CLEAN HARBORS INC [CLH] Filings

10-Q 1 clh-20240930.htm 10-Q clh-20240930

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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 ENDED

SEPTEMBER 30, 2024

☐

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)

Massachusetts

04-2997780

(State or Other Jurisdiction of Incorporation or Organization)

(IRS Employer Identification No.)

42 Longwater Drive

Norwell

02061-9149

(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 class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

CLH

New 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 filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller 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 October 25, 2024 was 53,899,103.

CLEAN HARBORS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


			Page No.

PART I: FINANCIAL INFORMATION

ITEM 1: Unaudited Consolidated Financial Statements
Consolidated Balance Sheets			1
Unaudited Consolidated Statements of Operations			2
Unaudited Consolidated Statements of Comprehensive Income			3
Unaudited Consolidated Statements of Cash Flows			4
Unaudited Consolidated Statements of Stockholders’ Equity			5
Notes to Unaudited Consolidated Financial Statements			7

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations			24

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk			35

ITEM 4: Controls and Procedures			35

PART II: OTHER INFORMATION

ITEM 1: Legal Proceedings			37
ITEM 1A: Risk Factors			37
ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds			37
ITEM 3: Defaults Upon Senior Securities			37
ITEM 4: Mine Safety Disclosures			37
ITEM 5: Other Information			38
ITEM 6: Exhibits			38
Signatures			39

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CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)


	September 30, 2024		December 31, 2023
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	512,371	$	444,698
Short-term marketable securities	82,371		106,101
Accounts receivable, net of allowances aggregating $48,570 and $42,209, respectively	1,100,660		983,111
Unbilled accounts receivable	204,308		107,859
Inventories and supplies	376,564		327,511
Prepaid expenses and other current assets	78,204		82,939
Total current assets	2,354,478		2,052,219
Property, plant and equipment, net	2,452,312		2,193,318
Other assets:
Operating lease right-of-use assets	246,061		187,060
Goodwill	1,485,065		1,287,736
Permits and other intangibles, net	708,935		602,797
Other long-term assets	59,159		59,739
Total other assets	2,499,220		2,137,332
Total assets	$	7,306,010	$	6,382,869

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	15,102	$	10,000
Accounts payable	504,206		451,806
Deferred revenue	103,291		95,230
Accrued expenses and other current liabilities	398,236		397,157
Current portion of closure, post-closure and remedial liabilities	30,477		26,914
Current portion of operating lease liabilities	70,539		56,430
Total current liabilities	1,121,851		1,037,537
Other liabilities:
Closure and post-closure liabilities, less current portion of $14,203 and $13,556, respectively	105,375		105,044
Remedial liabilities, less current portion of $16,274 and $13,358, respectively	94,384		97,885
Long-term debt, less current portion	2,773,659		2,291,717
Operating lease liabilities, less current portion	179,040		131,743
Deferred tax liabilities	356,150		353,107
Other long-term liabilities	147,241		118,330
Total other liabilities	3,655,849		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 53,898,805 and 53,929,703 shares, respectively	539		539

Additional paid-in capital	438,904		459,728
Accumulated other comprehensive loss	(192,036)		(175,339)
Retained earnings	2,280,903		1,962,578
Total stockholders’ equity	2,528,310		2,247,506
Total liabilities and stockholders’ equity	$	7,306,010	$	6,382,869

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

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CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Revenues:
Service revenues	$	1,278,955	$	1,129,216	$	3,719,183	$	3,341,539
Product revenues	250,467		236,480		739,653		729,444
Total revenues	1,529,422		1,365,696		4,458,836		4,070,983
Cost of revenues: (exclusive of items shown separately below)
Service revenues	872,829		765,004		2,539,569		2,288,199
Product revenues	182,770		178,947		522,642		534,778
Total cost of revenues	1,055,599		943,951		3,062,211		2,822,977
Selling, general and administrative expenses	177,846		171,019		557,590		505,154
Accretion of environmental liabilities	3,618		3,388		10,139		10,281
Depreciation and amortization	100,063		92,970		295,632		267,425

