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

JUNE 30, ~~2021~~2022

☐

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 "emerging 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 July ~~30, 2021~~29, 2022 was ~~54,402,611.~~54,103,226.

CLEAN HARBORS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


			Page No.

PART I: FINANCIAL INFORMATION

ITEM 1: Unaudited Financial Statements
Consolidated Balance Sheets			1
Unaudited Consolidated Statements of Operations			2
Unaudited Consolidated Statements of Comprehensive Income ~~(Loss)~~			3
Unaudited Consolidated Statements of Cash Flows			4
Unaudited Consolidated Statements of Stockholders’ Equity			5
Notes to Unaudited Consolidated Financial Statements			6

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations			2122

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk			34

ITEM 4: Controls and Procedures			34

PART II: OTHER INFORMATION

ITEM 1: Legal Proceedings			35
ITEM 1A: Risk Factors			35
ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds			35
ITEM 3: Defaults Upon Senior Securities			3635
ITEM 4: Mine Safety Disclosures			3635
ITEM 5: Other Information			3635
ITEM 6: Exhibits			36
Signatures			37

Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30, 2021 December 31, 2020
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 595,574 $ 519,101
Short-term marketable securities 70,683 51,857
Accounts receivable, net of allowances aggregating $40,009 and $44,749, respectively 659,364 611,534
Unbilled accounts receivable 59,446 55,681
Inventories and supplies 215,725 220,498
Prepaid expenses and other current assets 76,524 67,051
Total current assets 1,677,316 1,525,722
Property, plant and equipment, net 1,531,289 1,525,298
Other assets:
Operating lease right-of-use assets 135,363 150,341
Goodwill 544,639 527,023
Permits and other intangibles, net 374,230 386,620
Other 13,042 16,516
Total other assets 1,067,274 1,080,500
Total assets $ 4,275,879 $ 4,131,520
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 7,535 $ 7,535
Accounts payable 249,206 195,878
Deferred revenue 83,733 74,066
Accrued expenses 311,656 295,823
Current portion of closure, post-closure and remedial liabilities 23,865 26,093
Current portion of operating lease liabilities 35,074 36,750
Total current liabilities 711,069 636,145
Other liabilities:
Closure and post-closure liabilities, less current portion of $9,752 and $13,903, respectively 83,742 74,023
Remedial liabilities, less current portion of $14,113 and $12,190, respectively 98,341 102,623
Long-term debt, less current portion 1,547,398 1,549,641
Operating lease liabilities, less current portion 101,377 114,258
Deferred tax liabilities 228,718 230,097
Other long-term liabilities 95,647 83,182
Total other liabilities 2,155,223 2,153,824
Commitments and contingent liabilities (See Note 16) 0 0
Stockholders’ equity:
Common stock, $0.01 par value:
Authorized 80,000,000 shares; issued and outstanding 54,393,252 and 54,772,696 shares, respectively 544 548
Additional paid-in capital 539,390 582,749
Accumulated other comprehensive loss (188,889) (211,477)
Accumulated earnings 1,058,542 969,731
Total stockholders’ equity 1,409,587 1,341,551
Total liabilities and stockholders’ equity $ 4,275,879 $ 4,131,520


	June 30, 2022		December 31, 2021
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	344,631	$	452,575
Short-term marketable securities	70,797		81,724
Accounts receivable, net of allowances aggregating $49,817 and $40,140, respectively	1,005,488		792,734
Unbilled accounts receivable	134,173		94,963
Inventories and supplies	275,696		250,692
Prepaid expenses and other current assets	93,320		68,483
Total current assets	1,924,105		1,741,171
Property, plant and equipment, net	1,913,145		1,863,175
Other assets:
Operating lease right-of-use assets	157,048		161,797
Goodwill	1,244,655		1,227,042
Permits and other intangibles, net	637,254		644,912
Other	48,449		15,602
Total other assets	2,087,406		2,049,353
Total assets	$	5,924,656	$	5,653,699

