ADVANCED DISPOSAL SERVICES, INC., 10-Q filed on 5/7/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2018
Apr. 20, 2018
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 31, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Entity Registrant Name Advanced Disposal Services, Inc.  
Entity Central Index Key 0001585790  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   88,554,586
v3.8.0.1
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Current assets    
Cash and cash equivalents $ 6.5 $ 6.8
Accounts receivable, net of allowance for doubtful accounts of $5.0 and $5.4, respectively 191.2 199.9
Prepaid expenses and other current assets 44.8 37.9
Total current assets 242.5 244.6
Other assets 30.2 23.0
Property and equipment, net of accumulated depreciation of $1,406.4 and $1,355.5, respectively 1,722.3 1,728.8
Goodwill 1,209.9 1,208.2
Other intangible assets, net of accumulated amortization of $258.0 and $247.6, respectively 281.3 288.7
Total assets 3,486.2 3,493.3
Current liabilities    
Accounts payable 97.8 92.3
Accrued expenses 116.8 113.0
Deferred revenue 69.8 69.1
Current maturities of landfill retirement obligations 20.2 20.2
Current maturities of long-term debt 52.4 74.1
Total current liabilities 357.0 368.7
Other long-term liabilities 59.0 61.5
Long-term debt, less current maturities 1,874.7 1,884.2
Accrued landfill retirement obligations, less current maturities 209.7 205.7
Deferred income taxes 91.3 88.6
Total liabilities 2,591.7 2,608.7
Commitments and contingencies
Equity    
Common stock: $.01 par value, 1,000,000,000 shares authorized, 88,535,054 and 88,491,194 shares outstanding, respectively 0.9 0.9
Treasury stock at cost, 2,274 and 2,274 shares, respectively 0.0 0.0
Additional paid-in capital 1,490.2 1,487.4
Accumulated deficit (598.4) (603.3)
Accumulated other comprehensive income (loss) 1.8 (0.4)
Total stockholders' equity 894.5 884.6
Total liabilities and stockholders’ equity $ 3,486.2 $ 3,493.3
v3.8.0.1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts receivable $ 5.0 $ 5.4
Accumulated depreciation property and equipment 1,406.4 1,355.5
Accumulated amortization other intangible assets $ 258.0 $ 247.6
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 1,000,000,000 1,000,000,000
Common stock, shares outstanding (in shares) 88,535,054 88,491,194
Treasury stock at cost (in shares) 2,274 2,274
v3.8.0.1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Service revenues $ 364.7 $ 347.4
Operating costs and expenses    
Operating 236.1 228.9
Selling, general and administrative 45.5 45.0
Depreciation and amortization 64.7 61.4
Acquisition and development costs 0.2 0.5
(Gain) loss on disposal of assets and asset impairments (1.9) 0.3
Restructuring charges 0.1 0.0
Total operating costs and expenses 344.7 336.1
Operating income 20.0 11.3
Other (expense) income    
Interest expense (23.0) (22.5)
Other income (expense), net 5.9 (0.5)
Total other expense (17.1) (23.0)
Income (loss) before income taxes 2.9 (11.7)
Income tax expense (benefit) 0.8 (4.7)
Net income (loss) $ 2.1 $ (7.0)
Net income (loss) attributable to common stockholders per share    
Basic income (loss) per share (in dollars per share) $ 0.02 $ (0.08)
Diluted income (loss) per share (in dollars per share) $ 0.02 $ (0.08)
Basic average shares outstanding (in shares) 88,515,854 88,136,714
Diluted average shares outstanding (in shares) 89,021,709 88,136,714
v3.8.0.1
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Statement of Comprehensive Income [Abstract]    
Net income (loss) $ 2.1 $ (7.0)
Other comprehensive income, net of tax of $0.7 and $0.0, respectively 2.2 0.0
Comprehensive income (loss) $ 4.3 $ (7.0)
v3.8.0.1
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Statement of Comprehensive Income [Abstract]    
Other comprehensive income, tax $ 0.7 $ 0.0
v3.8.0.1
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($)
$ in Millions
Total
Common Stock
Treasury Stock
Additional Paid-In Capital
Accumulated Deficit
Accumulated Other Comprehensive (Loss) Income
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Impact of implementing new revenue recognition standard, net of tax of $1.1 $ 2.8       $ 2.8  
Balance (in shares) at Dec. 31, 2017   88,493,468 2,274      
Balance at Dec. 31, 2017 884.6 $ 0.9 $ 0.0 $ 1,487.4 (603.3) $ (0.4)
Increase (Decrease) in Stockholders' Equity [Roll Forward]            
Net income 2.1       2.1  
Stock-based compensation (in shares)   22,565        
Stock-based compensation 2.5     2.5    
Stock option exercises (in shares)   21,295        
Stock option exercises 0.3     0.3    
Unrealized gain resulting from change in fair value of derivative instruments, net of tax of $0.7 2.2         2.2
Balance (in shares) at Mar. 31, 2018   88,537,328 2,274      
Balance at Mar. 31, 2018 $ 894.5 $ 0.9 $ 0.0 $ 1,490.2 $ (598.4) $ 1.8
v3.8.0.1
Condensed Statement of Stockholders' Equity (Unaudited) (Parenthetical)
$ in Millions
3 Months Ended
Mar. 31, 2018
USD ($)
Statement of Stockholders' Equity [Abstract]  
Unrealized gain resulted from change in fair value of derivative instruments, tax $ 0.7
Impact of implementing new revenue recognition standard, tax $ 1.1
v3.8.0.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash flows from operating activities    
Net income (loss) $ 2.1 $ (7.0)
Adjustments to reconcile net income (loss) to net cash provided by operating activities    
Depreciation and amortization 64.7 61.4
Change in fair value of derivative instruments (5.3) 0.8
Amortization of debt issuance costs and original issue discount 1.6 1.6
Accretion on landfill retirement obligations 3.8 3.6
Other accretion and amortization 1.1 0.9
Provision for doubtful accounts 1.3 1.2
(Gain) loss on disposition of property and equipment (1.9) 0.3
Stock based compensation 2.5 2.7
Deferred tax expense (benefit) 1.4 (5.3)
Earnings in equity investee (0.5) (0.4)
Changes in operating assets and liabilities, net of businesses acquired    
Decrease in accounts receivable 7.3 15.2
Decrease (increase) in prepaid expenses and other current assets (0.5) (0.2)
Decrease in other assets 0.4 0.4
Increase (decrease) in accounts payable 5.3 (7.8)
Increase in accrued expenses 3.6 5.1
Increase (decrease) in deferred revenue 0.1 (1.4)
(Decrease) increase in other long-term liabilities (3.9) 0.5
Capping, closure and post-closure obligations (4.6) (0.8)
Assumption of long term care and closure reserve 0.0 24.0
Net cash provided by operating activities 78.5 94.8
Cash flows from investing activities    
Purchases of property and equipment and landfill construction and development (34.8) (41.9)
Proceeds from sale of property and equipment and insurance recoveries 1.6 1.1
Acquisition of businesses, net of cash acquired (4.5) (67.9)
Net cash used in investing activities (37.7) (108.7)
Cash flows from financing activities    
Proceeds from borrowings on debt instruments 10.0 87.0
Repayment on debt instruments, including capital leases (51.4) (75.6)
Proceeds from issuance of common stock 0.3 3.0
Net cash (used in) provided by financing activities (41.1) 14.4
Net (decrease) increase in cash and cash equivalents (0.3) 0.5
Cash and cash equivalents, beginning of period 6.8 1.2
Cash and cash equivalents, end of period $ 6.5 $ 1.7
v3.8.0.1
Business Operations
3 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business Operations
Business Operations
Advanced Disposal Services, Inc. together with its consolidated subsidiaries, as a consolidated entity, is a nonhazardous solid waste services company providing collection, transfer, recycling and disposal services to customers in the South, Midwest and Eastern regions of the United States.
The Company manages and evaluates its principal operations through three reportable operating segments on a regional basis. Those operating segments are the South, East and Midwest regions which provide collection, transfer, recycling and disposal services. Additional information related to segments can be found in Note 10.
Five acquisitions were completed during the three months ended March 31, 2018 for aggregate consideration consisting of a cash purchase price of $4.5 and notes payable of $0.5 subject to net working capital adjustments and other commitments, which are expected to be completed within approximately one year. Four acquisitions were completed during the three months ended March 31, 2017 for a cash purchase price, net of cash acquired, of $67.9 and notes payable of $0.7. The results of operations of each acquisition are included in the Company's unaudited condensed consolidated statements of operations subsequent to the closing date of each acquisition. Our acquisition accounting and valuation processes with respect to property and equipment, intangible assets, current liabilities and long-term liabilities related to acquisitions completed subsequent to January 1, 2018 are preliminary and subject to adjustments.
During the three months ended March 31, 2017, the Company entered into an Asset Transfer and Liability Assumption Agreement with BFI Waste Systems of North America, LLC. The Company received a cash payment of $24.0 which was recorded as an operating cash flow. In exchange for this payment, the Company assumed certain post-closure liabilities of a closed portion of a landfill and became responsible for expenditures related to a gas infrastructure system. The present value of the assumed post-closure liabilities and expenditures related to the gas infrastructure system over the life of the landfill approximate the amount of the cash received.
v3.8.0.1
Basis of Presentation
3 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
Basis of Presentation
The Company’s condensed consolidated financial statements include its wholly-owned subsidiaries and their respective subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
The condensed consolidated financial statements as of March 31, 2018 and for the three months ended March 31, 2018 and 2017 are unaudited. In the opinion of management, these condensed consolidated financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair statement of the balance sheet, results of operations, comprehensive income (loss), cash flows, and changes in equity for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The financial statements presented herein should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
In conformity with accounting principles generally accepted in the United States of America, the Company uses estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. The Company must make these estimates and assumptions because certain information that it uses is dependent on future events, cannot be calculated with a high degree of precision from data available or simply cannot be readily calculated based on generally accepted methodologies. In preparing the Company's financial statements, the more subjective areas that deal with the greatest amount of uncertainty relate to: accounting for long-lived assets, including recoverability; landfill development costs, final capping, closure and post-closure costs; valuation allowances for accounts receivable and deferred tax assets; liabilities for potential litigation, claims and assessments; liabilities for environmental remediation; stock compensation; accounting for goodwill and intangible asset impairments; deferred taxes; uncertain tax positions; self-insurance reserves; and estimates of the fair value of assets acquired and liabilities assumed in any acquisition. Actual results could differ materially from the estimates and assumptions that the Company uses in preparation of its financial statements.
Recently Adopted Accounting Standards
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 "Revenue Recognition" (Topic 605), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 and applicable technical updates as of January 1, 2018 using the modified retrospective transition method. See Note 3 for further details.

