10-Q 1 clh-20240331.htm 10-Q clh-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDEDMARCH 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM         TO       

Commission File Number 001-34223
_______________________
CLEAN HARBORS, INC.
(Exact name of registrant as specified in its charter)
Massachusetts04-2997780
(State or Other Jurisdiction of Incorporation or Organization)(IRS Employer Identification No.)
42 Longwater DriveNorwellMA02061-9149
(Address of Principal Executive Offices)(Zip Code)
Registrant’s Telephone Number, Including area code: (781) 792-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueCLHNew York Stock Exchange
    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “merging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes   No 
The number of shares of Common Stock, $0.01 par value, of the registrant outstanding at April 26, 2024 was 53,935,124.



CLEAN HARBORS, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page No.




CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, 2024December 31, 2023
ASSETS(unaudited)
Current assets:
Cash and cash equivalents$337,825 $444,698 
Short-term marketable securities104,811 106,101 
Accounts receivable, net of allowances aggregating $47,129 and $42,209, respectively
1,039,763 983,111 
Unbilled accounts receivable165,592 107,859 
Inventories and supplies354,310 327,511 
Prepaid expenses and other current assets103,495 82,939 
Total current assets2,105,796 2,052,219 
Property, plant and equipment, net2,330,484 2,193,318 
Other assets:
Operating lease right-of-use assets206,577 187,060 
Goodwill1,487,821 1,287,736 
Permits and other intangibles, net739,975 602,797 
Other long-term assets69,170 59,739 
Total other assets2,503,543 2,137,332 
Total assets$6,939,823 $6,382,869 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt$15,102 $10,000 
Accounts payable452,848 451,806 
Deferred revenue106,425 95,230 
Accrued expenses and other current liabilities349,435 397,157 
Current portion of closure, post-closure and remedial liabilities29,179 26,914 
Current portion of operating lease liabilities64,534 56,430 
Total current liabilities1,017,523 1,037,537 
Other liabilities:
Closure and post-closure liabilities, less current portion of $14,079 and $13,556, respectively
105,493 105,044 
Remedial liabilities, less current portion of $15,100 and $13,358, respectively
94,686 97,885 
Long-term debt, less current portion2,778,624 2,291,717 
Operating lease liabilities, less current portion145,544 131,743 
Deferred tax liabilities361,223 353,107 
Other long-term liabilities125,393 118,330 
Total other liabilities3,610,963 3,097,826 
Commitments and contingent liabilities (See Note 15)
Stockholders’ equity:
Common stock, $0.01 par value:
Authorized 80,000,000 shares; issued and outstanding 53,926,191 and 53,929,703 shares, respectively
539 539 
Additional paid-in capital458,014 459,728 
Accumulated other comprehensive loss(179,626)(175,339)
Retained earnings2,032,410 1,962,578 
Total stockholders’ equity2,311,337 2,247,506 
Total liabilities and stockholders’ equity$6,939,823 $6,382,869 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
1

CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
March 31,
20242023
Revenues:
Service revenues$1,151,858 $1,053,233 
Product revenues224,837 254,154 
Total revenues1,376,695 1,307,387 
Cost of revenues: (exclusive of items shown separately below)
Service revenues816,349 751,595 
Product revenues154,721 179,919 
Total cost of revenues971,070 931,514 
Selling, general and administrative expenses181,868 166,753 
Accretion of environmental liabilities3,217 3,407 
Depreciation and amortization95,065 84,758 
Income from operations125,475 120,955 
Other (expense) income, net(1,141)116 
Loss on early extinguishment of debt (2,362)
Interest expense, net of interest income of $3,514 and $2,955, respectively
(28,539)(20,632)
Income before provision for income taxes95,795 98,077 
Provision for income taxes25,963 25,676 
Net income$69,832 $72,401 
Earnings per share:
Basic$1.29 $1.34 
Diluted$1.29 $1.33 
Shares used to compute earnings per share - Basic53,930 54,076 
Shares used to compute earnings per share - Diluted54,213 54,404 
    

The accompanying notes are an integral part of these unaudited consolidated financial statements.
2

CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
 Three Months Ended
March 31,
 20242023
Net income$69,832 $72,401 
Other comprehensive loss, net of tax:
Unrealized (loss) gain on available-for-sale securities(84)174 
Unrealized gain (loss) on fair value of interest rate hedges8,661 (4,829)
Reclassification adjustment for interest rate hedge amounts realized in net income(3,733)(4,124)
Reclassification adjustment for settlement of interest rate hedges (5,905)
Pension adjustments19  
Foreign currency translation adjustments(9,150)338 
Other comprehensive loss, net of tax(4,287)(14,346)
Comprehensive income$65,545 $58,055 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
3

CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31,
20242023
Cash flows from operating activities:
Net income$69,832 $72,401 
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization95,065 84,758 
Allowance for doubtful accounts1,728 1,398 
Amortization of deferred financing costs and debt discount1,329 1,354 
Accretion of environmental liabilities3,217 3,407 
Changes in environmental liability estimates917 683 
Deferred income taxes(88)(363)
Other expense (income), net1,141 (116)
Stock-based compensation6,338 6,018 
Loss on early extinguishment of debt 2,362 
Environmental expenditures(4,729)(8,348)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable and unbilled accounts receivable(44,383)(5,030)
Inventories and supplies(13,572)2,758 
Other current and non-current assets(25,918)(17,328)
Accounts payable(17,358)(21,801)
Other current and long-term liabilities(54,970)(94,145)
Net cash from operating activities18,549 28,008 
Cash flows used in investing activities:
Additions to property, plant and equipment(137,913)(81,686)
Proceeds from sale and disposal of fixed assets1,008 1,855 
Acquisitions, net of cash acquired(475,306)(108,533)
Proceeds from sale of business, net of transaction costs750  
Additions to intangible assets including costs to obtain or renew permits(534)(333)
Purchases of available-for-sale securities(31,228)(39,037)
Proceeds from sale of available-for-sale securities33,350 29,800 
Net cash used in investing activities(609,873)(197,934)
Cash flows from (used in) financing activities:
Change in uncashed checks7,778 164 
Tax payments related to withholdings on vested restricted stock(3,052)(3,351)
Repurchases of common stock(5,000)(3,000)
Deferred financing costs paid(4,641)(6,094)
Payments on finance leases(4,665)(3,689)
Principal payments on debt(3,776)(616,475)
Proceeds from issuance of debt, net of discount499,375 500,000 
Borrowing from revolving credit facility 114,000 
Net cash from (used in) financing activities486,019 (18,445)
Effect of exchange rate change on cash(1,568)75 
Decrease in cash and cash equivalents(106,873)(188,296)
Cash and cash equivalents, beginning of period444,698 492,603 
Cash and cash equivalents, end of period$337,825 $304,307 
Supplemental information:
Cash payments for interest and income taxes:
Interest paid$51,243 $34,878 
Income taxes paid, net of refunds8,020 37,141 
Non-cash investing activities:
Property, plant and equipment accrued28,266 27,533 
ROU assets obtained in exchange for operating lease liabilities23,101 10,203 
ROU assets obtained in exchange for finance lease liabilities14,519 5,153 
The accompanying notes are an integral part of these unaudited consolidated financial statements.



