EX-99.1 2 tm2227015d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

GFL Environmental Inc.

 

Unaudited Interim Condensed

Consolidated Financial Statements

For the three and nine months ended September 30, 2022

 

F-1

 

 

GFL Environmental Inc.

Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In millions of dollars)

 

    

Three months ended

September 30, 

  

Nine months ended

September 30, 

 
   Notes    2022    2021(1)   2022    2021(1)
Revenue  11   $1,831.2   $1,381.3   $4,940.1   $3,697.0 
Expenses                        
Cost of sales       1,591.9    1,204.5    4,339.5    3,317.7 
Selling, general and administrative expenses       187.5    145.1    528.6    401.3 
Interest and other finance costs  8    136.2    96.6    340.7    327.6 
(Gain) loss on sale of property and equipment       (5.7)   1.9    (10.1)   3.0 
Loss on foreign exchange       195.3    111.6    249.3    35.3 
Mark-to-market (gain) loss on Purchase Contracts       (10.3)   208.6    (391.4)   319.6 
Loss (gain) on divestiture       1.6    (31.4)   (4.9)   (66.9)
Impairment  4    3.4    —    12.5    — 
        2,099.9    1,736.9    5,064.2    4,337.6 
Share of net income of investments accounted for using the equity method       9.2    —    14.5    — 
Loss before income taxes       (259.5)   (355.6)   (109.6)   (640.6)
Current income tax (recovery) expense       (3.4)   3.4    7.5    12.0 
Deferred tax recovery       (72.4)   (42.9)   (153.0)   (107.3)
Income tax recovery       (75.8)   (39.5)   (145.5)   (95.3)
Net (loss) income from continuing operations       (183.7)   (316.1)   35.9    (545.3)
Net income (loss) from discontinued operations  18    —    6.2    (127.9)   15.9 
Net loss       (183.7)   (309.9)   (92.0)   (529.4)
Less: Net loss attributable to non-controlling interests       (0.2)   —    (0.2)   — 
Net loss attributable to GFL Environmental Inc.       (183.5)   (309.9)   (91.8)   (529.4)
                         
Items that may be subsequently reclassified to net (loss) income                        
Currency translation adjustment       420.0    190.6    526.3    26.8 
Reclassification to net income (loss) of fair value movements on cash flow hedges, net of tax       —    —    —    (4.4)
Fair value movements on cash flow hedges, net of tax       (73.4)   9.5    (74.2)   6.8 
Other comprehensive income from continuing operations       346.6    200.1    452.1    29.2 
Comprehensive income (loss) from continuing operations       162.9    (116.0)   488.0    (516.1)
Comprehensive income (loss) from discontinued operations       —    6.2    (127.9)   15.9 
Total comprehensive income (loss)       162.9    (109.8)   360.1    (500.2)
Less: Total comprehensive income attributable to non-controlling interests       —    —    —    — 
Total comprehensive income (loss) attributable to GFL Environmental Inc.      $162.9   $(109.8)  $360.1   $(500.2)
                         
Basic and diluted (loss) earnings per share  10                     
Continuing operations      $(0.55)  $(0.91)  $(0.07)  $(1.62)
Discontinued operations       —    0.02    (0.35)   0.04 
Total operations      $(0.55)  $(0.89)  $(0.42)  $(1.58)

 

(1)Comparative figures have been re-presented to reflect discontinued operations, refer to Note 2 and Note 18.

 

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

 

F-2

 

 

GFL Environmental Inc.

Unaudited Interim Condensed Consolidated Statements of Financial Position

(In millions of dollars)

 

   Notes   September 30,
2022		   December 31,
2021		 
Assets               
Cash       $237.4   $190.4 
Trade and other receivables, net        1,211.5    1,134.7 
Prepaid expenses and other assets        189.0    170.6 
Current assets        1,637.9    1,495.7 
                
Property and equipment, net   4    6,538.8    6,010.6 
Intangible assets, net   5    3,290.6    3,330.0 
Investments accounted for using the equity method        321.6    — 
Other long-term assets   6    40.6    36.3 
Goodwill   5    8,184.9    7,501.1 
Non-current assets        18,376.5    16,878.0 
Total assets       $20,014.4   $18,373.7 
                
Liabilities               
Accounts payable and accrued liabilities        1,496.0    1,319.7 
Income taxes payable        5.8    25.8 
Long-term debt   7    18.2    17.2 
Lease obligations        51.3    50.9 
Due to related party   17    9.3    12.8 
Tangible equity units   9    926.6    56.9 
Landfill closure and post-closure obligations   6    39.4    39.1 
Current liabilities        2,546.6    1,522.4 
                
Long-term debt   7    9,358.5    7,961.8 
Lease obligations        337.1    257.4 
Other long-term liabilities        51.1    41.0 
Due to related party   17    8.7    18.0 
Deferred income tax liabilities        593.3    723.9 
Tangible equity units   9    —    1,231.6 
Landfill closure and post-closure obligations   6    797.5    841.5 
Non-current liabilities        11,146.2    11,075.2 
Total liabilities        13,692.8    12,597.6 
                
Shareholders’ equity               
Share capital   13    8,638.8    8,462.9 
Contributed surplus        96.0    77.4 
Deficit        (2,617.4)   (2,510.5)
Accumulated other comprehensive income (loss)        198.2    (253.7)
Total GFL Environmental Inc.’s shareholders’ equity        6,315.6    5,776.1 
Non-controlling interests        6.0    — 
Total shareholders’ equity        6,321.6    5,776.1 
Total liabilities and shareholders’ equity       $20,014.4   $18,373.7 

 

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

 

F-3

 

 

GFL Environmental Inc.

Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity

(In millions of dollars except per share amounts)

 

           GFL Environmental Inc.’s Shareholders’ Equity         
   Notes  

Share

capital -

# of shares 

   Share capital  

Contributed

surplus 

   Deficit  

Cash flow

hedges,

net of tax

  

Currency

translation

   Total equity attributable to shareholders   Non-controlling interests  

Total

shareholders’

equity

 
Balance, December 31, 2020        354,934,813   $7,644.8   $54.3   $(1,885.8)  $16.3   $(257.8)  $5,571.8   $—   $5,571.8 
Net loss and comprehensive income        —    —    —    (529.4)   2.4    26.8    (500.2)   —    (500.2)
Dividends issued and paid        —    —    —    (13.1)   —    —    (13.1)   —    (13.1)
Share capital issued upon acquisition of subsidiary        876,419    36.3    —    —    —    —    36.3    —    36.3 
Cancelled shares        (26,041)   (0.6)   —    —    —    —    (0.6)   —    (0.6)
Share capital issued on exercise of share options        1,000,000    5.2    (5.2)   —    —    —    —    —    — 
Share capital issued on exercise and settlement of RSUs        401,272    9.6    (9.6)   —    —    —    —    —    — 
Share capital issued on TEU conversion        4,782,030    211.8    —    —    —    —    211.8    —    211.8 
Share-based payments   13    —    —    31.2    —    —    —    31.2    —    31.2 
Balance, September 30, 2021        361,968,493   $7,907.1   $70.7   $(2,428.3)  $18.7   $(231.0)  $5,337.2   $—   $5,337.2 
                                                   
Balance, December 31, 2021        375,061,066   $8,462.9   $77.4   $(2,510.5)  $13.2   $(266.9)  $5,776.1   $—   $5,776.1 
Net loss and comprehensive income        —    —    —    (91.8)   (74.2)   526.1    360.1    —    360.1 
Dividends issued and paid        —    —    —    (15.1)   —    —    (15.1)   —    (15.1)
Share capital issued upon acquisition of subsidiary   3    3,976,434    154.5    —    —    —    —    154.5    —    154.5 
Non-controlling interests measured upon acquisition of subsidiary        —    —    —    —    —    —    —    6.0    6.0 
Cancelled shares   13    (8,057)   (0.2)   0.2    —    —    —    —    —    — 
Share capital issued on exercise of share options   13    450,000    3.7    (3.7)   —    —    —    —    —    — 
Share capital issued on exercise and settlement of RSUs   13    692,482    17.9    (17.9)   —    —    —    —    —    — 
Share capital issued on TEU conversion   13    297    —    —    —    —    —    —    —    — 
Share-based payments   13    —    —    40.0    —    —    —    40.0    —    40.0 
Balance, September 30, 2022        380,172,222   $8,638.8   $96.0   $(2,617.4)  $(61.0)  $259.2   $6,315.6   $6.0   $6,321.6 

 

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

 

F-4

 

 

GFL Environmental Inc.

Unaudited Interim Condensed Consolidated Statements of Cash Flows

(In millions of dollars)

 

     

Three months ended

September 30, 

  

Nine months ended

September 30, 

 
   Notes   2022   2021   2022   2021 
Operating activities                         
Net loss       $(183.7)  $(309.9)  $(92.0)  $(529.4)
Adjustments for non-cash items                         
Depreciation of property and equipment   4    264.0    227.5    736.8    652.9 
Amortization of intangible assets   5    124.2    113.3    383.3    334.5 
Share of net income of investments accounted for using the equity method        (9.2)   —    (14.5)   — 
Loss (gain) on divestiture   5    1.6    (31.4)   (4.9)   (66.9)
Impairment        3.4    —    12.5    — 
Impairment related to discontinued operations        —    —    128.1    — 
Interest and other finance costs        136.2    97.0    344.2    328.9 
Share-based payments   13    13.4    10.9    40.0    31.2 
Loss on unrealized foreign exchange on long-term debt and TEUs        196.3    111.4    249.6    33.9 
(Gain) loss on sale of property and equipment        (5.7)   1.7    (10.1)   2.7 
Mark-to-market (gain) loss on Purchase Contracts        (10.3)   208.6    (391.4)   319.6 
Current income tax (recovery) expense        (3.4)   3.3    7.6    12.8 
Deferred tax recovery        (72.4)   (40.4)   (154.9)   (105.3)
Interest paid in cash on Amortizing Notes component of TEUs        (0.4)   (1.0)   (1.7)   (3.3)
Interest paid in cash, excluding interest paid on Amortizing Notes        (113.2)   (72.7)   (296.9)   (247.4)
Income taxes paid in cash, net        (2.6)   (5.6)   (22.1)   (6.6)
Changes in non-cash working capital items   14    (40.8)   (74.0)   (201.2)   (118.0)
Landfill closure and post-closure expenditures   6    (11.3)   (14.8)   (19.1)   (25.5)
         286.1    223.9    693.3    614.1 
Investing activities                         
Proceeds on disposal of assets        12.4    101.2    328.6    170.4 
Purchase of property and equipment and intangible assets        (210.6)   (134.7)   (542.8)   (417.8)
Investment in joint ventures and associates        (11.2)   —    (43.0)   — 
Business acquisitions, net of cash acquired   3    (125.3)   (1,099.9)   (1,072.7)   (1,303.2)
         (334.7)   (1,133.4)   (1,329.9)   (1,550.6)
Financing activities                         
Repayment of lease obligations        (16.8)   (22.2)   (51.8)   (59.4)
Issuance of long-term debt        155.0    1,848.8    1,446.1    3,610.1 
Repayment of long-term debt        (40.3)   (46.3)   (588.2)   (1,371.6)
Payment of contingent purchase consideration and holdbacks   3    (2.9)   (3.7)   (13.1)   (19.6)
Repayment of Amortizing Notes        (14.8)   (13.7)   (43.0)   (40.1)
Dividends issued and paid        (5.4)   (4.4)   (15.1)   (13.1)
Payment of financing costs        (0.7)   (17.5)   (2.6)   (28.1)
Repayment of loan to related party        (6.4)   (6.4)   (12.8)   (12.8)
         67.7    1,734.6    719.5    2,065.4 
                          
Increase in cash        19.1    825.1    82.9    1,128.9 
Changes due to foreign exchange revaluation of cash        (12.3)   14.0    (35.9)   (6.6)
Cash, beginning of period        230.6    310.4    190.4    27.2 
Cash, end of period       $237.4   $1,149.5   $237.4   $1,149.5 

 

The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.

 

Refer to Note 18 for additional cash flow information.

 

F-5

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

1. DESCRIPTION OF THE BUSINESS

 

GFL Environmental Inc. (“GFL” or the “Company”) was formed on March 5, 2020 under the laws of the Province of Ontario. GFL’s subordinate voting shares trade on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “GFL” and tangible equity units (“TEUs”) trade on the New York Stock Exchange under the symbol “GFLU”.

