquiring well-run businesses in strategic markets across our footprint and in adjacent markets that will drive additional internalization to our facilities, operating synergies, and opportunities to grow profitably into new market areas.
We are focused on acquiring well-run businesses in strategic markets across our footprint and in markets that will drive additional operating synergies and provide opportunities to grow profitably, and further our potential to expand into new market areas over time.
(5) The variation in changes in airspace capacity associated with engineering estimates are primarily the result of changes in compaction at our landfills and estimated airspace changes associated with design changes at certain of our landfills. Our Eastern region consists of the following landfills: NCES Landfill.
(4) The variation in changes in airspace capacity associated with engineering estimates are primarily the result of changes in compaction at our landfills and estimated airspace changes associated with design changes at certain of our landfills.
On November 1, 2022, new waste ban regulations took effect in Massachusetts, adding mattresses and textiles as materials banned from disposal or transport for disposal in Massachusetts, and lowering the threshold on commercial organic/food waste to facilities generating more than one-half ton of these materials per week.
On November 1, 2022, new waste ban regulations took effect in Massachusetts, adding mattresses and textiles as materials banned from disposal or transport for disposal in Massachusetts, and lowering the threshold on commercial organic/food waste to facilities generating more than one-half ton of these materials per week. 18 Table of Contents New York State revised its regulations governing solid waste management, 6 NYCRR Part 360, effective in November 2017.
Cumulatively, these efforts have added approximately 0.5 million tons per year of permitted capacity and approximately 50.9 million cubic yards of permitted airspace. We also continue to focus on improving our landfill operations through various initiatives related to safety, compliance, operating practices, and capital efficiency programs.
Since early 2016, we have been advancing permit increases at our Subtitle D landfills, cumulatively adding approximately 0.5 million tons per year of permitted capacity and approximately 50.9 million cubic yards of permitted airspace. We also continue to focus on improving our landfill operations through various initiatives related to safety, compliance, operating practices, and capital efficiency programs.
Our transfer stations receive, process and transfer solid waste, collected primarily by our various residential and commercial collection operations, for transport to disposal facilities by larger vehicles.
Our transfer stations receive, process and transfer solid waste, collected by our various residential and commercial collection operations along with volumes from various third party service providers, for transport to disposal facilities by larger vehicles.
Revenues in our Eastern and Western regions consist primarily of fees charged to customers for solid waste collection and disposal, landfill, landfill gas-to-energy, transfer and recycling services. We derive a substantial portion of our collection revenues from commercial, industrial and municipal services that are generally performed under service agreements or pursuant to contracts with municipalities.
Our Mid-Atlantic region is comprised of collection facilities and a transfer station facility. Revenues in our Mid-Atlantic region consist primarily of fees charged to customers for solid waste collection and transfer services. We derive a substantial portion of our collection revenues from commercial, industrial and municipal services that are generally performed under service agreements or pursuant to contracts with municipalities.
Coletta has served on the Board of Trustees for Killington Mountain School since May 2020. Mr. Coletta holds an MBA from the Tuck School of Business at Dartmouth College and a Bachelor of Science degree from Brown University in Materials Science Engineering. Shelley E.
Coletta has served on the Board of Trustees for Killington Mountain School since May 2020. Mr. Coletta holds an MBA from the Tuck School of Business at Dartmouth College and a Bachelor of Science degree from Brown University in Materials Science Engineering. Bradford J. Helgeson has served as our Executive Vice President and Chief Financial Officer since November 2023.
Management’s Discussion and Analysis of Results of Operations and Financial Condition ” and “Item 8. Financial Statements and Supplementary Data ” of this Annual Report on Form 10-K. Solid Waste Operations Solid waste operations within our Eastern and Western regions comprise a full range of non-hazardous solid waste services, including collection, transfer stations, and disposal facilities.
Management’s Discussion and Analysis of Results of Operations and Financial Condition ” and “Item 8. Financial Statements and Supplementary Data ” of this Annual Report on Form 10-K. Solid Waste Operations Solid waste operations within our Eastern, Western and Mid-Atlantic regions consist of a comprehensive range of solid waste services.
The global recycling market has experienced volatility due to changes in economic conditions and numerous other factors beyond our control, from negative commodity pricing pressure resulting from China's National Sword program in fiscal year 2017, to near record highs followed by near record lows in fiscal year 2022. See also Item 7A.
The global recycling market has experienced volatility due to changes in economic conditions and numerous other factors beyond our control. In fiscal year 2017, China's National Sword program resulted in negative commodity pricing pressure.
Customers We provide our collection services to commercial, municipal, institutional, industrial and residential customers.
Customers We provide solid waste and recycling services to commercial, municipal, institutional, industrial and residential customers.
In 2021, the Maine Legislature passed EPR legislation for packaging, and rulemaking commenced in 2022. If broad EPR laws or regulations continue to be adopted, and are managed under a manufacturer implemented program, it could have an impact on our business.
If broad EPR laws or regulations continue to be adopted, and are managed under a manufacturer implemented program, it could have an impact on our business.
Casella is also an executive officer and director of Casella Construction, Inc., a company owned by Mr. Casella and his brother Douglas R. Casella, also a member of our Board of Directors, which specializes in general contracting, soil excavation and heavy equipment work, and which performs landfill-construction and related services for us. Mr.
Casella, also a member of our Board of Directors, which specializes in general contracting, soil excavation and heavy equipment work, and which performs landfill-construction and related services for us. Mr.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to develop additional disposal and transfer station capacity, our ability to achieve economies of scale from the internalization of our waste stream will be limited. If we fail to receive new landfill permits or renew existing permits, we may incur landfill asset impairment and other charges associated with accelerated closure.
Biggest changeDespite our best efforts, we may not be successful in obtaining new landfill or transfer station sites or expanding the permitted capacity of any of our current landfills and transfer stations. If we are unable to develop additional disposal and transfer station capacity, our ability to achieve economies of scale from the internalization of our waste stream will be limited.
We are, and may be in the future, a defendant in lawsuits brought by parties alleging environmental damage, including natural resource damage, personal injury, and/or property damage or impairment, or seeking to impose civil penalties, injunctive relief or overturn or prevent the issuance of an operating permit or authorization, all of which may result in us incurring significant liabilities.
We are, and may be in the future, a defendant in lawsuits brought by parties alleging environmental damage, including natural resource damage, personal injury, and/or property damage or impairment, or seeking to impose civil penalties or injunctive relief or overturn or prevent the issuance of an operating permit or authorization, all of which may result in us incurring significant liabilities.
In addition, state laws applicable to certain of our landfills require that the state determine whether acceptance of waste at the landfill not generated within the state provides a substantial public benefit.
In addition, state laws applicable to certain of our landfills require that the state determine whether acceptance at the landfill of waste not generated within the state provides a substantial public benefit.
Our operations require us to attract, hire, develop and retain a high-quality workforce to provide a superior customer experience. This includes key individuals in leadership and specialty roles, as well as a very large number of drivers, technicians and other front-line and back-office team members necessary to provide our environmental services.
Our operations require us to attract, hire, develop and retain a high-quality workforce to provide a superior customer experience. This includes key individuals in leadership and specialty roles, as well as a very large number of drivers, technicians and other front-line and back-office team members necessary to provide our services.
ITEM 1A. RISK FACTORS The following material factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made in this Annual Report on Form 10-K and presented elsewhere by management from time to time.
ITEM 1A. RISK FACTORS The following factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made in this Annual Report on Form 10-K and presented elsewhere by management from time to time.
Our growth strategy includes engaging in acquisitions or developing operations or assets with the goal of complementing or expanding our business. We have made, and we may make in the future, acquisitions to densify existing operations, expand service areas and grow services for our customers.
Our growth strategy includes engaging in acquisitions or developing operations or assets with the goal of complementing or expanding our business. We have made, and we may continue to make in the future, acquisitions to densify existing operations, expand service areas and grow services for our customers.
Our business is also subject to general risks and uncertainties that affect many other companies, including overall economic and industry conditions, especially in the northeastern United States, where our operations and customers are principally located, changes in laws or accounting rules or other disruptions of expected economic or business conditions.
Our business is also subject to general risks and uncertainties that affect many other companies, including overall economic and industry conditions, especially in the eastern United States, where our operations and customers are principally located, changes in laws or accounting rules or other disruptions of expected economic or business conditions.
As of January 31, 2023, an aggregate of 988,200 shares of our Class B common stock, representing 9,882,000 votes, were outstanding. Based on the number of shares of common stock outstanding as of January 31, 2023, the shares of our Class A common stock and Class B common stock beneficially owned by John W. Casella and Douglas R.
As of January 31, 2024, an aggregate of 988,200 shares of our Class B common stock, representing 9,882,000 votes, were outstanding. Based on the number of shares of common stock outstanding as of January 31, 2024, the shares of our Class A common stock and Class B common stock beneficially owned by John W. Casella and Douglas R.
This seasonality reflects the lower volume of solid waste during the late fall, winter and early spring months primarily because the volume of waste relating to C&D activities decreases substantially during the winter months in the northeastern United States where we are geographically located.
This seasonality reflects the lower volume of solid waste during the late fall, winter and early spring months primarily because the volume of waste relating to C&D activities decreases substantially during the winter months in the eastern United States where we are geographically located.
The laws and regulations 23 Table of Contents adopted by municipalities in which our landfills and transfer stations are located may limit or prohibit the expansion of a landfill or transfer station, as well as the amount of solid waste that we can accept at the landfill or transfer station on a daily, quarterly or annual basis, and any effort to acquire or expand landfills and transfer stations, which typically involves a significant amount of time and expense.
The laws and regulations adopted by municipalities in which our landfills and transfer stations are located may limit or prohibit the expansion of a landfill or transfer station, as well as the amount of solid waste that we can accept at the landfill or transfer station on a daily, quarterly or annual basis, and any effort to acquire or expand landfills and transfer stations, which typically involves a significant amount of time and expense.
Although we have restructured many of our recycling contracts to require the respective municipalities to absorb some of the impact of declining commodity prices, these restructured contracts have had the impact of significantly increasing the costs to municipalities for continuing to offer recycling services to their customers.
Although many of our recycling contracts require the respective municipalities to absorb some of the impact of declining commodity prices, these contracts have had the impact of significantly increasing the costs to municipalities for continuing to offer recycling services to their customers.