Income from operations	192,296		154,368		533,264		465,146
Other (expense) income, net	(1,123)		334		(2,431)		(833)
Loss on early extinguishment of debt	—		—		—		(2,362)

Interest expense, net of interest income of $5,391, $2,877, $13,257, and $7,833, respectively	(35,779)		(29,696)		(100,767)		(80,400)
Income before provision for income taxes	155,394		125,006		430,066		381,551
Provision for income taxes	40,181		33,666		111,741		102,044
Net income	$	115,213	$	91,340	$	318,325	$	279,507
Earnings per share:
Basic	$	2.14	$	1.69	$	5.90	$	5.17
Diluted	$	2.12	$	1.68	$	5.87	$	5.14
Shares used to compute earnings per share - Basic	53,951		54,122		53,936		54,097
Shares used to compute earnings per share - Diluted	54,229		54,419		54,229		54,411

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

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CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Net income	$	115,213	$	91,340	$	318,325	$	279,507
Other comprehensive loss, net of tax:
Unrealized gain on available-for-sale securities	262		93		170		311
Unrealized (loss) gain on fair value of interest rate hedges	(9,361)		7,801		2,406		15,528
Reclassification adjustment for interest rate hedge amounts realized in net income	(3,806)		(3,650)		(11,260)		(12,704)
Reclassification adjustment for settlement of interest rate hedges	—		—		—		(5,905)

Pension adjustments	(10)		6		18		(1)
Foreign currency translation adjustments	5,369		(7,423)		(8,031)		813
Other comprehensive loss, net of tax	(7,546)		(3,173)		(16,697)		(1,958)
Comprehensive income	$	107,667	$	88,167	$	301,628	$	277,549

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

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CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Nine Months Ended
	September 30,
	2024		2023
Cash flows from operating activities:
Net income	$	318,325	$	279,507
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	295,632		267,425
Allowance for doubtful accounts	5,674		2,620
Amortization of deferred financing costs and debt discount	4,623		4,036
Accretion of environmental liabilities	10,139		10,281
Changes in environmental liability estimates	4,347		3,258
Deferred income taxes	(418)		(356)
Other expense, net	2,431		833
Stock-based compensation	20,690		14,809
Loss on early extinguishment of debt	—		2,362

Environmental expenditures	(19,679)		(24,064)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable and unbilled accounts receivable	(145,647)		(46,445)
Inventories and supplies	(39,673)		12,691
Other current and long-term assets	(47,826)		(18,190)
Accounts payable	30,004		(40,013)
Other current and long-term liabilities	35,211		(13,062)
Net cash from operating activities	473,833		455,692
Cash flows used in investing activities:
Additions to property, plant and equipment	(369,826)		(311,906)
Proceeds from sale and disposal of fixed assets	6,353		5,129
Acquisitions, net of cash acquired	(474,011)		(119,596)
Proceeds from sale of business	750		750
Additions to intangible assets including costs to obtain or renew permits	(2,545)		(1,507)
Purchases of available-for-sale securities	(73,682)		(104,329)
Proceeds from sale of available-for-sale securities	100,021		84,390
Net cash used in investing activities	(812,940)		(447,069)
Cash flows from (used in) financing activities:
Change in uncashed checks	(5,852)		3,004
Tax payments related to withholdings on vested restricted stock	(11,514)		(10,886)
Repurchases of common stock	(30,215)		(18,000)
Deferred financing costs paid	(8,316)		(6,371)