In August 2016, the FASB issued ASU 2016‑15 associated with the classification of certain cash receipts and cash payments in the statement of cash flows. In November 2016, the FASB issued ASU 2016‑18 associated with the presentation of restricted cash and cash equivalents in the statement of cash flows. The objective of both amendments was to reduce existing diversity in practice. The Company's adoption of these ASUs in the first quarter of fiscal 2018 did not have a material impact on the Company's Statement of Cash Flows.
Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases, which will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required to increase transparency and comparability among organizations. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the standard is permitted; however, the Company does not expect to early adopt the ASU. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented. The Company is currently evaluating the expected impact of this standard update on disclosures, but does not anticipate any material changes to operating results or liquidity.
v3.8.0.1
Revenue Recognition
3 Months Ended
Mar. 31, 2018
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Revenue Recognition
Adoption of ASC Topic 606, "Revenue from Contracts with Customers"
On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company's historic accounting under Topic 605.
The Company recorded a net reduction to opening accumulated deficit of $2.8 as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact primarily related to capitalization of sales commissions. The impact to service revenues for the quarter ended March 31, 2018 was a decrease of $8.0 as a result of applying Topic 606 and an associated policy election to treat applicable state landfill tax payments as a reduction of revenue (historically recorded as an operating expense). Recycling rebates paid to customers, franchise fees paid to customers and state landfill tax payments are now recognized as a reduction of revenue.
Revenue Recognition
Revenues are recognized when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Further discussion of revenue for each major lines of business is provided below.
Residential Collection Revenue
The Company's residential collection operations consist of curbside collection of residential refuse from small carts or containers into collection vehicles for transport to a disposal/recycling site. These services are typically performed either under long-term contracts with local government entities or on a subscription basis, whereby individual households contract directly with the Company for collection services. The Company's residential collection service fees are typically quoted in its contracts on a weekly or monthly basis and revenue is recognized as the services are provided each month. The Company's residential contracts generally allow for annual rate increases and the number of households serviced under the Company's municipal contracts change throughout the contract period. For these reasons, revenue associated with the Company's residential collection service contracts is accounted for as variable consideration and the amounts recorded represent the value of the performance obligations completed.
Commercial Collection Revenue
The Company's commercial collection operations consist of collection of commercial refuse from Company supplied waste containers for transport to a disposal/recycling site. Standard service agreements with commercial customers are typically three to five years in length with pricing based on estimated disposal weight and time required to service the account. The Company's commercial collection service fees are typically quoted in its service agreements on a weekly or monthly basis and revenue is recognized as the services are provided each month. The Company's commercial service agreements generally allow for rate increases and it is not uncommon for the collection needs of the customer to change throughout the contract period. For these reasons, revenue associated with the Company's commercial collection service agreements is accounted for as variable consideration and the amounts recorded represent the value of the performance obligations completed.

Rolloff Collection Revenue
The Company's rolloff collection operations consist of providing construction and demolition sites with rolloff containers and collecting, transporting and disposing of the customers' waste at a disposal site. Rolloff services are typically provided pursuant to arrangements in which the customer provides 24-hour advance notice of its disposal needs and is billed on a "per pull" plus disposal basis. The Company typically has written service agreements with permanent rolloff customers but does not enter into written service agreements with customers that utilize temporary rolloff containers due to the relatively short-term nature of their needs. The Company's permanent rolloff service agreements generally allow for rate increases and number of pulls plus disposal weight vary throughout the contract period. For these reasons, revenue associated with the Company's rolloff collection service agreements is accounted for as variable consideration and the amounts recorded represent the value of the performance obligations completed.
Disposal Revenue
Transfer stations provide collection operations with a cost-effective means to consolidate waste and reduce transportation costs while providing the Company's landfill sites with an additional “gate” to extend the geographic reach of its landfills. Disposal revenue at transfer stations is primarily generated by charging tipping or disposal fees to third party customers.
Landfill disposal services represent the final stage in the Company's vertically integrated waste collection and disposal services solution. The Company generates disposal revenue at its landfills by charging tipping or disposal fees to third party customers.
The Company's landfill and transfer station tipping fees are quoted to customers on a per ton basis and disposal weight varies each time the customer disposes of waste at a Company facility. For these reasons, revenue associated with the Company's disposal services is accounted for as variable consideration and the amounts recorded represent the value of the performance obligations completed.
Sale of Recyclables
The Company has a network of 22 recycling facilities that it manages or operates. These facilities generate revenue through the collection, processing and sale of old corrugated cardboard, old newspaper, mixed paper, aluminum, glass and other materials. These recyclable materials are internally collected by the Company's residential, commercial and industrial collection operations as well as third-party haulers. The Company's sale of recyclables are quoted to customers on a per ton basis and recyclable weight varies each time the Company sells recyclables to its customers. For these reasons, revenue associated with the Company's sale of recyclables is accounted for as variable consideration and the amounts recorded represent the value of the performance obligations completed.
Fuel and Environmental Charges
The amounts charged for collection, disposal and recycling services may include fuel and environmental charges. These charges are not designed to be specific to the direct costs to service an individual customer’s account, but rather are designed to help recover changes in the Company's overall cost structure and to achieve an acceptable operating margin. Fuel and environmental charges vary each month in relation to the variable consideration of collection, disposal and recycling services. For this reason, fuel and environmental charges are accounted for as variable consideration.
Other Revenue
Other revenue is comprised of the following:
Trucking revenue;
Landfill management fee revenue;
Sale of landfill gas revenue;
Brokerage revenue; and
Service charges, administrative charges and other charges.
Other revenue typically varies based on volume of the related service therefore the Company accounts for this revenue as variable consideration.
Revenue by Segment
See Note 10 for additional information related to revenue by reportable segment and major line of business.
Variable Consideration
As described above, the Company accounts for revenue for each line of business as variable consideration. The Company believes that there will not be significant changes to its estimates of variable consideration as revenue recognized is recorded in accordance with the terms of the related contracts or verbal agreements.
Capitalized Sales Commissions
Under Topic 606, the Company will capitalize sales commissions as contract assets related to commercial and permanent rolloff collection customers and will amortize those sales commissions over the estimated customer life. The balance of capitalized sales commissions as of March 31, 2018 and January 1, 2018 were $3.9 and $3.8, respectively. The Company recorded amortization expense of $0.3 related to capitalized sales commissions during the first quarter of fiscal 2018.
Deferred Revenues
The Company records deferred revenue when cash payments are received in advance of the Company's performance. The increase in the deferred revenue balance is primarily driven by cash payments received in advance of the Company satisfying its performance obligations, offset by $66.3 of revenues recognized that were included in the deferred revenue balance at the beginning of the period.
Topic 606 Practical Expedients
As allowed by Topic 606, the Company does not disclose the value of unsatisfied performance obligations related to its contracts and service agreements as the Company accounts for its revenue as variable consideration and has the right to invoice for services performed each period.
v3.8.0.1
Landfill Liabilities
3 Months Ended
Mar. 31, 2018
Asset Retirement Obligation Disclosure [Abstract]  
Landfill Liabilities
Landfill Liabilities
Liabilities for final closure and post-closure costs for the year ended December 31, 2017 and for the three months ended March 31, 2018 are shown in the table below:
Balance at December 31, 2016
$
191.1