 

GFL is in the business of providing non-hazardous solid waste management and environmental services. These services are provided through GFL and its subsidiaries and a network of facilities across Canada and the United States. GFL’s registered office is Suite 500, 100 New Park Place, Vaughan, ON, L4K 0H9.

 

The unaudited interim condensed consolidated financial statements (the “Interim Financial Statements”) include the accounts of GFL and its subsidiaries for the three and nine months ended September 30, 2022.

 

The Board of Directors approved the Interim Financial Statements on November 2, 2022.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Statement of compliance

 

The Interim Financial Statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, within the framework of International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

The Interim Financial Statements do not include all disclosures required in the annual consolidated financial statements and should be read in conjunction with GFL’s annual audited consolidated financial statements for the year ended December 31, 2021 (the “Annual Financial Statements”).

 

Basis of measurement

 

The Interim Financial Statements were prepared on the historical cost basis except for certain financial instruments that are measured at fair value at the end of the reporting period and share-based payments as detailed in the Annual Financial Statements.

 

Presentation and functional currency

 

The Interim Financial Statements are presented in Canadian dollars which is GFL’s functional currency.

 

Use of estimates and judgments

 

The preparation of the Interim Financial Statements requires management to make estimates and use judgment that affect the reported amounts of revenue, expenses, assets, liabilities and accompanying disclosures. Accordingly, actual results may differ from estimated amounts as future confirming events occur. Significant estimates and judgments used in the preparation of the Interim Financial Statements are described in the Annual Financial Statements.

 

Accounting policies

 

The accounting policies adopted in the preparation of the Interim Financial Statements are consistent with those followed in the preparation of the Annual Financial Statements, except as described below.

 

F-6

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

Held for sale

 

Assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and when the sale is considered highly probable. Depreciation of assets held for sale ceases when assets are classified as held for sale. Assets held for sale are measured at the lower of carrying amount and fair value less costs to sell.

 

Discontinued operations

 

A discontinued operation is a component of GFL’s business which comprises operations and cash flows that can be clearly separated from the rest of GFL, and which: represents either a separate major line of business or a geographical area of operations; is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to resale.

 

The classification as discontinued operations occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale. When operations are classified as discontinued operations, the comparative statements of operations and comprehensive income (loss) are re-presented as if the operations had been discontinued from the start of the comparative period. The consolidated statements of cash flows include cash flows of the discontinued operations, and are not re-presented to reflect discontinued operations. The comparative consolidated statement of financial position is not re-presented to reflect discontinued operations.

 

Equity accounting for joint arrangements and associates

 

Associates are all entities over which GFL has significant influence but not control or joint control. Investments in associates are accounted for using the equity method of accounting after initially being recognized at cost.

 

Joint arrangements are classified as either joint operations or joint ventures. The classification depends on contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Interests in joint ventures are accounted for by GFL using the equity method, after initially being recognized at cost.

 

New and amended standards adopted

 

A number of amended standards became applicable for the current reporting period. GFL was not required to change its accounting policies or make retrospective adjustments as a result of adopting the applicable amended standards.

 

New accounting standards issued but not yet effective

 

Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. Of those standards applicable to GFL, they are not expected to have a material impact on these Interim Financial Statements.

 

Reclassification of prior period presentation

 

Certain revenue disaggregation and segment reporting balances in prior periods have been re-presented for consistency with the current period presentation in relation to GFL’s Infrastructure services division (“GFL Infrastructure”) which has been presented as discontinued operations as discussed in Note 18. GFL’s soil remediation division, previously included in its Infrastructure and Soil Remediation segment, has been combined with its Liquid Waste segment and renamed “Environmental Services”.

 

F-7

 

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

3. BUSINESS COMBINATIONS  

 

For the nine months ended September 30, 2022, GFL completed 34 acquisitions, of which 29 were solid waste management businesses, and each of which GFL considers to be individually immaterial.

 

The following table presents the purchase price allocation based on the best information available to GFL to date:

 

  

Three months ended

September 30, 2022 

  

Nine months ended

September 30, 2022 

 
Net working capital, including cash acquired of $1.5 million and $45.9 million, respectively  $(0.2)  $35.8 
Property and equipment   129.1    569.4 
Intangible assets   66.9    364.2 
Goodwill   31.3    463.9 
Lease obligations   (7.4)   (17.9)
Long-term debt   (64.1)   (64.1)
Other long-term liabilities   (0.2)   (7.4)
Landfill closure and post-closure obligations   (13.2)   (31.9)
Deferred income tax liabilities   (9.4)   (32.9)
    132.8    1,279.1 
Less: Non-controlling interests   (6.0)   (6.0)
Net assets acquired  $126.8   $1,273.1 
           
Share capital issued  $—   $154.5 
Cash paid   126.8    1,118.6 
Total consideration  $126.8   $1,273.1 

 

In addition to the consideration noted above, during the nine months ended September 30, 2022, GFL paid $13.1 million in additional consideration related to acquisitions from prior years.

 

GFL finalizes purchase price allocations relating to acquisitions within 12 months of the respective acquisition date and, as a result, there may be differences between the provisional estimates reflected above and the final acquisition accounting. During the nine months ended September 30, 2022, GFL finalized the purchase price allocations for certain acquisitions resulting in a decrease in net working capital of $2.7 million, an increase in property and equipment of $102.9 million, a decrease in intangible assets of $136.4 million, an increase in lease obligations of $1.5 million, a decrease in closure and post-closure obligations of $5.0 million, a decrease in deferred income tax liabilities of $0.7 million and an increase in goodwill of $32.0 million.

 

Approximately $12.5 million and $686.9 million of the goodwill acquired during the three and nine months ended September 30, 2022 ($33.6 million and $57.7 million for the three and nine months ended September 30, 2021) is expected to be deductible for tax purposes.

 

Since the respective acquisition dates, revenue and income before taxes of approximately $178.0 million and $21.0 million, respectively, attributable to the 2022 acquisitions, are included in these Interim Financial Statements.

 

Pro forma results of operations

 

If the 2022 acquisitions had occurred on January 1, 2022, the unaudited consolidated pro forma revenue and loss before taxes for the nine months ended September 30, 2022 would have been $5,078.7 million and $104.2 million, respectively. The pro forma results do not purport to be indicative of the results of operations which would have resulted had the acquisitions occurred at the beginning of the year, nor are they necessarily indicative of future operating results.