Payments on finance leases	(23,596)		(11,594)
Principal payments on debt	(11,327)		(621,475)
Proceeds from issuance of debt, net of discount	499,375		500,000
Borrowing from revolving credit facility	—		114,000
Payment on revolving credit facility	—		(114,000)
Net cash from (used in) financing activities	408,555		(165,322)
Effect of exchange rate change on cash	(1,775)		61
Increase (decrease) in cash and cash equivalents	67,673		(156,638)
Cash and cash equivalents, beginning of period	444,698		492,603
Cash and cash equivalents, end of period	$	512,371	$	335,965
Supplemental information:
Cash payments for interest and income taxes:
Interest paid	$	134,177	$	100,813
Income taxes paid, net of refunds	100,752		107,328
Non-cash investing activities:
Property, plant and equipment accrued	43,604		29,127

ROU assets obtained in exchange for operating lease liabilities	98,927		61,741
ROU assets obtained in exchange for finance lease liabilities	53,391		26,317

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

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CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)


	Common Stock						Accumulated Other Comprehensive Loss
	Number of Shares	$0.01 Par Value		Additional Paid-in Capital					Retained Earnings			Total Stockholders’ Equity
Balance at January 1, 2024	53,930	$	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 withholdings	23	—			(3,052)		—			—			(3,052)
Repurchases of common stock	(27)	—			(5,000)		—			—			(5,000)
Balance at March 31, 2024	53,926	539			458,014		(179,626)			2,032,410			2,311,337
Net income	—	—			—		—			133,280			133,280
Other comprehensive loss	—	—			—		(4,864)			—			(4,864)
Stock-based compensation	—	—			8,515		—			—			8,515
Issuance of common stock for restricted share vesting, net of employee tax withholdings	27	—			(1,547)		—			—			(1,547)
Repurchases of common stock	(23)	—			(5,000)		—			—			(5,000)
Balance at June 30, 2024	53,930	539			459,982		(184,490)			2,165,690			2,441,721
Net income	—	—			—		—			115,213			115,213
Other comprehensive loss	—	—			—		(7,546)			—			(7,546)
Stock-based compensation	—	—			5,837		—			—			5,837
Issuance of common stock for restricted share vesting, net of employee tax withholdings	54	1			(6,916)		—			—			(6,915)
Repurchases of common stock	(85)	(1)			(19,999)		—			—			(20,000)






Balance at September 30, 2024	53,899	$	539		$	438,904	$	(192,036)		$	2,280,903		$	2,528,310

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CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

(in thousands)


	Common Stock						Accumulated Other Comprehensive Loss
	Number of Shares	$0.01 Par Value		Additional Paid-in Capital					Retained Earnings			Total Stockholders’ Equity
Balance at January 1, 2023	54,065	$	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 withholdings	49	—			(3,351)		—			—			(3,351)
Repurchases of common stock	(22)	—			(3,000)		—			—			(3,000)
Balance at March 31, 2023	54,092	541			503,907		(181,527)			1,657,123			1,980,044

Net income	—	—			—		—			115,766			115,766
Other comprehensive income	—	—			—		15,561			—			15,561
Stock-based compensation	—	—			4,500		—			—			4,500
Issuance of common stock for restricted share vesting, net of employee tax withholdings	34	—			(984)		—			—			(984)
Repurchases of common stock	(36)	—			(5,001)		—			—			(5,001)
Balance at June 30, 2023	54,090	541			502,422		(165,966)			1,772,889			2,109,886
Net income	—	—			—		—			91,340			91,340
Other comprehensive loss	—	—			—		(3,173)			—			(3,173)
Stock-based compensation	—	—			4,291		—			—			4,291
Issuance of common stock for restricted share vesting, net of employee tax withholdings	71	1			(6,552)		—			—			(6,551)
Repurchases of common stock	(58)	(1)			(9,998)		—			—			(9,999)






Balance at September 30, 2023	54,103	$	541		$	490,163	$	(169,139)		$	1,864,229		$	2,185,794

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

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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 Company’s annual period beginning January 1, 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 requirements of this ASU are disclosure related and will not have an impact on the Company’s financial condition, results of operations, or cash flows. The Company is currently evaluating the impact of adopting this ASU on its reportable segment 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 requirements of this ASU are disclosure related and will not have an impact on the Company’s financial condition, results of operations, or cash flows. The Company is currently evaluating the impact of adopting this ASU on its income tax 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 with the year ended December 31, 2025. On April 4, 2024, the SEC voluntarily stayed implementation of the final rule to facilitate the orderly judicial resolution of pending legal challenges to the rule. The Company is currently monitoring the legal challenges and evaluating the final rule to determine its potential 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:

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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 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

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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.

