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,” “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.

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 the Company’s future financial and operating results, plans, strategy, objectives and goals, cost management initiatives, contingent liabilities, liquidity, business and market conditions, customer demand, acquisitions, growth opportunities, expectations and other statements that are not historical facts. 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 those items identified as “Risk Factors” 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. Forward-looking statements are neither historical facts nor assurances of future performance. 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

•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.

Current wording

•Safety-Kleen Sustainability Solutions -Safety-Kleen Sustainability Solutions (“SKSS”) offers high quality, environmentally responsible 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 market 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”) 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

Total direct revenues for the three and six months ended June 30, 2024 were $1,552.7 million and $2,929.4 million, compared with $1,397.9 million and $2,705.3 million for the three and six months ended June 30, 2023. Our Environmental Services segment direct revenues increased $137.3 million and $239.1 million or 11.7% and 10.7% for the three and six months ended June 30, 2024, respectively, from the comparable periods in 2023 driven by growth in Technical Services, Field and Emergency Response Services, including the contributions from the acquisition of HEPACO, and Safety-Kleen core service offerings. For the three months ended June 30, 2024, our SKSS segment direct revenues increased $17.5 million or 7.7%, from the comparable period in 2023, driven by contributions from our acquisition of Noble Oil and higher base oil sales. For the six months ended June 30, 2024, SKSS segment direct revenues decreased $15.0 million or 3.2% from the comparable period in 2023, due to lower base oil product revenues resulting from market-driven pricing partially offset by contributions from Noble Oil. Foreign currency translation of our Canadian operations negatively impacted our consolidated direct revenues by $2.9 million and $2.5 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023.

Current wording

Total direct revenues for the three and nine months ended September 30, 2024 were $1,529.4 million and $4,458.8 million, compared with $1,365.7 million and $4,071.0 million for the three and nine months ended September 30, 2023. Our Environmental Services segment direct revenues increased $150.8 million and $389.9 million or 13.2% and 11.5% for the three and nine months ended September 30, 2024, respectively, from the comparable periods in 2023 driven by growth in Field and Emergency Response Services, including the contributions from the acquisition of HEPACO, Technical Services and Safety-Kleen core service offerings. For the three months ended September 30, 2024, our SKSS segment direct revenues increased $12.9 million or 5.9%, from the comparable period in 2023, driven by contributions from our acquisition of Noble. For the nine months ended September 30, 2024, SKSS segment direct revenues decreased $2.0 million or 0.3% from the comparable period in 2023, due to lower base and blended oil product revenues resulting from market-driven pricing and lower volumes of base oil sold partially offset by contributions from Noble Oil. Foreign currency translation of our Canadian operations negatively impacted our consolidated direct revenues by $2.8 million and $5.3 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023.

Previous 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.

Current wording

Income from operations for the three and nine months ended September 30, 2024 was $192.3 million and $533.3 million, compared with $154.4 million and $465.1 million in the three and nine months ended September 30, 2023, representing an increase of 24.6% and 14.6%, respectively. Net income for the three and nine months ended September 30, 2024 was $115.2 million and $318.3 million, compared with net income of $91.3 million and $279.5 million in the three and nine months ended September 30, 2023, representing an increase of 26.1% and 13.9%, respectively.

Previous 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.”

Current wording

Adjusted EBITDA, which is the primary financial measure by which we evaluate our segments, increased $46.8 million or 18.4% from $255.0 million in the three months ended September 30, 2023 to $301.8 million in the three months ended September 30, 2024. Adjusted EBITDA increased $102.1 million or 13.5% from $757.7 million in the nine months ended September 30, 2023 to $859.7 million in the nine months ended September 30, 2024. This Adjusted EBITDA growth is primarily driven by contributions from the Environmental Services Segment. 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 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.”