Increase in retirement obligation
9.7

Accretion of closure and post-closure costs
15.4

Acquisition
28.3

Change in estimate
2.1

Costs incurred
(20.7
)
Balance at December 31, 2017
225.9

Increase in retirement obligation
2.1

Accretion of closure and post-closure costs
3.8

Costs incurred
(1.9
)
Balance at March 31, 2018
229.9

Less: Current portion
(20.2
)

$
209.7

v3.8.0.1
Earnings (Loss) Per Share
3 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
Earnings (Loss) Per Share
Earnings (Loss) Per Share

The following table sets forth the computation of basic earnings (loss) per share and earnings (loss) per share, assuming dilution:

 
Three Months Ended March 31,

 
2018

2017
Numerator:







Net income (loss)
$
2.1


$
(7.0
)
Denominator:





Average common shares outstanding
88,515,854


88,136,714


Other potentially dilutive common shares
505,855




Average common shares outstanding, assuming dilution
89,021,709


88,136,714









Basic net income (loss) per share
$
0.02


$
(0.08
)

Diluted net income (loss) per share
$
0.02


$
(0.08
)

Basic net income (loss) per share is based on the weighted-average number of shares of common stock outstanding for each of the periods presented. Diluted net income (loss) per share is based on the weighted-average number of shares of common stock equivalents outstanding adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. The Company's potentially dilutive instruments are made up of equity awards, which include stock options, restricted stock units and performance stock units.
Pursuant to the FASB’s Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share, the Company includes additional shares in the computation of diluted net income per share. The additional shares included in diluted net income per share represent the number of shares that would be issued if all of the above potentially dilutive instruments were converted into common stock. When calculating diluted net income per share, the ASC requires the Company to include the potential shares that would be outstanding if dilutive outstanding stock options were exercised. This number is different from outstanding stock options because it is offset by shares the Company could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent.
Approximately 2.3 million and 3.8 million of outstanding stock awards were excluded from the diluted income (loss) per share calculation for the three months ended March 31, 2018 and March 31, 2017, respectively, because their effect was antidilutive.
v3.8.0.1
Debt
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Debt
Debt
The following table summarizes the major components of debt at each balance sheet date and provides the maturities and interest rate ranges of each major category of debt:
 
March 31,
2018
 
December 31,
2017
Revolving line of credit with lenders (Revolver), interest at applicable rate plus margin, as defined (6.5% and 6.25% at March 31, 2018 and December 31, 2017, respectively) due quarterly; balance due at maturity in November 2021
$
8.5

 
$
29.0

Term loans (Term Loan B); quarterly payments of $3.75 commencing March 31, 2017 through September 30, 2023 with final payment due November 10, 2023; interest at an alternate base rate or adjusted LIBOR rate with a 0.75% floor plus an applicable margin
1,450.0

 
1,460.0

Senior notes (Senior Notes) payable; interest at 5.625% payable in arrears semi-annually commencing May 15, 2017; maturing on November 15, 2024

425.0

 
425.0

Capital lease obligations, maturing through 2024
64.0

 
63.9

Other debt
9.6

 
11.8

 
1,957.1

 
1,989.7

Less: Original issue discount and debt issuance costs classified as a reduction to long-term debt
(30.0
)
 
(31.4
)
Less: Current portion
(52.4
)
 
(74.1
)
 
$
1,874.7

 
$
1,884.2



All borrowings under the Term Loan B and the Revolver are guaranteed by each of the Company's current and future domestic subsidiaries (which also guarantee the Senior Notes), subject to certain agreed-upon exemptions. All guarantors are jointly and severally and fully and unconditionally liable. There are no significant restrictions on the Company or any guarantor to obtain funds from its subsidiaries by dividend or loan.

Revolver and Letter of Credit Facilities

As of March 31, 2018, the Company had an aggregate committed capacity of $300.0, of which $100.0 was available for letters of credit under its credit facilities. The Company’s Revolver is its primary source of letter of credit capacity and expires in 2021. As of March 31, 2018 and December 31, 2017, the Company had $8.5 and $29.0 of borrowings outstanding on the Revolver, respectively. As of March 31, 2018 and December 31, 2017, the Company had an aggregate of $39.3 and $39.3, respectively, of letters of credit outstanding under its credit facilities.
v3.8.0.1
Derivative Instruments and Hedging Activities
3 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities
Derivative Instruments and Hedging Activities
The following table summarizes the fair values of derivative instruments recorded in the Company’s condensed consolidated balance sheets:


Balance Sheet Location

March 31, 2018

December 31,
2017
Derivatives Designated as Hedging Instruments








2017 Interest rate caps

Other assets

$
3.1


$

2017 Interest rate caps

Other long-term liabilities



(0.4
)
Derivatives Not Designated as Hedging Instruments








2016 Interest rate caps

Prepaid expenses and other current assets

4.9


0.9

2016 Interest rate caps

Other assets

3.5


2.8

Total derivatives



$
11.5


$
3.3


The Company has not offset fair value of assets and liabilities recognized for its derivative instruments.
Interest Rate Caps