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 September 30, 2024
	Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total
Primary Geographical Markets
United States	$	1,166,660	$	218,963	$	96	$	1,385,719
Canada	120,990		22,713		—		143,703
Total third-party revenues	$	1,287,650	$	241,676	$	96	$	1,529,422

Sources of Revenue
Technical Services	$	437,180	$	—	$	—	$	437,180
Industrial Services and Other	345,573		—		96		345,669
Field and Emergency Response Services	260,200		—		—		260,200
Safety-Kleen Environmental Services	244,697		59,675		—		304,372
Safety-Kleen Oil	—		182,001		—		182,001
Total third-party revenues	$	1,287,650	$	241,676	$	96	$	1,529,422


	Three Months Ended September 30, 2023
	Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total
Primary Geographical Markets
United States	$	1,017,224	$	206,860	$	112	$	1,224,196
Canada	118,055		23,445		—		141,500
Total third-party revenues	$	1,135,279	$	230,305	$	112	$	1,365,696

Sources of Revenue
Technical Services	$	403,889	$	—	$	—	$	403,889
Industrial Services and Other	350,251		—		112		350,363
Field and Emergency Response Services	155,046		—		—		155,046
Safety-Kleen Environmental Services	226,093		59,458		—		285,551
Safety-Kleen Oil	—		170,847		—		170,847
Total third-party revenues	$	1,135,279	$	230,305	$	112	$	1,365,696

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	Nine Months Ended September 30, 2024
	Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total
Primary Geographical Markets
United States	$	3,395,446	$	645,664	$	297	$	4,041,407
Canada	350,781		66,648		—		417,429
Total third-party revenues	$	3,746,227	$	712,312	$	297	$	4,458,836

Sources of Revenue
Technical Services	$	1,288,339	$	—	$	—	$	1,288,339
Industrial Services and Other	1,064,441		—		297		1,064,738
Field and Emergency Response Services	676,562		—		—		676,562
Safety-Kleen Environmental Services	716,885		171,117		—		888,002
Safety-Kleen Oil	—		541,195		—		541,195
Total third-party revenues	$	3,746,227	$	712,312	$	297	$	4,458,836


	Nine Months Ended September 30, 2023
	Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total
Primary Geographical Markets
United States	$	3,017,547	$	641,625	$	335	$	3,659,507
Canada	340,196		71,280		—		411,476
Total third-party revenues	$	3,357,743	$	712,905	$	335	$	4,070,983

Sources of Revenue
Technical Services	$	1,160,306	$	—	$	—	$	1,160,306
Industrial Services and Other	1,086,175		—		335		1,086,510
Field and Emergency Response Services	457,491		—		—		457,491
Safety-Kleen Environmental Services	653,771		171,469		—		825,240
Safety-Kleen Oil	—		541,436		—		541,436
Total third-party revenues	$	3,357,743	$	712,905	$	335	$	4,070,983

Contract Balances


(in thousands)	September 30, 2024		December 31, 2023
Receivables	$	1,100,660	$	983,111
Contract assets (unbilled receivables)	204,308		107,859
Contract liabilities (deferred revenue)	103,291		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 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.

