CLEAN HARBORS INC

Previous wording

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements, which are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “seeks,” “should,” “estimates,” “projects,” “may,” “likely” or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, the Company’s plans, objectives, cost management initiatives, cash flow, liquidity, expectations and intentions and other statements that are not historical facts. Forward-looking statements are neither historical facts nor assurances of future performance. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of this date only and are subject to certain risks and uncertainties that could cause actual results to differ materially, including, without limitation, risks and uncertainties and the items identified in Part I, Item IA, “Risk Factors,” in this report under Item 1A and in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 21, 2024, and in other documents we file from time to time with the SEC. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

Current wording

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements, which are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “seeks,” “should,” “estimates,” “projects,” “may,” “likely,” “potential” or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, the Company’s plans, objectives, expectations and intentions and other statements that are not historical facts. Forward-looking statements are neither historical facts nor assurances of future performance. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of the date of this report only and are subject to certain risks and uncertainties that could cause actual results to differ materially, including, without limitation, risks and uncertainties and the items identified in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 21, 2024, and in other documents we file from time to time with the SEC. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

Previous wording

•Environmental Services -Environmental Services segment results are predicated upon the demand by our customers for our wide variety of services, waste volumes managed by delivering such services and project work for which responsible waste handling and/or disposal is required. Environmental Services results are also impacted by the demand for planned and unplanned industrial related cleaning and maintenance services at customer sites, environmental cleanup services on a scheduled or emergency basis, including response to large scale events such as major chemical spills, natural disasters, or other instances where immediate and specialized services are required. The Environmental Services segment results include the Safety-Kleen branches’ core environmental service offerings of containerized waste disposal, parts washer and vacuum services. These results are driven by the volumes of waste collected from these customers, the overall number of parts washers placed at customer sites and the demand for and frequency of other offered services. In managing the business and evaluating performance, management tracks the volumes and mix of waste handled and disposed of or recycled, generally through our incinerators, TSDFs and landfills, the utilization rates of our incinerators, equipment and workforce, including billable hours and the number of parts washer services performed, and pricing realized by our business and peer companies as well as other key metrics. Levels of activity and ultimate performance associated with this segment can be impacted by several factors including overall U.S. GDP, U.S. industrial production, economic conditions in the general manufacturing, chemical and automotive markets, including efforts and economic incentives to increase domestic operations available capacity at waste disposal outlets, weather conditions, efficiency of our operations, technology, changing regulations, competition, market pricing of our services, costs incurred to deliver our services and the management of our related operating costs.

Current wording

•Environmental Services -Environmental Services segment results are predicated upon the demand by our customers for our wide variety of services, waste volumes managed by delivering such services and project work for which responsible waste handling and/or disposal is required. Environmental Services results are also impacted by the demand for planned and unplanned industrial related cleaning and maintenance services at customer sites, environmental cleanup services on a scheduled or emergency basis, including response to large scale events such as major chemical spills, natural disasters, or other instances where immediate and specialized services are required. The Environmental Services segment results include the Safety-Kleen branches’ core environmental service offerings of containerized waste disposal, parts washer and vacuum services. These results are driven by the volumes of waste collected from these customers, the overall number of parts washers placed at customer sites and the demand for and frequency of other offered services. The results and integration of the acquired operations of HEPACO Blocker, Inc. and its subsidiaries (collectively “HEPACO”) also impact the overall segment results. In managing the business and evaluating performance, management tracks the volumes and mix of waste handled and disposed of or recycled, generally through our incinerators, TSDFs and landfills, the utilization rates of our incinerators, equipment and workforce, including billable hours and the number of parts washer services performed, and pricing realized by our business and peer companies as well as other key metrics. Levels of activity and ultimate performance associated with this segment can be impacted by several factors including overall North American GDP, U.S. industrial production, economic conditions in the general manufacturing, chemical and automotive markets, including efforts and economic incentives to increase domestic operations, available capacity at waste disposal outlets, weather conditions, efficiency of our operations, technology, changing regulations, competition, market pricing of our services, costs incurred to deliver our services and the management of our related operating costs.

