CASELLA WASTE SYSTEMS, INC. The following discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included under Item 1. In addition, reference should be made to our audited consolidated financial statements and notes thereto and related Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2019 filed with theSecurities and Exchange Commission ("SEC") onFebruary 21, 2020 . This Quarterly Report on Form 10-Q and, in particular, this Management's Discussion and Analysis of Financial Condition and Results of Operations, may contain or incorporate a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, including statements regarding: •the expected and potential direct or indirect impacts of the novel coronavirus ("COVID-19") outbreak on our business; •expected liquidity and financing plans; •expected future revenues, operations, expenditures and cash needs; •fluctuations in commodity pricing of our recyclables, increases in landfill tipping fees and fuel costs and general economic and weather conditions; •projected future obligations related to final capping, closure and post-closure costs of our existing landfills and any disposal facilities which we may own or operate in the future; •our ability to use our net operating losses and tax positions; •our ability to service our debt obligations; •the projected development of additional disposal capacity or expectations regarding permits for existing capacity; •the recoverability or impairment of any of our assets or goodwill; •estimates of the potential markets for our products and services, including the anticipated drivers for future growth; •sales and marketing plans or price and volume assumptions; •the outcome of any legal or regulatory matter; •potential business combinations or divestitures; and •projected improvements to our infrastructure and the impact of such improvements on our business and operations. In addition, any statements contained in or incorporated by reference into this report that are not statements of historical fact should be considered forward-looking statements. You can identify these forward-looking statements by the use of the words "believes", "expects", "anticipates", "plans", "may", "will", "would", "intends", "estimates" and other similar expressions, whether in the negative or affirmative. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate, as well as management's beliefs and assumptions, and should be read in conjunction with our consolidated financial statements and notes thereto. These forward-looking statements are not guarantees of future performance, circumstances or events. The occurrence of the events described and the achievement of the expected results depends on many events, some or all of which are not predictable or within our control. Actual results may differ materially from those set forth in the forward-looking statements. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. These risks and uncertainties include, without limitation, those detailed in Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2019 and those included under Part II, Item 1A of this Quarterly Report on Form 10-Q. There may be additional risks that we are not presently aware of or that we currently believe are immaterial, which could have an adverse impact on our business. We explicitly disclaim any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as otherwise required by law. 26 -------------------------------------------------------------------------------- Company Overview Founded in 1975 with a single truck,Casella Waste Systems, Inc. , aDelaware corporation and its wholly-owned subsidiaries (collectively, "we", "us" or "our"), is a regional, vertically-integrated solid waste services company. We provide resource management expertise and services to residential, commercial, municipal and industrial customers, primarily in the areas of solid waste collection and disposal, transfer, recycling and organics services. We provide integrated solid waste services in six states:Vermont ,New Hampshire ,New York ,Massachusetts ,Maine andPennsylvania , with our headquarters located inRutland, Vermont . We manage our solid waste operations on a geographic basis through two regional operating segments, the Eastern and Western regions, each of which provides a full range of solid waste services. We manage our larger-scale recycling and commodity brokerage operations along with our organics services and major account and industrial services through our single resource-renewal focusedResource Solutions segment. As ofApril 15, 2020 , we owned and/or operated 46 solid waste collection operations, 58 transfer stations, 20 recycling facilities, eight Subtitle D landfills, four landfill gas-to-energy facilities and one landfill permitted to accept construction and demolition ("C&D") materials. Results of Operations Recent Events With the global outbreak of COVID-19 and the declaration of a pandemic by theWorld Health Organization inMarch 2020 , theU.S. Government and all of the states in which we operate have declared the waste services industry as an essential services provider and as a result we are committed to continue to operate and provide our full breadth of services. We have prioritized the safety and well-being of our employees by strictly adhering to recommendations of theCenters for Disease Control and Prevention as well as executive orders of the states in which we operate. The COVID-19 outbreak has caused, and is likely to continue to cause, significant economic disruption across our geographic footprint and has adversely affected, and is expected to continue to adversely affect, our business. COVID-19 negatively impacted