Current wording

Net cash from operating activities for the nine months ended September 30, 2024 increased $18.1 million from $455.7 million in 2023 to $473.8 million in 2024. Adjusted free cash flow, which management uses to measure our financial strength and ability to generate cash, decreased $38.6 million in the nine months ended September 30, 2024 as compared to 2023. The decrease in adjusted free cash flow was driven by higher planned spend on property, plant and equipment including incremental investments in vehicles, machinery and equipment and notable project spend at our Baltimore, Maryland facility and Kimball, Nebraska incinerator and increased working capital balances, partially offset by higher cash flow from operations. 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 and six months ended June 30, 2024 and June 30, 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 nine months ended September 30, 2024 and September 30, 2023 (in thousands, except percentages):

Previous wording

Environmental Services direct revenues for the three months ended June 30, 2024 increased $137.3 million from the comparable period in 2023 due to growth across most of our service lines driven by acquisitive growth and incremental revenues from legacy operations. Field and emergency response service revenues increased $98.5 million from the comparable period in 2023 primarily driven by incremental revenue of approximately $80 million from the acquisition of HEPACO as well as a larger number of mid to large scale emergency response events handled by legacy field and emergency response services operations during the three months ended June 30, 2024. Technical services revenue increased $53.8 million with contributions across our portfolio of waste disposal services, including increased volumes and higher pricing at our incinerator and landfill facilities. Utilization at our incinerators increased by 4% to 88% for the three months ended June 30, 2024, as compared to the same period in 2023. Revenues for Safety-Kleen core service offerings grew by $23.6 million from the comparable period in 2023 due to improved pricing and greater demand for our containerized waste, parts washer and vacuum services. These increases were partially offset by decreased revenues from our industrial services operations which declined $40.1 million due to lower industrial turnaround activity for the three months ended June 30, 2024, as compared to the same period in 2023. Direct revenues for Canadian operations of the Environmental Services segment decreased by $2.4 million due to foreign currency translation.

Current wording

Environmental Services direct revenues for the three months ended September 30, 2024 increased $150.8 million from the comparable period in 2023 due to growth across most of our service lines driven by acquisitive growth and incremental revenues from legacy operations. Field and emergency response service revenues increased $105.2 million from the comparable period in 2023 driven by incremental revenue of approximately $75 million from the acquisition of HEPACO as well as contributions from our legacy field services operations. Technical services revenue increased $33.3 million largely due to contributions across our portfolio of waste disposal facilities, including higher incineration pricing and volumes. For the three months ended September 30, 2024, utilization at our incinerators increased from 86% to 89%. Revenues for Safety-Kleen core service offerings grew by $18.6 million from the comparable period in 2023 driven by improved pricing and greater demand for our containerized waste, vacuum and parts washer services. These increases were partially offset by decreased revenues from our industrial services operations for the three months ended September 30, 2024, which declined $4.7 million due to lower turnaround activity late in the quarter, as compared to the same period in 2023. Direct revenues for Canadian operations of the Environmental Services segment decreased by $2.2 million due to foreign currency translation.

Previous 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.

Current wording

Environmental Services direct revenues for the nine months ended September 30, 2024 increased $389.9 million from the comparable period in 2023 due to growth across most of our service lines driven by incremental revenues from legacy operations and acquisitive growth. Field and emergency response service revenues for the nine months ended September 30, 2024 increased $219.1 million from the comparable period in 2023 driven by incremental revenue of approximately $160 million from the acquisition of HEPACO as well as overall growth in core field and emergency response service offerings. Technical services revenue increased $128.0 million largely due to higher incineration pricing and volume coupled with improved pricing at our landfill facilities. Utilization at our incinerators increased from 83% to 85% for the nine months ended September 30, 2024 as compared to the same period in 2023. Revenues for Safety-Kleen core service offerings for the nine months ended September 30, 2024 grew by $63.1 million from the comparable period in 2023 due to improved pricing and greater demand for our containerized waste, vacuum and parts washer services. Revenue from our industrial services operations declined $21.7 million due to lower turnaround activity and related high-value services for the nine months ended September 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 $4.3 million due to foreign currency translation.

Previous wording

In the three months ended June 30, 2024, SKSS direct revenues increased $17.5 million from the comparable period in 2023 due to a $20.0 million increase in revenues from the sale of vacuum gas oil and specialty refinery products largely resulting from the acquisition of Noble Oil which took place on March 1, 2024. Revenue from the sale of base oil for the three months ended June 30, 2024 increased $10.6 million from the same period in 2023, due to favorable pricing and higher volumes sold. These increases were partially offset by a $6.6 million reduction in revenues from blended oil sales due to lower pricing despite relatively consistent volume sold and a reduction of $5.3 million in revenues from other product sales.