Previous wording

•Safety-Kleen Sustainability Solutions -Safety-Kleen Sustainability Solutions (“SKSS”) segment results are impacted by our customers’ demand for high-quality, environmentally responsible recycled oil products and their demand for our related service and product offerings. SKSS offers high quality recycled base and blended oil products and other automotive and industrial lubricants to fleet customers, distributors, manufacturers of oil products and industrial plants. Segment results are impacted by market pricing, overall demand and the mix of our oil products sales, with management’s objective being to limit exposure to commodity market pricing risk through increased volumes of value added lubricant products (e.g. blended oil, group III base oils) or strategic partnerships. Segment results are also predicated on the demand for other SKSS product and service offerings including collection services for used oil, used oil filters and other automotive fluids. The used oil collected is used as feedstock in our oil re-refining to produce our base and blended oil products and other hydraulic oils, lubricants and recycled fuel oil or are integrated into the Clean Harbors’ recycling and disposal network. In operating the business and evaluating performance, management tracks the volumes and relative percentages of base and blended oil sales along with various pricing metrics associated with the commodity driven margin between product pricing and the overall costs associated with the collection of used oil. Levels of activity and ultimate performance associated with this segment can be impacted by economic conditions in the manufacturing and automotive services markets, efficiency of our operations, partnerships, technology, weather conditions, changing regulations, competition and the management of our related operating costs. Costs incurred in connection with the collection of used oil and other raw materials associated with the segment’s oil related products can also be volatile and can be impacted by global events and their relative impact on commodity products and pricing. The overall market price of oil and regulations that change the possible usage of used oil or burning of used oil as a fuel, impact the premium the segment can charge for used oil collections.

Current wording

•Safety-Kleen Sustainability Solutions -Safety-Kleen Sustainability Solutions (“SKSS”) segment results are impacted by our customers’ demand for high-quality, environmentally responsible recycled oil products and their demand for our related service and product offerings. SKSS offers high quality recycled base and blended oil products and other automotive and industrial lubricants to fleet customers, distributors, manufacturers of oil products and industrial plants. Segment results are impacted by market pricing, overall demand and mix of our oil products sales, with management’s objective being to limit exposure to commodity market pricing risk through increased production of value added blended lubricants and contracted rate supply agreements with customers. Segment results are also predicated on the demand for other SKSS product and service offerings including collection services for used oil, used oil filters and other automotive fluids. The used oil collected is used as feedstock in our oil re-refining to produce our base and blended oil products and other hydraulic oils, lubricants and recycled fuel oil or are integrated into our recycling and disposal network. The results and integration of the acquired operations of Noble Oil Services, Inc. and its subsidiaries (collectively “Noble Oil”) also impact the overall segment results. In operating the business and evaluating performance, management tracks the volumes and relative percentages of base and blended oil sales along with various pricing metrics associated with the commodity driven margin between product pricing and the overall costs to collect used oil. Levels of activity and ultimate performance associated with this segment can be impacted by economic conditions and product demand in the manufacturing and automotive services markets, product pricing, efficiency of our operations, partnerships, technology, weather conditions, changing regulations, competition and the management of our related operating costs. Costs incurred in connection with the collection of used oil and other raw materials associated with the segment’s oil related products can also be volatile and can be impacted by global events and their relative impact on commodity products and pricing. The overall market price of oil and regulations that change the possible usage of used oil or burning of used oil as a fuel, impact the premium the segment can charge for used oil collections.

Previous wording

Income from operations for the three months ended March 31, 2024 was $125.5 million, compared with $121.0 million in the three months ended March 31, 2023, representing an increase of 3.7%. Net income for the three months ended March 31, 2024 was $69.8 million, compared with net income of $72.4 million in the three months ended March 31, 2023, representing a decrease of 3.5%.

Current wording

Income from operations for the three and six months ended June 30, 2024 was $215.5 million and $341.0 million, compared with $189.8 million and $310.8 million in the three and six months ended June 30, 2023, representing an increase of 13.5% and 9.7%, respectively. Net income for the three and six months ended June 30, 2024 was $133.3 million and $203.1 million, compared with net income of $115.8 million and $188.2 million in the three and six months ended June 30, 2023, representing an increase of 15.1% and 7.9%, respectively.

Previous wording

Adjusted EBITDA, which is the primary financial measure by which we evaluate our segments, increased 7.0% from $215.1 million in the three months ended March 31, 2023 to $230.1 million in the three months ended March 31, 2024. This increase was driven by 15.8% of Adjusted EBITDA growth in the Environmental Services segment. Additional information regarding Adjusted EBITDA, which is a non-GAAP measure, including a reconciliation of Adjusted EBITDA to net income, appears below under“Adjusted EBITDA.”

Current wording

Adjusted EBITDA, which is the primary financial measure by which we evaluate our segments, increased $40.3 million or 14.0% from $287.5 million in the three months ended June 30, 2023 to $327.8 million in the three months ended June 30, 2024. Adjusted EBITDA increased $55.3 million or 11.0% from $502.6 million in the six months ended June 30, 2023 to $557.9 million in the six months ended June 30, 2024. Overall Adjusted EBITDA growth was driven by 17.8% and 16.9% Adjusted EBITDA growth in the Environmental Services Segment in the three and six months ended June 30, 2024 respectively. Additional information regarding Adjusted EBITDA, which is a non-GAAP measure, including a reconciliation of net income to Adjusted EBITDA, appears below under“Adjusted EBITDA.”