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt	$	17,535	$	17,535
Accounts payable	409,218		359,866
Deferred revenue	94,531		83,749
Accrued expenses and other current liabilities	387,047		391,414
Current portion of closure, post-closure and remedial liabilities	34,551		25,136
Current portion of operating lease liabilities	47,176		47,614
Total current liabilities	990,058		925,314
Other liabilities:
Closure and post-closure liabilities, less current portion of $12,379 and $12,015, respectively	90,618		87,088
Remedial liabilities, less current portion of $22,172 and $13,121, respectively	101,484		98,752
Long-term debt, less current portion	2,510,963		2,517,024
Operating lease liabilities, less current portion	112,854		117,991
Deferred tax liabilities	322,108		314,853
Other long-term liabilities	79,621		78,790
Total other liabilities	3,217,648		3,214,498
Commitments and contingent liabilities (See Note 17)	0		0
Stockholders’ equity:
Common stock, $0.01 par value:
Authorized 80,000,000 shares; issued and outstanding 54,110,459 and 54,419,321 shares, respectively	541		544

Additional paid-in capital	512,662		536,377
Accumulated other comprehensive loss	(162,702)		(196,012)
Accumulated earnings	1,366,449		1,172,978
Total stockholders’ equity	1,716,950		1,513,887
Total liabilities and stockholders’ equity	$	5,924,656	$	5,653,699

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

Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		June 30,				June 30,					June 30,				June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues:	Revenues:									Revenues:
Service revenues	Service revenues	$	734,563	$	637,839	$	1,397,271	$	1,357,706	Service revenues	$	1,085,043	$	734,563	$	2,027,104	$	1,397,271
Product revenues	Product revenues	191,895		72,161		337,335		210,857		Product revenues	271,269		191,895		498,317		337,335
Total revenues	Total revenues	926,458		710,000		1,734,606		1,568,563		Total revenues	1,356,312		926,458		2,525,421		1,734,606
Cost of revenues: (exclusive of items shown separately below)	Cost of revenues: (exclusive of items shown separately below)									Cost of revenues: (exclusive of items shown separately below)
Service revenues	Service revenues	492,662		411,065		943,000		903,781		Service revenues	736,560		492,662		1,429,984		943,000
Product revenues	Product revenues	125,224		59,616		235,422		173,566		Product revenues	161,909		125,224		311,874		235,422
Total cost of revenues	Total cost of revenues	617,886		470,681		1,178,422		1,077,347		Total cost of revenues	898,469		617,886		1,741,858		1,178,422
Selling, general and administrative expenses	Selling, general and administrative expenses	124,106		103,839		245,747		233,146		Selling, general and administrative expenses	155,608		124,106		306,781		245,747
Accretion of environmental liabilities	Accretion of environmental liabilities	2,873		2,766		5,826		5,327		Accretion of environmental liabilities	3,197		2,873		6,353		5,826
Depreciation and amortization	Depreciation and amortization	71,592		72,494		143,755		147,027		Depreciation and amortization	87,868		71,592		172,166		143,755

Income from operations	Income from operations	110,001		60,220		160,856		105,716		Income from operations	211,170		110,001		298,263		160,856
Other expense, net		(1,480)		(500)		(2,708)		(2,865)
Loss on sale of businesses		0		(184)		0		(3,258)
Other income (expense), net										Other income (expense), net	1,265		(1,480)		1,969		(2,708)
Gain on sale of business										Gain on sale of business	8,864		—		8,864		—

Interest expense, net of interest income of $580, $668, $1,060 and $1,666, respectively		(18,051)		(18,654)		(35,969)		(37,441)
Interest expense, net of interest income of $563, $580, $1,056 and $1,060, respectively										Interest expense, net of interest income of $563, $580, $1,056 and $1,060, respectively	(26,256)		(18,051)		(51,273)		(35,969)
Income before provision for income taxes	Income before provision for income taxes	90,470		40,882		122,179		62,152		Income before provision for income taxes	195,043		90,470		257,823		122,179
Provision for income taxes	Provision for income taxes	23,395		11,859		33,368		21,557		Provision for income taxes	46,886		23,395		64,352		33,368
Net income	Net income	$	67,075	$	29,023	$	88,811	$	40,595	Net income	$	148,157	$	67,075	$	193,471	$	88,811
Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	1.23	$	0.52	$	1.63	$	0.73	Basic	$	2.73	$	1.23	$	3.56	$	1.63
Diluted	Diluted	$	1.22	$	0.52	$	1.62	$	0.73	Diluted	$	2.71	$	1.22	$	3.54	$	1.62
Shares used to compute earnings per share - Basic	Shares used to compute earnings per share - Basic	54,529		55,590		54,625		55,673		Shares used to compute earnings per share - Basic	54,318		54,529		54,362		54,625
Shares used to compute earnings per share - Diluted	Shares used to compute earnings per share - Diluted	54,854		55,748		54,945		55,882		Shares used to compute earnings per share - Diluted	54,597		54,854		54,639		54,945

