10-Q 1 clh-20220331.htm 10-Q clh-20220331
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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, 2022
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 "emerging 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 29, 2022 was 54,429,614.



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, 2022December 31, 2021
ASSETS(unaudited)
Current assets:
Cash and cash equivalents$339,584 $452,575 
Short-term marketable securities75,364 81,724 
Accounts receivable, net of allowances aggregating $45,373 and $40,140, respectively
900,273 792,734 
Unbilled accounts receivable123,945 94,963 
Inventories and supplies264,733 250,692 
Prepaid expenses and other current assets103,349 68,483 
Total current assets1,807,248 1,741,171 
Property, plant and equipment, net1,881,542 1,863,175 
Other assets:
Operating lease right-of-use assets156,811 161,797 
Goodwill1,221,399 1,227,042 
Permits and other intangibles, net633,445 644,912 
Other25,812 15,602 
Total other assets2,037,467 2,049,353 
Total assets$5,726,257 $5,653,699 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt$17,535 $17,535 
Accounts payable394,152 359,866 
Deferred revenue90,116 83,749 
Accrued expenses and other current liabilities338,835 391,414 
Current portion of closure, post-closure and remedial liabilities26,393 25,136 
Current portion of operating lease liabilities47,108 47,614 
Total current liabilities914,139 925,314 
Other liabilities:
Closure and post-closure liabilities, less current portion of $7,808 and $12,015, respectively
92,891 87,088 
Remedial liabilities, less current portion of $18,585 and $13,121, respectively
106,144 98,752 
Long-term debt, less current portion2,513,944 2,517,024 
Operating lease liabilities, less current portion113,059 117,991 
Deferred tax liabilities312,668 314,853 
Other long-term liabilities80,175 78,790 
Total other liabilities3,218,881 3,214,498 
Commitments and contingent liabilities (See Note 16)
Stockholders’ equity:
Common stock, $0.01 par value:
Authorized 80,000,000 shares; issued and outstanding 54,414,189 and 54,419,321 shares, respectively
544 544 
Additional paid-in capital536,564 536,377 
Accumulated other comprehensive loss(162,163)(196,012)
Accumulated earnings1,218,292 1,172,978 
Total stockholders’ equity1,593,237 1,513,887 
Total liabilities and stockholders’ equity$5,726,257 $5,653,699 

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,
20222021
Revenues:
Service revenues$942,061 $662,708 
Product revenues227,048 145,440 
Total revenues1,169,109 808,148 
Cost of revenues: (exclusive of items shown separately below)
Service revenues693,424 450,338 
Product revenues149,965 110,198 
Total cost of revenues843,389 560,536 
Selling, general and administrative expenses151,173 121,641 
Accretion of environmental liabilities3,156 2,953 
Depreciation and amortization84,298 72,163 
Income from operations87,093 50,855 
Other income (expense), net704 (1,228)
Interest expense, net of interest income of $493 and $479, respectively
(25,017)(17,918)
Income before provision for income taxes62,780 31,709 
Provision for income taxes17,466 9,973 
Net income$45,314 $21,736 
Earnings per share:
Basic$0.83 $0.40 
Diluted$0.83 $0.39 
Shares used to compute earnings per share - Basic54,408 54,723 
Shares used to compute earnings per share - Diluted54,672 55,043 

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,
 20222021
Net income$45,314 $21,736 
Other comprehensive income, net of tax:
Unrealized loss on available-for-sale securities(528)(74)
Unrealized gain on interest rate hedge24,681 3,108 
Reclassification adjustment for losses on interest rate hedge included in net income3,194 2,448 
Unfunded pension liability(10) 
Foreign currency translation adjustments6,512 6,466 
Other comprehensive income, net of tax33,849 11,948 
Comprehensive income$79,163 $33,684 