Previous wording

Net cash from operating activities for the three months ended March 31, 2024 decreased $9.5 million from $28.0 million in 2023 to $18.5 million in 2024. As is typical for the first quarter, adjusted free cash flow, which management uses to measure our financial strength and ability to generate cash, was an outflow of $118.4 million in the three months ended March 31, 2024 as compared to an outflow of $51.8 million in the comparable period of 2023. The decrease in adjusted free cash flow was driven by higher spend on property, plant and equipment net of proceeds from sale and disposal of fixed assets due to the purchase of a building for a strategic project in Baltimore, Maryland, continued incremental capital spend on the build out of our Kimball, Nebraska incinerator and incremental investments in vehicles, machinery and equipment. Additional information regarding adjusted free cash flow, which is a non-GAAP measure, including a reconciliation of adjusted free cash flow to net cash from operating activities, appears below under“Adjusted Free Cash Flow.”

Current wording

Net cash from operating activities for the six months ended June 30, 2024 decreased $1.0 million from $235.6 million in 2023 to $234.6 million in 2024. Adjusted free cash flow, which management uses to measure our financial strength and ability to generate cash, was an outflow of $34.1 million in the six months ended June 30, 2024 as compared to an inflow of $34.2 million in the comparable period of 2023. The decrease in adjusted free cash flow was driven by higher spend on property, plant and equipment due to incremental investments in vehicles, machinery and equipment and notable project spend including the acquisition and build out of our Baltimore, Maryland facility and the continued investment in our Kimball, Nebraska incinerator project. Additional information regarding adjusted free cash flow, which is a non-GAAP measure, including a reconciliation of net cash from operating activities to adjusted free cash flow, appears below under“Adjusted Free Cash Flow.”

Previous wording

The primary financial measure by which we evaluate the performance of our segments is Adjusted EBITDA. The following table sets forth certain financial information associated with our results of operations for the three months ended March 31, 2024 and March 31, 2023 (in thousands, except percentages):

Current wording

The primary financial measure by which we evaluate the performance of our segments is Adjusted EBITDA. The following table sets forth certain financial information associated with our results of operations for the three and six months ended June 30, 2024 and June 30, 2023 (in thousands, except percentages):

Previous wording

(4)Calculated as a percentage of total Company revenue.

Current wording

(4)Calculated as a percentage of total Company direct revenue.

Previous wording

There are many factors which can impact our revenues including, but not limited to: overall levels of industrial activity and economic growth in North America, competitive industry pricing, overall market incineration capacity including captive incineration closures, changes in the regulatory environment including those related to per- and polyfluoroalkyl substances (“PFAS”), impacts of acquisitions and divestitures, the level of emergency response services, government infrastructure investment, reshoring of domestic manufacturing, existence or non-existence of large scale environmental waste and remediation projects, weather related events, the number of parts washers placed at customer sites, miles driven and related lubricant demand, base and blended oil pricing, market supply for base oil products, market changes relative to the collection of used oil, our ability to manage the spread between oil product prices and prices for the collection of used oil and foreign currency translation. In addition, customer efforts to minimize hazardous waste and changes in regulation can impact our revenues.

Current wording

There are many factors which can impact our revenues including, but not limited to: overall levels of industrial activity and economic growth in North America, competitive industry pricing, overall market incineration capacity including captive incineration closures, changes in the regulatory environment including those related to per- and polyfluoroalkyl substances (“PFAS”), impacts of acquisitions and divestitures, the level of emergency response services, government infrastructure investment, reshoring of domestic manufacturing, existence or non-existence of large scale environmental waste and remediation projects, weather related events, the number of parts washers placed at customer sites, miles driven and related lubricant demand, base and blended oil pricing, market supply for base oil products, market changes relative to the collection of used oil and foreign currency translation. In addition, customer efforts to minimize hazardous waste and changes in regulation can impact our revenues.