 

F-8

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

4. PROPERTY AND EQUIPMENT

 

The following table presents the changes in cost and accumulated depreciation of GFL’s property and equipment for the periods indicated:

 

   Land,
buildings and
improvements		   Landfills   Vehicles   Machinery
and
equipment		  

Assets

under

development 

   Containers   Right-of-
use assets		   Total 
Cost                                        
Balance, December 31, 2021  $1,482.7   $2,257.0   $2,082.0   $1,129.0   $69.3   $549.3   $348.7   $7,918.0 
Additions   61.4    115.5    196.2    73.0    53.3    88.9    96.0    684.3 
Acquisitions via business combinations   72.9    234.4    143.2    38.2    6.0    56.7    18.0    569.4 
Adjustments for prior year acquisitions   —    111.9    (6.5)   (0.7)   —    —    1.5    106.2 
Adjustments for asset retirement obligations   —    (171.4)   —    —    —    —    —    (171.4)
Disposals   (43.3)   (66.3)   (30.0)   (240.8)   (2.5)   (0.4)   (12.6)   (395.9)
Transfers   20.6    25.9    0.4    0.7    (43.8)   —    (3.8)   — 
Changes in foreign exchange   67.1    180.7    112.8    36.5    23.1    46.5    6.7    473.4 
Balance, September 30, 2022   1,661.4    2,687.7    2,498.1    1,035.9    105.4    741.0    454.5    9,184.0 
Accumulated depreciation                                        
Balance, December 31, 2021   107.1    474.9    679.0    389.2    —    163.0    94.2    1,907.4 
Depreciation   45.1    209.6    223.8    126.1    —    70.6    53.8    729.0 
Disposals   (13.5)   (7.8)   (17.4)   (94.5)   —    (0.4)   (5.5)   (139.1)
Impairment   11.8    —    —    0.7    —    —    —    12.5 
Changes in foreign exchange   6.4    51.2    43.8    16.2    —    15.4    2.4    135.4 
Balance, September 30, 2022   156.9    727.9    929.2    437.7    —    248.6    144.9    2,645.2 
Carrying amounts                                        
At December 31, 2021  $1,375.6   $1,782.1   $1,403.0   $739.8   $69.3   $386.3   $254.5   $6,010.6 
At September 30, 2022  $1,504.5   $1,959.8   $1,568.9   $598.2   $105.4   $492.4   $309.6   $6,538.8 

 

For the three and nine months ended September 30, 2022, total depreciation of property and equipment was $264.0 million and $732.1 million ($222.3 million and $637.9 million for the three and nine months ended September 30, 2021). Of the total depreciation for the three and nine months ended September 30, 2022, $256.9 million and $709.7 million was included in cost of sales ($214.4 million and $614.7 million for the three and nine months ended September 30, 2021) and $7.1 million and $22.4 million was included in selling, general and administrative expenses ($7.9 million and $23.2 million for the three and nine months ended September 30, 2021).

 

Depreciation of property and equipment of $736.8 million as presented in the statement of cash flows for the nine months ended September 30, 2022 was comprised of $729.0 million of depreciation shown above, inclusive of GFL Infrastructure that has been classified as discontinued operations, and $7.8 million of depreciation expense due to the difference between the asset retirement obligation (“ARO”) calculated using the credit-adjusted, risk-free discount rate required for measurement of the ARO through purchase accounting, compared to the risk-free discount rate required for annual valuations.

 

For the three and nine months ended September 30, 2022, GFL recognized $3.4 million and $12.5 million of impairment charges related to assets that were destroyed in fires. There were no such charges for the three and nine months ended September 30, 2021.

 

F-9

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

5. GOODWILL AND INTANGIBLE ASSETS

 

The following table presents the changes in cost and accumulated amortization of GFL’s goodwill and intangible assets for the periods indicated:

 

   Goodwill   Indefinite
life C of A		   Customer
lists and
municipal
contracts		  

Trade name,
definite life
C of A and
other

licenses 

   Non-
compete
agreements		   Total 
Cost                              
Balance, December 31, 2021  $7,501.1   $811.9   $3,219.7   $81.5   $550.0   $12,164.2 
Acquisitions via business combinations   463.9    15.4    238.9    0.3    109.6    828.1 
Adjustments for prior year acquisitions   6.6    —    (109.4)   20.8    (26.3)   (108.3)
Other   —    0.3    11.4    —    0.5    12.2 
Disposals   (179.5)   (2.8)   (19.2)   —    (43.1)   (244.6)
Changes in foreign exchange   392.8    4.5    118.4    8.3    35.6    559.6 
Balance, September 30, 2022   8,184.9    829.3    3,459.8    110.9    626.3    13,211.2 
Accumulated amortization                              
Balance, December 31, 2021   —    —    1,101.4    21.0    210.7    1,333.1 
Amortization   —    —    290.9    8.8    83.6    383.3 
Disposals   —    —    (12.5)   —    (25.6)   (38.1)
Changes in foreign exchange   —    —    42.7    2.2    12.5    57.4 
Balance, September 30, 2022   —    —    1,422.5    32.0    281.2    1,735.7 
Carrying amounts                              
At December 31, 2021  $7,501.1   $811.9   $2,118.3   $60.5   $339.3   $10,831.1 
At September 30, 2022  $8,184.9   $829.3   $2,037.3   $78.9   $345.1   $11,475.5 

 

All intangible asset amortization expense is included in cost of sales.

 

For the nine months ended September 30, 2022, GFL completed the GFL Infrastructure divestiture for cash consideration of $224.0 million and an approximate 45% non-controlling equity interest in Green Infrastructure Partners Inc. (“GIP”). During the nine months ended September 30, 2022, GFL also completed divestitures of certain post collection assets and ancillary operations for aggregate proceeds of $95.7 million.

 

F-10

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

6. LANDFILL CLOSURE AND POST-CLOSURE OBLIGATIONS  

 

The following table presents GFL’s landfill closure and post-closure obligations for the periods indicated:

 

Balance, December 31, 2021  $880.6 
Acquisitions via business combinations   31.9 
Adjustment related to prior year acquisitions   (5.3)
Disposals   (16.4)
Provisions   59.6 
Adjustment for discount rates   (171.4)
Accretion   15.1 
Expenditures   (19.1)
Changes in foreign exchange   61.9 
Balance, September 30, 2022   836.9 
Less: Current portion of landfill closure and post-closure obligations   (39.4)
Non-current portion of landfill closure and post-closure obligations  $797.5 

 

The maturation of GFL’s landfill closure and post-closure obligations has not materially changed since December 31, 2021.