In our solid waste disposal markets, we also compete with operators of alternative disposal and recycling facilities and with counties, municipalities and solid waste districts that maintain their own solid waste collection, recycling and disposal operations. We are also facing increased competition from companies which seek to use parts of the waste stream as feedstock for renewable energy supplies.
In our solid waste disposal markets, we also compete with operators of alternative disposal and recycling facilities and with counties, municipalities and solid waste districts that maintain their own solid waste collection, recycling and disposal operations. We also face increased competition from companies which seek to use parts of the waste stream as feedstock for renewable energy supplies.
Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including customers’ personal information, private information about employees, and financial and strategic information about us and our 24 Table of Contents business partners. We also rely on a Payment Card Industry compliant third party to protect our customers’ credit card information.
Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including customers’ personal information, private information about employees, and financial and strategic information about us and our business partners. We also rely on a Payment Card Industry compliant third party to protect our customers’ credit card information.
Any operations, properties or facilities that we acquire may be subject to unknown liabilities, such as undisclosed environmental contamination, or other environmental liabilities, including off-site disposal liability for which we would have no recourse, or only limited recourse, to the former owners of such operations or properties.
Any operations, properties or facilities that we acquire may be subject to unknown liabilities, such as undisclosed environmental contamination, or other environmental liabilities, including off-site disposal liability for which we would have no recourse, or only limited recourse, to the former owners of such operations or 22 Table of Contents properties.
The goal of enterprise risk management is not to eliminate all risk, but rather to identify and assess risks; assign, mitigate and monitor risks; and report the status of our risks to the Board of Directors and its committees. 20 Table of Contents Risks Related to Our Business and Industry We are subject to general macroeconomic risks in the waste industry that are impacted by economic factors outside of our control, which, if realized, may adversely affect our business, operating results and financial performance.
The goal of enterprise risk management is not to eliminate all risk, but rather to identify and assess risks; assign, mitigate and monitor risks; and report the status of our risks to the Board of Directors and its committees on a quarterly and annual basis. 20 Table of Contents Risks Related to Our Business and Industry We are subject to general macroeconomic risks in the waste industry that are impacted by economic factors outside of our control, which, if realized, may adversely affect our business, operating results and financial performance.
While we have purchased insurance coverage for cybersecurity risks, there can be no assurance that any such coverage would be adequate to cover potential liability. Our business is geographically concentrated and is therefore subject to regional economic downturns. Our operations and customers are concentrated principally in New England, New York, and Pennsylvania.
While we have purchased insurance coverage for cybersecurity risks, there can be no assurance that any such coverage would be adequate to cover potential liability. Our business is geographically concentrated and is therefore subject to regional economic downturns. Our operations and customers are concentrated principally in New England, New York, Pennsylvania and other Mid-Atlantic states.
To varying degrees, our business is directly affected by general macroeconomic risks in the waste industry that are impacted by economic factors outside of our control, which if realized may negatively impact our business, results of operations, and financial performance.
Our business is directly affected by general macroeconomic risks in the waste industry that are impacted by economic factors outside of our control, which if realized may negatively impact our business, results of operations, and financial performance.
Casella represented approximately 16.6% of the aggregate voting power of our stockholders. Consequently, John W. Casella and Douglas R. Casella are able to substantially influence all matters for stockholder consideration and constitute, and are expected to continue to constitute, a significant portion of the shares entitled to vote on all matters requiring approval by our stockholders.
Casella represented approximately 15.0% of the aggregate voting power of our stockholders. Consequently, John W. Casella and Douglas R. Casella are able to substantially influence all matters for stockholder consideration and constitute, and are expected to continue to constitute, a significant portion of the shares entitled to vote on all matters requiring approval by our stockholders.
Depending on the type and duration of any labor disruptions, our revenues could decrease and our operating expenses could increase, which could adversely affect our financial condition, results of operations and cash flows. As of January 31, 2023, approximately 5% of our employees were represented by unions.
Depending on the type and duration of any labor disruptions, our revenues could decrease and our operating expenses could increase, which could adversely affect our financial condition, results of operations and cash flows. As of January 31, 2024, approximately 4% of our employees were represented by unions.
Given our current expected run rate and remaining available capacity at our NCES Landfill in Bethlehem, New Hampshire, we may consume all remaining permitted capacity at our NCES Landfill during fiscal year 2027.
Given our current expected run rate and remaining available capacity at our NCES Landfill in Bethlehem, New Hampshire, we may consume all remaining permitted capacity at our NCES Landfill during the fiscal year ending December 31, 2027 ("fiscal year 2027").
This competition may come from other waste management companies, but it also comes from other employers who hire drivers and maintain fleets, such as companies that provide courier delivery services, including United Parcel Service, Inc. and FedEx Corporation, as well as from a tightening labor market.
This competition comes from other waste management companies as well as other employers who hire drivers and maintain fleets, such as companies that provide courier delivery services, including United Parcel Service, Inc., FedEx Corporation and Amazon, as well as from a tightening labor market.
Economic factors, such as ongoing or potential geopolitical conflict, pandemics, recessions, or similar national or global events, adversely impact macroeconomic risks that have caused and may continue to cause, economic disruption across our geographic footprint resulting in reductions in business, consumer and construction activity.
Economic factors, such as ongoing or potential geopolitical conflict, pandemics, recessions, or similar national or global events, have caused and may continue to cause, economic disruption across our geographic footprint resulting in reductions in business, consumers and construction activity.
Although we have developed a framework and perform a global reporting initiative to identify, measure, monitor, report, and control our ESG practices and related exposure to ESG expectations and regulations, we may not achieve our sustainability goals and commitments, or we may improperly report on our progress toward achieving our sustainability goals and commitments, which could result in negative publicity that could affect our brand and reputation, and accordingly, adversely impact our financial condition and results of operations. 27 Table of Contents Risks Related to Our Indebtedness We have substantial debt and have the ability to incur additional debt.
Although we have developed a framework and perform a reporting initiative to identify, measure, monitor, report, and control our ESG practices and related exposure to ESG expectations and regulations, we may not achieve our sustainability goals and commitments, or we may improperly report on our progress toward achieving our sustainability goals and commitments, which could result in negative publicity that could affect our brand and reputation, and accordingly, adversely impact our financial condition and results of operations.
In addition, the use of our information technology systems give rise to cybersecurity risks, including security breach, espionage, system disruption, theft and inadvertent release of information.
In addition, the use of our information technology systems give rise to cybersecurity risks, including security breach, computer viruses, sabotage or espionage, ransomware attacks, system disruption, theft and inadvertent release of information.
John Casella and his spouse; and Douglas R. Casella, a member of our Board of Directors who is Mr. John Casella's brother.
John Casella and his spouse; Douglas R. Casella, a member of our Board of Directors who is Mr. John Casella's brother; and certain trusts for the benefit of Mr. Douglas Casella and his spouse.
If we are not able to expand or otherwise operate one or more of our facilities because of limits imposed under such laws, we may be required to increase our utilization of disposal facilities owned by third-parties, which could reduce our revenues and/or operating margins.
If we are not able to expand or otherwise operate one or more of our facilities because of limits imposed under such laws, we may be required to increase our utilization of disposal facilities owned by third-parties, which could reduce our revenues and/or operating margins. We have historically grown through acquisitions and expect to make additional acquisitions in the future.
Upgrades to our technology infrastructure are ongoing and include a limited pilot of a new service management system, on-board computers, dynamic route optimization, procurement optimization, cybersecurity initiatives, and other systems that we believe will improve our internal processes and the productivity of our employees.
Upgrades to our technology infrastructure are ongoing and include a comprehensive lead to cash solution, on-board computers, dynamic route optimization, procurement optimization, cybersecurity initiatives, and other systems that we believe will improve our internal processes and the productivity of our employees.
The difference in the voting power of our Class A common stock and Class B common stock could diminish the market value of our Class A common stock.
The difference in the voting power of our Class A common stock and Class B common stock could diminish the market value of our Class A common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
As of December 31, 2022, we had $266.1 million of unused commitments remaining under the Revolving Credit Facility, subject to customary borrowing conditions, and approximately $71.2 million in cash and cash equivalents available for any future payment obligations.
As of December 31, 2023, we had $272.3 million of unused commitments remaining under the Credit Facility, subject to customary borrowing conditions, and approximately $220.9 million in cash and cash equivalents available for any future payment obligations.
As a result, if claims for liabilities were asserted against us based upon ownership of an acquired property, we might 22 Table of Contents be required to pay significant sums to settle it, which could adversely affect our financial results and cash flows.
As a result, if claims for liabilities were asserted against us based upon ownership of an acquired property, we might be required to pay significant sums to settle it, which could adversely affect our financial results and cash flows. For information regarding our business acquisitions, see Note 5, Business Combinations to our consolidated financial statements included under Item 8.
Fuel is needed to run our fleet of trucks, equipment and other aspects of our operations, and price escalations for fuel increase our operating expenses. In fiscal year 2022, we consumed approximately 9.5 million gallons of diesel fuel in our solid waste operations.
Fuel is needed to run our fleet of trucks, equipment and other aspects of our operations, including our reliance on various third-party transporters and service providers. Price escalations of fuel increase our operating expenses. In fiscal year 2023, we consumed approximately 11.9 million gallons of diesel fuel in our solid waste operations.
For information regarding our business acquisitions, 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. The waste industry is subject to extensive government regulations, including environmental laws and regulations, and we incur substantial costs to comply with such laws and regulations.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K. The waste industry is subject to extensive government regulations, including environmental laws and regulations, and we incur substantial costs to comply with such laws and regulations.
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 disclosure about legal matters impacting our permitting efforts.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for disclosure about legal matters impacting our permitting efforts.
Employee morale and productivity could also suffer and result in unintended employee attrition. Any restructuring would require substantial management time and attention and may divert management from other important work.
Employee morale and productivity could also suffer and result in unintended employee attrition. Any restructuring would require substantial management time and attention and may divert management from other important work. Moreover, we could encounter delays in executing any restructuring plans, which could cause further disruption and additional unanticipated expense.