Previous wording

Environmental Services direct revenues for the three months ended March 31, 2024 increased $101.8 million from the comparable period in 2023 due to growth across our service lines coupled with incremental revenues from recent acquisitions. Technical services revenue increased $41.0 million with contributions across our portfolio of waste disposal services. Higher pricing of our disposal services more than offset a 1% decrease in utilization, which was 79% for the three months ended March 31, 2024. Revenue from our industrial services operations grew $23.0 million due to contributions from the acquisition of Thompson Industrial which did not close until March 31, 2023. Revenues for Safety-Kleen core service offerings grew by $20.9 million from the comparable period in 2023 due to improved pricing and greater demand for our containerized waste, parts washer and vacuum services. Field and emergency response service revenues increased $15.4 million from the comparable period in 2023 driven by incremental revenue from the HEPACO acquisition along with overall growth in core service offerings.

Current wording

Environmental Services direct revenues for the six months ended June 30, 2024 increased $239.1 million from the comparable period in 2023 due to growth across most of our service lines driven by incremental revenues from recent acquisitions and legacy operations. Field and emergency response service revenues for the six months ended June 30, 2024 increased $113.9 million from the comparable period in 2023 driven by incremental revenue of approximately $85 million from the acquisition of HEPACO along with overall growth in core field and emergency response service offerings. Technical services revenue increased $94.7 million with contributions across our portfolio of waste disposal services. Higher pricing and increased volumes at our incinerators and landfills drove incremental revenue within technical services. Utilization at our incinerators increased from 82% to 83% for the six months ended June 30, 2024 as compared to the same period in 2023. Revenues for Safety-Kleen core service offerings for the six months ended June 30, 2024 grew by $44.5 million from the comparable period in 2023 due to improved pricing and greater demand for our containerized waste, parts washer and vacuum services. Revenue from our industrial services operations declined $17.1 million due to lower industrial turnaround activity for the six months ended June 30, 2024 compared to the same period in 2023, partially offset by incremental revenue from the acquisition of Thompson Industrial Services which occurred in March 2023. Direct revenues for Canadian operations of the Environmental Services segment decreased by $2.1 million due to foreign currency translation.

Previous wording

In the three months ended March 31, 2024, SKSS direct revenues decreased $32.5 million from the comparable period in 2023 largely due to a $28.0 million reduction in revenues from base oil sales driven primarily by lower pricing and, to a lesser extent, lower volumes sold. Revenue from the sale of recycled fuel oil and refinery by-products also decreased $9.6 million from the comparable period while revenues from contract packaging decreased $5.7 million. These decreases were partially offset by a $9.6 million increase in revenues from blended oil sales as higher volumes sold outpaced lower pricing. Revenues from the collection of used oil increased $4.3 million driven by higher pricing for these services.

Current wording

In the six months ended June 30, 2024, SKSS direct revenues decreased $15.0 million from the comparable period in 2023 largely due to a $17.4 million reduction in revenues from base oil sales driven primarily by lower pricing and, to a lesser extent, lower volumes sold. Revenue from contract packaging decreased $6.0 million and revenues generated from the sales of other products decreased $4.3 million for the six months ended June 30, 2024 as compared to the same period in 2023. These decreases were partially offset by a $10.4 million increase in revenues from the sale of vacuum gas oil and specialty refinery products driven by the acquisition of Noble Oil. Furthermore, revenues from the collection of used oil for the six months ended June 30, 2024 increased $4.1 million as compared to the same period in 2023, which was driven by higher pricing for these services despite a relatively consistent volume of oil collected.

Previous wording

We believe that management of operating costs is vital to our ability to remain price competitive. We continue to experience inflationary pressures across several cost categories, but most notably related to internal and external labor, transportation, maintenance costs, and energy related costs. We aim to manage these increases through constant cost monitoring and a focus on cost saving areas, including lowering employee turnover, as well as our overall customer pricing strategies designed to offset the negative inflationary impacts on our margins.

Current wording

We believe that management of operating costs is vital to our ability to remain price competitive. We continue to experience inflationary pressures across several cost categories, but most notably related to internal and external labor, transportation, maintenance costs, and energy related costs. We aim to manage these increases through constant cost monitoring and a focus on cost saving areas, including lowering employee turnover, as well as our overall customer pricing strategies designed to offset the inflationary impacts on our margins.

Previous wording

Environmental Services cost of revenues for the three months ended March 31, 2024 increased $59.5 million from the comparable period in 2023, however as a percentage of revenues decreased 1.1% resulting in improved margins of the segment. Commensurate with the revenue growth in the business, labor and benefit related costs increased $33.7 million, equipment and supply costs increased $14.4 million and external transportation, vehicle and fuel related costs increased $7.0 million for the three months ended March 31, 2024 when compared to the three months ended March 31, 2023. Overall, the growth of revenue outpaced cost increases in all major cost categories, which we believe exhibits the strong operating leverage of the segment.