In November 2017, the Company entered into two interest rate cap agreements (the "2017 interest rate caps") to hedge the risk of a rise in interest rates and associated cash flows on its variable rate debt. The Company has applied hedge accounting to the 2017 interest rate caps; therefore, changes in the fair value of the 2017 interest rate caps, to the extent they are effective, are recorded in other comprehensive income, net of tax in the condensed consolidated statements of comprehensive income (loss). The 2017 interest rate caps commence in 2019 and expire in 2021. The Company will pay the $4.9 premium on the 2017 interest rate caps in monthly installments beginning in October 2019. The Company recorded a gain related to the 2017 interest rate caps of $3.5 for the three months ended March 31, 2018 of which the effective portion of $2.9 was recorded in other comprehensive income in the condensed consolidated statements of comprehensive income (loss) and the ineffective portion of $0.6 was recorded in other income (expense), net in the condensed consolidated statement of operations. The notional value of the 2017 interest rate cap contracts aggregated were $600.0 as of December 31, 2017 and will remain constant through maturity in 2021.
In May 2016, the Company entered into three interest rate cap agreements (the "2016 interest rate caps") as economic hedges against the risk of a rise in interest rates and the associated cash flows on its variable rate debt. The Company is paying the $5.5 premium of the 2016 interest rate caps equally over eleven quarters beginning on March 31, 2017. The Company elected not to apply hedge accounting to the 2016 interest rate caps, therefore, changes in the fair value of the 2016 interest rate caps are recorded in other income (expense), net in the condensed consolidated statements of operations. The Company recorded a gain related to the 2016 interest rate caps of $4.6 and a loss of $1.3 for the three months ending March 31, 2018 and 2017, respectively. The notional value of the 2016 interest rate cap contracts aggregated were $800.0 as of March 31, 2018 and will remain constant through maturity in September 2019.
v3.8.0.1
Income Taxes
3 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The Company’s effective income tax rate for the three months ended March 31, 2018 and 2017 was 27.6% and 40.2%, respectively. The Company evaluates its effective income tax rate at each interim period and adjusts it accordingly as facts and circumstances warrant. The difference between income taxes computed at the federal statutory rate of 21% and reported income taxes for the three months ended March 31, 2018 was primarily due to the unfavorable impact of state and local taxes. The difference between income taxes computed at the federal statutory rate of 35% and reported income taxes for the three months ended March 31, 2017 was primarily due to the favorable impact of change in recorded valuation allowance and the favorable impact of state and local taxes.
As of March 31, 2018, the Company had $30.9 of liabilities associated with unrecognized tax benefits and related interest. These liabilities are included as components of other liabilities and deferred income taxes in the Company’s consolidated balance sheet. The Company does not anticipate that settlement of the liabilities will require payment of cash within the next twelve months. The Company is not able to reasonably estimate when it would make any cash payments required to settle these liabilities, but the Company does not believe that the ultimate settlement of its obligations will materially affect its liquidity.
On December 22, 2017, the Tax Cut and Jobs Act (the “Act”) was signed into law. In accordance with Staff Accounting Bulletin (“SAB”) 118, the Company recognized the estimated impact of this legislation as a component of the benefit for income taxes in its audited financial statements for the year ending December 31, 2017. SAB 118 allows for a measurement period, not to extend beyond one year from the enactment date, for companies to complete their accounting for the provisions of the Act under ASC 740. As of March 31, 2018, no subsequent adjustments have been made to the provisional amounts recorded with the financial statements for the year ending December 31. 2017. The Company is still analyzing certain aspects of the Act and is refining its calculations, which could potentially affect the provisional measurement of these balances. The Company's estimate of the impacts of the Act may change due to future guidance issued by the U.S. Treasury Department, Internal Revenue Services, Financial Standards Accounting Board and other standard setting bodies. The Company continues to analyze its estimate of a $0.1 tax related to the Act’s taxation of deemed repatriation on foreign earnings related to the Company’s Bahamas operations. The completion of the Company's 2017 income tax returns by the fourth quarter 2018 may also impact the provisional amounts that have been recorded.
v3.8.0.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Financial Instruments
The Company has obtained letters of credit, performance bonds and insurance policies for the performance of the following: landfill final capping, closure and post-closure requirements; certain collection, landfill and transfer station contracts; environmental remediation; and other obligations. Letters of credit are supported by the Company’s Revolver (Note 6).
The Company does not expect that any claims against or draws on these instruments would have a material adverse effect on the Company’s condensed consolidated financial statements. The Company has not experienced any unmanageable difficulty in obtaining the required financial assurance instruments for its current operations. In an ongoing effort to mitigate risks of future cost increases and reductions in available capacity, the Company continues to evaluate various options to access cost-effective sources of financial assurance.
Insurance
The Company carries insurance coverage for protection of its assets and operations from certain risks including automobile liability, general liability, real and personal property, workers' compensation, directors' and officers' liability, pollution, legal liability and other coverages the Company believes are customary to the industry. The Company's exposure to loss for insurance claims is generally limited to the per incident deductible, or self-insured retention, under the related insurance policy. Its exposure, however, could increase if its insurers are unable to meet their commitments on a timely basis.
The Company has retained a significant portion of the risks related to its automobile, general liability, workers' compensation and health claims programs. For its self-insured retentions, the exposure for unpaid claims and associated expenses, including incurred but not reported losses, is based on an actuarial valuation and internal estimates. The accruals for these liabilities could be revised if future occurrences or loss development significantly differ from the Company's assumptions used. The Company does not expect the impact of any known casualty, property, environmental or other contingency to have a material impact on its financial condition, results of operations or cash flows.
 
Litigation and Other Matters
In February 2009, the Company and certain of its subsidiaries were named as defendants in a purported class action suit in the Circuit Court of Macon County, Alabama. Similar class action complaints were brought against the Company and certain of its subsidiaries in 2011 in Duval County, Florida and in 2013 in Quitman County, Georgia and Barbour County, Alabama, and in 2014 in Chester County, Pennsylvania. The 2013 Georgia complaint was dismissed in March 2014. In late 2015 in Gwinnett County, Georgia, another purported class action suit was filed. The plaintiffs in those cases primarily allege that the defendants charged improper charges (fuel, administrative and environmental charges) that were in breach of the plaintiffs' service agreements with the Company and seek damages in an unspecified amount. The Company believes that it has meritorious defenses against these purported class actions, which it will vigorously pursue. Given the inherent uncertainties of litigation, including the early stage of these cases, the unknown size of any potential class, and legal and factual issues in dispute, the outcome of these cases cannot be predicted and a range of loss, if any, cannot currently be estimated.

In February 2017, a waste slide occurred in one cell at the Company’s Greentree Landfill in Kersey, Pennsylvania. During the three months ended March 31, 2018 and March 31, 2017, the Company recorded a charge in operating expenses of $3.8 and $5.4, respectively. These charges were recorded to adjust the reserve related to this matter to the remaining probable costs to relocate displaced material and restore infrastructure, net of estimated insurance recoveries; this amount could increase or decrease as a result of actual costs incurred to completion and insurance recoveries. The Company has incurred expenditures of $10.5, net of insurance recoveries, as of March 31, 2018 related to this matter.
The Company is subject to various other proceedings, lawsuits, disputes and claims and regulatory investigations arising in the ordinary course of its business. Many of these actions raise complex factual and legal issues and are subject to uncertainties. Actions filed against the Company include commercial, customer, and employment-related claims. The plaintiffs in some actions seek unspecified damages or injunctive relief, or both. These actions are in various procedural stages, and some are covered in part by insurance. Although the Company cannot predict the ultimate outcome and the range of loss cannot be currently estimated, the Company does not believe that the eventual outcome of any such action could have a material adverse effect on its business, financial condition, results of operations, or cash flows.     

Multiemployer Defined Benefit Pension Plans
Approximately 12.9% of the Company’s workforce is covered by collective bargaining agreements with various local unions across its operating regions. As a result of some of these agreements, certain of the Company’s subsidiaries are participating employers in a number of trustee-managed multiemployer, defined benefit pension plans for the affected employees. In connection with its ongoing renegotiation of various collective bargaining agreements, the Company may discuss and negotiate for the complete or partial withdrawal from one or more of these pension plans. A complete or partial withdrawal from a multiemployer pension plan may also occur if employees covered by a collective bargaining agreement vote to decertify a union from continuing to represent them. The Company is not aware of any such actions in connection with continuing operations. As a result of certain discontinued operations, the Company is potentially exposed to certain withdrawal liabilities. The Company does not believe that any future withdrawals, individually or in the aggregate, from the multiemployer plans to which it contributes could have a material adverse effect on the Company's business, financial condition or liquidity. However, such withdrawals could have a material adverse effect on the Company's results of operations for a particular reporting period, depending on the number of employees withdrawn in any future period and the financial condition of the multiemployer plan(s) at the time of such withdrawal(s).