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(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 $392.2 million, net of cash acquired. The Company settled working capital balances for this acquisition in the third quarter of 2024 and adjusted the purchase price accordingly. 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 Acquisition Date As Reported March 31, 2024		Measurement Period Adjustments		At Acquisition Date As Reported September 30, 2024
Accounts receivable, including unbilled receivables	$	68,496	$	1,777	$	70,273
Inventories and supplies	1,574		(1,190)		384
Prepaid expenses and other current assets	5,221		(681)		4,540
Property, plant and equipment	45,453		817		46,270
Permits and other intangibles	130,000		500		130,500
Operating lease right-of-use assets	9,385		—		9,385
Other long-term assets	2,660		—		2,660
Accrued expenses and other current liabilities	(43,966)		(3,012)		(46,978)
Current portion of operating lease liabilities	(2,758)		—		(2,758)
Operating lease liabilities, less current portion	(6,627)		—		(6,627)
Deferred tax liabilities	(8,916)		—		(8,916)
Closure and post-closure liabilities	—		(1,025)		(1,025)
Other long-term liabilities	(374)		—		(374)
Total identifiable net assets	200,148		(2,814)		197,334
Goodwill	195,265		(420)		194,845
Total purchase price	$	395,413	$	(3,234)	$	392,179

Other intangible assets acquired include customer relationships and trademarks/tradenames and are anticipated to have estimated useful lives of between seven 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 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 September 30, 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 unaudited consolidated financial statements of the Company.

On March 1, 2024, the Company acquired Noble Oil Services, Inc and its subsidiaries (collectively, “Noble Oil”) for an all-cash purchase price of $68.7 million, net of cash acquired. The Company settled working capital for this acquisition in the second quarter of 2024 and adjusted the purchase price accordingly. The acquisition of Noble Oil 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 Acquisition Date As Reported March 31, 2024		Measurement Period Adjustments		At Acquisition Date As Reported September 30, 2024
Accounts receivable, including unbilled receivables	5,693		158		5,851
Inventories and supplies	6,817		(219)		6,598
Prepaid expenses and other current assets	423		(16)		407
Property, plant and equipment	38,914		8,782		47,696
Permits and other intangibles	20,200		(5,700)		14,500
Operating lease right-of-use assets	3,615		—		3,615
Other long-term assets	92		—		92
Accrued expenses and other current liabilities	(8,990)		97		(8,893)
Current portion of operating lease liabilities	(1,823)		—		(1,823)
Operating lease liabilities, less current portion	(1,792)		—		(1,792)

Closure and post-closure liabilities	—		(820)		(820)

Total identifiable net assets	63,149		2,282		65,431
Goodwill	5,744		(2,433)		3,311
Total purchase price	$	68,893	$	(151)	$	68,742

Other intangible assets acquired include customer relationships and trademarks/tradenames and are anticipated to have estimated useful lives of between seven 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 operating synergies and assembled workforce that the Company expects to realize from the acquisition. Goodwill generated from the acquisition is deductible for tax purposes.

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 in the first quarter of 2024. 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 As Reported September 30, 2024
Accounts receivable, including unbilled receivables	$	25,233	$	(73)	$	25,160
Inventories and supplies	228		—		228
Prepaid expenses and other current assets	1,302		—		1,302
Property, plant and equipment	26,719		—		26,719
Permits and other intangibles	28,900		—		28,900
Operating lease right-of-use assets	4,716		—		4,716
Other long-term assets	72		—		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 assets	71,509		(218)		71,291
Goodwill	39,346		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 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):


	September 30, 2024		December 31, 2023
Supplies	$	195,973	$	177,217
Oil and oil related products	149,814		118,600
Solvent and solutions	12,788		11,795
Other	17,989		19,899
Total inventories and supplies	$	376,564	$	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):


	September 30, 2024		December 31, 2023
Land	$	186,984	$	174,891
Asset retirement costs (non-landfill)	28,935		27,167
Landfill assets	259,233		253,180
Buildings and improvements (1)	649,401		630,525

Vehicles (2)	1,430,325		1,276,567
Equipment (3)	2,453,616		2,388,370

Construction in progress	316,666		213,601
	5,325,160		4,964,301
Less - accumulated depreciation and amortization	2,872,848		2,770,983
Total property, plant and equipment, net	$	2,452,312	$	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 $208.7 million and $151.7 million, respectively.