Current wording

Environmental Services cost of revenues for the three months ended June 30, 2024 increased $72.5 million from the comparable period in 2023, however as a percentage of revenues decreased 1.5%. Commensurate with the revenue growth in the business and recent acquisition of HEPACO, labor and benefit related costs increased $43.3 million, equipment and supply costs increased $21.2 million and external transportation, vehicle and fuel related costs increased $4.4 million for the three months ended June 30, 2024 when compared to the three months ended June 30, 2023. Overall, the growth of revenue outpaced cost increases in all major cost categories resulting in improved margins of the segment.

Previous wording

SKSS cost of revenues for the three months ended March 31, 2024 decreased $21.0 million from the comparable period in 2023 but as a percentage of revenues, increased by 1.6% driven by the reduced revenues discussed above. Overall costs of materials including oil additives and other raw materials decreased by $24.6 million mainly driven by lower cost of obtaining used oil through our oil collection services. Partially offsetting these cost decreases were increases in labor and benefit related costs of $1.3 million.

Current wording

SKSS cost of revenues for the six months ended June 30, 2024 decreased $4.4 million from the comparable period in 2023 but as a percentage of revenues, increased by 1.4% driven by market related pricing decreases discussed in the revenue section above. Overall costs of materials including oil additives and other raw materials decreased by $23.3 million between the six months ended June 30, 2024 and the same period in 2023, due to lower volumes of base oil inventory sold during the period. Partially offsetting these cost decreases were increases in transportation costs of $7.8 million and labor and benefit related costs of $6.9 million which were primarily driven by the operations of the Noble Oil acquisition.

Previous wording

Environmental Services SG&A expenses for the three months ended March 31, 2024 increased $6.1 million from the comparable period in 2023, however, remained relatively consistent as a percentage of segment revenues, continuing our trend of leveraging our SG&A base in the midst of revenue growth discussed above. Overall, investments in our employees led to higher labor and benefits related costs of $5.8 million in the three months ended March 31, 2024, partially offset by reductions across several other cost categories.

Current wording

Environmental Services SG&A expenses for the three and six months ended June 30, 2024 increased $10.6 million and $16.7 million, respectively, from the comparable periods in 2023, however, remained consistent as a percentage of segment revenues, continuing our trend of leveraging our SG&A base in the midst of revenue growth discussed above. SG&A expenses increased $4.6 million and $5.8 million in the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023, due to additional costs from HEPACO operations. The remaining increases were spread across various cost categories and were driven by overall growth in the segment results.

Previous wording

Management considers Adjusted EBITDA to be a measurement of performance which provides useful information to both management and investors. Adjusted EBITDA should not be considered an alternative to net income or other measurements under generally accepted accounting principles (“GAAP”). We define Adjusted EBITDA as net income plus accretion of environmental liabilities, stock-based compensation, depreciation and amortization, net interest expense, loss on early extinguishment of debt and provision for income taxes and excludes other gains, losses and non-cash charges not deemed representative of fundamental segment results and other (expense) income, net. Adjusted EBITDA is not calculated identically by all companies and therefore our measurements of Adjusted EBITDA, while defined consistently and in accordance with our existing credit agreement, may not be comparable to similarly titled measures reported by other companies.

Current wording

Management considers Adjusted EBITDA to be a measurement of performance which provides useful information to both management and investors. Adjusted EBITDA should not be considered an alternative to net income or other measurements under generally accepted accounting principles (“GAAP”). We define Adjusted EBITDA as net income plus accretion of environmental liabilities, stock-based compensation, depreciation and amortization, net interest expense, loss on early extinguishment of debt and provision for income taxes and excludes other gains, losses and non-cash charges not deemed representative of fundamental segment results and other expense, net. Adjusted EBITDA is not calculated identically by all companies and therefore our measurements of Adjusted EBITDA, while defined consistently with our existing credit agreement, may not be comparable to similarly titled measures reported by other companies.

Previous wording

(1) Environmental Services and SKSS calculated as a percentage of individual segment revenues. Corporate Items calculated as a percentage of total Company revenues.

Current wording

(1) Environmental Services and SKSS calculated as a percentage of individual segment direct revenues. Corporate Items calculated as a percentage of total Company direct revenues.

Previous wording

Depreciation and amortization for the three months ended March 31, 2024 increased by $10.3 million from the comparable period in 2023 due to the depreciation of assets placed in service including the incremental assets acquired in the Thompson Industrial acquisition which occurred on March 31, 2023.