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,
20222021
Cash flows (used in) from operating activities:
Net income$45,314 $21,736 
Adjustments to reconcile net income to net cash (used in) from operating activities:
Depreciation and amortization84,298 72,163 
Allowance for doubtful accounts3,619 2,446 
Amortization of deferred financing costs and debt discount1,561 900 
Accretion of environmental liabilities3,156 2,953 
Changes in environmental liability estimates312 275 
Deferred income taxes2,226 (39)
Other (income) expense, net(704)1,228 
Stock-based compensation5,712 3,480 
Environmental expenditures(3,615)(3,011)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable and unbilled accounts receivable(138,690)(9,703)
Inventories and supplies(13,610)(747)
Other current and non-current assets(32,924)(9,956)
Accounts payable43,001 22,179 
Other current and long-term liabilities(38,285)(904)
Net cash (used in) from operating activities(38,629)103,000 
Cash flows used in investing activities:
Additions to property, plant and equipment(70,308)(41,913)
Proceeds from sale and disposal of fixed assets1,320 1,204 
Acquisitions, net of cash acquired5,000 (22,918)
Additions to intangible assets including costs to obtain or renew permits(321)(505)
Proceeds from sale of available-for-sale securities10,450 20,375 
Purchases of available-for-sale securities(5,002)(42,980)
Net cash used in investing activities(58,861)(86,737)
Cash flows used in financing activities:
Change in uncashed checks(2,295)(6,662)
Tax payments related to withholdings on vested restricted stock(1,831)(3,719)
Repurchases of common stock(3,694)(26,546)
Deferred financing costs paid(291)(137)
Payments on finance leases(3,585)(1,672)
Principal payments on debt(4,384)(1,884)
Net cash used in financing activities(16,080)(40,620)
Effect of exchange rate change on cash579 1,639 
Decrease in cash and cash equivalents(112,991)(22,718)
Cash and cash equivalents, beginning of period452,575 519,101 
Cash and cash equivalents, end of period$339,584 $496,383 
Supplemental information:
Cash payments for interest and income taxes:
Interest paid$33,697 $27,507 
Income taxes paid, net of refunds3,121 3,599 
Non-cash investing activities:
Property, plant and equipment accrued11,397 5,108 
Remedial liability assumed in acquisition of property, plant and equipment13,073  
ROU assets obtained in exchange for operating lease liabilities7,342 2,305 
ROU assets obtained in exchange for finance lease liabilities4,679 9,205 
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
Accumulated
Earnings
Total
Stockholders’
Equity
Balance at January 1, 202254,419 $544 $536,377 $(196,012)$1,172,978 $1,513,887 
Net income— — — — 45,314 45,314 
Other comprehensive income— — — 33,849 — 33,849 
Stock-based compensation— — 5,712 — — 5,712 
Issuance of common stock for restricted share vesting, net of employee tax withholdings36 — (1,831)— — (1,831)
Repurchases of common stock(41)— (3,694)— — (3,694)
Balance at March 31, 202254,414 $544 $536,564 $(162,163)$1,218,292 $1,593,237 



Common StockAccumulated
Other
Comprehensive Loss
Number
of
Shares
$0.01
Par
Value
Additional
Paid-in
Capital
Accumulated
Earnings
Total
Stockholders’
Equity
Balance at January 1, 202154,773 $548 $582,749 $(211,477)$969,731 $1,341,551 
Net income— — — — 21,736 21,736 
Other comprehensive income— — — 11,948 — 11,948 
Stock-based compensation— — 3,480 — — 3,480 
Issuance of common stock for restricted share vesting, net of employee tax withholdings78 1 (3,720)— — (3,719)
Repurchases of common stock(300)(3)(26,543)— — (26,546)
Balance at March 31, 202154,551 $546 $555,966 $(199,529)$991,467 $1,348,450 

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 (the “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, 2021.

(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, 2021. There have been no material changes in these policies or their application.