4

CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
Common StockAccumulated
Other
Comprehensive Loss
Number
of
Shares
$0.01
Par
Value
Additional
Paid-in
Capital
Retained EarningsTotal
Stockholders’
Equity
Balance at January 1, 202453,930 $539 $459,728 $(175,339)$1,962,578 $2,247,506 
Net income— — — — 69,832 69,832 
Other comprehensive loss— — — (4,287)— (4,287)
Stock-based compensation— — 6,338 — — 6,338 
Issuance of common stock for restricted share vesting, net of employee tax withholdings23 — (3,052)— — (3,052)
Repurchases of common stock(27)— (5,000)— — (5,000)
Balance at March 31, 202453,926 $539 $458,014 $(179,626)$2,032,410 $2,311,337 


Common StockAccumulated
Other
Comprehensive Loss
Number
of
Shares
$0.01
Par
Value
Additional
Paid-in
Capital
Retained EarningsTotal
Stockholders’
Equity
Balance at January 1, 202354,065 $541 $504,240 $(167,181)$1,584,722 $1,922,322 
Net income— — — — 72,401 72,401 
Other comprehensive loss— — — (14,346)— (14,346)
Stock-based compensation— — 6,018 — — 6,018 
Issuance of common stock for restricted share vesting, net of employee tax withholdings49 — (3,351)— — (3,351)
Repurchases of common stock(22)— (3,000)— — (3,000)
Balance at March 31, 202354,092 $541 $503,907 $(181,527)$1,657,123 $1,980,044 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
5

CLEAN HARBORS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION
The accompanying consolidated interim financial statements are unaudited and include the accounts of Clean Harbors, Inc. and its subsidiaries (collectively, “Clean Harbors” or the “Company”) and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, include all adjustments which are of a normal recurring nature and are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Management has made estimates and assumptions affecting the amounts reported in the Company’s consolidated interim financial statements and accompanying footnotes; actual results could differ from those estimates and judgments. The results for interim periods are not necessarily indicative of results for the entire year or any other interim periods. The financial statements presented herein should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

(2) SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are described in Note 2, “Significant Accounting Policies,” in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this new pronouncement on its consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances income tax disclosures related to the tax rate reconciliation and income taxes paid. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact of adopting this new pronouncement on its consolidated financial statements and disclosures.

In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. The rules require disclosure of, among other things: material climate-related risks; activities to mitigate or adapt to such risks; governance and management of such risks; and material Scope 1 and Scope 2 greenhouse gas emissions. Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. The rules will become effective on a phased-in timeline beginning the year ended December 31, 2025. The Company is currently evaluating the final rule to determine its impact on the Company’s consolidated financial statements and disclosures.

(3) REVENUES
The Company generates revenues through the following operating segments: Environmental Services and Safety-Kleen Sustainability Solutions (“SKSS”). The Company’s Environmental Services operating segment generally has four sources of revenue and the SKSS operating segment has two sources of revenue. The Company disaggregates third-party revenues by geographic location and source of revenue as management believes these categories depict how revenue and cash flows are affected by economic factors. The Company’s significant sources of revenue include:
Technical Services—Technical Services contribute to the revenues of the Environmental Services operating segment. Revenues for these services are generated from fees charged for waste material management and disposal services including onsite environmental management services, collection and transportation, packaging, recycling, treatment and disposal of waste and remediation projects. These services handle hazardous and/or non-hazardous waste, including per- and polyfluoroalkyl substances (“PFAS”). Revenue is primarily generated by short-term projects, most of which are governed by master service agreements that are long-term in nature. These master service agreements are typically entered into with the Company’s larger customers and outline the pricing and legal frameworks for such arrangements. Services are provided based on purchase orders or agreements with the
6