The commodity markets continue to see ongoing variable pricing, with significant price declines associated with excess inventory, inflation and tepid consumer spending due to deteriorating global economic activity and concerns about a recession. Significant price fluctuations may adversely affect our results of operations and cash flows in the form of higher operating costs or lower revenues.
Global and domestic factors such as recycling commodity inventory levels, inflation, consumer spending and economic activity levels may result in lower recycling commodity prices. The recycling commodity markets continue to see ongoing price volatility. Significant price fluctuations may adversely affect our results of operations and cash flows in the form of higher operating costs or lower revenues.
We may be adversely affected by market responses to our environmental, social and governance ("ESG") practices and may not be effective in mitigating the risks associated with ESG expectations and emerging ESG regulations, or in reducing the potential for losses in connection with such risks.
The ineffectiveness of our enterprise risk management framework in mitigating the impact of known risks or the emergence of previously unknown or unanticipated risks may result in our incurring losses in the future that could adversely impact our financial condition and results of operations. 27 Table of Contents We may be adversely affected by market responses to our environmental, social and governance ("ESG") practices and may not be effective in mitigating the risks associated with ESG expectations and emerging ESG regulations, or in reducing the potential for losses in connection with such risks.
Based on currently available information, we believe that it may not be likely that the Granite State Landfill will be fully permitted, constructed and operational by the end of the fiscal year ending December 31, 2027 ("fiscal year 2027").
Based on currently available information, we believe that it is unlikely that the landfill under development by us in Dalton, New Hampshire will be fully permitted, constructed and operational by the end of fiscal year 2027.
The principal and interest payment obligations of such debt may restrict our future operations.
Risks Related to Our Indebtedness We have substantial debt and have the ability to incur additional debt. The principal and interest payment obligations of such debt may restrict our future operations.
Those costs or actions could be significant to us and affect our results of operations, cash flows, and available capital. Environmental and land use laws and regulations also affect our ability to expand and, in the case of our solid waste operations, may dictate those geographic areas from which we must, or, from which we may not, accept solid waste.
Future regulation changes may also require us to modify, supplement, or replace equipment or facilities at a substantial cost. Environmental and land use laws and regulations also affect our ability to expand and, in the case of our solid waste operations, may dictate those geographic areas from which we must, or, from which we may not, accept solid waste.
If we are unable to obtain the necessary financial assurance in sufficient amounts or at acceptable rates, we could be precluded from entering into additional municipal contracts or from obtaining or retaining landfill management contracts or operating permits.
If we are unable to obtain the necessary financial assurance in sufficient amounts or at acceptable rates, we could be precluded from entering into additional municipal contracts or from obtaining or retaining landfill management contracts or operating permits. 26 Table of Contents We may be required to write-off or impair capitalized costs or intangible assets in the future or we may incur restructuring costs or other charges, each of which could harm our earnings.
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.
If we are unable to repay debt to our lenders or are 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. 28 Table of Contents Risks Related to Our Common Stock Holders of our Class A common stock are entitled to one vote per share, and holders of our Class B common stock are entitled to ten votes per share.
As of December 31, 2022, we had approximately $603.5 million of outstanding principal indebtedness (excluding approximately $27.9 million of outstanding letters of credit issued under our term loan A facility ("Term Loan Facility") and revolving line of credit facility (“Revolving Credit Facility” and, together with the Term Loan Facility, the "Credit Facility").
As of December 31, 2023, we had $1,054.5 million of outstanding principal indebtedness (excluding $27.7 million of outstanding letters of credit issued under our $350.0 million term loan A facility, $300 million revolving line of credit facility with a $75.0 million sublimit for letters of credit, and $430.0 million aggregate principal amount of term loan A facility (collectively, the "Credit Facility")).
Our results of operations and financial condition may be negatively affected if we inadequately accrue for final capping, closure and post-closure costs or by the timing of these costs for our waste disposal facilities.
In addition, as we seek to expand in our existing markets, opportunities for growth within this region will become more limited and the geographic concentration of our business will increase. 25 Table of Contents Our results of operations and financial condition may be negatively affected if we inadequately accrue for final capping, closure and post-closure costs or by the timing of these costs for our waste disposal facilities.
Furthermore, residual macroeconomic effects associated with these economic factors that have negatively impacted the global supply chain, labor markets and distribution networks leading to heightened inflation across labor, select services and goods, and capital investments may also materially adversely affect our operating and financial results in a manner that is not currently known to us or that we do not currently consider to present significant risks to our operations.
Furthermore, residual macroeconomic effects associated with these economic factors have negatively impacted, and may continue to negatively impact, the global supply chain, labor markets and distribution networks leading to heightened inflation across labor, select services and goods, and capital investments.
In the event that the costs of such services become excessive, such municipalities could discontinue their recycling programs altogether, which could materially affect our financial results. See Item 7A. " Quantitative and Qualitative Disclosure About Market Risk " of this Annual Report on Form 10-K for further discussion over the impacts of commodity prices on our operations.
In the event that the costs of such services become excessive, such municipalities could discontinue their recycling programs altogether, which could materially affect our financial results. See Item 7A.
Moreover, we could encounter delays in executing any restructuring plans, which could cause further disruption and additional unanticipated expense. 26 Table of Contents Our revenues and our operating income experience seasonal fluctuations, which could adversely affect our operational results in certain quarters and cause our results to fluctuate.
Our revenues and our operating income experience seasonal fluctuations, which could adversely affect our operational results in certain quarters and cause our results to fluctuate.
Therefore, our business, financial condition and results of operations are susceptible to regional economic downturns and other regional factors, including state regulations and budget constraints and severe weather conditions. In addition, as we seek to expand in our existing markets, opportunities for growth within this region will become more limited and the geographic concentration of our business will increase.
Therefore, our business, financial condition and results of operations are susceptible to regional economic downturns and other regional factors, including state regulations and budget constraints and severe weather conditions.
It is possible that some liabilities may prove to be more difficult or costly to identify or address than we anticipate.
We have tried and will continue to try to evaluate and limit environmental risks and liabilities presented by businesses to be acquired prior to the acquisition. It is possible that some liabilities may prove to be more difficult or costly to identify or address than we anticipate.
We are upgrading our technology infrastructure and there can be no assurance that our efforts will be completed on the projected timetable or that our investment will result in the expected gains.
" Quantitative and Qualitative Disclosure About Market Risk " of this Annual Report on Form 10-K for further discussion over the impacts of commodity prices on our operations. 24 Table of Contents We are upgrading our technology infrastructure and there can be no assurance that our efforts will be completed on the projected timetable or that our investment will result in the expected gains.
If we are unable to hire and retain sufficient numbers of drivers to service our collection and disposal routes and mechanics to maintain our trucks, our financial condition and operating results could be materially impacted. Additionally, the market for employees that serve on our digital team is highly competitive.
If we are unable to hire and retain sufficient numbers of drivers to service our collection and disposal routes and mechanics to maintain our trucks, our financial condition and operating results could be materially impacted. We also compete to attract skilled business leaders, and our own key team members are sought after by our competitors and other companies.
For information regarding our final capping, closure and post-closure obligations, see Note 10, Final Capping, Closure and Post-Closure Costs to our consolidated financial statements included under Item 8.
For information regarding our final capping, closure and post-closure obligations, 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. Our insurance coverage and self-insurance reserves may be inadequate to cover all significant risk exposures.
We may be required to write-off or impair capitalized costs or intangible assets in the future or we may incur restructuring costs or other charges, each of which could harm our earnings. In accordance with generally accepted accounting principles in the United States, we capitalize certain expenditures and advances relating to our acquisitions, landfills, cost method investments and development projects.
In accordance with generally accepted accounting principles in the United States, we capitalize certain expenditures and advances relating to our acquisitions, landfills, cost method investments and development projects. In addition, we have considerable unamortized assets, including goodwill.
Failure to comply with these requirements or other laws or regulations could subject us to enforcement actions or financial penalties which could have a material adverse effect on our business. We may be unable to obtain or maintain required permits or to expand existing permitted capacity of our landfills, which could decrease our revenue and increase our costs.
Any such liability is likely to be uninsurable, with no coverage likely under our pollution or product liability policies. We may be unable to obtain or maintain required permits or to expand existing permitted capacity of our landfills, which could decrease our revenue and increase our costs.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K. 25 Table of Contents Our insurance coverage and self-insurance reserves may be inadequate to cover all significant risk exposures. The provision of environmental services, including the operation of landfills, a substantial fleet of trucks and other waste-related assets, involves risks.
The provision of resource management services, including the operation of landfills, a substantial fleet of trucks and other waste-related assets, involves risks.
Removed
For example, in fiscal year 2020 revenues declined as we experienced decreased demand for our services as a result of the novel coronavirus ("COVID-19") pandemic as some of our commercial collection customers requested service level decreases, construction activity decreased and volumes into our landfills declined due to lower economic activity.
Added
Inflationary increases in costs, including current inflationary pressures associated primarily with labor, certain other cost categories and capital items, have materially affected, and may continue to materially affect, our operating margins and cash flows. In addition, fuel cost increases may materially impact our operating margins and cash flows.
Removed
Demand for services has since improved as local economies have reopened and the economic effects of the COVID-19 pandemic have diminished.
Added
Significant components of our operating expenses, including labor, fuel and third-party services, have been impacted by sustained inflation.
Removed
As we have accelerated our investments in our digital platform, it is increasingly important that we are able to attract and retain employees with the skills and expertise necessary to implement and manage our technology-led strategy. We also compete to attract skilled business leaders, and our own key team members are sought after by our competitors and other companies.
Added
Those costs or actions could be significant to us and affect our results of operations, cash flows, and available capital. In addition, the potential for increased regulation of PFAS and other emerging contaminants could lead to increased compliance and remediation costs, or litigation risks, which could adversely impact our financial condition and results of operations.
Removed
The foregoing includes recent changes in solid waste laws of the State of Maine, which we do not anticipate will have a material effect on our business, results of operations, financial condition and/or liquidity, but which may negatively impact our operating results in the form of lower revenues or increased costs and/or liabilities.
Added
Failure to comply with these obligations could subject us to enforcement actions or financial penalties which could have a material adverse effect on our business. 23 Table of Contents The increasing focus on PFAS and other emerging contaminants may lead to increased compliance and remediation costs and litigation risks, which could adversely impact our financial condition and results of operations.