Current wording

Depreciation and amortization for the three and six months ended June 30, 2024 increased by $10.8 million and $21.1 million from the comparable periods in 2023 due to the depreciation of fixed assets and amortization of intangible assets placed in service in the second half of 2023 and throughout 2024 including the incremental assets acquired from the March 2024 HEPACO and Noble Oil acquisitions.

Previous wording

During the three months ended March 31, 2023, we recorded a $2.4 million loss on early extinguishment of debt in connection with the repayment of outstanding debt due in 2024.

Current wording

During the six months ended June 30, 2023, we recorded a $2.4 million loss on early extinguishment of debt in connection with the repayment of outstanding debt due in 2024.

Previous wording

For the three months ended March 31, 2023, interest expense, net of interest income included an $8.3 million benefit recognized from settling interest rate swaps in that prior year period. Absent this benefit, interest expense, net of interest income decreased slightly compared to 2023 aided by higher interest income.

Current wording

Interest expense, net of interest income for the six months ended June 30, 2024 increased $14.3 million from the comparable period in 2023. During the six months ended June 30, 2023, interest expense, net of interest income included an $8.3 million benefit recognized from settling interest rate swaps in that prior year period.

Previous wording

As of March 31, 2024, the effective interest rate on our debt was 5.7%. For additional information regarding the financing events during 2024 and our current portfolio of long-term debt, see Note 11, “Financing Arrangements,” to the accompanying unaudited consolidated financial statements.

Current wording

As of June 30, 2024, the effective interest rate on our debt was 5.7%. For the remainder of 2024, we expect interest expense to continue to trend higher than the prior year due to higher levels of outstanding debt and a slightly higher weighted average effective interest rate. For additional information regarding the financing events during 2024 and our current portfolio of long-term debt, see Note 11, “Financing Arrangements,” to the accompanying unaudited consolidated financial statements.

Previous wording

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. Our primary ongoing cash requirements will be to fund operations, capital expenditures, interest payments and investments in line with our business strategy. We believe our future operating cash flows will be sufficient to meet our future operating and internal investing cash needs. We monitor our actual needs and forecasted cash flows, our liquidity and our capital resources, enabling us to plan our present needs and fund items that may arise during the year as a result of changing business conditions or opportunities. Furthermore, our existing cash balance and the availability of additional borrowings under our revolving credit facility provide additional potential sources of liquidity should they be required.

Current wording

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. Our primary ongoing cash requirements will be to fund operations, capital expenditures, interest payments and investments in line with our business strategy as of the date of this report. We believe our future operating cash flows will be sufficient to meet our future operating and internal investing cash needs. We monitor our actual needs and forecasted cash flows, our liquidity and our capital resources, enabling us to plan our present needs and fund items that may arise during the year as a result of changing business conditions or opportunities. Furthermore, our existing cash balance and the availability of additional borrowings under our revolving credit facility provide additional potential sources of liquidity should they be required.

Previous wording

Net cash from operating activities for the three months ended March 31, 2024 was $18.5 million as compared to $28.0 million in the comparable period of 2023. This $9.5 million decrease in operating cash flows was attributable to increased working capital balances and higher interest paid partially offset by lower taxes paid.

Current wording

Net cash from operating activities for the six months ended June 30, 2024 was $234.6 million as compared to $235.6 million in the same period in 2023 as increased working capital balances and higher interest payments were mostly offset by higher operating income as well as lower payments for income taxes and environmental liabilities.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2024 was $609.9 million, an increase of $411.9 million from the comparable period in 2023. Cash used for acquisitions increased $366.8 million due to the acquisition of HEPACO as well as smaller acquisitions completed during the three months ended March 31, 2024. In 2023 the cash used for acquisitions was $108.5 million due to the acquisition of Thompson Industrial. Property, plant and equipment, net of proceeds from the sale and disposal of fixed assets increased $57.1 million, largely driven by $15.1 million spent on the Baltimore, Maryland strategic project, an increase of $7.5 million in capital spending for our new incinerator construction in Kimball, Nebraska and other investments in vehicles and equipment for our operations. The remaining change in net cash used in investing activities was due to the timing of transactions within our wholly owned captive insurance company which resulted in a $2.1 million cash inflow in the three months ended March 31, 2024 as compared to a $9.2 million cash outflow in the three months ended 2023.

Current wording

Net cash used in investing activities for the six months ended June 30, 2024 was $730.7 million, an increase of $383.4 million from the comparable period in 2023. Cash used for acquisitions increased $356.6 million as we paid more for the acquisitions of HEPACO and Noble Oil in 2024 than we did for the acquisition of Thompson Industrial in 2023. Additions to Property, plant and equipment increased $68.7 million, largely driven by investments in vehicles, machinery and equipment for our operations and notable project spend including $15.4 million spent on the Baltimore, Maryland facility, and an increase of $4.9 million in capital spending for our incinerator project in Kimball, Nebraska. The remaining change in net cash used in investing activities was due to the timing of transactions within our wholly owned captive insurance company which resulted in a $16.4 million cash inflow in the six months ended June 30, 2024 as compared to a $24.2 million cash outflow in the six months ended 2023.