(3) REVENUES
The Company’s third-party revenues are disaggregated 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. 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 customer and include prices based upon units of volume of waste, and 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 incineration, 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.
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, large remediation projects, demolition, spill cleanup on land and water, railcar cleaning, hydro excavation, manhole/vault clean outs, product recovery and transfer and vacuum services. Additional services include filtration and water treatment services. Response services for environmental emergencies of any scale range from man-made disasters such as oil spills to natural disasters such as hurricanes. Emergency response services also include contagion disinfection, decontamination and disposal services most recently in response to the COVID-19 pandemic. 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
6

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.
Industrial Services and Other—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, mines, upgraders, chemical plants, pulp and paper mills, manufacturing facilities, power generation facilities 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.
Safety-Kleen Environmental Services—Safety-Kleen Environmental Services revenues contribute both to the Environmental Services operating segment and the Safety-Kleen Sustainability Solutions 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 Safety-Kleen Sustainability Solutions 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 our 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.
Safety-Kleen Oil—Safety-Kleen Oil related sales contribute to the revenues of the Safety-Kleen Sustainability Solutions 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.
7

The following tables present the Company's third-party revenue disaggregated by source of revenue and geography (in thousands):
For the Three Months Ended March 31, 2022
Environmental ServicesSafety-Kleen Sustainability SolutionsCorporateTotal
Primary Geographical Markets
United States$834,678 $202,530 $72 $1,037,280 
Canada106,120 25,709  131,829 
Total third-party revenues$940,798 $228,239 $72 $1,169,109 
Sources of Revenue
Technical Services$323,656 $ $ $323,656 
Field and Emergency Response Services (1)
132,359   132,359 
Industrial Services and Other (2)
308,838  72 308,910 
Safety-Kleen Environmental Services175,945 44,388  220,333 
Safety-Kleen Oil 183,851  183,851 
Total third-party revenues$940,798 $228,239 $72 $1,169,109 
_____________
(1) Includes approximately $28.0 million of third-party revenues from the operations of the HydroChemPSC business
(2) Includes approximately $156.1 million of third-party revenues from the operations of the HydroChemPSC business
For the Three Months Ended March 31, 2021
Environmental ServicesSafety-Kleen Sustainability SolutionsCorporateTotal
Primary Geographical Markets
United States$575,508 $138,990 $79 $714,577 
Canada77,370 16,201  93,571 
Total third-party revenues$652,878 $155,191 $79 $808,148 
Sources of Revenue
Technical Services$272,040 $ $ $272,040 
Field and Emergency Response Services105,168   105,168 
Industrial Services and Other119,810  79 119,889 
Safety-Kleen Environmental Services155,860 38,978  194,838 
Safety-Kleen Oil 116,213  116,213 
Total third-party revenues$652,878 $155,191 $79 $808,148 
Contract Balances
(in thousands)March 31, 2022December 31, 2021
Receivables$900,273 $792,734 
Contract assets (unbilled receivables)123,945 94,963 
Contract liabilities (deferred revenue)90,116 83,749 
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. Contract assets 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 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 were generally fully recognized in the subsequent three-month period.
8