Tax Matters

The Company has open tax years dating back to 2003. Prior to the acquisition in fiscal 2012, Veolia ES Solid Waste division was part of a consolidated group and is still subject to IRS and state examinations dating back to 2004. Pursuant to the terms of the acquisition of Veolia ES Solid Waste, Inc., the Company is entitled to certain indemnifications for Veolia ES Solid Waste Division's pre-acquisition tax liabilities.
The Company maintains a liability for uncertain tax positions, the balance of which management believes is adequate. Results of audit assessments by taxing authorities are not currently expected to have a material adverse impact on the Company's results of operations or cash flows.
v3.8.0.1
Segment and Related Information
3 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
Segment and Related Information
Segment and Related Information
The Company manages and evaluates its operations primarily through its South, East and Midwest regional segments. These three groups are presented below as the Company’s reportable segments. The Company’s three geographic operating segments provide collection, transfer, disposal and recycling services. The Company serves residential, commercial and industrial, and municipal customers throughout its operating segments.
Service revenues, operating income/(loss) and depreciation and amortization for the Company's reportable segments for the periods indicated are shown in the following tables:
 
Service
Revenues
 
Operating
Income
(Loss)
 
Depreciation
and
Amortization
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
 
 
 
 
South
$
148.8

 
$
26.0

 
$
21.7

East
89.2

 
(1.8
)
 
18.0

Midwest
126.7

 
13.9

 
23.9

Corporate

 
(18.1
)
 
1.1

 
$
364.7

 
$
20.0

 
$
64.7

 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
 
South
$
135.5

 
$
22.2

 
$
19.1

East
86.1

 
(2.6
)
 
17.5

Midwest
125.8

 
11.3

 
22.6

Corporate

 
(19.6
)
 
2.2

 
$
347.4

 
$
11.3

 
$
61.4

 
The following table presents the Company's revenues disaggregated by major line of business. Recycling rebates paid to customers, franchise fees paid to customers and state landfill taxes are excluded from revenues.


Three Months Ended March 31,


2018

2017 (1)
Residential Collection Revenue

$
99.5


$
93.6

Commercial Collection Revenue

92.2


90.6

Rolloff Collection Revenue

60.6


57.0

Disposal Revenue

57.1


55.3

Fuel and Environmental Charges

26.8


22.9

Sale of Recyclables

5.1


7.7

Other Revenue

23.4


20.3



$
364.7


$
347.4

(1) Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company's historic accounting under Topic 605.
Fluctuations in the Company's operating results may be caused by many factors, including period-to-period changes in the relative contribution of revenue by each line of business and operating segment and by general economic conditions. In addition, its revenues and income from operations typically reflect seasonal patterns. The Company expects its operating results to vary seasonally, with revenues typically lowest in the first quarter, higher in the second and third quarters and lower in the fourth quarter than in the second and third quarters. This seasonality reflects the lower volume of solid waste generated during the late fall, winter and early spring in the East and Midwest segments because of decreased construction and demolition activities during winter months in these regions of the United States. In addition, some of the Company's operating costs may be higher in the winter months. Adverse winter weather conditions slow waste collection activities, resulting in higher labor and operational costs. Greater precipitation in the winter increases the weight of collected municipal solid waste, resulting in higher disposal costs, which are calculated on a per ton basis.
Additionally, certain destructive weather conditions that tend to occur during the second half of the year, such as hurricanes that most often impact the South region, can increase the Company’s revenues in the areas affected. While weather-related and other occurrences can boost revenues through additional work, the earnings generated can be moderated as a result of significant start-up costs and other factors, resulting in earnings at comparatively lower margins. These destructive weather conditions can result in higher fuel costs, higher labor costs, reduced municipal contract productivity and higher disposal costs in disposal neutral markets. Certain weather conditions, including severe winter storms, may result in the temporary suspension of the Company’s operations, which can significantly affect the operating results of the affected regions.
v3.8.0.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
Assets and Liabilities Accounted for at Fair Value
In measuring fair values of assets and liabilities, the Company uses valuation techniques that maximize the use of observable inputs (Level 1) and minimize the use of unobservable inputs (Level 3). The Company also uses market data or assumptions that it believes market participants would use in pricing an asset or liability, including assumptions about risk when appropriate. The carrying value for certain of the Company's financial instruments approximate fair value because of their short-term nature. The Company’s assets and liabilities that are measured at fair value on a recurring basis include the following:
 
 
 
Fair Value Measurement at March 31, 2018
Reporting Date Using
 
Total
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Gains
(Losses)
 
Carrying
Value
 
 
 
 
 
 
 
 
 
 
 
 
Recurring fair value measurements
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
6.5

 
$
6.5

 
$

 
$

 
$

 
$
6.5

Interest rate caps - asset position
11.5

 

 
11.5

 

 

 
11.5

Total recurring fair value measurements
$
18.0

 
$
6.5

 
$
11.5

 
$

 
$

 
$
18.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value Measurement at December 31, 2017
Reporting Date Using
 
Total
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Gains
(Losses)
 
Carrying
Value
 
 
 
 
 
 
 
 
 
 
 
 
Recurring fair value measurements
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
6.8

 
$
6.8

 
$

 
$

 
$

 
$
6.8

Derivative instrument - asset position
3.7




3.7






3.7

Derivative instruments - liability position
(0.4
)

$


(0.4
)





(0.4
)
Total recurring fair value measurements
$
10.1


$
6.8


$
3.3


$


$


$
10.1


The fair value of the interest rate caps are determined using standard option valuation models with assumptions about interest rates based on those observed in underlying markets (Level 2 in fair value hierarchy).
Fair Value of Debt
The fair value of the Company’s debt (Level 2) is estimated using indirectly observable market inputs, except for the Revolver for which cost approximates fair value due to the short-term nature of the interest rate. Although the Company has determined the estimated fair value amounts using quoted market prices, considerable judgment is required in interpreting the information and in developing the estimated fair values. Therefore, these estimates are not necessarily indicative of the amounts that the Company, or holders of the instruments, could realize in a current market exchange. The fair value estimates are based on information available as of March 31, 2018 and December 31, 2017, respectively.


The estimated fair value of the Company’s debt is as follows:
 
March 31,
2018
 
December 31,
2017
Revolver
$
8.5


$
29.0

Senior Notes
430.8


435.1

Term Loan B
1,455.4


1,467.3


$
1,894.7


$
1,931.4


The carrying value of the Company’s debt at March 31, 2018 and December 31, 2017 was $1,883.5 and $1,914.0, respectively.
v3.8.0.1
Stock-based Compensation
3 Months Ended
Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Stock-based Compensation