 

Funded landfill post-closure assets

 

GFL is required to deposit funds into trusts to settle post-closure obligations for landfills in certain jurisdictions. As at September 30, 2022, included in other long-term assets are funded landfill post-closure obligations, representing the fair value of legally restricted assets, totaling $25.6 million ($22.9 million as at December 31, 2021).

 

F-11

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

7. LONG-TERM DEBT  

 

The following table presents GFL’s long-term debt for the periods indicated:

 

   September 30, 2022   December 31, 2021 
Revolving credit facility  $874.0   $— 
Term Loan A Facility   500.0    500.0 
Term Loan B Facility   1,768.2    1,647.9 
Notes          
4.250% USD senior secured notes (“4.250% 2025 Secured Notes”)(1)   685.4    633.9 
3.750% USD senior secured notes (“3.750% 2025 Secured Notes”)(2)   1,028.0    950.9 
5.125% USD senior secured notes (“5.125% 2026 Secured Notes”)(3)   685.4    633.9 
3.500% USD senior secured notes (“3.500% 2028 Secured Notes”)(4)   1,028.0    950.9 
4.000% USD senior notes (“4.000% 2028 Notes”)(5)   1,028.0    950.9 
     4.750% USD senior notes (“4.750% 2029 Notes”)(6)   1,028.0    950.9 
     4.375% USD senior notes (“4.375% 2029 Notes”)(7)   753.8    697.2 
Other   75.1    4.6 
Subtotal   9,453.9    7,921.1 
Discount   (5.7)   (4.6)
Net derivative instruments   (8.4)   131.9 
Deferred finance costs   (63.1)   (69.4)
Total long-term debt   9,376.7    7,979.0 
Less: Current portion of long-term debt   (18.2)   (17.2)
Non-current portion of long-term debt  $9,358.5   $7,961.8 

 

(1)The 4.250% 2025 Secured Notes bear interest semi-annually which commenced on December 1, 2020 with the principal maturing on June 1, 2025.
(2)The 3.750% 2025 Secured Notes bear interest semi-annually which commenced on February 1, 2021 with the principal maturing on August 1, 2025.
(3)The 5.125% 2026 Secured Notes bear interest semi-annually which commenced on December 15, 2019 with the principal maturing on December 15, 2026.
(4)The 3.500% 2028 Secured Notes bear interest semi-annually which commenced on September 1, 2021 with the principal maturing on September 1, 2028.
(5)The 4.000% 2028 Notes are comprised of US$500.0 million of initial notes and US$250.0 million of additional notes. The initial notes and additional notes bear interest semi-annually which commenced on February 1, 2021 and February 1, 2022, respectively. The total principal matures on August 1, 2028.
(6)The 4.750% 2029 Notes bear interest semi-annually which commenced on December 15, 2021 with the principal maturing on June 15, 2029.
(7)The 4.375% 2029 Notes bear interest semi-annually which commenced on February 15, 2022 with the principal maturing on August 15, 2029.

 

Under the amended and restated revolving credit agreement dated as of September 27, 2021 (as amended, the “Revolving Credit Agreement”), GFL has access to (a) a $1,205.0 million revolving credit facility (available in Canadian and US dollars) and an aggregate US$75.0 million in revolving credit facilities (available in US dollars) (collectively, the “Revolving Credit Facility”) and (b) a term loan of $500.0 million (the “Term Loan A Facility”). The Revolving Credit Facility and Term Loan A Facility accrue interest at a rate of LIBOR/Bankers Acceptance plus 1.500% to 2.250% or Canadian/US prime plus 0.500% to 1.250%. The Revolving Credit Facility and Term Loan A Facility are secured by mortgages on certain properties, a general security agreement over all of the assets of GFL and certain material subsidiaries and a pledge of the shares of such subsidiaries.

 

The Revolving Credit Agreement contains a Total Net Funded Debt to Adjusted EBITDA and an Interest Coverage Ratio (each as defined in the Revolving Credit Agreement) financial maintenance covenant.

 

The Total Net Funded Debt to Adjusted EBITDA ratio to be maintained is equal to or less than 6.00 to 1.00 for a period of four complete fiscal quarters following completion of a Material Acquisition and at all other times, equal to or less than 5.75 to 1.00. The Interest Coverage Ratio must be equal to or greater than 3.00 to 1.00. As at September 30, 2022 and December 31, 2021, GFL was in compliance with these covenants.

 

F-12

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

GFL has a term loan B facility which matures on May 31, 2025 and bears interest at a rate of LIBOR (with a floor rate at 0.500%) plus 3.000% or US prime plus 2.000% (the “Term Loan B Facility”). The Term Loan B Facility is secured by mortgages on certain properties, a general security agreement over all the assets of GFL and certain material subsidiaries and a pledge of the shares of such subsidiaries.

 

8. INTEREST AND OTHER FINANCE COSTS

 

The following table presents GFL’s interest and other finance costs for the periods indicated, excluding the results of GFL Infrastructure which has been classified as discontinued operations:

 

  

Three months ended

September 30, 

  

Nine months ended

September 30, 

 
   2022   2021(1)   2022   2021(1) 
Interest  $118.9   $80.9   $295.3   $231.9 
Prepayment penalties for early note redemption   —    —    —    49.3 
Amortization of deferred finance costs   3.6    6.8    10.1    17.9 
Accretion of landfill closure and post-closure obligations   5.9    3.7    15.1    11.0 
Other finance costs   7.8    5.2    20.2    17.5 
Interest and other finance costs  $136.2   $96.6   $340.7   $327.6 

 

(1)Comparative figures have been re-presented, refer to Note 2 and Note 18.

 

9. TANGIBLE EQUITY UNITS  

 

Each TEU, which has a stated amount of US$50.00, is comprised of a prepaid stock purchase contract (“Purchase Contract(s)”) and a senior amortizing note (“Amortizing Note(s)”) due March 15, 2023, both of which are freestanding instruments and separate units of account. As at September 30, 2022, 11,698,543 Purchase Contracts were outstanding (11,698,678 as at December 31, 2021).