customer and include prices based upon units of volume of waste, material and personnel costs as well as transportation and other fees. Collection and transportation revenues are recognized over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. The Company uses the input method to recognize revenue over time, based on time and materials incurred as a basis for measuring the satisfaction of the performance obligation. Revenues for treatment and disposal of waste are recognized upon completion of treatment, final disposition in a landfill or incinerator, or when the waste is shipped to a third-party for processing and disposal. The Company periodically enters into bundled arrangements for the collection and transportation and disposal of waste. For such arrangements, transportation and disposal are considered distinct performance obligations and the Company allocates revenue to each based on the relative standalone selling price (i.e., the estimated price that a customer would pay for the services on a standalone basis). Revenues and the related costs from waste that is not yet completely processed and disposed of are deferred. The deferred revenues and costs are recognized when the services are completed. The period between collection and transportation and the final processing and disposal ranges depending on the location of the customer, but generally is measured in days.
Industrial Services—Industrial Services contribute to the revenues of the Environmental Services operating segment. These revenues are primarily generated from industrial and specialty services provided to refineries, chemical plants, manufacturing facilities, power generation companies and other industrial customers throughout North America. Services include in-plant cleaning and maintenance services, plant outage and turnaround services, specialty cleaning services including chemical cleaning, pigging and high and ultra-high pressure water cleaning, leak detection and repair, daylighting, production services and upstream energy services. Services are provided based on purchase orders or agreements with the customer and include prices based upon daily, hourly or job rates for equipment, materials and personnel. The Company recognizes revenue for these services over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. The Company uses the input method to recognize revenue over time, based on time and materials incurred.
Field and Emergency Response Services—Field and Emergency Response Services contribute to the revenues of the Environmental Services operating segment. Field Services revenues are generated from cleanup services at customer sites, including those managed by municipalities and utility providers, or other locations on a scheduled or emergency response basis. Services include confined space entry for tank cleaning, site decontamination, environmental remediation, railcar cleaning, manhole/vault clean outs, product recovery and transfer and vacuum services. Additional services include filtration, water treatment services and wetland restoration. Response services for environmental emergencies of any scale range from man-made disasters such as oil spills to natural disasters like hurricanes. Emergency response services also include spill cleanup on land and water, as well as contagion disinfection, decontamination and disposal services. Field and emergency response services are provided based on purchase orders or agreements with customers and include prices generally based upon daily, hourly or job rates for equipment, materials and personnel. The Company recognizes revenue for these services over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. The Company uses the input method to recognize revenue over time, based on time and materials incurred. The duration of such services can be over a number of hours, several days or even months for larger scale projects.
Safety-Kleen Environmental Services—Safety-Kleen Environmental Services revenues contribute both to the Environmental Services operating segment and the SKSS operating segment depending upon the nature of such revenues and operating responsibilities relative to executing the revenue contracts. Revenues from providing containerized waste handling and disposal services, parts washer services and vacuum services, referred to collectively as the Safety-Kleen branches’ core service offerings, contribute to the revenues of the Environmental Services operating segment. In addition, sales of packaged blended oil products and other complementary product sales contribute to the revenues of the Environmental Services operating segment. Revenues generated from waste oil, anti-freeze and oil filter collection services, sales of bulk blended oil products and sales of bulk automotive fluids contribute to the SKSS operating segment.
Generally, the revenue from services is recognized over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. The duration of such services can be over a number of hours or several days. The Company uses the input method to recognize revenue over time, based on time and materials incurred. Product revenue is recognized upon the transfer of control whereby control transfers when the products are delivered to the customer. Containerized waste services consist of profiling, collecting, transporting and recycling or disposing of a wide variety of waste. Related collection and transportation revenues are recognized over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. Parts washer services include customer use of the Company’s parts washer equipment, cleaning and maintenance of the parts washer equipment and removal and replacement of used cleaning fluids. Parts washer services are considered a single performance obligation due to the highly integrated and interdependent nature of the arrangement. Revenue from parts washer services is recognized over the service interval as the customer receives the benefit of the services.
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Safety-Kleen Oil—Safety-Kleen Oil related sales contribute to the revenues of the SKSS segment. These revenues are generated from sales of high-quality base and blended lubricating oils to third-party distributors, government agencies, fleets, railroads and industrial customers. The business also sells recycled fuel oil to asphalt plants, industrial plants and pulp and paper companies. The used oil is also processed into vacuum gas oil which can be further re-refined into lubricant base oils or sold directly into the marine diesel oil fuel market. Revenue for oil products is recognized at a point in time, upon the transfer of control. Control transfers when the products are delivered to the customer.
The following tables present the Company's third-party revenue disaggregated by source of revenue and geography (in thousands):
Three Months Ended March 31, 2024
Environmental ServicesSafety-Kleen Sustainability SolutionsCorporateTotal
Primary Geographical Markets
United States$1,053,458 $193,912 $102 $1,247,472 
Canada107,821 21,402  129,223 
Total third-party revenues$1,161,279 $215,314 $102 $1,376,695 
Sources of Revenue
Technical Services$407,491 $ $ $407,491 
Industrial Services and Other
359,397  102 359,499 
Field and Emergency Response Services163,469   163,469 
Safety-Kleen Environmental Services230,922 53,021  283,943 
Safety-Kleen Oil 162,293  162,293 
Total third-party revenues$1,161,279 $215,314 $102 $1,376,695 
Three Months Ended March 31, 2023
Environmental ServicesSafety-Kleen Sustainability SolutionsCorporateTotal
Primary Geographical Markets
United States$958,584 $221,771 $107 $1,180,462 
Canada102,398 24,527  126,925 
Total third-party revenues$1,060,982 $246,298 $107 $1,307,387 
Sources of Revenue
Technical Services$366,509 $ $ $366,509 
Industrial Services and Other336,379  107 336,486 
Field and Emergency Response Services148,086   148,086 
Safety-Kleen Environmental Services210,008 49,559  259,567 
Safety-Kleen Oil 196,739  196,739 
Total third-party revenues$1,060,982 $246,298 $107 $1,307,387 
Contract Balances
(in thousands)March 31, 2024December 31, 2023
Receivables$1,039,763 $983,111 
Contract assets (unbilled receivables)165,592 107,859 
Contract liabilities (deferred revenue)106,425 95,230 

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets) and customer advances and deposits or deferred revenue (contract liabilities) on the consolidated balance sheet. Generally, billing occurs subsequent to revenue recognition, as a right to payment is not just subject to passage of time, resulting in contract assets, which are generally classified as current. The Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the consolidated balance
8

sheet on a contract-by-contract basis at the end of each reporting period. The contract liability balances at the beginning of each period presented are generally fully recognized in the subsequent three-month period.