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

Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(in thousands)

Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Net income $ 67,075 $ 29,023 $ 88,811 $ 40,595
Other comprehensive income (loss), net of tax:
Unrealized (losses) gains on available-for-sale securities (48) 296 (122) 232
Unrealized (losses) gains on interest rate hedge (349) (3,000) 2,759 (21,382)
Reclassification adjustment for losses on interest rate hedge included in net income 2,494 2,130 4,942 3,228
Foreign currency translation adjustments 8,543 18,102 15,009 (23,856)
Other comprehensive income (loss), net of tax 10,640 17,528 22,588 (41,778)
Comprehensive income (loss) $ 77,715 $ 46,551 $ 111,399 $ (1,183)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income	$	148,157	$	67,075	$	193,471	$	88,811
Other comprehensive (loss) income, net of tax:
Unrealized loss on available-for-sale securities	(128)		(48)		(656)		(122)

Unrealized gain (loss) on fair value of interest rate hedge	11,243		(349)		35,924		2,759
Reclassification adjustment for interest rate hedge amounts realized in net income	2,164		2,494		5,358		4,942
Unfunded pension liability	20		—		10		—
Foreign currency translation adjustments	(13,838)		8,543		(7,326)		15,009
Other comprehensive (loss) income, net of tax	(539)		10,640		33,310		22,588
Comprehensive income	$	147,618	$	77,715	$	226,781	$	111,399

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

Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


		Six Months Ended					Six Months Ended
		June 30,					June 30,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	88,811	$	40,595	Net income	$	193,471	$	88,811
Adjustments to reconcile net income to net cash from operating activities:	Adjustments to reconcile net income to net cash from operating activities:					Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	Depreciation and amortization	143,755		147,027		Depreciation and amortization	172,166		143,755
Allowance for doubtful accounts	Allowance for doubtful accounts	2,109		9,006		Allowance for doubtful accounts	6,927		2,109
Amortization of deferred financing costs and debt discount	Amortization of deferred financing costs and debt discount	1,806		1,787		Amortization of deferred financing costs and debt discount	3,135		1,806
Accretion of environmental liabilities	Accretion of environmental liabilities	5,826		5,327		Accretion of environmental liabilities	6,353		5,826
Changes in environmental liability estimates	Changes in environmental liability estimates	445		5,607		Changes in environmental liability estimates	1,232		445
Deferred income taxes	Deferred income taxes	1,912		0		Deferred income taxes	2,226		1,912
Other expense, net		2,708		2,865
Other (income) expense, net						Other (income) expense, net	(1,969)		2,708
Stock-based compensation	Stock-based compensation	6,785		6,077		Stock-based compensation	12,547		6,785
Loss on sale of businesses		0		3,258
Gain on sale of business						Gain on sale of business	(8,864)		—