 

The following table presents the respective components of the TEUs as at the dates indicated:

 

   September 30, 2022   December 31, 2021 
Amortizing Notes  $31.2   $70.4 
Purchase Contracts   895.4    1,218.1 
    926.6    1,288.5 
Less: Current portion   (926.6)   (56.9)
Non-current portion of Amortizing Notes and Purchase Contracts  $—   $1,231.6 

 

F-13

 

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

10. LOSS PER SHARE

 

The following table presents GFL’s loss per share for the periods indicated:

 

  

Three months ended

September 30, 

  

Nine months ended

September 30, 

 
   2022   2021(1)(2)   2022   2021(1)(2) 
Net loss attributable to GFL Environmental Inc.  $(183.5)  $(309.9)  $(91.8)  $(529.4)
                     
Less:                    
Net income (loss) from discontinued operations   —    6.2    (127.9)   15.9 
Amounts attributable to preferred shareholders   20.6    13.2    60.6    39.4 
Adjusted net loss from continuing operations  $(204.1)  $(329.3)  $(24.5)  $(584.7)
                     
Weighted and diluted weighted average number of shares outstanding   368,627,958    362,058,515    366,521,465    361,063,498 
                     
Basic and diluted (loss) earnings per share                    
Continuing operations  $(0.55)  $(0.91)  $(0.07)   (1.62)
Discontinued operations   —    0.02    (0.35)   0.04 
Total operations  $(0.55)  $(0.89)  $(0.42)  $(1.58)

 

(1)Comparative figures have been re-presented, refer to Note 2 and Note 18.
(2)Subsequent to the original issuance of the September 30, 2021 unaudited interim condensed consolidated financial statements, GFL determined the mark-to-market loss on Purchase Contracts should not be treated as a temporary difference for deferred income tax purposes. As a result, to correct this immaterial error, income tax recovery decreased by $64.7 million and $83.2 million for the three and nine months ended September 30, 2021.

 

Basic and diluted loss per share includes the minimum conversion of TEUs into subordinate voting shares, which as at September 30, 2022 represented 25,663,094 subordinate voting shares (29,212,413 subordinate voting shares as at September 30, 2021). Diluted loss per share excludes the effects of time-based share options, RSUs (defined below), Preferred Shares (defined below), and any amount of subordinate voting shares arising from the conversion of TEUs in excess of the minimum conversion, as the effect would be anti-dilutive.

 

F-14

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

11. REVENUE

 

The following table presents GFL’s revenue disaggregated by service type for the periods indicated, excluding the results of GFL Infrastructure which has been classified as discontinued operations:

 

  

Three months ended

September 30, 

  

Nine months ended

September 30,

 
   2022   2021(1)   2022   2021(1) 
Residential  $387.8   $320.8   $1,087.5   $913.3 
Commercial/industrial   657.5    481.9    1,781.8    1,358.5 
Total collection   1,045.3    802.7    2,869.3    2,271.8 
Landfill   229.3    184.6    614.6    485.5 
Transfer   178.7    158.2    495.6    442.8 
Material recovery   85.0    98.7    268.1    265.1 
Other   120.0    67.3    296.7    183.0 
Solid Waste   1,658.3    1,311.5    4,544.3    3,648.2 
Environmental Services(2)   390.9    254.5    990.3    540.5 
Intercompany revenue   (218.0)   (184.7)   (594.5)   (491.7)
Revenue  $1,831.2   $1,381.3   $4,940.1   $3,697.0 

 

(1)Comparative figures have been re-presented, refer to Note 2 and Note 18.
(2)Environmental Services segment is the combination of the Liquid Waste segment and the soil remediation division, previously included in GFL’s Infrastructure and Soil Remediation segment.

 

F-15

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

12. OPERATING SEGMENTS

 

The following tables present GFL’s revenue and Adjusted EBITDA by operating segment for the periods indicated, excluding the results of GFL Infrastructure which has been classified as discontinued operations. Gross revenue is calculated based on revenue before intercompany revenue eliminations.

 

   Three months ended September 30, 2022 
   Gross
Revenue		   Intercompany
Revenue		   Revenue  

Adjusted

EBITDA 

 
Solid Waste                    
Canada  $516.3   $(69.0)  $447.3   $122.4 
USA   1,142.0    (122.5)   1,019.5    300.8 
Solid Waste   1,658.3    (191.5)   1,466.8    423.2 
Environmental Services(2)   390.9    (26.5)   364.4    96.5 
Corporate   —    —    —    (46.4)
   $2,049.2   $(218.0)  $1,831.2   $473.3 

 

   Three months ended September 30, 2021(1) 
   Gross
Revenue		   Intercompany
Revenue		   Revenue  

Adjusted

EBITDA 

 
Solid Waste                    
Canada  $430.3   $(52.9)  $377.4   $116.5 
USA   881.2    (102.6)   778.6    250.5 
Solid Waste   1,311.5    (155.5)   1,156.0    367.0 
Environmental Services(2)   254.5    (29.2)   225.3    67.4 
Corporate   —    —    —    (34.8)
   $1,566.0   $(184.7)  $1,381.3   $399.6 

 

(1)Comparative figures have been re-presented, refer to Note 2 and Note 18.
(2)Environmental Services segment is the combination of the Liquid Waste segment and the soil remediation division, previously included in GFL’s Infrastructure and Soil Remediation segment.

 

F-16

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

   Nine months ended September 30, 2022 
   Gross
Revenue		   Intercompany
Revenue		   Revenue  

Adjusted

EBITDA 

 
Solid Waste                    
Canada  $1,422.4   $(184.7)  $1,237.7   $333.9 
USA   3,121.9    (339.9)   2,782.0    845.7 
Solid Waste   4,544.3    (524.6)   4,019.7    1,179.6 
Environmental Services   990.3    (69.9)   920.4    234.4 
Corporate   —    —    —    (133.0)
   $5,534.6   $(594.5)  $4,940.1   $1,281.0 

 

   Nine months ended September 30, 2021(1) 
   Gross
Revenue		   Intercompany
Revenue		    Revenue(1)  

Adjusted

EBITDA(2) 

 
Solid Waste                    
Canada  $1,177.2   $(148.3)  $1,028.9   $304.5 
USA   2,471.0    (289.3)   2,181.7    698.0 
Solid Waste   3,648.2    (437.6)   3,210.6    1,002.5 
Environmental Services(2)   540.5    (54.1)   486.4    131.3 
Corporate   —    —    —    (98.7)
   $4,188.7   $(491.7)  $3,697.0   $1,035.1 

 

(1)Comparative figures have been re-presented, refer to Note 2 and Note 18.
(2)Environmental Services segment is the combination of the Liquid Waste segment and the soil remediation division, previously included in GFL’s Infrastructure and Soil Remediation segment.