our revenue at the end of the quarter endedMarch 31, 2020 as many collection customers required service level changes and volumes into our landfills declined. We have experienced an increase in certain costs associated with the protection of our employees including costs for additional safety equipment, hygiene products and enhanced facility cleaning. These costs are expected to continue throughout the remainder of the year. We have also taken immediate measures to reduce costs in other areas and preserve liquidity during this period of uncertainty. As of the date of this filing, we are unable to determine or predict the nature, duration or scope of the overall impact that COVID-19 will have on our business, results of operations, liquidity or capital resources. For further information regarding the impact of COVID-19 on us, see Part II, Item 1A, "Risk Factors" included in this Quarterly Report on Form 10-Q. Revenues We manage our solid waste operations, which include a full range of solid waste services, on a geographic basis through two regional operating segments, which we designate as the Eastern and Western regions. Revenues in our Eastern and Western regions consist primarily of fees charged to customers for solid waste collection and disposal, landfill, landfill gas-to-energy, transfer and recycling services. We derive a substantial portion of our collection revenues from commercial, industrial and municipal services that are generally performed under service agreements or pursuant to contracts with municipalities. The majority of our residential collection services are performed on a subscription basis with individual households. Landfill and transfer customers are charged a tipping fee on a per ton basis for disposing of their solid waste at our disposal facilities and transfer stations. We also generate and sell electricity at certain of our landfill facilities. Revenues associated with our resource renewal operations are derived from organics services, major account and industrial services, as well as recycling services generated from both municipalities and customers in the form of processing fees, tipping fees and commodity sales. A summary of revenues attributable to service provided (dollars in millions and as a percentage of total revenues) follows: 27 --------------------------------------------------------------------------------
Three Months Ended March 31, $
2020 2019 Change
Collection $ 94.6 51.7 % $ 83.1 50.8 % $ 11.5
Disposal 38.6 21.1 % 36.1 22.0 % 2.5
Power 1.0 0.5 % 1.1 0.7 % (0.1)
Processing 1.1 0.7 % 0.8 0.5 % 0.3
Solid waste operations 135.3 74.0 % 121.1 74.0 % 14.2
Organics 14.9 8.1 % 13.6 8.3 % 1.3
Customer solutions 21.7 11.9 % 18.2 11.1 % 3.5
Recycling 11.0 6.0 % 10.8 6.6 % 0.2
Resource solutions operations 47.6 26.0 % 42.6 26.0 % 5.0
Total revenues $ 182.9 100.0 % $ 163.7 100.0 % $ 19.2 A summary of the period-to-period change in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:
Period-to-Period Change for the Three Months
Ended
Amount % Growth
Price $ 7.1 5.8 %
Volume (1) (3.4) (2.7) %
Surcharges and other fees 1.3 1.1 %
Commodity price and volume (0.3) (0.3) %
Acquisitions 10.3 8.5 %
Solid waste revenues $ 15.0 12.4 %
(1)Adjusted for $0.8 million of inter-company movements between solid waste
collection volume and customer solutions associated with the acquisition of a
business.
Solid waste revenues
Price.
The price change component in quarterly solid waste revenues growth is the
result of the following:
•$4.3 million from favorable collection pricing; and
•$2.8 million from favorable disposal pricing associated primarily with our
landfills and transfer stations.
Volume.
The volume change component in quarterly solid waste revenues growth is the
result of the following:
•$(2.8) million from lower collection volumes due to the initial negative
impacts of COVID-19; and
•$(0.6) million from lower disposal volumes (of which $(1.3) million relates to
lower landfill volumes due to the initial negative impacts of COVID-19, $0.6
million relates to higher transfer station volumes and $0.1 million relates to
higher transportation volumes).
Surcharges and other fees.
The surcharges and other fees change component in quarterly solid waste revenues
growth is associated primarily with the Energy component of the Energy and
Environmental fee and the Sustainability Recycling Adjustment fee. The Energy
component of the fee floats on a monthly basis based on diesel fuel prices. The
Sustainability Recycling Adjustment fee floats on a monthly basis based on
recycled commodity prices.
28
--------------------------------------------------------------------------------
Commodity price and volume.
The commodity price and volume change component in quarterly solid waste
revenues growth is the result of the following:
•$(0.4) million from unfavorable commodity pricing;
•$(0.1) million due to lower commodity processing volumes; partially offset by
•$0.2 million due to higher landfill gas-to-energy volumes.
Acquisitions.
The acquisitions change component in quarterly solid waste revenues growth is
associated with the following acquisition activity:
•the acquisition of one tuck-in solid waste collection business in our Western
region; and
•the acquisition of nine businesses throughout the prior year: seven tuck-in
solid waste collection businesses, a business comprised of solid waste
collection, transfer and recycling operations, and a business comprised of solid
waste hauling and transfer assets.
Resource Solutions revenues
Organics.
Organics revenues increased $1.3 million quarterly as a result of higher volumes
associated with two large transportation and disposal contracts.