Previous wording

Net cash from financing activities for the three months ended March 31, 2024 was $486.0 million, as compared to net cash used in financing activities of $18.4 million for the three months ended March 31, 2023. The primary drivers of this change were the incurrence of additional term loans net of discount and deferred financing costs paid of $494.7 million. Partially offsetting this, the Company spent $2.0 million more for repurchases of common stock compared to 2023.

Current wording

Net cash from financing activities for the six months ended June 30, 2024 was $455.5 million, as compared to net cash used in financing activities of $142.9 million for the six months ended June 30, 2023. The primary drivers of this change were the incurrence of additional term loans net of discount of $499.4 million in 2024 as compared to a net repayment of term loans in 2023 of $114.0 million. Partially offsetting this activity was an increase in finance lease payments of $3.9 million.

Previous wording

The following is a reconciliation from net cash from operating activities to adjusted free cash flow for the following periods (in thousands):

Current wording

The following is a reconciliation of net cash from operating activities to adjusted free cash flow for the following periods (in thousands):

Previous wording

At March 31, 2024, cash and cash equivalents and marketable securities totaled $442.6 million, compared to $550.8 million at December 31, 2023. At March 31, 2024, cash and cash equivalents held by our Canadian subsidiaries totaled $56.0 million. The cash and cash equivalents and marketable securities balance for our U.S. operations was $386.6 million at March 31, 2024. Our U.S. operations had net operating cash inflows of $27.5 million for the three months ended March 31, 2024.

Current wording

At June 30, 2024, cash and cash equivalents and marketable securities totaled $493.3 million, compared to $550.8 million at December 31, 2023. At June 30, 2024, cash and cash equivalents held by our Canadian subsidiaries totaled $31.0 million. The cash and cash equivalents and marketable securities balance for our U.S. operations was $462.3 million at June 30, 2024. Our U.S. operations had net operating cash inflows of $257.9 million for the six months ended June 30, 2024.

Previous wording

We also maintain a $400.0 million revolving credit facility of which, as of March 31, 2024, approximately $268.0 million was available to borrow under the facility, with letters of credit of $132.0 million outstanding.

Current wording

We also maintain a $600.0 million revolving credit facility of which, as of June 30, 2024, approximately $463.5 million was available to borrow under the facility, with letters of credit of $136.5 million outstanding.

Previous wording

Capital expenditures during the first three months of 2024 was $137.9 million as compared to $81.7 million during the first three months of 2023 mainly driven by the purchase of the Baltimore facility discussed below, incremental spend on the Kimball incinerator and additional investment in our fleet and equipment. We anticipate that 2024 capital spending, net of disposals, will be in the range of $400.0 million to $430.0 million. This projected amount is inclusive of capital expenditures of approximately $65.0 million to finish the Kimball, Nebraska incinerator project and approximately $20.0 million for a strategic project in Baltimore, Maryland.

Current wording

Capital expenditures during the first six months of 2024 were $273.0 million as compared to $204.3 million during the first six months of 2023. The increase was driven by incremental investments in our fleet and equipment and Baltimore, Maryland facility, as well as the incremental spend on the Kimball incinerator. We anticipate that 2024 capital spending, net of disposals, will be in the range of $400.0 million to $430.0 million. This projected amount includes capital expenditures of approximately $65 million to finish the Kimball, Nebraska incinerator project and approximately $20 million for the acquisition and build out of our Baltimore, Maryland facility.

Previous wording

During the first three months of 2024, capital spending on the construction of our new incinerator at our Kimball, Nebraska facility was approximately $20.5 million. Total spending on the project as of March 31, 2024 was $155.2 million. We expect the remaining spending for this project to be approximately $51.7 million and we anticipate it will be complete in late 2024. Additionally, capital spending on the strategic project in Baltimore, Maryland was approximately $15.1 million for the purchase of the facility and we expect to incur an additional $5.0 million relative to this project during the remainder of 2024.

Current wording

During the first six months of 2024, capital spending on the construction of our new incinerator in Kimball, Nebraska was $40.4 million. Total spending on the project as of June 30, 2024 was $175.1 million. We continue to anticipate that the total spend for this project will be approximately $200.0 million and we anticipate it will be operational in late 2024. Additionally, capital spending on the strategic project in Baltimore, Maryland for the first six months of 2024 was $15.4 million for the purchase of the facility and site improvements and we expect to incur an additional $4.6 million relative to this project during the remainder of 2024.