(4) BUSINESS COMBINATIONS
2024 Acquisitions
On March 22, 2024, the Company completed its acquisition of Hepaco Blocker, Inc. and its subsidiaries (collectively, “HEPACO”) for an all-cash purchase price of $395.4 million, net of cash acquired and subject to final settlement of working capital balances. The operations of HEPACO expand the Environmental Services segment’s field services business.
The preliminary allocation of the purchase price is provisional and was based on estimates of the fair value of assets acquired and liabilities assumed as of March 22, 2024. The Company continues to obtain information to complete the valuation of these balances and the associated income tax accounting. Measurement period adjustments will reflect new information obtained about facts and circumstances that existed as of the acquisition date. The following table summarizes the preliminary determination and recognition of assets acquired and liabilities assumed (in thousands):
At March 22, 2024
Accounts receivable, including unbilled receivables$68,496 
Inventories and supplies1,574 
Prepaid expenses and other current assets5,221 
Property, plant and equipment45,453 
Permits and other intangibles130,000 
Operating lease right-of-use assets9,385 
Other long-term assets2,660 
Accrued expenses and other current liabilities(43,966)
Current portion of operating lease liabilities(2,758)
Operating lease liabilities, less current portion(6,627)
Deferred tax liabilities(8,916)
Other long-term liabilities(374)
Total identifiable net assets200,148 
Goodwill195,265 
Total purchase price$395,413 
Other intangible assets acquired include customer relationships and trademarks/tradenames and are anticipated to have estimated useful lives of between 10 and 20 years with a weighted average useful life of approximately 19 years. The excess of the total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible and intangible assets acquired and liabilities assumed, was recorded as goodwill. The goodwill recognized is attributable to the expected operating synergies, assembled workforce and growth potential that the Company expects to realize from the acquisition. Goodwill generated from the acquisition is not deductible for tax purposes.
The operations included in the Company’s financial statements for the period ended March 31, 2024, and pro forma revenue and earnings amounts on a combined basis as if this acquisition had been completed on January 1, 2023 are immaterial to the consolidated financial statements of the Company.
On March 1, 2024, the Company acquired a privately-owned business for an all-cash purchase price of $68.9 million, net of cash acquired and subject to the final settlement of working capital balances. The acquired company expands the SKSS segment’s oil collection operations in the southeastern region of the United States while also adding incremental production from the re-refinery owned and operated by the acquired company.
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The preliminary allocation of the purchase price is provisional and was based on estimates of the fair value of assets acquired and liabilities assumed as of March 1, 2024. The Company continues to obtain information to complete the valuation of these balances and the associated income tax accounting. Measurement period adjustments will reflect new information obtained about facts and circumstances that existed as of the acquisition date. The following table summarizes the preliminary determination and recognition of assets acquired and liabilities assumed (in thousands):
At March 1, 2024
Accounts receivable, including unbilled receivables$5,693 
Inventories and supplies6,817 
Prepaid expenses and other current assets423 
Property, plant and equipment38,914 
Permits and other intangibles20,200 
Operating lease right-of-use assets3,615 
Other long-term assets92 
Accrued expenses and other current liabilities(8,990)
Current portion of operating lease liabilities(1,823)
Operating lease liabilities, less current portion(1,792)
Total identifiable net assets63,149 
Goodwill5,744 
Total purchase price$68,893 
Other intangible assets acquired include customer relationships and trademarks/tradenames and are anticipated to have estimated useful lives of between 7 and 15 years with a weighted average useful life of approximately 13 years. The excess of the total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible and intangible assets acquired and liabilities assumed, was recorded as goodwill. The goodwill recognized is attributable to the expected operating synergies and assembled workforce that the Company expects to realize from the acquisition. Goodwill generated from the acquisition is deductible for tax purposes.
The operations included in the Company’s financial statements for the period ended March 31, 2024, and pro forma revenue and earnings amounts on a combined basis as if this acquisition had been completed on January 1, 2023 are immaterial to the consolidated financial statements of the Company.
2023 Acquisition
On March 31, 2023, the Company acquired Thompson Industrial Services, LLC (“Thompson Industrial”) for an all-cash purchase price of $110.9 million, net of cash acquired. The operations of Thompson Industrial expand the Environmental Services segment’s industrial service operations in the southeastern region of the United States.
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The Company finalized the purchase accounting for this acquisition. The allocation of the purchase price was based on estimates of the fair value and assets acquired and liabilities assumed as of March 31, 2023. The following table summarizes the final determination and recognition of assets acquired and liabilities assumed (in thousands):
At Acquisition Date As Reported December 31, 2023
Measurement Period Adjustments
Final Allocation At Acquisition Date As Reported March 31, 2024
Accounts receivable, including unbilled receivables$25,233 $(73)$25,160 
Inventories and supplies228 — 228 
Prepaid expenses and other current assets1,302 — 1,302 
Property, plant and equipment26,719 — 26,719 
Permits and other intangibles28,900 — 28,900 
Operating lease right-of-use assets4,716 — 4,716 
Other long-term assets72 — 72 
Accrued expenses and other current liabilities(10,385)(145)(10,530)
Current portion of operating lease liabilities(1,653)— (1,653)
Operating lease liabilities, less current portion(3,063)— (3,063)
Other long-term liabilities(560)— (560)
Total identifiable net assets71,509 (218)71,291 
Goodwill39,346 218 39,564 
Total purchase price$110,855 $ $110,855 
Permits and other intangible assets acquired include customer relationships, trademarks/tradenames and non-compete agreements and are anticipated to have estimated useful lives of between five and 15 years with a weighted average useful life of approximately 13 years. The excess of the total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible and intangible assets acquired and liabilities assumed, was recorded as goodwill. The goodwill recognized is attributable to the expected operating synergies, assembled workforce and growth potential that the Company expects to realize from the acquisition. Goodwill generated from the acquisition is deductible for tax purposes.

(5) INVENTORIES AND SUPPLIES
Inventories and supplies consisted of the following (in thousands):
March 31, 2024December 31, 2023
Supplies$194,411 $177,217 
Oil and oil related products128,922 118,600 
Solvent and solutions11,618 11,795 
Other19,359 19,899 
Total inventories and supplies$354,310 $327,511 
Supplies inventories consist primarily of critical spare parts to support the Company’s incinerator and re-refinery operations and other general supplies used in our normal day-to-day operations. Other inventories consist primarily of parts washer components, cleaning fluids, absorbents and automotive fluids, such as windshield washer fluid and antifreeze.

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(6) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in thousands):
March 31, 2024December 31, 2023
Land$184,242 $174,891 
Asset retirement costs (non-landfill)27,155 27,167 
Landfill assets252,816 253,180 
Buildings and improvements (1)
639,514 630,525 
Vehicles (2)
1,345,995 1,276,567 
Equipment (3)
2,391,075 2,388,370 
Construction in progress263,878 213,601 
5,104,675 4,964,301 
Less - accumulated depreciation and amortization2,774,191 2,770,983 
Total property, plant and equipment, net$2,330,484 $2,193,318 
________________
(1) Balances inclusive of gross right-of-use (“ROU”) assets classified as finance leases of $8.0 million in both periods.
(2) Balances inclusive of gross ROU assets classified as finance leases of $175.0 million and $151.7 million, respectively.
(3) Balances inclusive of gross ROU assets classified as finance leases of $9.2 million in both periods.
Depreciation expense, inclusive of landfill and finance lease amortization, was $82.2 million and $72.0 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The Company recorded $2.5 million and $1.2 million of capitalized interest during the three months ended March 31, 2024 and March 31, 2023, respectively, mainly attributable to the construction of a new incinerator in Kimball, Nebraska.