Current wording

In the three months ended September 30, 2024, SKSS direct revenues increased $12.9 million from the comparable period in 2023 due to a $16.8 million increase in revenues from the sale of vacuum gas oil and specialty refinery products largely resulting from the acquisition of Noble which took place on March 1, 2024. This increase was partially offset by a $1.8 million decrease in revenues from the collection of used oil despite an increase in the volume collected in the three months ended September 30, 2024 when compared to the used oil collections in the same period of 2023. Revenues from the sale of base and blended oil products were relatively flat due to unfavorable market conditions.

Previous 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.

Current wording

In the nine months ended September 30, 2024, SKSS direct revenues decreased $2.0 million from the comparable period in 2023 largely due to a $12.8 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 $8.9 million and revenues generated from the sales of other products decreased $5.2 million for the nine months ended September 30, 2024 as compared to the same period in 2023. Revenue from the sales of blended oil products decreased by $2.3 million in the nine months ended September 30, 2024 when compared with the same period in the prior year, primarily due to lower pricing despite increased volume sold. These decreases were partially offset by a $27.2 million increase in revenues from the sale of vacuum gas oil and specialty refinery products primarily driven by the acquisition of Noble as well as a $2.3 million increase in revenues from the collection of used oil driven by higher volume collected in the nine months ended September 30, 2024 when compared to the used oil collections in the same period of 2023.

Previous 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.

Current wording

Environmental Services cost of revenues for the three months ended September 30, 2024 increased $108.2 million from the comparable period in 2023 while remaining relatively consistent as a percentage of revenues. Commensurate with the revenue growth in the business and recent acquisition of HEPACO, labor and benefit related costs increased $54.3 million, equipment and supply costs increased $41.6 million and external transportation, vehicle and fuel related costs increased $13.3 million for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023.

Previous wording

Environmental Services cost of revenues for the six months ended June 30, 2024 increased $132.0 million from the comparable period in 2023, however as a percentage of revenues decreased 1.2%. Commensurate with the revenue growth in the business and recent acquisitions, labor and benefit related costs increased $74.5 million, equipment and supply costs increased $35.6 million and external transportation, vehicle and fuel related costs increased $11.3 million for the six months ended June 30, 2024 when compared to the six 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.

Current wording

Environmental Services cost of revenues for the nine months ended September 30, 2024 increased $240.2 million from the comparable period in 2023, however as a percentage of revenues decreased 0.7%. Commensurate with the revenue growth in the business and recent acquisitions, labor and benefit related costs increased $130.3 million, equipment and supply costs increased $77.2 million and external transportation, vehicle and fuel related costs increased $24.6 million for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. Overall, the growth of revenue outpaced cost increases resulting in the improved margin of the segment.

Previous 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.

Current wording

Environmental Services SG&A expenses for the nine months ended September 30, 2024 increased $15.8 million, from the comparable periods 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. SG&A expenses for the nine months ended September 30, 2024 increased approximately $10 million due to additional costs from the HEPACO operations. The remaining increases were spread across various cost categories and were driven by overall growth in the segment results.

Previous wording

SKSS SG&A expenses for the three months ended June 30, 2024 increased $2.9 million and remained relatively consistent, as a percentage of revenues, when compared to the same period in 2023. For the six months ended June 30, 2024, SKSS SG&A expenses increased $3.2 million, and as a percentage of revenues, increased 1.0%, when compared to the same period in 2023. Overall, labor and benefit related costs increased $2.5 million and $3.2 million in the three and six months ended June 30, 2024 when compared to the same periods in 2023, mainly driven by the acquisition of Noble Oil.

Current wording

For the nine months ended September 30, 2024, SKSS SG&A expenses increased $4.1 million, and as a percentage of revenues, remained relatively consistent with the prior year. Overall, labor and benefit related costs increased $5.0 million in the nine months ended September 30, 2024 when compared to the same period in 2023, mainly driven by increased costs from Noble operations. This cost increase was partially offset by a $1.1 million increase to remedial liability reserves in 2023 which did not recur in 2024.