 

F-17

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

The following table presents GFL’s reconciliation of Adjusted EBITDA to net (loss) income from continuing operations for the periods indicated, excluding the results of GFL Infrastructure which has been classified as discontinued operations:

 

  

Three months ended

September 30, 

  

Nine months ended

September 30, 

 
   2022   2021(1)   2022   2021(1) 
Adjusted EBITDA  $473.3   $399.6   $1,281.0   $1,035.1 
Less:                    
Depreciation of property and equipment   264.0    222.3    732.1    637.9 
Amortization of intangible assets   124.2    112.2    382.1    331.7 
Interest and other finance costs   136.2    96.6    340.7    327.6 
Loss on foreign exchange   195.3    111.6    249.3    35.3 
(Gain) loss on sale of property and equipment   (5.7)   1.9    (10.1)   3.0 
Mark-to-market (gain) loss on Purchase Contracts   (10.3)   208.6    (391.4)   319.6 
Share of net income of investments accounted for using the equity method   (9.2)   —    (14.5)   — 
Share-based payments   13.4    9.8    38.2    28.4 
Impairment   3.4    —    12.5    — 
Loss (gain) on divestiture   1.6    (31.4)   (4.9)   (66.9)
Transaction costs   13.6    17.8    36.9    43.2 
Acquisition, rebranding and other integration costs   6.3    5.8    19.7    15.9 
Income tax recovery   (75.8)   (39.5)   (145.5)   (95.3)
Net (loss) income from continuing operations  $(183.7)  $(316.1)  $35.9   $(545.3)

 

(1)Comparative figures have been re-presented, refer to Note 2 and Note 18.

 

Goodwill and indefinite life intangible assets by operating segment

 

The carrying amount of goodwill and indefinite life intangible assets allocated to the operating segments is as follows:

 

   September 30, 2022   December 31, 2021(1) 
Solid Waste          
Canada  $2,064.3   $1,934.7 
USA   6,041.1    5,328.8 
Environmental Services(2)   908.8    872.2 
    9,014.2    8,135.7 
GFL Infrastructure   —    177.3 
   $9,014.2   $8,313.0 

 

(1)Comparative figures have been re-presented, refer to Note 2 and Note 18.
(2)Environmental Services segment is the combination of the Liquid Waste segment and the soil remediation division, previously included in GFL’s Infrastructure and Soil Remediation segment.

 

F-18

 

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

13. SHAREHOLDERS' EQUITY

 

a)Authorized capital

 

GFL’s authorized share capital consists of (i) an unlimited number of subordinate voting shares, (ii) an unlimited number of multiple voting shares, (iii) an unlimited number of preferred shares, issuable in series, (iv) 28,571,428 Series A perpetual convertible preferred shares (the “Series A Preferred Shares”), and (v) 8,196,721 Series B perpetual convertible preferred shares (the “Series B Preferred Shares”). The Series A Preferred Shares and Series B Preferred Shares are collectively referred to as the “Preferred Shares”.

 

Normal course issuer bid

 

On May 10, 2022, the Toronto Stock Exchange accepted GFL’s notice of intention to implement a normal course issuer bid (“NCIB”) during the twelve-month period commencing on May 12, 2022 and ending May 11, 2023. Under the NCIB, a maximum of 16,510,694 subordinate voting shares may be repurchased by GFL. All subordinate voting shares repurchased by GFL under the NCIB will be cancelled. During the three and nine months ended September 30, 2022, GFL did not repurchase any subordinate voting shares under the plan.

 

Share issuances and cancellations

 

The following table presents GFL’s share capital for the periods indicated:

 

   Subordinate voting
shares		   Multiple voting
shares		   Preferred Shares   Total 
Balance, December 31, 2021   326,229,953    12,062,964    36,768,149    375,061,066 
Issued as partial consideration for acquisition   3,976,434    —    —    3,976,434 
Converted from options   450,000    —    —    450,000 
Converted from RSUs   692,482    —    —    692,482 
Converted from multiple voting shares into subordinate voting shares   250,000    (250,000)   —    — 
Converted from TEUs   297    —    —    297 
Cancelled during the period   (8,057)   —    —    (8,057)
Balance, September 30, 2022   331,591,109    11,812,964    36,768,149    380,172,222 

 

b)Share options, restricted share units (“RSUs”), and deferred share units (“DSUs”)

 

Share options

 

The number of share options held by officers and employees with their average exercise price per option are summarized below:

 

   Options   Weighted average
exercise price (US$)		 
Share options outstanding, December 31, 2021   24,114,121   $31.79 
Exercised   (1,985,539)   22.80 
Share options outstanding, September 30, 2022   22,128,582   $32.59 
Vested from outstanding above, September 30, 2022   4,398,876   $26.02 

 

For the three and nine months ended September 30, 2022, there were no options granted, expired or forfeited.

 

For the three and nine months ended September 30, 2022, the total compensation expense related to share options amounted to $5.1 million and $15.8 million ($6.1 million and $12.4 million for the three and nine months ended September 30, 2021).

 

F-19

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

RSUs and DSUs

 

The following table presents GFL’s summary of the status of RSUs and DSUs for the periods indicated:

 

   RSUs   Weighted
average grant
date fair value
(US$)		   DSUs   Weighted
average grant
date fair value
(US$)		 
Outstanding, December 31, 2021   1,736,670   $26.77    32,536   $27.76 
Granted   975,801    28.69    19,801    30.88 
Settled   (691,442)   25.60    —    — 
Forfeited   (73,844)   27.90    —    — 
Outstanding, September 30, 2022   1,947,185   $28.10    52,337   $28.94 
Expected to vest from outstanding above, September 30, 2022   1,855,375   $28.19    52,337   $28.94 

 

For the three and nine months ended September 30, 2022, there were no RSUs or DSUs cancelled.