Named Executive Officer (NEO) Grants
During the quarter ended March 31, 2018, there were 93,353 NEO restricted stock units granted under the 2016 Omnibus Equity Plan (the "2016 Plan") with a fair value of $22.16 per share. The restricted stock units will vest in full on the third anniversary of the date of the grant.
During the quarter ended March 31, 2018, there were 96,455 NEO performance stock units (PSUs) granted under the 2016 Plan with a fair value of $22.16 per share. The PSUs will vest in full on the third anniversary of the date of the grant. The PSUs shall be measured based on the Company's budget and are weighted as follows: Adjusted EBITDA: 50%; Adjusted EBITDA less capital expenditures: 30%; and Revenue: 20%. The measurement criteria begins with an attainment of 90% of the budget which results in vesting of 25% of the shares underlying the PSUs granted and ends with an attainment of 110% of the budget which results in vesting of 175% of the shares underlying the PSUs granted. Performance will be measured separately for each of the three years in the performance period and the total number of PSUs earned at the conclusion of the three-year performance period will be the sum of the PSUs earned with respect to each individual year.
During the quarter ended March 31, 2018, there were 185,867 NEO options granted under the 2016 Plan. Each option had an estimated fair value of $5.75 per option on the date of grant and each option had an exercise price of $22.16. The options will vest in full on the third anniversary of the date of the grant. The contractual term of each option is ten years.
Non-Employee Director Grants
During the quarter ended March 31, 2018, there were 22,565 restricted stock awards granted under the 2016 Plan to non-employee directors with a fair value of $22.16 per share. The restricted stock awards will vest in full on the third anniversary of the date of the grant.
Annual Stock Option Grants
During the quarter ended March 31, 2018, there were 484,174 annual options granted under the 2016 Plan for employees other than the NEO's. Each option had an estimated fair value of $5.60 per option on the date of grant and each option had an exercise price of $22.16. The options will vest 20% on date of grant and 20% in four equal installments over each of the first four anniversaries of the date of the grant. The contractual term of each option is ten years.
v3.8.0.1
Basis of Presentation (Policies)
3 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Consolidation
The Company’s condensed consolidated financial statements include its wholly-owned subsidiaries and their respective subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates and Assumptions
In conformity with accounting principles generally accepted in the United States of America, the Company uses estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. The Company must make these estimates and assumptions because certain information that it uses is dependent on future events, cannot be calculated with a high degree of precision from data available or simply cannot be readily calculated based on generally accepted methodologies. In preparing the Company's financial statements, the more subjective areas that deal with the greatest amount of uncertainty relate to: accounting for long-lived assets, including recoverability; landfill development costs, final capping, closure and post-closure costs; valuation allowances for accounts receivable and deferred tax assets; liabilities for potential litigation, claims and assessments; liabilities for environmental remediation; stock compensation; accounting for goodwill and intangible asset impairments; deferred taxes; uncertain tax positions; self-insurance reserves; and estimates of the fair value of assets acquired and liabilities assumed in any acquisition. Actual results could differ materially from the estimates and assumptions that the Company uses in preparation of its financial statements.
Recently Adopted and Issued Accounting Standards
Recently Adopted Accounting Standards
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic 606 supersedes the revenue recognition requirements in Topic 605 "Revenue Recognition" (Topic 605), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 and applicable technical updates as of January 1, 2018 using the modified retrospective transition method. See Note 3 for further details.

In August 2016, the FASB issued ASU 2016‑15 associated with the classification of certain cash receipts and cash payments in the statement of cash flows. In November 2016, the FASB issued ASU 2016‑18 associated with the presentation of restricted cash and cash equivalents in the statement of cash flows. The objective of both amendments was to reduce existing diversity in practice. The Company's adoption of these ASUs in the first quarter of fiscal 2018 did not have a material impact on the Company's Statement of Cash Flows.
Recently Issued Accounting Standards

In February 2016, the FASB issued ASU 2016-02, Leases, which will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required to increase transparency and comparability among organizations. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption of the standard is permitted; however, the Company does not expect to early adopt the ASU. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented. The Company is currently evaluating the expected impact of this standard update on disclosures, but does not anticipate any material changes to operating results or liquidity.
v3.8.0.1
Landfill Liabilities (Tables)
3 Months Ended
Mar. 31, 2018
Asset Retirement Obligation Disclosure [Abstract]  
Summary of Liabilities for Final Closure and Post-Closure Costs
Liabilities for final closure and post-closure costs for the year ended December 31, 2017 and for the three months ended March 31, 2018 are shown in the table below:
Balance at December 31, 2016
$
191.1

Increase in retirement obligation
9.7

Accretion of closure and post-closure costs
15.4

Acquisition
28.3

Change in estimate
2.1

Costs incurred
(20.7
)
Balance at December 31, 2017
225.9

Increase in retirement obligation
2.1

Accretion of closure and post-closure costs
3.8

Costs incurred
(1.9
)
Balance at March 31, 2018
229.9

Less: Current portion
(20.2
)

$
209.7

v3.8.0.1
Earnings (Loss) Per Share (Tables)
3 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
Computation of Basic and Dilutive Earnings (Loss) Per Share
The following table sets forth the computation of basic earnings (loss) per share and earnings (loss) per share, assuming dilution:

 
Three Months Ended March 31,

 
2018

2017
Numerator:







Net income (loss)
$
2.1


$
(7.0
)
Denominator:





Average common shares outstanding
88,515,854


88,136,714


Other potentially dilutive common shares
505,855




Average common shares outstanding, assuming dilution
89,021,709


88,136,714









Basic net income (loss) per share
$
0.02


$
(0.08
)

Diluted net income (loss) per share
$
0.02


$
(0.08
)
v3.8.0.1
Debt (Tables)
3 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Summary of Major Components of Debt
The following table summarizes the major components of debt at each balance sheet date and provides the maturities and interest rate ranges of each major category of debt:
 
March 31,
2018
 
December 31,
2017
Revolving line of credit with lenders (Revolver), interest at applicable rate plus margin, as defined (6.5% and 6.25% at March 31, 2018 and December 31, 2017, respectively) due quarterly; balance due at maturity in November 2021
$
8.5

 
$
29.0

Term loans (Term Loan B); quarterly payments of $3.75 commencing March 31, 2017 through September 30, 2023 with final payment due November 10, 2023; interest at an alternate base rate or adjusted LIBOR rate with a 0.75% floor plus an applicable margin
1,450.0

 
1,460.0

Senior notes (Senior Notes) payable; interest at 5.625% payable in arrears semi-annually commencing May 15, 2017; maturing on November 15, 2024

425.0

 
425.0

Capital lease obligations, maturing through 2024
64.0

 
63.9

Other debt
9.6

 
11.8

 
1,957.1

 
1,989.7

Less: Original issue discount and debt issuance costs classified as a reduction to long-term debt
(30.0
)
 
(31.4
)
Less: Current portion
(52.4
)
 
(74.1
)
 
$
1,874.7

 
$
1,884.2

v3.8.0.1
Derivative Instruments and Hedging Activities (Tables)
3 Months Ended
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Summary of Fair Values of Derivative Instruments Recorded in Condensed Consolidated Balance Sheets
The following table summarizes the fair values of derivative instruments recorded in the Company’s condensed consolidated balance sheets:


Balance Sheet Location

March 31, 2018

December 31,
2017
Derivatives Designated as Hedging Instruments








2017 Interest rate caps

Other assets

$
3.1


$

2017 Interest rate caps

Other long-term liabilities



(0.4
)
Derivatives Not Designated as Hedging Instruments








2016 Interest rate caps

Prepaid expenses and other current assets

4.9


0.9

2016 Interest rate caps

Other assets

3.5


2.8

Total derivatives



$
11.5


$
3.3

v3.8.0.1
Segment and Related Information (Tables)
3 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
Summary of Financial Information Concerning Reportable Segments
Service revenues, operating income/(loss) and depreciation and amortization for the Company's reportable segments for the periods indicated are shown in the following tables:
 
Service
Revenues
 
Operating
Income
(Loss)
 
Depreciation
and
Amortization
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
 
 
 
 
South
$
148.8

 
$
26.0

 
$
21.7

East
89.2

 
(1.8
)
 
18.0

Midwest
126.7

 
13.9

 
23.9

Corporate

 
(18.1
)
 
1.1

 
$
364.7

 
$
20.0

 
$
64.7

 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
 
South
$
135.5

 
$
22.2

 
$
19.1

East
86.1

 
(2.6
)
 
17.5

Midwest
125.8

 
11.3

 
22.6

Corporate

 
(19.6
)
 
2.2

 
$
347.4

 
$
11.3

 
$
61.4

Summary of Disaggregation of Revenue
The following table presents the Company's revenues disaggregated by major line of business. Recycling rebates paid to customers, franchise fees paid to customers and state landfill taxes are excluded from revenues.