Customer solutions.
Customer solutions revenues increased $2.7 million quarterly as the result of
higher volumes mainly due to multi-site retail and industrial services organic
growth. The increase was adjusted for $0.8 million of inter-company movements
between solid waste collection volume and customer solutions associated with the
acquisition of a business.
Recycling.
Quarterly recycling revenues increased $0.2 million as a result of the
following:
•$2.0 million from higher recycling processing fees;
•$0.3 million from the acquisition of one recycling operation; and
•$0.1 million from higher commodity volumes; partially offset by
•$(2.2) million from unfavorable commodity pricing in the marketplace.
Operating Expenses
A summary of cost of operations, general and administration expense, and
depreciation and amortization expense (dollars in millions and as a percentage
of total revenues) is as follows:
Three Months Ended March 31, $
2020 2019 Change
Cost of operations $ 128.5 70.3 % $ 117.8 72.0 % $ 10.7
General and administration $ 24.4 13.3 % $ 22.7 13.9 % $ 1.7
Depreciation and amortization $ 21.4 11.7 % $ 17.5 10.7 % $ 3.9
Cost of Operations
Cost of operations includes labor costs, tipping fees paid to third-party
disposal facilities, fuel costs, maintenance and repair costs of vehicles and
equipment, workers' compensation and vehicle insurance costs, third-party
transportation costs, district and state taxes, host community fees, and
royalties. Cost of operations also includes accretion expense related to final
capping, closure and post-closure obligations, leachate treatment and disposal
costs, and depletion of landfill operating lease obligations.
As a percentage of revenues, cost of operations decreased 170 basis points
during the three months ended March 31, 2020 from the same period of the prior
year. The period-to-period change in cost of operations can be primarily
attributed to the following:
29
--------------------------------------------------------------------------------
Third-party direct costs increased $5.1 million quarterly while decreasing
slightly as a percentage of revenues due to the following:
•higher disposal costs associated with: additional volumes related to
acquisition activity; additional volumes related to multi-site retail and
industrial services organic growth in our customer solutions line-of-business
and higher volumes in our organics line-of-business within our Resource
Solutions segment; and increased disposal pricing in the northeastern United
States ; partially offset by lower organic collection and landfill volumes due to
our focus on improving pricing and the initial negative impacts of COVID-19 in
March 2019 that resulted in lower commercial collection volumes, lower
construction and demolition volumes, and lower landfill volumes.
•higher hauling and third-party transportation costs associated with: higher
collection volumes related to acquisition activity; higher brokerage volumes in
our customer solutions line-of-business with high pass through direct costs;
higher recycling volumes; and higher transportation rates.
Labor and related benefit costs increased $1.2 million quarterly, but decreased
90 basis points as a percentage of revenues, due to higher labor costs related
primarily to acquisition activity.
Maintenance and repair costs increased $2.4 million quarterly, but decreased 40
basis points as a percentage of revenues, due primarily to higher fleet and
facility maintenance costs associated with acquisition activity and related
business growth.
Fuel costs increased $0.3 million quarterly, but decreased 20 basis points as a
percentage of revenues, due primarily to higher volumes associated with
acquisition activity, partially offset by lower fuel prices.
Direct operational costs increased $1.7 million quarterly, but decreased 20
basis points as a percentage of revenues, due to higher auto insurance costs,
associated primarily with claims activity, and higher operating costs related to
business growth.
General and Administration
General and administration expense includes management, clerical and
administrative compensation, bad debt expense, as well as overhead costs,
professional service fees and costs associated with marketing, sales force and
community relations efforts.
The period-to-period change in general and administration expense can be
primarily attributed to higher labor costs associated with acquisition activity
and higher bad debt expense as we reevaluated bad debt rates due to the
projected economic downturn associated with COVID-19, partially offset by lower
accrued incentive compensation.
Depreciation and Amortization
Depreciation and amortization expense includes: (i) depreciation of property and
equipment (including assets recorded for finance leases) on a straight-line
basis over the estimated useful lives of the assets; (ii) amortization of
landfill costs (including those costs incurred and all estimated future costs
for landfill development and construction, along with asset retirement costs
arising from closure and post-closure obligations) on a units-of-consumption
method as landfill airspace is consumed over the total estimated remaining
capacity of a site, which includes both permitted capacity and unpermitted
expansion capacity that meets certain criteria for amortization purposes, and
amortization of landfill asset retirement costs arising from final capping
obligations on a units-of-consumption method as airspace is consumed over the
estimated capacity associated with each final capping event; and
(iii) amortization of intangible assets with a definite life, using either an
economic benefit provided approach or on a straight-line basis over the
definitive terms of the related agreements.