(7) GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in goodwill by segment for the three months ended March 31, 2024 were as follows (in thousands):
Environmental ServicesSafety-Kleen Sustainability SolutionsTotals
Balance at January 1, 2024$1,112,013 $175,723 $1,287,736 
Increase from current period acquisitions195,265 5,744 201,009 
Measurement period adjustments from prior period acquisitions218  218 
Foreign currency translation(815)(327)(1,142)
Balance at March 31, 2024$1,306,681 $181,140 $1,487,821 
The Company assesses goodwill on an annual basis as of December 31 or at an interim date when events or changes in the business environment (“triggering events”) would more likely than not reduce the fair value of a reporting unit below its carrying value. During the period ended March 31, 2024, no such triggering events were identified.
As of March 31, 2024 and December 31, 2023, the Company’s intangible assets consisted of the following (in thousands):
March 31, 2024December 31, 2023
CostAccumulated
Amortization
NetCostAccumulated
Amortization
Net
Permits$191,130 $119,219 $71,911 $191,747 $117,556 $74,191 
Customer and supplier relationships
739,675 262,894 476,781 604,994 258,879 346,115 
Other intangible assets
112,336 41,123 71,213 100,068 37,862 62,206 
Total amortizable permits and other intangible assets
1,043,141 423,236 619,905 896,809 414,297 482,512 
Trademarks and trade names
120,070 — 120,070 120,285 — 120,285 
Total permits and other intangible assets
$1,163,211 $423,236 $739,975 $1,017,094 $414,297 $602,797 
Amortization expense of permits, customer and supplier relationships and other intangible assets was $12.9 million and $12.7 million in the three months ended March 31, 2024 and March 31, 2023, respectively.
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The expected amortization of the net carrying amount of finite-lived intangible assets at March 31, 2024 was as follows (in thousands):
Years Ending December 31,Expected Amortization
2024 (nine months)$37,463 
202547,957 
202645,383 
202743,304 
202842,044 
Thereafter403,754 
$619,905 

(8) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following (in thousands):
March 31, 2024December 31, 2023
Accrued insurance$104,566 $107,658 
Accrued compensation and benefits72,253 113,236 
Accrued income, real estate, sales and other taxes63,276 44,752 
Accrued interest15,494 33,857 
Accrued other93,846 97,654 
$349,435 $397,157 

(9) CLOSURE AND POST-CLOSURE LIABILITIES
The changes to closure and post-closure liabilities (also referred to as “asset retirement obligations”) from January 1, 2024 through March 31, 2024 were as follows (in thousands):
Landfill
Retirement
Liability
Non-Landfill
Retirement
Liability
Total
Balance at January 1, 2024$59,443 $59,157 $118,600 
New asset retirement obligations556  556 
Accretion1,221 1,071 2,292 
Changes in estimates recorded to consolidated statement of operations 58 58 
Changes in estimates recorded to consolidated balance sheet 51 51 
Expenditures(608)(1,183)(1,791)
Currency translation and other(109)(85)(194)
Balance at March 31, 2024$60,503 $59,069 $119,572 
In the three months ended March 31, 2024, there were no significant benefits or charges resulting from changes in estimates for closure and post-closure liabilities.

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(10) REMEDIAL LIABILITIES 
The changes to remedial liabilities from January 1, 2024 through March 31, 2024 were as follows (in thousands):
Remedial
Liabilities for
Landfill Sites
Remedial
Liabilities for
Inactive Sites
Remedial
Liabilities
(Including
Superfund) for
Non-Landfill
Operations
Total
Balance at January 1, 2024$1,880 $60,277 $49,086 $111,243 
Accretion22 521 382 925 
Changes in estimates recorded to consolidated statement of operations5 75 779 859 
Expenditures(13)(831)(2,094)(2,938)
Currency translation and other (13)(290)(303)
Balance at March 31, 2024$1,894 $60,029 $47,863 $109,786 
In the three months ended March 31, 2024, there were no significant benefits or charges resulting from changes in estimates for remedial liabilities.

(11) FINANCING ARRANGEMENTS
Long-Term Debt
The following table is a summary of the Company’s long-term debt (in thousands):
Current Portion of Long-Term Debt:March 31, 2024December 31, 2023
Secured senior term loans$15,102 $10,000 
Long-Term Debt:
Secured senior term loans due October 8, 20281,461,122 970,000 
Unsecured senior notes, at 4.875%, due July 15, 2027 (“2027 Notes”)
545,000 545,000 
Unsecured senior notes, at 5.125%, due July 15, 2029 (“2029 Notes”)
300,000 300,000 
Unsecured senior notes, at 6.375%, due February 1, 2031 (“2031 Notes”)
500,000 500,000 
Long-term debt, at par$2,806,122 $2,315,000 
Unamortized debt issuance costs and discount(27,498)(23,283)
Long-term debt, at carrying value$2,778,624 $2,291,717 
Financing Activities
The Company’s significant financing arrangements are described in Note 12, “Financing Arrangements,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and, other than as noted below, there have been no material changes to the arrangements described therein.
On March 22, 2024, the Company and substantially all of the Company’s domestic subsidiaries entered into Incremental Facility Amendment No. 5 to the Company’s existing Credit Agreement, dated as of June 30, 2017 (“Term Loan Agreement”). Incremental Facility Amendment No. 5 provided for the incurrence of additional term loans (the “2024 Incremental Term Loans”) under the Term Loan Agreement in the aggregate principal amount of $500.0 million. Proceeds from the issuance of the 2024 Incremental Term Loans were $494.7 million after debt discount and debt issuance costs, and were used to fund the acquisition of HEPACO, with the excess increasing the Company’s cash balances. The 2024 Incremental Term Loans are in addition to the aggregate of $980.0 million of term loans (the “Existing Term Loans”) which were outstanding prior to the issuance of the 2024 Incremental Term Loans. Both the 2024 Incremental Term Loans and the Existing Term Loans (collectively referred to as the “2028 Term Loans”) will mature on October 8, 2028, and may be prepaid at any time without premium or penalty other than customary breakage costs or if the Company engages in certain repricing transactions before September 22, 2024, in which event a 1.0% prepayment premium would be due. The Company’s obligations under the 2028 Term Loans are guaranteed by substantially all of the Company’s domestic restricted subsidiaries and secured by liens on substantially all of the assets of the Company and the guarantors.
The 2028 Term Loans bear interest, at the Company’s election, at either of the following rates per annum: (a) the sum of Term SOFR (as defined in the Term Loan Agreement) plus a SOFR Adjustment (as defined in the Term Loan Agreement) ranging
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from 0.11448% to 0.42826% (depending on the duration of the loan) plus 1.75%, or (b) the sum of the Base Rate (as defined in the Term Loan Agreement) plus 0.75%, with Term SOFR being subject to a floor of 0.00% and the Base Rate being subject to a floor of 1.00%. Interest on the 2028 Term Loans is paid monthly with interest payments on the 2024 Incremental Term Loan portion commencing in April 2024.
The Company maintains a $400.0 million revolving credit facility under which the Company had no outstanding loan balance as of March 31, 2024 and December 31, 2023. As of March 31, 2024, the Company had $268.0 million available to borrow under the revolving credit facility and outstanding letters of credit were $132.0 million. Subject to certain conditions, this credit facility will expire in October 2025.
As of March 31, 2024 and December 31, 2023, the estimated fair value of the Company’s outstanding long-term debt, including the current portion, was $2.8 billion and $2.3 billion, respectively. The Company’s estimates of fair value of its long-term debt, including the current portion, are based on quoted market prices or other available market data which are considered Level 2 measures according to the fair value hierarchy. Level 2 utilizes quoted market prices in markets that are not active, broker or dealer quotation or alternative pricing sources with reasonable levels of price transparency for similar assets and liabilities.
As of March 31, 2024, after taking into account the interest rate swaps discussed under the “Cash Flow Hedges” header below, the Company’s variable rate debt consisted of $876.2 million of the 2028 Term Loans. The Company’s interest rate on this variable rate debt as of March 31, 2024 was 7.19%.
Cash Flow Hedges
The Company’s strategy to hedge against fluctuations in variable interest rates involves entering into interest rate derivative agreements.
The Company has entered into interest rate swap agreements with a notional amount of $600.0 million (“2022 Swaps”) to effectively fix the interest rate on $600.0 million principal of the outstanding Existing Term Loans. The fixed rate on these instruments is 1.9645% and the variable rate is linked to the Term SOFR to mirror the variable interest payments for the Existing Term Loans. Including the 1.75% interest rate margin and the 0.11448% SOFR adjustment for the Existing Term Loans, the effective annual interest rate of this $600.0 million is approximately 3.83%. Prior to the phase-out of LIBOR as a referenced rate on June 30, 2023, the fixed rate was 0.931% and the variable rate was linked to LIBOR, again to mirror the LIBOR linked variable interest payments for the Existing Term Loans. With the then 2.00% interest rate margin for the Existing Term Loans, the effective annual interest rate of the $600.0 million was 2.931% through June 30, 2023. The 2022 Swaps will expire on September 30, 2027.
At the inception of these instruments, the Company designated the 2022 Swaps as cash flow hedges. As of March 31, 2024, the Company recorded a derivative asset with a fair value of $42.2 million related to the 2022 Swaps. The balance of the derivative asset as of December 31, 2023 was $35.5 million.
No ineffectiveness has been identified on the 2022 Swaps and, therefore the change in fair value is recorded in stockholders’ equity as a component of accumulated other comprehensive loss. Amounts are reclassified from accumulated other comprehensive loss into interest expense on the consolidated statement of operations in the same period or periods during which the hedged transactions affect earnings.