Three Months Ended March 31,


2018

2017 (1)
Residential Collection Revenue

$
99.5


$
93.6

Commercial Collection Revenue

92.2


90.6

Rolloff Collection Revenue

60.6


57.0

Disposal Revenue

57.1


55.3

Fuel and Environmental Charges

26.8


22.9

Sale of Recyclables

5.1


7.7

Other Revenue

23.4


20.3



$
364.7


$
347.4

(1) Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company's historic accounting under Topic 605.
v3.8.0.1
Fair Value Measurements (Tables)
3 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
Assets and Liabilities Measured at Fair Value on Recurring Basis
The Company’s assets and liabilities that are measured at fair value on a recurring basis include the following:
 
 
 
Fair Value Measurement at March 31, 2018
Reporting Date Using
 
Total
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Gains
(Losses)
 
Carrying
Value
 
 
 
 
 
 
 
 
 
 
 
 
Recurring fair value measurements
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
6.5

 
$
6.5

 
$

 
$

 
$

 
$
6.5

Interest rate caps - asset position
11.5

 

 
11.5

 

 

 
11.5

Total recurring fair value measurements
$
18.0

 
$
6.5

 
$
11.5

 
$

 
$

 
$
18.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair Value Measurement at December 31, 2017
Reporting Date Using
 
Total
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
Total
Gains
(Losses)
 
Carrying
Value
 
 
 
 
 
 
 
 
 
 
 
 
Recurring fair value measurements
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
6.8

 
$
6.8

 
$

 
$

 
$

 
$
6.8

Derivative instrument - asset position
3.7




3.7






3.7

Derivative instruments - liability position
(0.4
)

$


(0.4
)





(0.4
)
Total recurring fair value measurements
$
10.1


$
6.8


$
3.3


$


$


$
10.1

Estimated Fair Value of Company's Debt
The estimated fair value of the Company’s debt is as follows:
 