Previous wording

Corporate SG&A expenses for the three months ended June 30, 2024 increased $17.0 million yet remained relatively consistent as a percentage of our total direct revenues when compared to the same period in the prior year. The increase in Corporate SG&A expenses for the three months ended June 30, 2024 was driven by a $9.9 million increase in labor and benefits related costs primarily resulting from incremental headcount from the acquired operations and higher incentive compensation, a $3.8 million change in legal reserve costs and a $2.9 million increase in a remedial liability for an existing Superfund site.

Current wording

Corporate SG&A expenses for the three months ended September 30, 2024 increased $6.8 million from the same period in the prior year yet remained relatively consistent as a percentage of our total direct revenues. The increase in Corporate SG&A expenses for the three months ended September 30, 2024 was driven by a $5.3 million increase in labor and benefits related costs, including stock-based compensation, primarily resulting from incremental headcount from the acquired operations and a $1.2 million increase in information technology related costs.

Previous wording

Corporate SG&A expenses for the six months ended June 30, 2024 increased $25.7 million yet remained relatively consistent as a percentage of our total direct revenues when compared to the same period in the prior year. The increase in Corporate SG&A expenses for the six months ended June 30, 2024 was driven by an $18.9 million increase in labor and benefits related costs, a $3.8 million change in legal reserve costs and a $2.9 million increase in a remedial liability for an existing Superfund site.

Current wording

Corporate SG&A expenses for the nine months ended September 30, 2024 increased $32.5 million yet remained relatively consistent as a percentage of our total direct revenues when compared to the same period in the prior year. The increase in Corporate SG&A expenses for the nine months ended September 30, 2024 was driven by a $21.7 million increase in labor and benefits related costs, including stock-based compensation, a $3.6 million change in legal reserve costs and a $2.4 million increase in information technology related costs.

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, 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.

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 (income), 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

The following table presents Adjusted EBITDA as well as Adjusted EBITDA as a percent of Direct Revenues by segment (in thousands, except percentages):

Current wording

The following table presents Adjusted EBITDA as well as Adjusted EBITDA as a percentage of Direct Revenues by segment (in thousands, except percentages):

Previous 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.

Current wording

Depreciation and amortization for the three and nine months ended September 30, 2024 increased by $7.1 million and $28.2 million from the comparable periods in 2023 due to the depreciation of fixed assets and amortization of intangible assets placed in service in the last quarter of 2023 and throughout 2024 including the incremental assets acquired from the March 2024 HEPACO and Noble acquisitions.

Previous 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.

Current wording

During the nine months ended September 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

Interest expense, net of interest income for the three months ended June 30, 2024 increased $6.4 million from the comparable period in 2023 due to higher levels of outstanding debt as a result of the 2024 Incremental Term Loans entered into on March 22, 2024 as well as higher interest rates on our variable interest debt. Interest expense was partially offset by a $2.4 million increase in interest income in the three months ended June 30, 2024 compared to the comparable period in 2023.

Current wording

Interest expense, net of interest income for the three months ended September 30, 2024 increased $6.1 million from the comparable period in 2023 due to higher levels of outstanding debt as a result of the 2024 Incremental Term Loans entered into on March 22, 2024. Interest expense was partially offset by a $2.5 million increase in interest income in the three months ended September 30, 2024 compared to the comparable period in 2023.

Previous 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.

Current wording

Interest expense, net of interest income for the nine months ended September 30, 2024 increased $20.4 million from the comparable period in 2023. During the nine months ended September 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

Absent this benefit, interest expense, net of interest income, for the six months ended June 30, 2024 increased $6.0 million from the comparable period in 2023 due to the 2024 Incremental Term Loans discussed above. Interest expense was partially offset by a $2.9 million increase in interest income in the six months ended June 30, 2024 compared to the comparable period in 2023.

Current wording

Absent this benefit, interest expense, net of interest income, for the nine months ended September 30, 2024 increased $12.1 million from the comparable period in 2023 due to the 2024 Incremental Term Loans discussed above. Interest expense was partially offset by a $5.4 million increase in interest income in the nine months ended September 30, 2024 compared to the comparable period in 2023.

Previous 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.

Current wording

As of September 30, 2024, the effective interest rate on our debt was 5.6%. 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

For the three and six months ended June 30, 2024, the provision for income taxes increase was consistent with the increase in pre-tax income compared to the prior period. Our effective tax rates for the three and six months ended June 30, 2024 remained relatively consistent compared to the prior periods.