(3) Balances inclusive of gross ROU assets classified as finance leases of $9.3 million and $9.2 million, respectively.

Depreciation expense, inclusive of landfill and finance lease amortization, was $86.2 million and $254.9 million for the three and nine months ended September 30, 2024, respectively. Depreciation expense, inclusive of landfill and finance lease amortization, was $80.4 million and $229.7 million for the three and nine months ended September 30, 2023, respectively. The Company recorded $3.3 million and $8.6 million of capitalized interest during the three and nine months ended September 30, 2024, respectively. The Company recorded $1.7 million and $4.4 million of capitalized interest during the three and nine months ended September 30, 2023, respectively. Capitalized interest in the periods presented is primarily 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 nine months ended September 30, 2024 were as follows (in thousands):


	Environmental Services		Safety-Kleen Sustainability Solutions		Totals
Balance at January 1, 2024	$	1,112,013	$	175,723	$	1,287,736
Increase from current period acquisitions	194,845		3,311		198,156
Measurement period adjustments from prior period acquisitions	218		—		218

Foreign currency translation	(745)		(300)		(1,045)
Balance at September 30, 2024	$	1,306,331	$	178,734	$	1,485,065

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 September 30, 2024, no such triggering events were identified.

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As of September 30, 2024 and December 31, 2023, the Company’s intangible assets consisted of the following (in thousands):


	September 30, 2024						December 31, 2023
	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Permits	$	193,201	$	123,335	$	69,866	$	191,747	$	117,556	$	74,191
Customer and supplier relationships	697,295		249,215		448,080		604,994		258,879		346,115
Other intangible assets	114,112		43,210		70,902		100,068		37,862		62,206
Total amortizable permits and other intangible assets	1,004,608		415,760		588,848		896,809		414,297		482,512
Trademarks and trade names	120,087		—		120,087		120,285		—		120,285
Total permits and other intangible assets	$	1,124,695	$	415,760	$	708,935	$	1,017,094	$	414,297	$	602,797

Amortization expense of permits, customer and supplier relationships and other intangible assets was $13.9 million and $40.7 million in the three and nine months ended September 30, 2024, respectively. Amortization expense of permits, customer and supplier relationships and other intangible assets was $12.5 million and $37.8 million in the three and nine months ended September 30, 2023, respectively.

The expected amortization of the net carrying amount of finite-lived intangible assets at September 30, 2024 was as follows (in thousands):


Years Ending December 31,	Expected Amortization
2024 (three months)	$	13,608
2025	57,103
2026	50,813
2027	48,308
2028	46,836
Thereafter	372,180
	$	588,848

(8) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following (in thousands):


	September 30, 2024		December 31, 2023
Accrued compensation and benefits	$	117,526	$	113,236
Accrued insurance	106,906		107,658
Accrued income, real estate, sales and other taxes	60,547		44,752

Accrued interest	14,799		33,857
Accrued other	98,458		97,654
	$	398,236	$	397,157

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(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 September 30, 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
Liabilities assumed in acquisitions	—		1,845		1,845

New asset retirement obligations	4,093		—		4,093

Accretion	3,915		3,305		7,220
Changes in estimates recorded to consolidated statement of operations	(134)		(120)		(254)
Changes in estimates recorded to consolidated balance sheet	46		39		85
Expenditures	(8,728)		(3,128)		(11,856)
Currency translation and other	(81)		(74)		(155)
Balance at September 30, 2024	$	58,554	$	61,024	$	119,578

In the nine months ended September 30, 2024, there were no significant benefits or charges resulting from changes in estimates for closure and post-closure liabilities.

(10) REMEDIAL LIABILITIES

The changes to remedial liabilities from January 1, 2024 through September 30, 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