March 31,
2018
 
December 31,
2017
Revolver
$
8.5


$
29.0

Senior Notes
430.8


435.1

Term Loan B
1,455.4


1,467.3


$
1,894.7


$
1,931.4

v3.8.0.1
Business Operations (Details)
$ in Millions
3 Months Ended
Mar. 31, 2018
USD ($)
Segment
company
Mar. 31, 2017
USD ($)
acquisition
Business Acquisition [Line Items]    
Number of reportable operating segments | Segment 3  
Number of geographic operating segments | Segment 3  
Assumption of long term care and closure reserve $ 0.0 $ 24.0
BFI Waste Systems of North America, LLC    
Business Acquisition [Line Items]    
Assumption of long term care and closure reserve   $ 24.0
Business Acquisition    
Business Acquisition [Line Items]    
Number of acquisitions completed 5 4
Consideration transferred $ 4.5  
Amount of notes payable incurred as part of consideration transferred $ 0.5  
Consideration transferred, cash   $ 67.9
Consideration transferred, notes payable   $ 0.7
v3.8.0.1
Revenue Recognition (Details)
$ in Millions
3 Months Ended
Mar. 31, 2018
USD ($)
recycling_facility
Mar. 31, 2017
USD ($)
Jan. 01, 2018
USD ($)
Dec. 31, 2017
USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]        
Retained earnings $ 598.4     $ 603.3
Decrease in service revenues $ (364.7) $ (347.4)    
Number of recycling facilities | recycling_facility 22      
Capitalized sales commissions $ 3.9   $ 3.8  
Capitalized sales commissions amortization 0.3      
Recognized deferred revenue 66.3      
Cumulative impact | Topic 606        
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]        
Retained earnings     $ 2.8  
Decrease in service revenues $ 8.0      
Minimum        
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]        
Term of standard service agreement 3 years      
Maximum        
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]        
Term of standard service agreement 5 years      
v3.8.0.1
Landfill Liabilities - Summary of Liabilities for Final Closure and Post-Closure Costs (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2016
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]      
Beginning balance $ 225.9 $ 191.1  
Increase in retirement obligation 2.1   $ 9.7
Accretion of closure and post-closure costs 3.8 $ 3.6 15.4
Acquisition     28.3
Change in estimate     2.1
Costs incurred (1.9)   (20.7)
Ending balance 229.9   $ 191.1
Less: Current portion (20.2)    
Noncurrent portion $ 209.7    
v3.8.0.1
Earnings (Loss) Per Share (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Numerator:    
Net income (loss) $ 2.1 $ (7.0)
Denominator:    
Average common shares outstanding (in shares) 88,515,854 88,136,714
Other potentially dilutive common shares (in shares) 505,855 0
Average common shares outstanding, assuming dilution (in shares) 89,021,709 88,136,714
Basic net income (loss) per share (in dollars per share) $ 0.02 $ (0.08)
Diluted net income (loss) per share (in dollars per share) $ 0.02 $ (0.08)
Stock option    
Denominator:    
Antidilutive stock awards excluded from calculation (in shares) 2,300,000 3,800,000
v3.8.0.1
Debt - Summary of Major Components of Debt - Principal (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Debt Instrument [Line Items]    
Capital lease obligations, maturing through 2024 $ 64.0 $ 63.9
Other debt 9.6 11.8
Long-term debt, gross 1,957.1 1,989.7
Less: Original issue discount (30.0) (31.4)
Less: Current portion (52.4) (74.1)
Long-term debt, less original issue discount and current maturities 1,874.7 1,884.2
Revolver    
Debt Instrument [Line Items]    
Long-term debt 8.5 29.0
Term Loan B    
Debt Instrument [Line Items]    
Long-term debt 1,450.0 1,460.0
Senior Notes    
Debt Instrument [Line Items]    
Long-term debt $ 425.0 $ 425.0
v3.8.0.1
Debt - Summary of Major Components of Debt - Interest Rates (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Revolver    
Debt Instrument [Line Items]    
Line of credit interest rate 6.50% 6.25%
Term Loan B    
Debt Instrument [Line Items]    
Debt periodic principal payment $ 3,750 $ 3,750
Term Loan B | LIBOR    
Debt Instrument [Line Items]    
Debt reference rate 0.75% 0.75%
Senior Notes    
Debt Instrument [Line Items]    
Debt interest rate 5.625% 5.625%
v3.8.0.1
Debt - Additional Information (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Debt Instrument [Line Items]    
Letters of credit outstanding $ 39,300,000 $ 39,300,000
Revolver    
Debt Instrument [Line Items]    
Long-term debt 8,500,000 $ 29,000,000
Revolving Credit Facility    
Debt Instrument [Line Items]    
Line of credit maximum borrowing capacity 300,000,000.0  
Letters of Credit    
Debt Instrument [Line Items]    
Line of credit maximum borrowing capacity $ 100,000,000.0  
v3.8.0.1
Derivative Instruments and Hedging Activities - Summary of Fair Values of Derivative Instruments Recorded in Condensed Consolidated Balance Sheets (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Total derivatives $ 11.5 $ 3.3
Derivatives Designated as Hedging Instruments | Interest rate caps | Other assets    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Derivative assets 3.1 0.0
Derivatives Designated as Hedging Instruments | Interest rate caps | Other long-term liabilities    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Derivative liabilities 0.0 (0.4)
Derivatives Not Designated as Hedging Instruments | Interest rate caps | Other assets    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Derivative assets 3.5 2.8
Derivatives Not Designated as Hedging Instruments | Interest rate caps | Prepaid expenses and other current assets    
Derivative Instruments and Hedging Activities Disclosures [Line Items]    
Derivative assets $ 4.9 $ 0.9
v3.8.0.1
Derivative Instruments and Hedging Activities - Additional Information (Details) - Interest rate caps
$ in Millions
3 Months Ended
Mar. 31, 2018
USD ($)
Mar. 31, 2017
USD ($)
Dec. 31, 2017
USD ($)
Nov. 30, 2017
USD ($)
Agreement
May 31, 2016
USD ($)
Agreement
Derivatives Designated as Hedging Instruments          
Derivative Instruments and Hedging Activities Disclosures [Line Items]          
Number of interest rate cap agreements | Agreement       2  
Premium included in other assets from condensed consolidated balance sheet       $ 4.9  
Gain related to interest rate caps $ 3.5        
Effective portion recorded in other comprehensive income 2.9        
Notional amounts of the contracts     $ 600.0    
Derivatives Designated as Hedging Instruments | Other income (expense), net          
Derivative Instruments and Hedging Activities Disclosures [Line Items]          
Ineffective portion recorded in other income (expense), net 0.6        
Derivatives Not Designated as Hedging Instruments          
Derivative Instruments and Hedging Activities Disclosures [Line Items]          
Number of interest rate cap agreements | Agreement         3
Premium included in other assets from condensed consolidated balance sheet         $ 5.5
Notional amounts of the contracts 800.0        
Derivatives Not Designated as Hedging Instruments | Other income (expense), net          
Derivative Instruments and Hedging Activities Disclosures [Line Items]          
Gain (loss) due to changes in fair value of derivative instruments $ 4.6 $ (1.3)      
v3.8.0.1
Income Taxes (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Income Tax Disclosure [Abstract]      
Effective income tax rate continuing operations 27.60% 40.20%  
Federal statutory tax rate 21.00% 35.00%  
Liabilities associated with unrecognized tax benefits and related interest $ 30.9    
Taxation of deemed repatriation on foreign earnings     $ 0.1
v3.8.0.1
Commitments and Contingencies (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]    
Environmental remediation expense $ 3.8 $ 5.4
Environmental remediation costs incurred $ 10.5  
Percentage of workforce covered under collective bargaining 12.90%  
v3.8.0.1
Segment and Related Information - Additional Information (Details)
3 Months Ended
Mar. 31, 2018
Segment
Segment Reporting [Abstract]  
Number of reportable segments 3
Number of geographic operating segments 3
v3.8.0.1
Segment and Related Information - Summary of Financial Information Concerning Reportable Segments (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Segment Reporting Information [Line Items]    
Service Revenue $ 364.7 $ 347.4
Operating Income (Loss) 20.0 11.3
Depreciation and Amortization 64.7 61.4
Operating Segments | South    
Segment Reporting Information [Line Items]    
Service Revenue 148.8 135.5
Operating Income (Loss) 26.0 22.2
Depreciation and Amortization 21.7 19.1
Operating Segments | East    
Segment Reporting Information [Line Items]    
Service Revenue 89.2 86.1
Operating Income (Loss) (1.8) (2.6)
Depreciation and Amortization 18.0 17.5
Operating Segments | Midwest    
Segment Reporting Information [Line Items]    
Service Revenue 126.7 125.8
Operating Income (Loss) 13.9 11.3
Depreciation and Amortization 23.9 22.6
Corporate    
Segment Reporting Information [Line Items]    
Service Revenue 0.0 0.0
Operating Income (Loss) (18.1) (19.6)
Depreciation and Amortization $ 1.1 $ 2.2
v3.8.0.1
Segment and Related Information - Disaggregated Revenue (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Disaggregation of Revenue [Line Items]    
Revenue $ 364.7 $ 347.4
Residential Collection Revenue    
Disaggregation of Revenue [Line Items]    
Revenue 99.5 93.6
Commercial Collection Revenue    
Disaggregation of Revenue [Line Items]    
Revenue 92.2 90.6
Rolloff Collection Revenue    
Disaggregation of Revenue [Line Items]    
Revenue 60.6 57.0
Disposal Revenue    
Disaggregation of Revenue [Line Items]    
Revenue 57.1 55.3
Sale of Recyclables    
Disaggregation of Revenue [Line Items]    
Revenue 26.8 22.9
Fuel and Environmental Charges    
Disaggregation of Revenue [Line Items]    
Revenue 5.1 7.7
Other Revenue    
Disaggregation of Revenue [Line Items]    
Revenue $ 23.4 $ 20.3
v3.8.0.1
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Recurring - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Total Fair Value    
Recurring fair value measurements    
Cash and cash equivalents $ 6.5 $ 6.8
Derivative instrument - asset position 11.5 3.7
Derivative instruments - liability position   (0.4)
Total recurring fair value measurements 18.0 10.1
Total Fair Value | Level 1    
Recurring fair value measurements    
Cash and cash equivalents 6.5 6.8
Derivative instrument - asset position 0.0 0.0
Derivative instruments - liability position   0.0
Total recurring fair value measurements 6.5 6.8
Total Fair Value | Level 2    
Recurring fair value measurements    
Cash and cash equivalents 0.0 0.0
Derivative instrument - asset position 11.5 3.7
Derivative instruments - liability position   (0.4)
Total recurring fair value measurements 11.5 3.3
Total Fair Value | Level 3    
Recurring fair value measurements    
Cash and cash equivalents 0.0 0.0
Derivative instrument - asset position 0.0 0.0
Derivative instruments - liability position   0.0
Total recurring fair value measurements 0.0 0.0
Total Gains (Losses)    
Recurring fair value measurements    
Cash and cash equivalents 0.0 0.0
Derivative instrument - asset position 0.0 0.0
Derivative instruments - liability position   0.0
Total recurring fair value measurements 0.0 0.0
Carrying Value    
Recurring fair value measurements    
Cash and cash equivalents 6.5 6.8
Derivative instrument - asset position 11.5 3.7
Derivative instruments - liability position   (0.4)
Total recurring fair value measurements $ 18.0 $ 10.1
v3.8.0.1
Fair Value Measurements - Estimated Fair Value of Company's Debt (Details) - USD ($)
$ in Millions
Mar. 31, 2018
Dec. 31, 2017
Debt Instrument [Line Items]    
Debt instruments carrying value $ 1,883.5 $ 1,914.0
Level 2    
Debt Instrument [Line Items]    
Estimated fair value debt 1,894.7 1,931.4
Level 2 | Revolver    
Debt Instrument [Line Items]    
Estimated fair value debt 8.5 29.0
Level 2 | Senior Notes    
Debt Instrument [Line Items]    
Estimated fair value debt 430.8 435.1
Level 2 | Term Loan B    
Debt Instrument [Line Items]    
Estimated fair value debt $ 1,455.4 $ 1,467.3
v3.8.0.1
Stock-based Compensation (Details) - 2016 Plan
3 Months Ended
Mar. 31, 2018
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of options granted in period (in shares) | shares 185,867
Restricted Stock Units (RSUs)  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of awards granted in period (in shares) | shares 93,353
Fair value per share of (in dollars per share) $ 22.16
NEO PUSs  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of awards granted in period (in shares) | shares 96,455
Fair value per share of (in dollars per share) $ 22.16
Measurement percentage based on Parent's budget, EBITDA 50.00%
Measurement percentage based on Parent's budget, Free Cash Flow 30.00%
Measurement percentage based on Parent's budget, Revenue 20.00%
Budget attainment beginning percentage 90.00%
Budget attainment beginning earning percentage 25.00%
Budget attainment ending percentage 110.00%
Budget attainment ending earning percentage 175.00%
Vesting period (in years) 3 years
NEO option  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Options grant date fair value (in dollars per share) $ 5.75
Weighted average exercise price (in dollars per share) $ 22.16
Expiration period of awards 10 years
NEO option | Employees other than NEOs  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of options granted in period (in shares) | shares 484,174
Options grant date fair value (in dollars per share) $ 5.60
Weighted average exercise price (in dollars per share) $ 22.16
Expiration period of awards 10 years
Vesting percentage of awards 20.00%
NEO option | Employees other than NEOs | First Anniversary of Grant Date  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Vesting percentage of awards 20.00%
NEO option | Employees other than NEOs | Second Anniversary of Grant Date  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Vesting percentage of awards 20.00%
NEO option | Employees other than NEOs | Third Anniversary of Grant Date  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Vesting percentage of awards 20.00%
NEO option | Employees other than NEOs | Fourth Anniversary of Grant Date  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Vesting percentage of awards 20.00%
Restricted Stock | Non-Employee Director  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of awards granted in period (in shares) | shares 22,565
Fair value per share of (in dollars per share) $ 22.16