Current wording

For the three and nine months ended September 30, 2024, the provision for income taxes increase was consistent with the increase in pre-tax income compared to the prior period. Our effective tax rates for the three and nine months ended September 30, 2024 remained relatively consistent compared to the prior periods.

Previous 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.

Current wording

Net cash used in investing activities for the nine months ended September 30, 2024 was $812.9 million, an increase of $365.9 million from the comparable period in 2023. Cash used for acquisitions increased $354.4 million as we paid more for the acquisitions of HEPACO and Noble in 2024 than we did for the acquisition of Thompson Industrial in 2023. Additions to property, plant and equipment increased $57.9 million, largely driven by increased investments in vehicles, machinery and equipment for our operations and notable project spend including $15.8 million spent on the Baltimore, Maryland facility. 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 $26.3 million cash inflow in the nine months ended September 30, 2024 as compared to a $19.9 million cash outflow in the nine months ended 2023.

Previous 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.

Current wording

Net cash from financing activities for the nine months ended September 30, 2024 was $408.6 million, as compared to net cash used in financing activities of $165.3 million for the nine months ended September 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 $121.5 million repayment of debt in 2023. Partially offsetting this activity was an increase in finance lease payments of $12.0 million.

Previous 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.

Current wording

At September 30, 2024, cash and cash equivalents and marketable securities totaled $594.7 million, compared to $550.8 million at December 31, 2023. At September 30, 2024, cash and cash equivalents held by our Canadian subsidiaries totaled $46.8 million. The cash and cash equivalents and marketable securities balance for our U.S. operations was $547.9 million at September 30, 2024. Our U.S. operations had net operating cash inflows of $478.3 million for the nine months ended September 30, 2024.

Previous 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.

Current wording

We maintain a $600.0 million revolving credit facility of which, as of September 30, 2024, approximately $469.8 million was available to borrow under the facility, with letters of credit of $130.2 million outstanding.

Previous 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.

Current wording

Capital expenditures during the first nine months of 2024 were $369.8 million as compared to $311.9 million during the first nine months of 2023. The increase was driven by incremental investments in our fleet and equipment and Baltimore, Maryland facility as well as 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.

Previous 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.

Current wording

We are nearing the completion of the construction of our new incinerator in Kimball, Nebraska and intend to commence operations in the fourth quarter of 2024. Total spending on the project as of September 30, 2024 was $198.0 million. Capital spending on the strategic project in Baltimore, Maryland for the first nine months of 2024 was $15.8 million for the purchase of the facility and site improvements.

Previous 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.

Current wording

As of September 30, 2024, our financing arrangements include (i) $545.0 million of 4.875% senior unsecured notes due 2027, (ii) $1,468.7 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 September 30, 2024.

Previous 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.

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 nine months ended September 30, 2024, the Company repurchased and retired 84,910 and 135,572 shares, respectively, of the Company’s common stock for total expenditures of $20.0 million and $30.0 million, respectively. During the three and nine months ended September 30, 2023, the Company repurchased and retired a total of 58,341 and 117,064 shares, respectively, of the Company’s common stock for total expenditures of $10.0 million and $18.0 million, respectively.

Previous 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.

Current wording

Through September 30, 2024, the Company has repurchased and retired a total of approximately 8.7 million shares of its common stock for $575.9 million under the board approved plan, and as of September 30, 2024, an additional $524.1 million remained available for repurchase of shares.

Previous 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.

Current wording

Total environmental liabilities as of September 30, 2024 were $230.2 million, relatively consistent with the balance as of December 31, 2023. During the nine months ended September 30, 2024, the environmental liability balance increased due to accretion of $10.1 million, new environmental liabilities, including those assumed through acquisition, of $5.9 million and changes in environmental liability estimates of $4.4 million. These increases were partially offset by expenditures of $19.7 million. The liability estimate increase was primarily driven by a $2.9 million increase to the remedial liability reserve for a Superfund site.

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 June 30, 2024, there were $136.5 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 September 30, 2024, there were $130.2 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 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.

Current wording

In the first nine months of 2024, there were no material changes 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.