 

For the three and nine months ended September 30, 2022, the total compensation expense related to RSUs amounted to $8.0 million and $21.6 million ($3.5 million and $15.4 million for the three and nine months ended September 30, 2021). For the three and nine months ended September 30, 2022, the total compensation expense related to DSUs amounted to $0.3 million and $0.8 million ($0.2 million and $0.6 million for the three and nine months ended September 30, 2021).

 

14. SUPPLEMENTAL CASH FLOW INFORMATION

 

The following table presents GFL’s net change in non-cash working capital for the periods indicated:

 

    Three months ended
September 30, 		     Nine months ended
September 30, 		  
    2022     2021     2022     2021  
Effects of changes in                                
Accounts payable and accrued liabilities   $ 65.4     $ 60.6     $ 165.1     $ 31.7  
Trade and other receivables, net     (111.5 )     (139.0 )     (329.9 )     (133.0 )
Prepaid expenses and other assets     5.3       4.4       (36.4 )     (16.7 )
Changes in non-cash working capital items     (40.8 )     (74.0 )     (201.2 )     (118.0 )
Changes in non-cash working capital items for discontinued operations     —       (21.0 )     (44.8 )     (39.5 )
Changes in non-cash working capital items for continuing operations   $ (40.8 )   $ (53.0 )   $ (156.4 )   $ (78.5 )

 

F-20

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

 

GFL’s financial instruments consist of cash, trade accounts receivable, trade accounts payable, long-term debt, including related hedging instruments, and TEUs.

 

Fair value measurement

 

The carrying value of GFL’s financial assets are equal to their fair values. The carrying value of GFL’s financial liabilities approximate their fair values with the exception of GFL’s outstanding USD secured and unsecured notes (the “Notes”) and Amortizing Notes. The fair value hierarchy for these instruments are as follows for the periods indicated:

 

   September 30, 2022 
   Carrying Value   Fair Value   Level 1   Level 2   Level 3 
Notes  $6,230.9   $5,461.3   $—   $5,461.3   $— 
Amortizing Notes   31.2    31.2    31.2    —    — 

 

   December 31, 2021 
   Carrying Value   Fair Value   Level 1   Level 2   Level 3 
Notes  $5,764.0   $5,808.3   $—   $5,808.3   $— 
Amortizing Notes   70.4    70.4    70.4    —    — 

 

GFL uses a discounted cash flow model incorporating observable market data, such as foreign currency forward rates, to estimate the fair value of its Notes. Certain leases, equipment loans and other, and amounts due to related parties, do not bear interest or bear interest at an amount that is not stated at fair value.

 

Purchase Contracts and net derivative instruments, which are recorded at fair value, are classified within Level 1 and Level 2, respectively.

 

Financial risk management

 

There were no changes in the financial risk management policies disclosed in the Annual Financial Statements.

 

16. COMMITMENTS

 

a) Letters of credit

 

As at September 30, 2022, GFL had letters of credit totaling approximately $238.3 million outstanding ($199.5 million as at December 31, 2021), which are not recognized in the Interim Financial Statements. Interest expense in connection with these letters of credit was $1.2 million and $3.5 million for the three and nine months ended September 30, 2022 ($0.9 million and $2.7 million for the three and nine months ended September 30, 2021).

 

b) Performance bonds

 

As at September 30, 2022, GFL had issued performance bonds totaling $1,492.2 million ($1,748.1 million as at December 31, 2021).

 

F-21

 

 

GFL Environmental Inc. - Notes to the Unaudited Interim Condensed Consolidated Financial Statements

(In millions of dollars except per share amounts or otherwise stated)

 

17. RELATED PARTY TRANSACTIONS

 

After the payment of the semi-annual instalment of $3.5 million, the remaining principal outstanding on the note payable to Josaud Holdings Inc. (an entity controlled by Patrick Dovigi) was $3.5 million as at September 30, 2022 ($10.5 million as at December 31, 2021).

 

After the payment of the semi-annual instalment of $2.9 million, the remaining principal outstanding on the note payable to Sejosa Holdings Inc. (an entity controlled by Patrick Dovigi) was $14.5 million as at September 30, 2022 ($20.3 million as at December 31, 2021).

 

For the three and nine months ended September 30, 2022, GFL paid $1.6 million and $4.0 million ($1.0 million and $2.9 million for the three and nine months ended September 30, 2021) in aggregate lease payments to related parties.

 

For the three and nine months ended September 30, 2022, GFL entered into transactions with GIP which resulted in revenue of $10.2 million and $13.9 million ($nil for the three and nine months ended September 30, 2021) and net payables of $2.5 million as at September 30, 2022 ($nil as at December 31, 2021).

 

18. DISCONTINUED OPERATIONS

 

On April 25, 2022, GFL announced the completion of the divestiture of GFL Infrastructure for cash consideration of $224.0 million and an approximate 45% non-controlling equity interest in GIP, an entity that is controlled by funds managed by HPS Investment Partners Inc. through a majority equity interest. An affiliate controlled by Patrick Dovigi holds a minority equity interest in GIP.

 

The results of GFL Infrastructure are presented as a single amount on the statement of operations and comprehensive income (loss). The post-tax results of the discontinued operations are as follows:

 
    Three months ended
September 30,		     Nine months ended
September 30,		  
    2022     2021     2022     2021  
Revenue   $ —     $ 103.8     $ 96.8     $ 289.0  
Expenses     —       95.2       98.4       270.3  
Earnings (loss) before income taxes     —       8.6       (1.6 )     18.7  
Income tax (recovery) expense     —       2.4       (1.8 )     2.8  
Net income     —       6.2       0.2       15.9  
Impairment     —       —       (128.1 )     —  
Net income (loss) and comprehensive income (loss) from discontinued operations   $ —     $ 6.2     $ (127.9 )   $ 15.9  

 

Cash flow information for GFL Infrastructure is as follows:

 

    Three months ended
September 30,  		     Nine months ended
September 30,  		  
    2022     2021     2022     2021  
Operating cash flows from discontinued operations   $ —     $ (5.3 )   $ (35.4 )   $ (0.7 )
Investing cash flows from discontinued operations     —       (7.4 )     (7.2 )     (47.0 )
Financing cash flows from discontinued operations     —       (0.8 )     (1.0 )     (2.4 )
Decrease in cash from discontinued operations   $ —     $ (13.5 )   $ (43.6 )   $ (50.1 )

 

F-22