A summary of the components of depreciation and amortization expense (dollars in
millions and as a percentage of total revenues) follows:
Three Months Ended March 31, $
2020 2019 Change
Depreciation $ 12.9 7.0 % $ 10.3 6.3 % $ 2.6
Landfill amortization 6.4 3.5 % 5.8 3.6 % 0.6
Other amortization 2.1 1.1 % 1.4 0.9 % 0.7
$ 21.4 11.6 % $ 17.5 10.8 % $ 3.9
The period-to-period change in depreciation and amortization expense can be
primarily attributed to acquisition activity and higher landfill amortization
expense associated with changes in cost estimates and other assumptions,
partially offset by lower landfill volumes associated with the initial negative
impacts of COVID-19.
Expense from Acquisition Activities and Other Items
In the three months ended March 31, 2020 and 2019, we recorded charges of $1.0
million and $0.7 million , respectively, associated primarily with acquisition
activities.
30
--------------------------------------------------------------------------------
Southbridge Landfill Closure Charge
In 2017, we initiated the plan to cease operations of the landfill located in
Southbridge, Massachusetts ("Southbridge Landfill ") and later closed it in
November 2018 when Southbridge Landfill reached its final capacity. Accordingly,
in the three months ended March 31, 2020 and 2019, we recorded legal and other
costs associated with various matters as part of the Southbridge Landfill
closure of $0.6 million and $0.6 million , respectively.
Other Expenses
Interest Expense, net
Our interest expense, net decreased $(0.4) million quarterly due primarily to
lower average interest rates associated with changes in LIBOR and the
remarketing of our New York State Environmental Facilities Corporation Solid
Waste Disposal Revenue Bonds Series 2014 ("New York Bonds 2014") and our
Business Finance Authority of the State of New Hampshire Solid Waste Disposal
Revenue Bonds Series 2013 ("New Hampshire Bonds").
Provision for Income Taxes
Our provision for income taxes increased $0.1 million during the three months
ended March 31, 2020 , as compared to the same period in the prior year.
On March 27, 2020 , the Coronavirus Aid, Relief, and Economic Security Act (the
"CARES Act") was enacted which, among other things, allows the carryback of
remaining minimum tax credit carryforwards to tax year 2018. Prior to the CARES
Act, the minimum tax credit carryforwards were fully refunded through tax year
2021, if not otherwise used to offset tax liabilities. A current income tax
benefit of $1.0 million , offset by a $1.0 million deferred tax provision, was
recognized in the three months ended March 31, 2020 for the remaining minimum
tax credit being carried back to tax year 2018 by us. In the three months ended
March 31, 2019 , we recognized a $0.2 million current income tax benefit, offset
by a $0.2 million deferred tax provision, for the portion of the minimum tax
credit carryforward refundable for 2019 based on law then enacted.
On December 22, 2017 , the Tax Cuts and Jobs Act (the "TCJ Act") was enacted. The
TCJ Act significantly changed US corporate income tax laws by, among other
things, changing carryforward rules for net operating losses. Our $110.6 million
in federal net operating loss carryforwards generated as of the end of 2017
continue to be carried forward for 20 years and are expected to be available to
fully offset taxable income earned in 2020 and future tax years. Federal net
operating losses generated after 2017, totaling $51.2 million carried forward to
2020, will be carried forward indefinitely, but generally may only offset up to
80% of taxable income earned in a tax year. The total federal net operating
losses generated after 2017 and carried forward to 2020 has been updated from
$67.4 million as estimated in the quarter ended December 31, 2019 with
corresponding changes to the deferred tax asset and valuation allowance.
Although the CARES Act further modifies the net operating loss rules to permit
net operating losses incurred in tax years 2018 through 2020 to be carried back
5 years and to temporarily permit such losses to offset 100% of taxable income
in tax year 2020, these modifications under the CARES Act are not anticipated to
impact us.
We are continuing to evaluate the CARES Act, but other income tax changes are
not expected to have a material impact.