(4) BUSINESS COMBINATIONS
2021 Acquisitions
On October 8, 2021, the Company completed the acquisition of LJ Energy Services Intermediate Holding Corp. and its subsidiaries (collectively, “HydroChemPSC”), a privately-owned company, for an all-cash purchase price of approximately $1.23 billion. HydroChemPSC is a leading U.S. provider of industrial cleaning, specialty maintenance and utilities services. These operations enhance and have been integrated into the Company's Environmental Services segment. During the three months ended March 31, 2022, the Company received $5.0 million after finalizing the acquisition date working capital balances, which decreased the overall purchase price.
The allocation of the purchase price was based on estimates of the fair value of assets acquired and liabilities assumed as of October 8, 2021. The Company continues to obtain information to complete the valuation of these balances and the associated income tax accounting. Measurement period adjustments reflect new information obtained about facts and circumstances that existed as of the acquisition date, including the adjustment for the monies received for the working capital finalization noted above. The components and allocation of the purchase price consist of the following amounts (in thousands):
At Acquisition Date As Reported December 31, 2021Measurement Period Adjustments
At Acquisition Date
As Reported March 31, 2022
Accounts receivable, including unbilled receivables$131,924 $(319)$131,605 
Inventories and supplies3,162 — 3,162 
Prepaid expenses and other current assets16,016 268 16,284 
Property, plant and equipment313,540 — 313,540 
Other intangibles289,000 — 289,000 
Operating lease right-of-use assets34,347 68 34,415 
Other non-current assets1,045 (2)1,043 
Current liabilities(115,704)(818)(116,522)
Current portion of operating lease liabilities(11,659)382 (11,277)
Operating lease liabilities, less current portion(26,128)(216)(26,344)
Deferred tax liabilities(85,908)2,436 (83,472)
Other long-term liabilities(2,685)(242)(2,927)
Total identifiable net assets546,950 1,557 548,507 
Goodwill (i)
683,463 (6,557)676,906 
Total purchase price$1,230,413 $(5,000)$1,225,413 
_____________
(i) Goodwill represents the excess of the fair value of the net assets acquired over the purchase price. Goodwill of $676.9 million was assigned to the Environmental Sales & Service reporting unit and is attributable to the future economic benefits arising from the acquired operations, synergies and the acquired workforce of HydroChemPSC. None of the goodwill related to this acquisition will be deductible for tax purposes.
HydroChemPSC's results of operations have been included in the Company's financial statements for the period subsequent to the completion of the acquisition on October 8, 2021. The following unaudited supplemental pro-forma data presents consolidated information as if the acquisition had occurred on January 1, 2021 (in thousands):
Three months ended March 31, 2021
Pro forma combined revenues$986,188 
Pro forma combined net income27,552 
The pro forma results do not include any costs incurred directly attributable to the acquisition of HydroChemPSC. The pro forma results do reflect impacts resulting from the issuance of $1.0 billion senior secured term loans issued in connection with the acquisition assuming interest rates in effect at the time of the acquisition.
9

This pro forma financial information is not necessarily indicative of the Company's consolidated operating results that would have been reported had the transactions been completed as described herein, nor is such information necessarily indicative of the Company's consolidated results for any future period. Interest expense used in calculating the pro forma net income did not contemplate the interest rate swap that the Company put in place in early 2022.
In addition to the HydroChemPSC acquisition, on March 27, 2021, the Company acquired a privately-owned business for $22.8 million cash consideration. The acquired company increases the Safety-Kleen Sustainability Solutions segment's network within the south central United States. In connection with this acquisition, a final goodwill amount of $16.3 million was recognized.
(5) INVENTORIES AND SUPPLIES
Inventories and supplies consisted of the following (in thousands):
March 31, 2022December 31, 2021
Oil and oil related products$105,011 $101,965 
Supplies136,031 126,602 
Solvent and solutions9,141 8,099 
Other14,550 14,026 
Total inventories and supplies$264,733 $250,692 
Supplies inventories consist primarily of critical spare parts to support the Company's incinerator and re-refinery operations, personal protective equipment 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.

(6) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in thousands):
March 31, 2022December 31, 2021
Land$174,480 $165,010 
Asset retirement costs (non-landfill)19,154 19,105 
Landfill assets208,481 205,873 
Buildings and improvements (1)
568,493 551,795 
Camp equipment129,304 127,680 
Vehicles (2)
926,148 912,836 
Equipment (3)
2,116,923 2,092,395 
Furniture and fixtures6,390 6,444 
Construction in progress75,578 60,447 
4,224,951 4,141,585 
Less - accumulated depreciation and amortization2,343,409 2,278,410 
Total property, plant and equipment, net$1,881,542 $1,863,175 
________________
(1) Balances inclusive of gross right-of-use ("ROU") assets classified as finance leases of $8.0 million and $8.9 million respectively.
(2) Balances inclusive of gross ROU assets classified as finance leases of $82.4 million and $77.7 million, respectively.
(3) Balances inclusive of gross ROU assets classified as finance leases of $9.3 million in both periods.
Depreciation expense, inclusive of landfill and finance lease amortization, was $72.1 million and $64.6 million for the three months ended March 31, 2022 and 2021, respectively.