Removed
We have historically grown through acquisitions and expect to make additional acquisitions in the future. We have tried and will continue to try to evaluate and limit environmental risks and liabilities presented by businesses to be acquired prior to the acquisition.
Added
The regulatory environment for PFAS is rapidly evolving, with increasing demands for enhanced environmental monitoring programs and advanced treatment technologies to mitigate PFAS contamination.
Removed
Despite our best efforts, we may not be successful in obtaining new landfill or transfer station sites, including a landfill under development by us in Dalton, New Hampshire ("Granite State Landfill"), or expanding the permitted capacity of any of our current landfills and transfer stations.
Added
Risks to the Company related to PFAS include regulatory risks, including the proposed designation by the EPA of PFAS as hazardous substances, which could create Superfund liabilities under CERCLA for all downstream recipients of PFAS, including passive receivers such as our landfills, the establishment of federal and state drinking water standards and surface water criteria which set low thresholds for impacts to drinking water and surface water, the risk that states in which we operate will require stringent monitoring of PFAS at our landfills, the risk of material increases in landfill leachate treatment costs due to mandatory pre-treatment or otherwise, the risk that existing remedial sites will become more complex and that closed landfills will be under enhanced regulatory scrutiny, the risk that biosolids management will be impacted by restrictions on end uses and the risk that that pre-existing land application sites will be determined to contain PFAS.
Removed
The ineffectiveness of our enterprise risk management framework in mitigating the impact of known risks or the emergence of previously unknown or unanticipated risks may result in our incurring losses in the future that could adversely impact our financial condition and results of operations.
Added
In addition, the potential for increased regulation of PFAS and other emerging contaminants could also lead to increased financial impacts such as additional capping requirements, increased closure/post-closure care costs and obligations, enhanced leachate treatment requirements, waste disposal limits, and transport limitations.
Removed
Risks Related to Our Common Stock Holders of our Class A common stock are entitled to one vote per share, and holders of our Class B common stock are entitled to ten votes per share.
Added
If we fail to receive new landfill permits or renew existing permits, we may incur landfill asset impairment and other charges associated with accelerated closure. See Note 13, Commitments and Contingencies to our consolidated financial statements included under Item 8.
Added
In addition, outside parties may attempt to penetrate our systems or those of our vendors or fraudulently induce our employees or employees of our vendors to disclose sensitive information to gain access to our data.
Added
If we are unable to service or refinance our debt, we may be required to divert funds that would otherwise be invested in growing our business operations or sell selected assets. Such measures might not be sufficient to enable us to service our debt, which could negatively impact our financial results.
Added
In addition, we may not be able to obtain any such financing, refinancing or complete a sale of assets on economically favorable terms. In the case of financing or refinancing, favorable interest rates will depend on conditions in the debt capital markets.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt January 31, 2023, we operated eight subtitle D landfills, four of which we own and four of which we lease; one landfill permitted to accept C&D materials that we own; 65 transfer stations, 35 of which we own, ten of which we lease and 20 of which we operate under a contract; 49 solid waste collection facilities, 30 of which we own, 18 of which we lease and one of which we operate under a contract; 26 recycling processing facilities, 14 of which we own, nine of which we lease and three of which we operate under a contract; three landfill gas-to-energy facilities that we own; and 30 corporate office and other administrative facilities, ten of which we own and 20 of which we lease (See "Operational Overview" in Item 1.
Biggest changeAt January 31, 2024, we operated eight subtitle D landfills, four of which we own and four of which we lease; one landfill permitted to accept C&D materials that we own; 71 transfer stations, 40 of which we own, 11 of which we lease and 20 of which we operate under a contract; 64 solid waste collection facilities, 41 of which we own, 22 of which we lease and one of which we operate under a contract; 29 recycling processing facilities, 16 of which we own, 10 of which we lease and three of which we operate under a contract; three landfill gas-to-energy facilities that we own; and 34 corporate office and other administrative facilities, 15 of which we own and 19 of which we lease (See "Operational Overview" in Item 1.
ITEM 2. PROPERTIES Our headquarters is located at 25 Greens Hill Lane, Rutland, Vermont 05701, where we currently lease approximately 12,000 square feet of office space. Our principal property and equipment consists of land, landfills, buildings, machinery and equipment, rolling stock and containers.
ITEM 2. PROPERTIES Our headquarters is located at 25 Greens Hill Lane, Rutland, Vermont 05701, where we currently lease approximately 12,000 square feet of office space. Our principal property and equipment consists of land, landfills, finance lease right-of-use assets, buildings, machinery and equipment, rolling stock and containers.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The information required by this Item is provided in Note 13, Commitments and Contingencies to our consolidated financial statements included in Item 8. " Financial Statements and Supplementary Data " of this Annual Report on Form 10-K.
Biggest changeITEM 3. LEGAL PROCEEDINGS The information required by this Item is provided in Note 13, Commitments and Contingencies to our consolidated financial statements included in Part II, Item 8. " Financial Statements and Supplementary Data " of this Annual Report on Form 10-K.
Pursuant to Item 103, we have determined such disclosure threshold to be $1,000,000. We have no matters to disclose in accordance with that requirement. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 29 Table of Contents PART II
Pursuant to Item 103, we have determined such disclosure threshold to be $1,000,000. We have no matters to disclose in accordance with that requirement. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 30 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNo dividends have been declared or paid on our Class A common stock. 30 Table of Contents December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 Casella Waste Systems, Inc. $ 100.00 $ 123.76 $ 199.96 $ 269.11 $ 371.07 $ 344.53 Russell 2000 $ 100.00 $ 88.99 $ 111.70 $ 134.00 $ 153.85 $ 122.41 Peer Group $ 100.00 $ 106.36 $ 135.70 $ 147.40 $ 208.15 $ 196.13 (1) The Peer Group is comprised of GFL Environmental, Inc., Waste Connections Inc., Waste Management, Inc. and Republic Services, Inc.
Biggest changeNo dividends have been declared or paid on our Class A common stock. 31 Table of Contents December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Casella Waste Systems, Inc. $ 100.00 $ 161.57 $ 217.44 $ 299.82 $ 278.38 $ 299.96 Russell 2000 $ 100.00 $ 125.52 $ 150.58 $ 172.90 $ 137.56 $ 160.85 Peer Group $ 100.00 $ 127.59 $ 138.58 $ 195.70 $ 184.40 $ 220.13 (1) The Peer Group is comprised of GFL Environmental, Inc., Waste Connections Inc., Waste Management, Inc. and Republic Services, Inc.
The stock performance graph assumes the investment on December 31, 2017 of $100.00 in our Class A common stock at the closing price on such date, in the Russell 2000 Index and the Peer Group, and that dividends are reinvested.
The stock performance graph assumes the investment on December 31, 2018 of $100.00 in our Class A common stock at the closing price on such date, in the Russell 2000 Index and the Peer Group, and that dividends are reinvested.
The stock performance graph below compares the percentage change in cumulative stockholder return on our Class A common stock for the period from December 31, 2017 through December 31, 2022, with the cumulative total return on the Russell 2000 Index and Peer Group.
The stock performance graph below compares the percentage change in cumulative stockholder return on our Class A common stock for the period from December 31, 2018 through December 31, 2023, with the cumulative total return on the Russell 2000 Index and Peer Group.
As of January 31, 2023, there were approximately 600 holders of record of our Class A common stock and two holders of record of our Class B common stock.
As of January 31, 2024, there were approximately 700 holders of record of our Class A common stock and two holders of record of our Class B common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

108 edited+41 added−38 removed70 unchanged
Biggest changeThe table below shows revenue attributable to services provided (in millions) for the following periods: Fiscal Year Ended December 31, $ Change 2022 2021 Collection $ 539.6 49.7 % $ 442.7 49.8 % $ 96.9 Disposal 228.0 21.0 % 197.0 22.2 % 31.0 Power 7.5 0.7 % 5.1 0.6 % 2.4 Processing 10.1 1.0 % 9.3 1.0 % 0.8 Solid waste 785.2 72.4 % 654.1 73.6 % 131.1 Processing 119.1 10.9 % 93.3 10.5 % 25.8 Customer Solutions 180.8 16.7 % 141.8 15.9 % 39.0 Resource Solutions 299.9 27.6 % 235.1 26.4 % 64.8 Total revenues $ 1,085.1 100.0 % $ 889.2 100.0 % $ 195.9 Solid waste revenues A summary of the period-to-period change in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows: Period-to-Period Change For Fiscal Year 2022 vs Fiscal Year 2021 Amount % Growth Price $ 41.7 6.4 % Volume 5.0 0.7 % Surcharges and other fees 32.6 5.0 % Commodity price and volume 2.3 0.3 % Acquisitions 49.5 7.6 % Solid waste revenues $ 131.1 20.0 % 33 Table of Contents Price.
Biggest changeThe 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 2023 2022 Collection $ 710.6 56.2 % $ 539.6 49.7 % $ 171.0 Disposal 244.6 19.3 % 228.0 21.0 % 16.6 Power 6.6 0.5 % 7.5 0.7 % (0.9) Processing 9.9 0.8 % 10.1 1.0 % (0.2) Solid waste operations 971.7 76.8 % 785.2 72.4 % 186.5 Processing 106.0 8.4 % 119.1 10.9 % (13.1) National Accounts 186.8 14.8 % 180.8 16.7 % 6.0 Resource Solutions operations 292.8 23.2 % 299.9 27.6 % (7.1) Total revenues $ 1,264.5 100.0 % $ 1,085.1 100.0 % $ 179.4 Solid waste revenues A summary of the period-to-period change in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows: Period-to-Period Change For Fiscal Year 2023 vs Fiscal Year 2022 Amount % Growth Price $ 58.6 7.5 % Volume (14.7) (1.9) % Surcharges and other fees 12.3 1.6 % Commodity price and volume (1.6) (0.2) % Acquisitions 131.9 16.8 % Solid waste revenues $ 186.5 23.8 % The most significant items impacting the change in our solid waste revenues during fiscal year 2023 are summarized below: 35 Table of Contents • Price increased due to (i) $42.9 million, or 7.9%, from favorable collection pricing and (ii) $15.7 million, or 6.9%, from favorable disposal pricing associated with our landfills, transfer stations and, to a lesser extent, transportation services. • Volume decreased due to (i) $(10.9) million from lower collection volumes associated with slowing economic activity, primarily in the roll-off business, higher customer churn due to increased pricing and fees charged to additional customers, particularly in our Western region, and, to a lesser extent, purposeful shedding of less profitable customers and (ii) $(4.3) million from lower disposal volumes, primarily lower landfill volumes related to slowing economic activity; partially offset by additional disposal volumes in our Western region related to flooding from a severe weather event in the summer; partially offset by $0.5 million from higher processing volumes. • Surcharge and other fees increased primarily due to (i) new fees related to legacy fuel and environmental cost recovery programs associated with the GFL Acquisition and (ii) higher sustainability recycling adjustment fees ("SRA Fee(s)") revenues as a result of lower recycled commodity prices and a higher customer participation rate; partially offset by lower energy and environmental fees ("E&E Fee(s)") revenues associated with our fuel cost recovery program as a result of lower diesel fuel prices, partially offset by a higher customer participation rate.