(12) EARNINGS PER SHARE     
The following are computations of basic and diluted earnings per share (in thousands, except per share amounts):
Three Months Ended
 March 31,
 20242023
Numerator for basic and diluted earnings per share:
Net income$69,832 $72,401 
Denominator:
Weighted-average basic shares outstanding53,930 54,076 
Dilutive effect of outstanding stock awards283 328 
Dilutive shares outstanding54,213 54,404 
Basic earnings per share:$1.29 $1.34 
Diluted earnings per share:$1.29 $1.33 
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The Company included all outstanding performance awards and restricted stock awards in the calculation of diluted earnings per share except for as shown in the table below (in thousands):
 Three Months Ended March 31,
20242023
Antidilutive restricted stock awards3 2 
Performance stock awards for which performance criteria was not attained at reporting date160 116 

(13) ACCUMULATED OTHER COMPREHENSIVE LOSS
The changes in accumulated other comprehensive loss by component and related tax impacts for the three months ended March 31, 2024 were as follows (in thousands):
Foreign Currency Translation
Adjustments
Unrealized Loss on Available-For-Sale SecuritiesUnrealized Gain on Fair Value of Interest Rate HedgesUnrealized Loss on PensionTotal
Balance at January 1, 2024$(200,339)$(4)$25,891 $(887)$(175,339)
Other comprehensive (loss) income before reclassifications(9,150)(106)11,864 19 2,627 
Amounts reclassified out of accumulated other comprehensive loss  (5,114) (5,114)
Tax benefit (provision) 22 (1,822) (1,800)
Other comprehensive (loss) income(9,150)(84)4,928 19 (4,287)
Balance at March 31, 2024$(209,489)$(88)$30,819 $(868)$(179,626)
The amount realized in the consolidated statement of operations during the three months ended March 31, 2024 which was reclassified out of accumulated other comprehensive loss was as follows (in thousands):
Component of Accumulated Other Comprehensive LossThree Months Ended March 31, 2024Location
Unrealized Gain on Fair Value of Interest Rate Hedges$5,114 Interest expense, net of interest income

(14) STOCK-BASED COMPENSATION
Total stock-based compensation cost recognized for the three months ended March 31, 2024 and March 31, 2023 was $6.3 million and $6.0 million, respectively. The total income tax benefit recognized in the consolidated statements of operations from stock-based compensation expense for the three months ended March 31, 2024 and March 31, 2023 was $1.2 million and $1.0 million, respectively.
Restricted Stock Awards
The following table summarizes information about restricted stock awards for the three months ended March 31, 2024:
Restricted StockNumber of SharesWeighted Average
Grant-Date
Fair Value
Balance at January 1, 2024414,623 $114.02 
Granted86,523 173.18 
Vested(21,092)112.02 
Forfeited(6,690)128.70 
Balance at March 31, 2024473,364 $124.71 
As of March 31, 2024, there was $43.9 million of total unrecognized compensation cost arising from restricted stock awards. This cost is expected to be recognized over a weighted average period of 3.3 years. The total fair value of restricted stock vested during the three months ended March 31, 2024 and March 31, 2023 was $3.7 million and $2.1 million, respectively.
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Performance Stock Awards
Performance stock awards are subject to performance criteria established by the Compensation and Human Capital Committee of the Company’s Board of Directors prior to or at the date of grant. The performance stock awards are earned based on achieving certain revenue, Adjusted EBITDA Margin, Return on Invested Capital and Total Recordable Incident Rate targets. Performance stock awards include continued service conditions through vesting.
The following table summarizes information about performance stock awards for the three months ended March 31, 2024:
Performance StockNumber of SharesWeighted Average
Grant-Date
Fair Value
Balance at January 1, 2024181,284 $114.10 
Granted77,476 172.76 
Vested(19,589)104.31 
Forfeited(1,275)127.75 
Balance at March 31, 2024237,896 $133.94 
As of March 31, 2024, there was $7.4 million of total unrecognized compensation cost arising from performance stock awards deemed probable of vesting. The total fair value of performance awards vested during the three months ended March 31, 2024 and March 31, 2023 was $3.7 million and $7.8 million, respectively.