10

(7) GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in goodwill by segment for the three months ended March 31, 2022 were as follows (in thousands):
Environmental ServicesSafety-Kleen Sustainability SolutionsTotals
Balance at January 1, 2022$1,085,534 $141,508 $1,227,042 
Measurement period adjustments from prior period acquisitions(6,557) (6,557)
Foreign currency translation671 243 914 
Balance at March 31, 2022$1,079,648 $141,751 $1,221,399 
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, 2022, no such triggering events were identified.
As of March 31, 2022 and December 31, 2021, the Company's intangible assets consisted of the following (in thousands):
March 31, 2022December 31, 2021
CostAccumulated
Amortization
NetCostAccumulated
Amortization
Net
Permits$188,204 $104,586 $83,618 $187,519 $102,408 $85,111 
Customer and supplier relationships
577,017 222,560 354,457 576,474 214,776 361,698 
Other intangible assets
94,357 22,340 72,017 94,271 19,359 74,912 
Total amortizable permits and other intangible assets
859,578 349,486 510,092 858,264 336,543 521,721 
Trademarks and trade names
123,353 — 123,353 123,191 — 123,191 
Total permits and other intangible assets
$982,931 $349,486 $633,445 $981,455 $336,543 $644,912 
Amortization expense of permits, customer and supplier relationships and other intangible assets was $12.2 million and $7.6 million in the three months ended March 31, 2022 and 2021, respectively.
The expected amortization of the net carrying amount of finite-lived intangible assets at March 31, 2022 was as follows (in thousands):
Years Ending December 31,Expected Amortization
2022 (nine months)$36,803 
202344,826 
202439,342 
202538,132 
202636,328 
Thereafter314,661 
$510,092 

(8) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following (in thousands):
March 31, 2022December 31, 2021
Accrued insurance$99,819 $102,853 
Accrued interest9,271 19,785 
Accrued compensation and benefits101,486 133,604 
Accrued income, real estate, sales and other taxes42,758 29,954 
Interest rate swap liability1,622 17,383 
Accrued other83,879 87,835 
$338,835 $391,414 

11

(9) CLOSURE AND POST-CLOSURE LIABILITIES
The changes to closure and post-closure liabilities (also referred to as “asset retirement obligations”) from January 1, 2022 through March 31, 2022 were as follows (in thousands):
Landfill
Retirement
Liability
Non-Landfill
Retirement
Liability
Total
Balance at January 1, 2022$53,425 $45,678 $99,103 
New asset retirement obligations891  891 
Accretion1,129 982 2,111 
Changes in estimates recorded to consolidated statement of operations 53 53 
Changes in estimates recorded to consolidated balance sheet 37 37 
Expenditures(1,604)(27)(1,631)
Currency translation and other98 37 135 
Balance at March 31, 2022$53,939 $46,760 $100,699 
In the three months ended March 31, 2022, there were no significant charges or benefits resulting from changes in estimates for closure and post-closure liabilities.
New asset retirement obligations incurred during the first three months of 2022 were discounted at the credit-adjusted risk-free rate of 5.37%.

(10) REMEDIAL LIABILITIES 
The changes to remedial liabilities from January 1, 2022 through March 31, 2022 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, 2022$1,780 $59,787 $50,306 $111,873 
Liability assumed in acquisition of real estate  13,073 13,073 
Measurement period adjustment from a prior period acquisition  242 242 
Accretion21 624 400 1,045 
Changes in estimates recorded to consolidated statement of operations1 190 68 259 
Expenditures(12)(721)(1,251)(1,984)
Currency translation and other 10 211 221 
Balance at March 31, 2022$1,790 $59,890 $63,049 $124,729 
In the three months ended March 31, 2022, there were no significant benefits or charges resulting from changes in estimates for remedial liabilities. The $13.1 million liability assumed in acquisition relates to real estate that the Company acquired in 2022. In purchasing the property, the Company assumed a known associated remedial liability, which was contemplated in the purchase price.