Revenues from processing services are derived from customers in the form of processing fees, tipping fees, and commodity sales, primarily comprised of newspaper, corrugated containers, plastics, ferrous and aluminum, and organic materials such as our earthlife® soils products including fertilizers, composts and mulches.
Revenues from processing services are derived from customers in the form of processing fees, tipping fees, commodity sales, primarily comprised of newspaper, corrugated containers, plastics, ferrous and aluminum, and organic materials such as our earthlife® soils products including fertilizers, composts and mulches.
Given the cash flow impact that this seasonality, the capital-intensive nature of our business and the timing of debt payments has on our business, we typically incur higher debt borrowings in order to meet our liquidity needs during these times. Consequently, our availability and performance against our financial covenants tighten during these times as well.
Given the cash flow impact that this seasonality, the capital intensive nature of our business and the timing of debt payments has on our business, we typically incur higher debt borrowings in order to meet our liquidity needs during these times. Consequently, our availability and performance against our financial covenants may tighten during these times as well.
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, Plant and Equipment ” accounting policy more fully discussed in Note 3, Summary of Significant Accounting Policies of our consolidated financial statements included in Item 8.
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.
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 program.
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.
Acquisitions and Divestitures Acquisitions We have made in the past, and we may make in the future, acquisitions to densify existing operations, expand service areas, and grow services for our customers. 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.
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.
We expect existing cash and cash equivalents combined with 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.
We expect existing cash and cash equivalents combined with available cash flows from operations and financing activities to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future.
Events or changes in circumstances that may indicate that an asset may be impaired include the following: • 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; 51 Table of Contents • 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.
Events or changes in circumstances that may indicate that an asset may be impaired include the following: • 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.
The fair value of restricted stock 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. The fair value of market-based performance stock unit grants is valued using a Monte Carlo 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. The fair value of market-based performance stock unit grants is valued using a Monte Carlo pricing model.
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 2022 consider the current economic conditions and the potential impact to our customers’ ability to pay for services that we have provided.
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 2023 consider the current economic conditions and the potential impact to our customers’ ability to pay for services that we have provided.
The first amendment provides, commencing in the fiscal year ending December 31, 2024, the interest rate margin applied for drawn and undrawn amounts under the Amended and Restated Credit Agreement shall be separately adjusted based on our achievement of certain thresholds and targets on two sustainability related key performance indicator metrics during the fiscal year ending December 31, 2023 ("fiscal year 2023"): i) metric tons of solid waste materials reduced, reused or recycled through our direct operations or with third-parties in collaboration with customers; and ii) our total recordable incident rate.
The first amendment provides, commencing in the fiscal year ending December 31, 2024, that the interest rate margin applied for drawn and undrawn amounts under the Amended and Restated Credit Agreement shall be separately adjusted based on our achievement of certain thresholds and targets on two sustainability related key performance indicator metrics during the prior fiscal year: (i) metric tons of solid waste materials reduced, reused or recycled through our direct operations or with third-parties in collaboration with customers; and (ii) our total recordable incident rate.
Interest obligations related to variable rate debt were calculated using variable rates in effect at December 31, 2022. (2) Contractual cash obligations do not include accounts payable or accrued liabilities, which will be paid in the fiscal year ending December 31, 2023. We have no contractual obligations related to unrecognized tax benefits at December 31, 2022.
Interest obligations related to variable rate debt were calculated using variable rates in effect at December 31, 2023. (2) Contractual cash obligations do not include accounts payable or accrued liabilities, which will be paid in the fiscal year ending December 31, 2024. We have no contractual obligations related to unrecognized tax benefits at December 31, 2023.
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 program, which is the energy component of our E&E Fee, is designed to recover escalating fuel price fluctuations above a periodically reset floor.
We have also implemented a number of operating efficiency programs that seek to improve productivity and reduce our service costs, and our fuel cost recovery programs, primarily the energy component of our E&E Fee, which is designed to recover escalating fuel price fluctuations above a periodically reset floor.
Long-lived assets include, for example, capitalized landfill costs, other property and equipment, identifiable intangible assets, and operating lease right-of-use assets.
Long-lived assets include, for example, capitalized landfill costs, property and equipment, identifiable intangible assets, and operating lease right-of-use assets.
While rapid inflation negatively impacted operating results and margins during fiscal year 2022, 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.
While inflation negatively impacted operating results and margins during fiscal year 2023 and fiscal year 2022, 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.
Additionally, management’s estimates associated with inflation have had, and will continue to have, an impact on our accounting for landfill and environmental remediation liabilities. Regional Economic Conditions Our business is primarily located in the northeastern United States.
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.
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 2022.
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 2023.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for further disclosure about final capping, closure and post-closure asset retirement costs, including revisions in estimates. 49 Table of Contents Remaining Permitted Airspace. Our engineers, in consultation with third-party engineering consultants and surveyors, are responsible for determining remaining permitted airspace at our landfills.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for further disclosure about final capping, closure and post-closure 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.
Revenues associated with our solid waste operations are derived mainly from solid waste collection and disposal services, including landfill, transfer station and transportation, landfill gas-to-energy, and processing services in the northeastern United States.
Revenues associated with our solid waste operations are derived mainly from solid waste collection and disposal services, including landfill, transfer station and transportation services, landfill gas-to-energy services, and processing services in the eastern United States.
For purposes of calculating stock-based compensation expense, forfeitures are accounted for as they occur. Our equity awards granted generally consist of stock options, restricted stock, 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.
For purposes of calculating stock-based compensation expense, forfeitures are accounted for as they occur. Our equity awards granted generally consist of stock options, restricted stock awards, restricted stock units and market-based performance stock units. 54 Table of Contents The fair value of each stock option grant is estimated using a Black-Scholes option-pricing model.
Our actual results may differ materially from those contained in any forward-looking statements. 31 Table of Contents Discussion and analysis of our financial condition and results of operations for the fiscal year ended December 31, 2021 ("fiscal year 2021") compared to our financial condition and results of operations for the fiscal year ended December 31, 2020 is included under the heading Item 7.
Our actual results may differ materially from those contained in any forward-looking statements. 32 Table of Contents Discussion and analysis of our financial condition and results of operations for the fiscal year ended December 31, 2022 ("fiscal year 2022") compared to our financial condition and results of operations for the fiscal year ended December 31, 2021 is included under the heading Item 7.
Revenues from our Customer Solutions 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.
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.
Revenues from our Customer Solutions 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.
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.
(3) We recorded a landfill closure project (credit) charge associated with revised costs under the closure plan at Southbridge Landfill. See Note 10, Final Capping, Closure and Post-Closure Costs, to our consolidated financial statements included under Item 8.
(2) We recorded a landfill closure project charge associated with revised costs under the closure plan at Southbridge Landfill. See Note 10, Final Capping, Closure and Post-Closure Costs, to our consolidated financial statements included under Item 8.
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. 32 Table of Contents Results of Operations Revenues We manage our solid waste operations, which include a full range of solid waste services, on a geographic basis through two regional operating segments, which we designate as the Eastern and Western regions.
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. 34 Table of Contents Results of Operations Revenues We manage our solid waste operations, which include a full range of solid waste services, on a geographic basis through three regional operating segments, which we designate as the Eastern, Western and Mid-Atlantic regions.
Consolidated EBITDA is based on operating results for the twelve months preceding the measurement date of December 31, 2022.
Consolidated EBITDA is based on operating results for the twelve months preceding the measurement date of December 31, 2023.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for disclosure regarding our debt. 47 Table of Contents Contractual Obligations The following table sets forth a summary of our significant contractual cash obligations (in thousands) as of December 31, 2022.
" 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, 2023.
" 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, 2021 as filed with the Securities and Exchange Commission on February 18, 2022.
" 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, 2022 as filed with the Securities and Exchange Commission on February 17, 2023.
Our self-insurance reserves totaled $22.2 million and $19.8 million as of December 31, 2022 and December 31, 2021, 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.
Our self-insurance reserves totaled $22.4 million and $22.2 million as of December 31, 2023 and December 31, 2022, 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.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for further disclosure about environmental remediation liabilities, including revisions in estimates. 50 Table of Contents Accounts Receivable, Net of Allowance for Credit Losses Accounts receivable represent receivables from customers for collection, transfer, recycling, disposal and other services.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for further disclosure about environmental remediation liabilities, including revisions in estimates, to the extent applicable. Accounts Receivable, Net of Allowance for Credit Losses Accounts receivable represent receivables from customers for collection, transfer, recycling, disposal and other services.
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, 2022, further advances were available under the Credit Facility in the amount of $266.1 million.
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, 2023, further advances were available under the Credit Facility in the amount of $272.3 million.
The second amendment provides, effective for fiscal year 2023, that loans under the Amended and Restated Credit Agreement shall bear interest, at our election, at the term secured overnight financing rate, including a secured overnight financing rate adjustment of 10 basis points ("Term SOFR"), or a base rate, in each case, plus an applicable interest rate margin based on consolidated net leverage ratio, and plus or minus any sustainability rate adjustment.
The second amendment provides that loans under the Amended and Restated Credit Agreement shall bear interest, at our election, at term secured overnight financing rate ("Term SOFR"), including a secured overnight financing rate adjustment of 10 basis points, or at a base rate, in each case, plus or minus any sustainable rate adjustment plus an applicable interest rate margin based upon our consolidated net leverage ratio.