(15) COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are subject to legal proceedings and claims arising in the ordinary course of business. Actions filed against the Company arise from commercial and employment-related claims including alleged class actions related to sales practices and wage and hour claims. The plaintiffs in these actions may be seeking damages or injunctive relief or both. These actions are in various jurisdictions and stages of proceedings, and some are covered in part by insurance. In addition, the Company’s waste management services operations are regulated by federal, state, provincial and local laws enacted to regulate discharge of materials into the environment, remediation of contaminated soil and groundwater or otherwise protect the environment. This ongoing regulation results in the Company frequently becoming a party to legal or administrative proceedings involving all levels of government authorities and other interested parties. The issues involved in such proceedings generally relate to alleged violations of existing permits and licenses or alleged responsibility under federal or state Superfund laws to remediate contamination at properties owned either by the Company or by other parties (“third-party sites”) to which either the Company or the prior owners of certain of the Company’s facilities shipped waste.
At March 31, 2024 and December 31, 2023, the Company had recorded reserves of $28.5 million and $32.4 million, respectively, for actual or probable liabilities related to the legal and administrative proceedings in which the Company was then involved, the principal of which are described below. As of March 31, 2024 and December 31, 2023, the $28.5 million and $32.4 million, respectively, of reserves consisted of (i) $23.6 million and $25.0 million, respectively, related to pending legal or administrative proceedings, including Superfund liabilities, which were included in remedial liabilities on the consolidated balance sheets, and (ii) $4.9 million and $7.4 million, respectively, primarily related to federal, state and provincial enforcement actions, which were included in accrued expenses on the consolidated balance sheets.
In management’s opinion, it is not reasonably possible that the potential liability beyond what has been recorded, if any, that may result from these actions, either individually or collectively, will have a material effect on the Company’s financial position, results of operations or cash flows. The Company periodically adjusts the aggregate amount of these reserves when actual or probable liabilities are paid or otherwise discharged, new claims arise, or additional relevant information about existing or probable claims becomes available.
Legal or Administrative Proceedings
As of March 31, 2024, the principal legal and administrative proceedings in which the Company was involved, or which had been terminated during 2024, relate to Safety-Kleen product liability cases and Superfund proceedings.
Safety-Kleen Product Liability Cases: Safety-Kleen, Inc. (“Safety-Kleen”), which is a legal entity acquired by the Company in 2012, has been named as a defendant in certain product liability cases that are currently pending in various courts and jurisdictions throughout the United States. As of March 31, 2024, there were approximately 70 proceedings (excluding cases which have been settled but not formally dismissed) wherein persons claim personal injury resulting from the use of Safety-Kleen’s parts cleaning
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equipment or cleaning products. These proceedings typically involve allegations that the solvent used in Safety-Kleen’s parts cleaning equipment contains contaminants and/or that Safety-Kleen’s recycling process does not effectively remove the contaminants that become entrained in the solvent during their use. In addition, certain claimants assert that Safety-Kleen failed to warn adequately the product user of potential risks, including a historic failure to warn that solvent contains trace amounts of toxic or hazardous substances such as benzene.
The Company maintains insurance that it believes will provide coverage for these product liability claims (over amounts accrued for self-insured retentions and deductibles in certain limited cases), except for punitive damages to the extent not insurable under state law or excluded from insurance coverage. The Company historically has vigorously defended, and intends to continue to vigorously defend, itself and the safety of its products against all of these claims. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. Consequently, the Company is unable to ascertain the ultimate aggregate amount of monetary liability or financial impact with respect to these matters as of March 31, 2024. From January 1, 2024 to March 31, 2024, four product liability claims were settled or dismissed. Due to the nature of these claims and the related insurance, the Company did not incur any expense as insurance provided coverage in full for all such claims. Safety-Kleen may be named in similar, additional lawsuits in the future, including claims for which insurance coverage may not be available.
Superfund Proceedings: The Company has been notified that either the Company (which, since December 28, 2012, has included Safety-Kleen) or the prior owners of certain of the Company’s facilities for which the Company may have certain indemnification obligations have been identified as potentially responsible parties (“PRPs”) or potential PRPs in connection with 131 sites which are subject to or are proposed to become subject to proceedings under federal or state Superfund laws. Of the 131 Superfund related sites, six involve facilities that are now owned or leased by the Company and 125 involve third-party sites to which either the Company or the prior owners of certain of the Company’s facilities shipped waste. Of the 125 third-party sites, 30 are now settled, 13 are currently requiring expenditures on remediation and 82 are not currently requiring expenditures on remediation.
In connection with each site, the Company has estimated the extent, if any, to which it may be subject, either directly or as a result of any indemnification obligations, for cleanup and remediation costs, related legal and consulting costs associated with PRP investigations, settlements and related legal and administrative proceedings. The amount of such actual and potential liability is inherently difficult to estimate because of, among other relevant factors, uncertainties as to the legal liability (if any) of the Company or the prior owners of certain of the Company’s facilities to contribute a portion of the cleanup costs, the assumptions that must be made in calculating the estimated cost and timing of remediation, the identification of other PRPs and their respective capability and obligation to contribute to remediation efforts and the existence and legal standing of indemnification agreements (if any) with prior owners, which may either benefit the Company or subject the Company to potential indemnification obligations. The Company believes its potential monetary liability could exceed $1.0 million at three of the 131 Superfund related sites.
Of the 125 third-party sites at which the Company has been notified it is a PRP or potential PRP or may have indemnification obligations, the Company has indemnification agreements at a total of 17 sites. These agreements indemnify the Company (which now includes Safety-Kleen) with respect to any liability at the 17 sites for waste disposed prior to the Company’s (or Safety-Kleen’s) acquisition of the former subsidiaries of Waste Management, Inc. and McKesson Corporation which had shipped waste to those sites. Accordingly, the indemnifying parties are paying all costs of defending those subsidiaries in those 17 cases, including legal fees and settlement costs. However, there can be no guarantee that the Company’s ultimate liabilities for those sites will not exceed the amount recorded or that indemnities applicable to any of these sites will be available to pay all or a portion of related costs. Except for those indemnification agreements discussed, the Company does not have an indemnity agreement with respect to any of the 125 third-party sites discussed above.
Federal, State and Provincial Enforcement Actions
From time to time, the Company pays fines or penalties in regulatory proceedings relating primarily to waste treatment, storage or disposal facilities. As of March 31, 2024 and December 31, 2023 there were no proceedings for which the Company believes it is possible that the sanctions could equal or exceed $1.0 million. The Company believes that the fines or other penalties in this or any of the other regulatory proceedings will, individually or in the aggregate, not have a material effect on its financial condition, results of operations or cash flows.