Segment Reporting
Revenues
A summary of revenues by reportable operating segment (in millions) follows:
Three Months Ended
March 31, $
2020 2019 Change
Eastern $ 50.1 $ 47.0 $ 3.1
Western 85.2 74.2 11.0
Resource solutions 47.6 42.5 5.1
Corporate entities - - -
Total revenues $ 182.9 $ 163.7 $ 19.2
31--------------------------------------------------------------------------------Eastern Region A summary of the period-to-period change in solid waste revenues (dollars in millions and as percentage growth of solid waste revenues) follows:
Period-to-Period Change for the Three
Months Ended
Amount % Growth
Price $ 2.5 5.4 %
Volume (1.1) (2.1) %
Surcharges and other fees 0.3 0.5 %
Commodity price and volume 0.1 0.1 %
Acquisitions 1.3 2.8 %
Solid waste revenues $ 3.1 6.7 %
Price.
The price change component in quarterly solid waste revenues growth is the
result of the following:
•$1.8 million from favorable collection pricing; and
•$0.7 million from favorable disposal pricing related to transfer stations and
landfills.
Volume.
The volume change component in quarterly solid waste revenues growth is the
result of the following:
•$(0.6) million from lower collection volumes due to the initial negative
impacts of COVID-19; and
•$(0.5) million from lower disposal volumes related to landfills and transfer
stations due to the initial negative impacts of COVID-19.
Surcharges and other fees.
The surcharge and other fees change component in quarterly solid waste revenues
growth is associated primarily with the Energy component of the Energy and
Environmental fee and the Sustainability Recycling Adjustment fee. The Energy
component of the fee floats on a monthly basis based on diesel fuel prices. The
Sustainability Recycling Adjustment fee floats on a monthly basis based on
recycled commodity prices.
Commodity price and volume.
The commodity price and volume change component in quarterly solid waste
revenues growth is the result of higher landfill gas-to-energy volumes.
Acquisitions.
The acquisitions change component in quarterly solid waste revenues growth is
primarily the result of the acquisition of three tuck-in solid waste collection
businesses in the prior year.
Western Region
A summary of the period-to-period change in solid waste revenues (dollars in
millions and as percentage growth of solid waste revenues) follows:
Period-to-Period Change for the Three Months
Ended
Amount % Growth
Price $ 4.5 6.1 %
Volume (1) (2.2) (3.1) %
Surcharges and other fees 1.0 1.4 %
Commodity price and volume (0.4) (0.5) %
Acquisitions 8.9 12.1 %
Solid waste revenues $ 11.8 16.0 %
32--------------------------------------------------------------------------------
(1)Adjusted for
Price.
The price change component in quarterly solid waste revenues growth is the result of the following: •$2.4 million from favorable collection pricing; and •$2.1 million from favorable disposal pricing related to landfills and transfer stations. Volume. The volume change component in quarterly solid waste revenues growth is the result of the following: •$(2.1) million from lower collection volumes due to the initial negative impacts of COVID-19; and •$(0.1) million from lower disposal volumes related to landfills due to the initial negative impacts of COVID-19, which more than offset higher disposal volumes related to transfer stations and transportation. Surcharges and other fees. The surcharge and other fees change component in quarterly solid waste revenues growth is associated primarily with the Energy component of the Energy and Environmental fee and the Sustainability Recycling Adjustment fee. The Energy component of the fee floats on a monthly basis based on diesel fuel prices. The Sustainability Recycling Adjustment fee floats on a monthly basis based on recycled commodity prices. Commodity price and volume. The commodity price and volume change component in quarterly solid waste revenues growth is the result of lower energy pricing, lower commodity prices and lower commodity processing volumes, partially offset by higher landfill gas-to-energy volumes. Acquisitions. The acquisitions change component in quarterly solid waste revenues growth is primarily the result of the acquisition of one tuck-in solid waste collection business in the three months endedMarch 31, 2020 and the acquisition of four tuck-in solid waste collection businesses, a business comprised of solid waste collection, transfer and recycling operations and a business comprised of solid waste hauling and transfer assets in the prior year. Operating Income A summary of operating income (loss) by operating segment (in millions) follows: Three Months Ended March 31, $ 2020 2019 Change Eastern$ 1.0 $ (0.6) $ 1.6 Western 5.6 5.4 0.2 Resource solutions 1.0 0.4 0.6 Corporate entities (0.6) (0.8) 0.2 Operating income$ 7.0 $ 4.4 $ 2.6 Eastern Region Operating results improved$1.6 million quarterly. Excluding the impact of theSouthbridge Landfill closure charge and the expense from acquisition activities and other items, our operating performance in the three months endedMarch 31, 2020 improved year-over-year as a result of revenue growth and the following cost changes: 33 -------------------------------------------------------------------------------- Cost of operations: Cost of operations increased$2.4 million quarterly due to the following: •higher hauling and third-party transportation costs associated with higher collection volumes related to acquisition activity and higher transportation rates; •higher fuel costs associated with