General and Administration General and administration expense includes: (i) labor costs, which consists 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) bad debt expense; and (iv) other overhead costs including those associated with marketing, sales force and community relations efforts.
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 force and community relations efforts.
We strive to maintain a negative working capital cycle driven by shorter days sales outstanding as compared to days payable outstanding in an effort to collect money at a faster rate than paying bills to facilitate business growth. 43 Table of Contents Summary of Cash Flow Activity Cash and cash equivalents increased $37.4 million in fiscal year 2022.
We strive to maintain a negative working capital cycle driven by shorter days sales outstanding as compared to days payable outstanding in an effort to collect money at a faster rate than paying bills to facilitate business growth. Summary of Cash Flow Activity Cash and cash equivalents increased $149.7 million in fiscal year 2023.
Consolidated funded debt, net of unencumbered cash and cash equivalents in excess of $2.0 million and up to $100.0 million, and consolidated EBITDA as defined by the Amended and Restated 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.
Consolidated funded debt, net and consolidated EBITDA as defined by the Amended and Restated 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 summary of investing cash flows (in millions) follows: Fiscal Year Ended December 31, 2022 2021 Acquisitions, net of cash acquired $ (78.2) $ (170.7) Additions to property, plant and equipment (130.9) (123.3) Proceeds from sale of cost method investment 1.6 — Proceeds from sale of property and equipment 0.6 0.8 Net cash used in investing activities $ (206.9) $ (293.2) A summary of the most significant items affecting the change in our investing cash flows follows: Acquisitions, net of cash acquired .
A summary of investing cash flows (in millions) follows: Fiscal Year Ended December 31, 2023 2022 Acquisitions, net of cash acquired $ (851.8) $ (78.2) Additions to property and equipment (154.9) (130.9) Proceeds from sale of cost method investment — 1.6 Proceeds from sale of property and equipment 1.1 0.6 Net cash used in investing activities $ (1,005.6) $ (206.9) A summary of the most significant items affecting the change in our investing cash flows follows: Acquisitions, net of cash acquired .
Our known current- and long-term uses of cash include, among other possible demands: (1) capital expenditures and leases, (2) acquisitions, (3) repayments to service debt and other long-term obligations and (4) payments for final capping, closure and post-closure asset retirement obligations and environmental remediation liabilities.
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.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for further disclosure, including the effect of the valuation allowance release. 52 Table of Contents Contingent Liabilities We are subject to various legal proceedings, claims and regulatory matters, the outcomes of which are subject to significant uncertainty.
" 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.
Tax-Exempt Financings and Other Debt As of December 31, 2022, we had outstanding $197.0 million aggregate principal amount of tax-exempt bonds, $49.8 million aggregate principal amount of finance leases and $0.7 million aggregate principal amount of notes payable. See Note 12, Debt to our consolidated financial statements included under Item 8.
Tax-Exempt Financings and Other Debt As of December 31, 2023, we had outstanding $232.0 million aggregate principal amount of tax-exempt bonds, $53.1 million aggregate principal amount of finance leases and $0.2 million aggregate principal amount of notes payable. See Note 12, Debt to our consolidated financial statements included under Item 8.
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.
Legal, tax, information technology, human resources, certain finance and accounting and other administrative functions are included in our Corporate Entities segment, which is not a reportable operating segment. Corporate Entities results reflect those costs not allocated to our reportable operating segments.
We manage our resource-renewal operations through the Resource Solutions operating segment, which includes processing services, and non-processing services, which we refer to as our Customer Solutions business.
We manage our resource renewal operations through the Resource Solutions operating segment, which includes processing services and non-processing services, which we previously referred to as our Customer Solutions business, but now refer to as our National Accounts business.
Proceeds from sale of cost method investment associated with the sale of our minority ownership interest in a subsidiary of Vanguard Renewables in fiscal year 2022. Cash flows from financing activities .
Proceeds from sale of cost method investment. In fiscal year 2022, we received proceeds associated with the sale of our minority ownership interest in a subsidiary of Vanguard Renewables.
As of October 1, 2022, our Eastern, Western, and Resource Solutions reporting units indicated that the fair value of each reporting unit exceeded its carrying amount, including goodwill. Furthermore, in each case the fair value of our Eastern, Western, and Resource Solutions reporting units exceeded its carrying value by in excess of 67.0%.
As of October 1, 2023, 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. In the case the fair value of our Eastern, Western, and Resource Solutions reporting units exceeded its carrying value by in excess of 30%.
A summary of financing cash flows (in millions) follows: Fiscal Year Ended December 31, 2022 2021 Proceeds from debt borrowings $ 88.2 $ 3.7 Principal payments on debt (59.3) (10.3) Payments of debt issuance costs (1.2) (3.7) Payments of contingent consideration (1.0) — Proceeds from the exercise of share-based awards 0.2 0.2 Net cash provided by (used in) financing activities $ 26.9 $ (10.1) A summary of the most significant items affecting the change in our financing cash flows follows: Debt activity .
A summary of financing cash flows (in millions) follows: Fiscal Year Ended December 31, 2023 2022 Proceeds from debt borrowings $ 465.0 $ 88.2 Principal payments on debt (26.2) (59.3) Payments of debt issuance costs (12.8) (1.2) Payments of contingent consideration — (1.0) Proceeds from the exercise of share-based awards 0.1 0.2 Proceeds from the public offering of Class A Common Stock 496.2 — Net cash provided by financing activities $ 922.3 $ 26.9 A summary of the most significant items affecting the change in our financing cash flows follows: Debt activity .
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.
As of December 31, 2023, we were in compliance with all covenants contained in the Amended and Restated Credit Agreement. 48 Table of Contents 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.
" Management's Discussion and Analysis of Financial Condition and Results of Operations " of this Annual Report on Form 10-K.
" Management's Discussion and Analysis of Financial Condition and Results of Operations " of this Annual Report on Form 10-K. Cash flows from investing activities .
A summary of operating cash flows (in millions) follows: Fiscal Year Ended December 31, 2022 2021 Net income $ 53.1 $ 41.1 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 126.4 103.6 Interest accretion on landfill and environmental remediation liabilities 8.0 7.3 Amortization of debt issuance costs on long-term debt 1.9 2.3 Stock-based compensation 8.2 11.6 Operating lease right-of-use assets expense 13.8 13.8 Disposition of assets, other items and charges, net 0.7 1.0 Deferred income taxes 16.5 15.1 228.6 195.8 Changes in assets and liabilities, net (11.3) (13.1) Net cash provided by operating activities $ 217.3 $ 182.7 Net cash provided by operating activities increased $34.6 million in fiscal year 2022 as compared to fiscal year 2021.
A summary of operating cash flows (in millions) follows: Fiscal Year Ended December 31, 2023 2022 Net income $ 25.4 $ 53.1 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 170.7 126.4 Interest accretion on landfill and environmental remediation liabilities 9.9 8.0 Amortization of debt issuance costs on long-term debt 3.0 1.9 Stock-based compensation 9.1 8.2 Operating lease right-of-use assets expense 15.3 13.8 Disposition of assets, other items and charges, net 0.7 0.7 Loss from termination of bridge financing 8.2 — Landfill capping charge - veneer failure 3.0 — Deferred income taxes 7.4 16.5 252.7 228.6 Changes in assets and liabilities, net (19.6) (11.3) Net cash provided by operating activities $ 233.1 $ 217.3 44 Table of Contents Net cash provided by operating activities increased $15.8 million in fiscal year 2023 as compared to fiscal year 2022.
Southbridge Landfill Closure Charge, Net 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 Southbridge Landfill reached its final capacity .
Engineering analysis is currently underway to determine root causes and responsibility for the event. Southbridge Landfill Closure Charge, Net 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 Southbridge Landfill reached its final capacity .
A summary of the major components of our general and administration expenses is as follows (dollars in millions and as a percentage of total revenues): Fiscal Years Ended December 31, $ Change 2022 2021 Labor costs $ 91.5 8.4 % $ 83.6 9.4 % $ 7.9 Professional fees 7.0 0.6 % 7.2 0.8 % (0.2) Provision for bad debt expense 2.0 0.2 % 1.7 0.2 % 0.3 Other 32.9 3.1 % 26.3 3.0 % 6.6 $ 133.4 12.3 % $ 118.8 13.4 % $ 14.6 These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies.
A summary of the major components of our general and administration expenses is as follows (dollars in millions and as a percentage of total revenues): 37 Table of Contents Fiscal Years Ended December 31, $ Change 2023 2022 Labor costs $ 101.6 8.0 % $ 91.5 8.4 % $ 10.1 Professional fees 10.1 0.8 % 7.0 0.6 % 3.1 Provision for expected credit losses 2.5 0.2 % 2.0 0.2 % 0.5 Other 41.6 3.3 % 32.9 3.1 % 8.7 $ 155.8 12.3 % $ 133.4 12.3 % $ 22.4 These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies.
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.
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.
As of December 31, 2022, 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, 2022 Covenant Requirements at December 31, 2022 Maximum consolidated net leverage ratio (1) 2.08 4.00 Minimum interest coverage ratio 11.56 3.00 46 Table of Contents (1) The maximum consolidated net leverage ratio is calculated as consolidated funded debt, net of unencumbered cash and cash equivalents in excess of $2.0 million and up to $100.0 million (calculated at $534.3 million as of December 31, 2022, or $603.5 million of consolidated funded debt less $69.2 million of cash and cash equivalents in excess of $2.0 million and up to $100.0 million as of December 31, 2022), divided by consolidated EBITDA.
As of December 31, 2023, we were in compliance with all financial covenants contained in the Amended and Restated Credit Agreement as follows (in millions): Credit Facility Covenant Fiscal Year Ended December 31, 2023 Covenant Requirements at December 31, 2023 Maximum consolidated net leverage ratio (1) 2.78 4.75 Minimum interest coverage ratio 7.57 3.00 (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 in excess of $2.0 million (calculated at $954.5 million as of December 31, 2023, or $1,054.5 million of consolidated funded debt less $100.0 million total of unencumbered cash and cash equivalents), divided by consolidated EBITDA.
Revenues associated with our Resource Solutions operations are derived from two lines-of-service: processing services and our Customer Solutions business. Revenues from processing services are derived from customers in the form of processing fees, tipping fees, commodity sales, and organic material sales.