Environmental expenditures	Environmental expenditures	(6,594)		(6,104)		Environmental expenditures	(7,028)		(6,594)
Changes in assets and liabilities, net of acquisitions:	Changes in assets and liabilities, net of acquisitions:					Changes in assets and liabilities, net of acquisitions:
Accounts receivable and unbilled accounts receivable	Accounts receivable and unbilled accounts receivable	(51,285)		67,540		Accounts receivable and unbilled accounts receivable	(263,584)		(51,285)
Inventories and supplies	Inventories and supplies	765		(9,024)		Inventories and supplies	(23,888)		765
Other current and non-current assets	Other current and non-current assets	(12,043)		(25,840)		Other current and non-current assets	(25,504)		(12,043)
Accounts payable	Accounts payable	49,880		(82,134)		Accounts payable	45,748		49,880
Other current and long-term liabilities	Other current and long-term liabilities	30,552		7,499		Other current and long-term liabilities	19,002		30,552
Net cash from operating activities	Net cash from operating activities	265,432		173,486		Net cash from operating activities	131,970		265,432
Cash flows used in investing activities:	Cash flows used in investing activities:					Cash flows used in investing activities:
Additions to property, plant and equipment	Additions to property, plant and equipment	(91,988)		(125,721)		Additions to property, plant and equipment	(148,042)		(91,988)
Proceeds from sale and disposal of fixed assets	Proceeds from sale and disposal of fixed assets	3,479		3,101		Proceeds from sale and disposal of fixed assets	3,023		3,479
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(22,918)		(8,877)		Acquisitions, net of cash acquired	(68,766)		(22,918)
Proceeds from sale of businesses, net of transactional costs		0		7,753
Proceeds from sale of business, net of transaction costs						Proceeds from sale of business, net of transaction costs	17,486		—
Additions to intangible assets including costs to obtain or renew permits	Additions to intangible assets including costs to obtain or renew permits	(1,750)		(1,242)		Additions to intangible assets including costs to obtain or renew permits	(836)		(1,750)
Proceeds from sale of available-for-sale securities	Proceeds from sale of available-for-sale securities	70,526		28,851		Proceeds from sale of available-for-sale securities	32,835		70,526
Purchases of available-for-sale securities	Purchases of available-for-sale securities	(89,689)		(45,550)		Purchases of available-for-sale securities	(23,182)		(89,689)
Net cash used in investing activities	Net cash used in investing activities	(132,340)		(141,685)		Net cash used in investing activities	(187,482)		(132,340)
Cash flows (used in) from financing activities:
Cash flows used in financing activities:						Cash flows used in financing activities:
Change in uncashed checks	Change in uncashed checks	(2,895)		(1,689)		Change in uncashed checks	475		(2,895)
Tax payments related to withholdings on vested restricted stock	Tax payments related to withholdings on vested restricted stock	(4,739)		(3,395)		Tax payments related to withholdings on vested restricted stock	(2,571)		(4,739)
Repurchases of common stock	Repurchases of common stock	(45,409)		(17,341)		Repurchases of common stock	(33,694)		(45,409)
Deferred financing costs paid	Deferred financing costs paid	(146)		0		Deferred financing costs paid	(321)		(146)

Payments on finance leases	Payments on finance leases	(3,577)		(1,790)		Payments on finance leases	(6,552)		(3,577)
Principal payments on debt	Principal payments on debt	(3,768)		(3,768)		Principal payments on debt	(8,768)		(3,768)

Borrowing from revolving credit facility		0		150,000
Payment on revolving credit facility		0		(75,000)
Net cash (used in) from financing activities		(60,534)		47,017

Net cash used in financing activities						Net cash used in financing activities	(51,431)		(60,534)
Effect of exchange rate change on cash	Effect of exchange rate change on cash	3,915		(3,443)		Effect of exchange rate change on cash	(1,001)		3,915
Increase in cash and cash equivalents		76,473		75,375
(Decrease) increase in cash and cash equivalents						(Decrease) increase in cash and cash equivalents	(107,944)		76,473
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	519,101		371,991		Cash and cash equivalents, beginning of period	452,575		519,101
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	595,574	$	447,366	Cash and cash equivalents, end of period	$	344,631	$	595,574
Supplemental information:	Supplemental information:					Supplemental information:
Cash payments for interest and income taxes:	Cash payments for interest and income taxes:					Cash payments for interest and income taxes:
Interest paid	Interest paid	$	34,164	$	38,327	Interest paid	$	48,104	$	34,164
Income taxes paid, net of refunds	Income taxes paid, net of refunds	32,519		1,478		Income taxes paid, net of refunds	29,307		32,519
Non-cash investing activities:	Non-cash investing activities:					Non-cash investing activities:
Property, plant and equipment accrued	Property, plant and equipment accrued	8,807		7,421		Property, plant and equipment accrued	21,156		8,807
Remedial liability assumed in acquisition of property, plant and equipment						Remedial liability assumed in acquisition of property, plant and equipment	13,073		—
ROU assets obtained in exchange for operating lease liabilities	ROU assets obtained in exchange for operating lease liabilities	5,774		16,216		ROU assets obtained in exchange for operating lease liabilities	20,686		5,774
ROU assets obtained in exchange for finance lease liabilities	ROU assets obtained in exchange for finance lease liabilities	18,704		16,452		ROU assets obtained in exchange for finance lease liabilities	7,646		18,704

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

Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)