higher volumes on acquisition activity, partially offset by lower fuel prices; •higher direct operational costs associated with higher auto insurance costs, associated primarily with claims activity, and higher operating costs related to business growth; and •higher maintenance and repair costs associated with higher fleet and facility maintenance costs associated with acquisition activity and related business growth. General and administration: General and administration expense decreased$(0.4) million quarterly due to higher bad debt expense as we reevaluated bad debt rates due to the projected economic downturn associated with COVID-19, partially offset by lower accrued incentive compensation. Depreciation and amortization: Depreciation and amortization expense increased$0.7 million quarterly due to higher depreciation and amortization expense associated with acquisition activity.Western Region Operating results improved$0.2 million quarterly. Excluding the impact of the expense from acquisition activities and other items, our operating performance in the three months endedMarch 31, 2020 was driven by revenue growth and the following cost changes: Cost of operations: Cost of operations increased$11.2 million quarterly due to the following: •higher disposal costs associated with acquisition activity and increased disposal pricing in the northeasternUnited States ; •higher hauling and third-party transportation costs associated with higher collection volumes related to acquisition activity and higher transportation rates; •higher labor costs associated with acquisition activity; •higher direct operational costs associated with higher auto insurance costs, associated primarily with claims activity, and higher operating costs related to business growth; •higher maintenance and repair costs associated with higher fleet and facility maintenance costs associated with acquisition activity and related business growth; and •higher fuel costs associated with higher volumes on acquisition activity, partially offset by lower fuel prices. General and administration: General and administration expense increased$1.3 million quarterly due to higher labor costs associated with acquisition activity and higher bad debt expense as we reevaluated bad debt rates due to the projected economic downturn associated with COVID-19, partially offset by lower accrued incentive compensation. Depreciation and amortization: Depreciation and amortization expense increased$3.0 million quarterly due primarily to acquisition activity and higher landfill amortization expense associated with changes in cost estimates and other assumptions, partially offset by lower landfill volumes associated with the initial negative impacts of COVID-19.Resource Solutions Operating results improved$0.6 million quarterly due to the following: Recycling. Our operating performance in the three months endedMarch 31, 2020 improved primarily due to revenue growth on higher recycling processing fees and acquisition activity combined with lower operating costs, including lower third-party disposal costs, lower hauling costs and lower maintenance costs, partially offset by higher depreciation expense. Organics. Our operating performance in the three months endedMarch 31, 2020 improved as revenue growth on higher volumes outpaced higher operating costs driven by two large lower margin transportation and disposal contracts. Customer solutions. Our operating performance in the three months endedMarch 31, 2020 improved as revenue growth associated with increased volumes outpaced higher cost of operations associated with the corresponding increase in hauling, transportation and disposal costs. 34 -------------------------------------------------------------------------------- Liquidity and Capital Resources Recent Events We continue to monitor the impact that COVID-19 has had and will continue to have on our actual and forecasted cash flows, our liquidity, and our capital requirements in order to properly manage our liquidity needs as we move forward. Because of the nature of the services we provide, we expect to continue to generate positive operating cash flows through stable revenue sources. To counter the impact of expected revenue declines, we have initiated steps to reduce discretionary spending and delay certain capital expenditures and can further scale down these expenditures to meet liquidity needs. We have$113.6 million of undrawn capacity from our$200.0 million revolving line of credit facility ("Revolving Credit Facility") as ofMarch 31, 2020 to help meet our liquidity needs. Additionally, we have increased our cash holding to$26.2 million as ofMarch 31, 2020 and our next significant debt maturity is Revolving Credit Facility and term loan A facility ("Term Loan Facility", together with the Revolving Credit Facility, the "Credit Facility"), which matures inMay 2023 . We believe that we will remain in compliance with all necessary covenants of our Credit Facility over the remaining term of this facility. A summary of cash and cash equivalents, restricted assets and debt balances, excluding any unamortized debt discount and debt issuance costs (in millions), follows: March 31, December 31, 2020 2019 Cash and cash equivalents$ 26.2 $ 3.5 Restricted assets:
Restricted investment securities - landfill closure
1.6 Debt: Current portion$ 5.4 $ 4.3 Non-current portion 556.6 518.4 Total debt$ 562.0 $ 522.7 Summary of Cash Flow Activity A summary of cash flows (in millions) follows:
© Edgar Online, source