Revenues associated with our Resource Solutions operations are comprised of 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, and organic material sales.
Federal net operating losses generated following the 2017 tax year are carried forward indefinitely, but generally may only offset up to 80% of taxable income earned in a tax year (“post-2017 net operating losses”). We carried $59.8 million of pre-2018 net operating losses and $46.5 million post-2017 net operating losses into the 2022 tax year.
Federal net operating losses generated following the 2017 tax year are carried forward indefinitely, but generally may only offset up to 80% of taxable income earned in a tax year (“post-2017 net operating losses”).
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 regulations, labor availability and severe weather conditions.
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 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.
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.
These rates per ton are updated annually, or more frequently, as significant facts change. 51 Table of Contents 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.
The majority of our residential collection services are performed on a subscription basis with individual property owners or occupants. Landfill and transfer customers are charged a tipping fee on a per ton basis for disposing of their solid waste at our disposal facilities and transfer stations. We also generate and sell electricity at certain of our landfill facilities.
Landfill and transfer customers are charged a tipping fee on a per ton basis for disposing of their solid waste at our disposal facilities and transfer stations. We also generate and sell electricity at certain of our landfill facilities.
We shall also pay a fronting fee for each letter of credit of 0.25% per annum. Interest under the Amended and Restated Credit Agreement shall be subject to increase by 2.00% per annum during the continuance of a payment default and may be subject to increase by 2.00% per annum during the continuance of any other event of default.
Interest under the Amended and Restated Credit Agreement is subject to increase by 2.00% per annum during the continuance of a payment default and may be subject to increase by 2.00% per annum during the continuance of any other event of default.
In fiscal year 2022, our minimum and maximum exposure per individual event under the automobile plan were up to $1.50 million and $3.65 million, respectively.
In fiscal year 2023, our maximum exposure per individual event under the workers’ compensation plan was $1.25 million. In fiscal year 2023, our minimum and maximum exposure per individual event under the automobile plan were up to $1.75 million and $3.88 million, respectively.
We have the right to request, at our discretion, an increase in the amount of loans under the Credit Facility by an aggregate amount of $125.0 million, subject to the terms and conditions set forth in the Credit Agreement.
We have the right to request, at our discretion, an increase in the amount of loans under the Credit Facility by an aggregate amount of $125.0 million, subject to further increase based on the terms and conditions set forth in the Amended and Restated Credit Agreement. The Credit Facility has a 5-year term that matures in December 2026.
In fiscal year 2022, we acquired fourteen businesses for total consideration of $82.7 million, including $76.6 million in cash and paid $1.6 million in holdback payments on businesses previously acquired, as compared to fiscal year 2021, during which we acquired ten businesses for total consideration of $171.7 million, including $166.5 million in cash and $1.3 million in cash held in escrow accounts as holdbacks to sellers, and paid $2.9 million in holdback payments on businesses previously acquired.
In fiscal year 2023, we acquired seven businesses for total consideration of $846.6 million, including $846.7 million in cash, and paid $5.1 million in holdback payments on businesses previously acquired, as compared to fiscal year 2022 during which we acquired fourteen businesses for total consideration of $82.7 million, including $76.6 million in cash, and paid $1.6 million in holdback payments on businesses previously acquired.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for further disclosure over environmental remediation liabilities.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for further disclosure regarding the public offering.
Provision for Income Taxes Our provision for income taxes was $21.9 million in fiscal year 2022 and $16.9 million in fiscal year 2021. For fiscal year 2022, the provision for income taxes includes $5.4 million of current income taxes and $16.5 million of deferred income taxes.
For fiscal year 2023, the provision for income taxes includes $4.4 million of current income taxes and $7.2 million of deferred income taxes. The provision for income taxes in fiscal year 2022 included $5.4 million of current income taxes and $16.5 million of deferred income taxes.
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 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.
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 2022 or 2021. However, there can be no assurance that long-lived assets will not be impaired at any time in the future.
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 2023 or 2022.
Inflation Inflationary increases in costs, including current inflationary pressures associated primarily with fuel, labor and certain other cost categories and capital items, have materially affected, and may continue to materially affect, our operating margins and cash flows.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K. 49 Table of Contents Inflation Inflationary increases in costs, including current inflationary pressures associated primarily with labor, certain other cost categories, and capital items, have materially affected, and may continue to materially affect, our operating margins and cash flows.
On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was enacted. The TCJA significantly changed U.S. corporate income tax laws by, among other things, changing carryforward rules for net operating losses.
The TCJA significantly changed U.S. corporate income tax laws by, among other things, changing carryforward rules for net operating losses.
A summary of cash flows (in millions) follows: Fiscal Year Ended December 31, $ Change 2022 2021 Net cash provided by operating activities $ 217.3 $ 182.7 $ 34.6 Net cash used in investing activities $ (206.9) $ (293.2) $ 86.3 Net cash provided by (used in) financing activities $ 26.9 $ (10.1) $ 37.0 Cash flows from operating activities.
A summary of cash flows (in millions) follows: Fiscal Year Ended December 31, $ Change 2023 2022 Net cash provided by operating activities $ 233.1 $ 217.3 $ 15.8 Net cash used in investing activities $ (1,005.6) $ (206.9) $ (798.7) Net cash provided by financing activities $ 922.3 $ 26.9 $ 895.4 Cash flows from operating activities.
In the fiscal year ended December 31, 2022 ("fiscal year 2022"), we acquired fourteen businesses primarily related to our solid-waste operations, including, among others, solid-waste collection, recycling, transfer station and transportation businesses for total consideration of $82.7 million, including $76.6 million in cash, $1.3 million in non-cash consideration and $4.8 million in holdbacks to sellers and contingent consideration.
In the fiscal year 2022, we acquired fourteen businesses, primarily related to our solid waste collection, transfer, recycling and transportation operations, for total consideration of $82.7 million, including $76.6 million in cash, $1.3 million in non-cash consideration and $4.8 million in holdbacks to sellers. 33 Table of Contents Divestitures From time to time, we may sell or divest certain investments or other components of our business.
We incurred no impairment of goodwill as a result of our annual goodwill impairment tests in fiscal years 2022 or 2021. 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.
However, there can be no assurance that goodwill will not be impaired at any time in the future. 52 Table of Contents Intangible assets consist primarily of covenants not-to-compete, customer relationships and trade names.
Accordingly, in fiscal years 2022 and 2021, we recorded charges associated with the closure of our Southbridge Landfill (in millions) as follows: Fiscal Year Ended December 31, 2022 2021 Legal and transaction costs (1) $ 0.7 $ 0.9 Contract settlement charge (2) — 0.6 Landfill closure project charge (credit) (3) 0.7 (1.0) Southbridge Landfill closure charge, net $ 1.4 $ 0.5 (1) We incurred legal costs as well as other transaction costs associated with various matters as part of the Southbridge Landfill closure. 37 Table of Contents (2) We updated the cost estimates associated with a contract settlement charge associated with the Southbridge Landfill closure and the remaining future obligations due to the Town of Southbridge under the landfill operating agreement with the Town of Southbridge.
Accordingly, in fiscal years 2023 and 2022, we recorded charges associated with the closure of our Southbridge Landfill (in millions) as follows: Fiscal Year Ended December 31, 2023 2022 Legal and transaction costs (1) $ 0.4 $ 0.7 Landfill closure project charge (2) 0.1 0.7 Southbridge Landfill closure charge, net $ 0.5 $ 1.4 (1) We incurred legal costs as well as other transaction costs associated with various matters as part of the Southbridge Landfill closure.
Expense from Acquisition Activities and Other Items In the fiscal years 2022 and 2021, we recorded charges of $4.6 million and $5.3 million, respectively, comprised primarily of legal, consulting and other similar costs associated with due diligence and the acquisition and integration of acquired businesses or select development projects.
Expense from Acquisition Activities In fiscal years 2023 and 2022, we recognized expenses of $15.0 million and $4.6 million, respectively, comprised primarily of legal, consulting and other similar costs associated with the due diligence, acquisition and integration of acquired businesses, including the GFL Acquisition and the Twin Bridges Acquisition, in fiscal year 2023, as well as select development projects.
Unless loans are made as or converted to base rate loans, loans under the Amended and Restated Credit Agreement shall bear interest at Term SOFR, plus a margin based upon our consolidated net leverage ratio in the range of 1.125% to 2.125% per annum, plus a sustainability adjustment of up to positive or negative 4.0 basis point per annum, and a commitment fee on undrawn amounts will be charged on undrawn amounts at a rate of Term SOFR, plus a margin based upon our consolidated net leverage ratio in the range of 0.20% to 0.40% per annum, plus a sustainability adjustment of up to positive or negative 1.0 basis points per annum.
The Credit Facility shall bear interest, at our election, at Term SOFR, including a secured overnight financing rate adjustment of 10 basis points, 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 Term Loan Facility 1.125% to 2.125% 0.125% to 1.125% Revolving Credit Facility 1.125% to 2.125% 0.125% to 1.125% 2023 Term Loan Facility 1.625% to 2.625% 0.625% to 1.625% 47 Table of Contents A commitment fee will be charged on undrawn amounts of our Revolving Credit Facility based upon our consolidated net leverage ratio in the range of 0.20% to 0.40% per annum, plus a sustainability adjustment of up to positive or negative 1.0 basis point per annum.
We have $266.1 million of undrawn capacity from our $300.0 million revolving credit facility ("Revolving Credit Facility") as of December 31, 2022 to help meet our short-term and long-term liquidity needs.
As of December 31, 2023, we had $272.3 million of undrawn capacity under our $300.0 million revolving credit facility ("Revolving Credit Facility") and $220.9 million of cash and equivalents to help meet our short-term and long-term liquidity needs.
The most significant items impacting the changes in our general and administration expense during fiscal year 2022 are summ arized below: • Labor costs decreased as a percentage of revenues, while increasing in aggregate dollars due primarily to acquisition-related growth, wage inflation and higher accrued incentive compensation associated with increased headcount, partially offset by lower equity compensation costs; and • Other costs increased in aggregate dollars due primarily to inflationary pressures and an increase in general overhead costs to support business growth. 36 Table of Contents 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.
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.