12

(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, 2022December 31, 2021
Secured senior term loans$17,535 $17,535 
Long-Term Debt:
Secured senior term loans due June 30, 2024 ("2024 Term Loans")$710,207 $712,091 
Secured senior term loans due October 8, 2028 ("2028 Term Loans")987,500 990,000 
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 
Long-term debt, at par$2,542,707 $2,547,091 
Unamortized debt issuance costs and discount, net(28,763)(30,067)
Long-term debt, at carrying value$2,513,944 $2,517,024 
Financing Activities
As of March 31, 2022 and December 31, 2021, the estimated fair value of the Company’s outstanding long-term debt, including the current portion, was $2.5 billion and $2.6 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 quotations or alternative pricing sources with reasonable levels of price transparency for similar assets and liabilities.
The Company maintains a $400.0 million revolving credit facility under which the Company had no outstanding loan balances as of March 31, 2022 and December 31, 2021. As of March 31, 2022, the Company had $290.3 million available to borrow under the revolving credit facility and outstanding letters of credit were $109.7 million. Subject to certain conditions, this credit facility will expire in October 2025.
Cash Flow Hedges
The Company’s strategy to hedge against fluctuations in variable interest rates involves entering into interest rate derivative agreements.
Although the interest rates on the Term Loans are variable, the Company has effectively fixed the interest rate on $350.0 million principal of the outstanding 2024 Term Loans by entering into interest rate swap agreements in 2018 with a notional amount of $350.0 million ("2018 Swaps"). Under the terms of the 2018 Swaps, the Company receives interest based on the one-month LIBOR index and pays interest at a weighted average rate of approximately 2.92%, resulting in a fixed effective annual interest rate of approximately 4.67%.
In January 2022, the Company entered into interest rate swap agreements ("2022 Swaps") with a notional amount of $600.0 million to effectively fix the interest rate on $600.0 million principal of the outstanding 2028 Term Loans. Under the terms of the 2022 Swaps' agreements, the Company will receive interest based upon the variable rates on the 2028 Term Loans and pay a fixed amount of interest. The fixed rate on these instruments is 0.931% through June 30, 2023 and then increases to 1.9645% from July 1, 2023 through September 30, 2027. The variable rate on these instruments is designed to both mirror the current 2028 Term Loan interest payments and the successor rate upon the eventual sunsetting of the LIBOR rate. Under the terms of the 2022 Swaps, the Company currently receives interest based on one-month LIBOR index and pays interest at a weighted average rate of 0.931%, resulting in a fixed effective annual interest rate of approximately 2.931%.
The Company has designated both the 2018 Swaps and the 2022 Swaps (collectively referred to as the “Swaps”) as cash flow hedges. The Company recognizes the fair value of the derivative instruments by counterparty as either a net asset, included in Other Assets, or net liability, included in Accrued expenses and other current liabilities, on the consolidated balance sheets. As of March 31, 2022, the Company recorded a related derivative asset with a fair value of $16.6 million and a related derivative liability with a fair value of $1.6 million. As of December 31, 2021, the derivative liability totaled $17.4 million.
The fair value of the Swaps are measured using discounted cash flow valuation methodologies based upon the yield curves of the relevant variable rate indexes that are observable at commonly quoted intervals for the term of the Swaps and as such is considered a Level 2 measure according to the fair value hierarchy.
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No ineffectiveness has been identified on the 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) INCOME TAXES 
The Company records a tax provision or benefit on an interim basis using an estimated annual effective tax rate. This rate is applied to the current period ordinary income or loss to determine the income tax provision or benefit allocated to the interim period. Losses from jurisdictions for which no benefit can be recognized and the income tax effects of unusual or infrequent items are excluded from the estimated annual effective tax rate and are recognized in the impacted interim period. The estimated annual effective tax rate may be significantly impacted by projected earnings mix by tax jurisdiction. Adjustments to the estimated annual effective income tax rate are recognized in the period when such estimates are revised. The Company’s effective tax rate for the three months ended March 31, 2022 was 27.8%, compared to 31.5%, respectively, for the comparable period in 2021.
As of March 31, 2022 and December 31, 2021, the Company had recorded $3.7 million and $5.5 million, respectively, of gross liabilities for unrecognized tax benefits and $1.9 million and $2.3 million, respectively, of accrued interest.
(13) 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,
 20222021
Numerator for basic and diluted earnings per share:
Net income$45,314 $21,736&