(16) SEGMENT REPORTING 
Segment reporting is prepared on the same basis that the Company’s chief operating decision maker, which is a committee comprised of the Company’s Co-Chief Executive Officers, manages the business, makes operating decisions and assesses performance. The Company is managed and reports as two operating segments; (i) the Environmental Services segment and (ii) the Safety-Kleen Sustainability Solutions segment.
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Third-party revenue is revenue billed to outside customers by a particular segment. Direct revenue is revenue allocated to the segment providing the product or service. Intersegment revenues represent the sharing of third-party revenues among the segments based on products and services provided by each segment as if the products and services were sold directly to the third-party. The intersegment revenues are shown net. The operations not managed through the Company’s operating segments described above are recorded as “Corporate Items.”
The following tables reconcile third-party revenues to direct revenues for the three months ended March 31, 2024 and 2023 (in thousands):
Three Months EndedThree Months Ended
March 31, 2024March 31, 2023
Third-Party RevenuesIntersegment Revenues (Expenses), netDirect RevenuesThird-Party RevenuesIntersegment Revenues (Expenses), netDirect Revenues
Environmental Services$1,161,279 $11,231 $1,172,510 $1,060,982 $9,759 $1,070,741 
Safety-Kleen Sustainability Solutions215,314 (11,231)204,083 246,298 (9,759)236,539 
Corporate Items102 — 102 107 — 107 
Total$1,376,695 $— $1,376,695 $1,307,387 $— $1,307,387 
The primary financial measure by which the Company evaluates the performance of its segments is Adjusted EBITDA, which consists of 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. Transactions between the segments are accounted for at the Company’s best estimate based on similar transactions with outside customers.
The following table presents Adjusted EBITDA information used by management by reported segment (in thousands):
 Three Months Ended
March 31,
 20242023
Adjusted EBITDA:
Environmental Services$264,475 $228,345 
Safety-Kleen Sustainability Solutions29,700 41,463 
Corporate Items(64,080)(54,670)
Total230,095 215,138 
Reconciliation to Consolidated Statements of Operations:
Accretion of environmental liabilities3,217 3,407 
Stock-based compensation6,338 6,018 
Depreciation and amortization95,065 84,758 
Income from operations125,475 120,955 
Other expense (income), net
1,141 (116)
Loss on early extinguishment of debt
 2,362 
Interest expense, net of interest income28,539 20,632 
Income before provision for income taxes$95,795 $98,077 

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
Forward-Looking Statements 
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.
Overview
We are North America’s leading provider of environmental and industrial services, supporting our customers in finding environmentally responsible solutions to further their sustainability goals in today’s world. Everywhere industry meets the environment, we strive to provide eco-friendly products and services that protect and restore North America’s natural environment. We believe we operate, in the aggregate, the largest number of hazardous waste incinerators, landfills and treatment, storage and disposal facilities (“TSDFs”) in North America. We serve over 300,000 customers, including the majority of Fortune 500 companies, across various markets including chemical and manufacturing, as well as numerous government agencies. These customers rely on us to safely deliver a broad range of services including but not limited to end-to-end hazardous waste management, emergency response, industrial cleaning and maintenance and recycling services. We are also a leading provider of parts cleaning and related environmental services to general manufacturing, automotive and commercial customers in North America and the largest re-refiner and recycler of used oil in North America, offering a unique closed-loop re-refining process that helps customers achieve their sustainability goals.
Performance of our segments is evaluated on several factors of which the primary financial measure is Adjusted EBITDA, which is reconciled to our net income and described more fully below. The following is a discussion of how management evaluates its segments using other factors, including key performance indicators that management uses to assess the segments’ results, as well as certain macroeconomic trends and influences that impact each reportable segment:
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.
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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.
Highlights
Total direct revenues for the three months ended March 31, 2024 were $1,376.7 million, compared with $1,307.4 million for the three months ended March 31, 2023. Our Environmental Services segment direct revenues increased $101.8 million or 9.5% from the comparable period in 2023 driven by growth across our service offerings and contributions from the recent acquisitions of Thompson Industrial and HEPACO. In the three months ended March 31, 2024, our SKSS segment direct revenues decreased $32.5 million or 13.7% from the comparable period in 2023, due to lower base oil product revenues resulting from market-driven pricing, partially offset by higher revenue from blended oil product sales and the collection of used motor oil.
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%.
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.”
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.
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Segment Performance
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):
 Summary of Operations
 Three Months Ended
 March 31, 2024March 31, 2023Change% Change
Direct Revenues (1):
Environmental Services$1,172,510$1,070,741$101,7699.5%
Safety-Kleen Sustainability Solutions204,083236,539(32,456)(13.7)
Corporate Items102107(5)N/M
Total1,376,6951,307,38769,3085.3
Cost of Revenues (2):
  
Environmental Services812,898753,36059,5387.9
Safety-Kleen Sustainability Solutions154,887175,857(20,970)(11.9)
Corporate Items3,2852,297988N/M
Total971,070931,51439,5564.2
Selling, General & Administrative Expenses:  
Environmental Services95,13789,0366,1016.9
Safety-Kleen Sustainability Solutions19,49619,2192771.4
Corporate Items67,23558,4988,73714.9
Total181,868166,75315,1159.1
Adjusted EBITDA:  
Environmental Services264,475228,34536,13015.8
Safety-Kleen Sustainability Solutions29,70041,463(11,763)(28.4)
Corporate Items (64,080)(54,670)(9,410)(17.2)
Total$230,095$215,138$14,9577.0%
Adjusted EBITDA as a % of Direct Revenues:
Environmental Services (3)
22.6 %21.3 %1.3 %
Safety-Kleen Sustainability Solutions(3)
14.6 %17.5 %(2.9)%
Corporate Items (4)
(4.7)%(4.2)%(0.5)%
Total16.7 %16.5 %0.2 %
_____________________
N/M = not meaningful
(1)Direct revenues are revenues allocated to the segment performing the provided service.
(2)Cost of revenues are shown exclusive of items presented separately on the consolidated statements of operations which consist of (i) accretion of environmental liabilities and (ii) depreciation and amortization.
(3)Calculated as a percentage of individual segment direct revenue.
(4)Calculated as a percentage of total Company revenue.
22

Direct Revenues
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.
Environmental Services     
Three Months Ended
March 31,2024 over 2023
(in thousands, except percentages)20242023Change% Change
Direct revenues$1,172,510 $1,070,741 $101,769 9.5 %
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 $15.4 million from the comparable period in 2023 driven by incremental revenue from the HEPACO acquisition along with overall growth in core service offerings.
Safety-Kleen Sustainability Solutions
Three Months Ended
March 31,2024 over 2023
(in thousands, except percentages)20242023Change% Change
Direct revenues$