Resource Solutions revenues The change component in fiscal year 2022 resource solutions revenues growth of $64.8 million from the prior year is the result of the following: • $42.9 million from acquisition activity; • $25.9 million on higher volumes from our Customer Solutions business, favorable pricing and increased fees; partially offset by • $(3.5) million from unfavorable commodity pricing, partially offset by higher tipping fees and favorable other processing pricing; and • $(0.5) million from lower processing volumes mainly driven by lower recycled commodity volumes. 34 Table of Contents Operating Expenses A summary of our cost of operations, general and administration and depreciation and amortization expenses is as follows (dollars in millions and as a percentage of total revenues): Fiscal Years Ended December 31, $ Change 2022 2021 Cost of operations $ 723.1 66.6 % $ 582.4 65.5 % $ 140.7 General and administration $ 133.4 12.3 % $ 118.8 13.4 % $ 14.6 Depreciation and amortization $ 126.4 11.6 % $ 103.6 11.6 % $ 22.8 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.
Operating Expenses A summary of our cost of operations, general and administration and depreciation and amortization expenses is as follows (dollars in millions and as a percentage of total revenues): Fiscal Years Ended December 31, $ Change 2023 2022 Cost of operations $ 832.0 65.8 % $ 723.1 66.6 % $ 108.9 General and administration $ 155.8 12.3 % $ 133.4 12.3 % $ 22.4 Depreciation and amortization $ 170.7 13.5 % $ 126.4 11.6 % $ 44.3 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. 36 Table of Contents A summary of the major components of our cost of operations is as follows (dollars in millions and as a percentage of total revenues): Fiscal Years Ended December 31, $ Change 2023 2022 Direct costs $ 311.2 24.6 % $ 279.7 25.8 % $ 31.5 Direct labor costs 175.3 13.9 % 144.0 13.3 % 31.3 Direct operational costs 99.7 7.9 % 89.5 8.3 % 10.2 Fuel costs 48.6 3.8 % 48.3 4.4 % 0.3 Maintenance and repair costs 102.1 8.1 % 81.7 7.4 % 20.4 Other operational costs 95.1 7.5 % 79.9 7.4 % 15.2 $ 832.0 65.8 % $ 723.1 66.6 % $ 108.9 These cost categories may change from time to time and may not be comparable to similarly titled categories presented by other companies.
These obligations are reflected in our balance sheet and include obligations with scheduled maturities, as well as significant obligations pertaining to accrued environmental remediation liabilities 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.
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 and final capping, closure and post-closure asset retirement obligations at our landfills.
For further description regarding contractual obligations, see Note 8, Leases , Note 10, Final Capping, Closure and Post-Closure Costs, Note 13, Commitments and Contingencies and Note 17, Income Taxes, to our consolidated financial statements included in Item 8. " Financial Statements and Supplementary Data " of this Annual Report on Form 10-K.
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 , and Note 16, Employee Benefit Plans to our consolidated financial statements included in Item 8.
The Credit Agreement required and the Amended and Restated 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.
The available amount is net of outstanding irrevocable letters of credit totaling $27.7 million, and as of December 31, 2023 no amount had been drawn. The Amended and Restated 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.
Environmental Remediation Charge In the fiscal year 2022, we recorded an environmental remediation charge of $0.8 million associated with the investigation of potential remediation at an inactive waste disposal site that adjoins one of our landfills.
" Financial Statements and Supplementary Data " of this Annual Report on Form 10-K for disclosure regarding our landfill final capping, closure and post-closure costs. Environmental Remediation Charge In fiscal year 2022, we recorded an environmental remediation charge of $0.8 million associated with the investigation of potential remediation at an inactive waste disposal site that adjoins one of our landfills.
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 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAccording to the terms of the agreements, we receive interest based on the 1-month LIBOR index, in some instances restricted by a 0.0% floor, and pay interest at a weighted average rate of approximately 2.20%. The agreements mature between May 2023 and June 2027.
Biggest change(2) These agreements mature between February 2026 and June 2028 and state that we receive interest based on Term SOFR, restricted by a 0.0% floor, and pay interest at a weighted average rate of approximately 3.60%.
We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. As of December 31, 2022, we were not party to any commodity hedging agreements. Should recycled material commodity prices change by $10 per ton, we estimate that our annual operating income margin would change by approximately $0.9 million annually.
We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. As of December 31, 2023, we were not party to any commodity hedging agreements. Should recycled material commodity prices change by $10 per ton, we estimate that our annual operating income margin would change by approximately $1.0 million annually.
We have a fuel cost recovery program, which is the energy component of our E&E Fee that is designed to offset some or all of the impact of diesel fuel price increases above a periodically reset floor and contemplates a minimum customer participation level to cover changes in our fuel costs.
We have fuel cost recovery programs, primarily the energy component of our E&E Fee which is designed to offset some or all of the impact of diesel fuel price increases above a periodically reset floor and contemplates a minimum customer participation level to cover changes in our fuel costs.
The weighted average interest rate on the variable rate portion of long-term debt was approximately 5.4% at December 31, 2022. Should the average interest rate on the variable rate portion of long-term debt change by 100 basis points, we estimate that our annual interest expense would change by up to approximately $1.7 million. 54 Table of Contents
The weighted average interest rate on the variable rate portion of long-term debt was approximately 7.4% at December 31, 2023. Should the average interest rate on the variable rate portion of long-term debt change by 100 basis points, we estimate that our annual interest expense would change by up to approximately $2.5 million. 56 Table of Contents
As of December 31, 2022, we have $247.5 million of fixed rate debt in addition to the $190.0 million fixed through our interest rate derivative agreements. We had interest rate risk relating to approximately $166.0 million of long-term debt as of December 31, 2022.
As of December 31, 2023, we have $285.3 million of fixed rate debt in addition to the $515.0 million fixed through our interest rate derivative agreements. We had interest rate risk relating to approximately $254.3 million of long-term debt as of December 31, 2023.
Based on our consumption levels in the last twelve months ended December 31, 2022, after considering physically settled fuel contracts we believe a $0.50 cent per gallon change in the price of diesel fuel would change our direct fuel costs by approximately $4.8 million per year.
Based on our consumption levels in the last twelve months ended December 31, 2023, combined with our expected fuel consumption related to the GFL Acquisition, and after considering physically settled fuel contracts, we believe a $0.40 cent per gallon change in the price of diesel fuel would change our direct fuel costs by approximately $5.6 million per year.
In addition to direct fuel costs related to our consumption levels, we are also subject to fuel surcharge expense from third party transportation providers.
In addition to direct fuel costs related to our consumption levels, we are also subject to fuel surcharge expense from third party transportation providers. Other operational costs and capital expenditures may also be impacted by fuel prices.
Offsetting these changes in direct fuel expense would be changes in the energy component of the E&E Fees charged to our customers. Based on participation rates as of December 31, 2022, we believe a $0.50 cent per gallon change in the price of diesel fuel would change the energy component of the E&E Fee by approximately $5.3 million per year.
Based on participation rates as of December 31, 2023 and considering the GFL Acquisition, we believe a $0.40 cent per gallon change in the price of diesel fuel would change the energy component of the E&E Fee by approximately $5.3 million per year.
Our sensitivity to changes in commodity prices is complex because each customer contract is unique relative to revenue sharing, tipping or processing fees and other arrangements. The above operating income impact may not be indicative of future operating results and actual results may vary materially.
Our sensitivity to changes in commodity prices is complex because each customer contract is unique relative to revenue sharing, tipping or processing fees and other arrangements.
Interest Rate Risk Our strategy to reduce exposure to interest rate risk involves entering into interest rate derivative agreements to hedge against adverse movements in interest rates related to the variable rate portion of our long-term debt.
The above operating income impact may not be indicative of future operating results and actual results may vary materially. 55 Table of Contents Interest Rate Risk Our strategy to reduce exposure to interest rate risk involves entering into interest rate derivative agreements to hedge against adverse movements in interest rates related to the variable rate portion of our long-term debt.
Differences paid or received over the life of the agreements are recorded as additions to or reductions of interest expense on the underlying debt and included in cash flows from operating activities. As of December 31, 2022 and December 31, 2021, our active interest rate derivative agreements had a total notional amount of $190.0 million and $195.0 million, respectively.
Differences paid or received over the life of the agreements are recorded as additions to or reductions of interest expense on the underlying debt and included in cash flows from operating activities.
Commodity Price Risk We market a variety of materials, including fibers such as old corrugated cardboard and old newsprint, plastics, glass, ferrous and aluminum metals.
Our fuel costs were $48.6 million in fiscal year 2023, or 3.8% of revenue, compared to $48.3 million in fiscal year 2022, or 4.4% of revenue. Commodity Price Risk We market a variety of materials, including fibers such as old corrugated cardboard and old newsprint, plastics, glass, ferrous and aluminum metals.
Removed
Other operational costs and capital expenditures may also be impacted by fuel prices. 53 Table of Contents Our fuel costs were $48.3 million in 2022, or 4.4% of revenue, compared to $26.9 million in 2021, or 3.0% of revenue.
Added
Offsetting these changes in direct fuel expense would be changes in the energy component of the E&E Fees charged to our customers.
Removed
As of December 31, 2021, we had forward starting interest rate derivative agreements with a total notional amount of $85.0 million outstanding. As of December 31, 2022, we have a forward starting interest rate derivative agreement with a total notional amount of $20.0 million.
Added
A summary of the changes to the notional amount of interest rate derivative agreements follows (in millions): Active Forward Starting Total Balance, December 31, 2021 $ 195.0 $ 85.0 $ 280.0 Commencements 65.0 (65.0) — Maturities (70.0) — (70.0) Balance, December 31, 2022 (1) 190.0 20.0 210.0 Additions 390.0 — 390.0 Commencements 20.0 (20.0) — Maturities (85.0) — (85.0) Balance, December 31, 2023 (2) $ 515.0 $ — $ 515.0 (1) These agreements mature between May 2023 and May 2028 and state that we receive interest based on 1-month LIBOR, restricted by a 0.0% floor in some instances, and pay interest at a weighted average rate of approximately 2.11%.
Removed
According to the terms of this agreement, we will receive interest based on the 1-month LIBOR index, restricted by a 0.0% floor, and will pay interest at a rate of 1.29%. The agreement matures in May 2028.

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