Previous wording

As of March 31, 2024, our financing arrangements include (i) $545.0 million of 4.875% senior unsecured notes due 2027, (ii) $1,476.2 million of senior secured term loans due 2028, (iii) $300.0 million of 5.125% senior unsecured notes due 2029 and (iv) $500.0 million of 6.375% senior unsecured notes due 2031. As noted above, we also maintain our $400.0 million revolving credit facility with no amounts owed as of March 31, 2024.

Current wording

As of June 30, 2024, our financing arrangements include (i) $545.0 million of 4.875% senior unsecured notes due 2027, (ii) $1,472.4 million of senior secured term loans due 2028, (iii) $300.0 million of 5.125% senior unsecured notes due 2029 and (iv) $500.0 million of 6.375% senior unsecured notes due 2031. As noted above, we also maintain our $600.0 million revolving credit facility with no amounts owed as of June 30, 2024.

Previous wording

In 2023 our Board of Directors authorized a $500.0 million expansion of the Company’s existing share repurchase program for a total authorization of $1.1 billion under the expanded plan. During the three months ended March 31, 2024 and March 31, 2023, the Company repurchased and retired a total of 27,265 and 22,250 shares, respectively, of the Company’s common stock for total expenditures of approximately $5.0 million and $3.0 million, respectively.

Current wording

The Company’s common stock repurchases are made pursuant to the previously authorized board approved plan to repurchase up to $1.1 billion of the Company’s common stock. During the three and six months ended June 30, 2024, the Company repurchased and retired 23,397 and 50,662 shares, respectively, of the Company’s common stock for total expenditures of $5.0 million and $10.0 million, respectively. During the three and six months ended June 30, 2023, the Company repurchased and retired a total of 36,473 and 58,723 shares, respectively, of the Company’s common stock for total expenditures of $5.0 million and $8.0 million, respectively.

Previous wording

Through March 31, 2024, the Company has repurchased and retired a total of approximately 8.6 million shares of its common stock for approximately $550.9 million under the expanded plan, and as of March 31, 2024, an additional $549.1 million remained available for repurchase of shares.

Current wording

Through June 30, 2024, the Company has repurchased and retired a total of approximately 8.6 million shares of its common stock for $555.9 million under the board approved plan, and as of June 30, 2024, an additional $544.1 million remained available for repurchase of shares.

Previous wording

Total environmental liabilities as of March 31, 2024 were $229.4 million, relatively consistent with the balance as of December 31, 2023. During the three months ended March 31, 2024, expenditures of $4.7 million were partially offset by accretion of $3.2 million and changes in estimates for the environmental liabilities of $1.0 million.

Current wording

Total environmental liabilities as of June 30, 2024 were $230.7 million, relatively consistent with the balance as of December 31, 2023. During the six months ended June 30, 2024, accretion of $6.5 million and increases in environmental liability estimates of $4.1 million were partially offset by expenditures of $9.9 million. The liability estimate increase was primarily driven by a change a remedial liability estimate for a Superfund site of $2.9 million.

Previous wording

We obtain standby letters of credit as security for financial assurances we have been required to provide to regulatory bodies for our hazardous waste facilities and which would be called only in the event that we fail to satisfy closure, post-closure and other obligations under the permits issued by those regulatory bodies for such licensed facilities. As of March 31, 2024, there were $132.0 million outstanding letters of credit. See Note 11, “Financing Arrangements,” to the accompanying unaudited consolidated financial statements.

Current wording

We obtain standby letters of credit as security for financial assurances we have been required to provide to regulatory bodies for our hazardous waste facilities and which would be called only in the event that we fail to satisfy closure, post-closure and other obligations under the permits issued by those regulatory bodies for such licensed facilities. As of June 30, 2024, there were $136.5 million outstanding letters of credit. See Note 11, “Financing Arrangements,” to the accompanying unaudited consolidated financial statements.

Previous wording

There were no material changes in the first three months of 2024 to the information provided under the heading “Critical Accounting Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2023. For more information regarding our accounting policies, please refer to Note 2, “Significant Accounting Policies” to the accompanying unaudited consolidated financial statements.

Current wording

There were no material changes in the first six months of 2024 to the information provided under the heading “Critical Accounting Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2023. For more information regarding our accounting policies, please refer to Note 2, “Significant Accounting Policies” to the accompanying unaudited consolidated financial statements.