		Common Stock						Accumulated Other Comprehensive Loss										Common Stock								Accumulated Other Comprehensive Loss
		Number of Shares	$0.01 Par Value		Additional Paid-in Capital					Accumulated Earnings			Total Stockholders’ Equity			Number of Shares			$0.01 Par Value			Additional Paid-in Capital			Accumulated Other Comprehensive Loss					Total Stockholders’ Equity
Balance at January 1, 2021		54,773	$	548		$	582,749	$	(211,477)		$	969,731		$	1,341,551
Balance at January 1, 2022																	Balance at January 1, 2022	54,419		$	544		$	536,377				$	(196,012)			$	1,172,978			$	1,513,887
Net income	Net income	—	—			—		—			21,736			21,736			Net income	—		—			—			—				45,314				45,314
Other comprehensive income	Other comprehensive income	—	—			—		11,948			—			11,948			Other comprehensive income	—		—			—			33,849				—				33,849
Stock-based compensation	Stock-based compensation	—	—			3,480		—			—			3,480			Stock-based compensation	—		—			5,712			—				—				5,712
Issuance of common stock for restricted share vesting, net of employee tax withholdings	Issuance of common stock for restricted share vesting, net of employee tax withholdings	78	1			(3,720)		—			—			(3,719)			Issuance of common stock for restricted share vesting, net of employee tax withholdings	36		—			(1,831)			—				—				(1,831)
Repurchases of common stock	Repurchases of common stock	(300)	(3)			(26,543)		—			—			(26,546)			Repurchases of common stock	(41)		—			(3,694)			—				—				(3,694)
Balance at March 31, 2021		54,551	546			555,966		(199,529)			991,467			1,348,450
Balance at March 31, 2022																	Balance at March 31, 2022	54,414		544			536,564			(162,163)				1,218,292				1,593,237
Net income	Net income	—	—			—		—			67,075			67,075			Net income	—		—			—			—				148,157				148,157
Other comprehensive income		—	—			—		10,640			—			10,640
Other comprehensive loss																	Other comprehensive loss	—		—			—			(539)				—				(539)
Stock-based compensation	Stock-based compensation	—	—			3,305		—			—			3,305			Stock-based compensation	—		—			6,835			—				—				6,835
Issuance of common stock for restricted share vesting, net of employee tax withholdings	Issuance of common stock for restricted share vesting, net of employee tax withholdings	42	—			(1,020)		—			—			(1,020)			Issuance of common stock for restricted share vesting, net of employee tax withholdings	31		—			(740)			—				—				(740)
Repurchases of common stock	Repurchases of common stock	(200)	(2)			(18,861)		—			—			(18,863)			Repurchases of common stock	(335)		(3)			(29,997)			—				—				(30,000)

Balance at June 30, 2021		54,393	$	544		$	539,390	$	(188,889)		$	1,058,542		$	1,409,587
Balance at June 30, 2022																	Balance at June 30, 2022	54,110		$	541		$	512,662		$	(162,702)			$	1,366,449			$	1,716,950


		Common Stock						Accumulated Other Comprehensive Loss										Common Stock								Accumulated Other Comprehensive Loss
		Number of Shares	$0.01 Par Value		Additional Paid-in Capital					Accumulated Earnings			Total Stockholders’ Equity			Number of Shares			$0.01 Par Value			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance at January 1, 2020		55,798	$	558		$	644,412	$	(210,051)		$	834,894		$	1,269,813

Net income		—	—			—		—			11,572			11,572
Other comprehensive loss		—	—			—		(59,306)			—			(59,306)
Stock-based compensation		—	—			3,291		—			—			3,291
Issuance of common stock for restricted share vesting, net of employee tax withholdings		59	1			(2,225)		—			—			(2,224)
Repurchases of common stock		(302)	(3)			(17,338)		—			—			(17,341)
Balance at March 31, 2020		55,555	556			628,140		(269,357)			846,466			1,205,805
Balance at January 1, 2021																	Balance at January 1, 2021	54,773		$	548		$	582,749		$	(211,477)	$	969,731	$	1,341,551

Net income	Net income	—	—			—		—			29,023			29,023			Net income	—		—			—			—		21,736		21,736
Other comprehensive income	Other comprehensive income	—	—			—		17,528			—			17,528			Other comprehensive income	—		—			—			11,948		—		11,948
Stock-based compensation	Stock-based compensation	—	—			2,786		—			—			2,786			Stock-based compensation	—		—			3,480			—		—		3,480
Issuance of common stock for restricted share vesting, net of employee tax withholdings	Issuance of common stock for restricted share vesting, net of employee tax withholdings	58	—			(1,171)		—			—			(1,171)			Issuance of common stock for restricted share vesting, net of employee tax withholdings	78		1			(3,720)			—		—		(3,719)
Repurchases of common stock																	Repurchases of common stock	(300)		(3)			(26,543)			—		—		(26,546)
Balance at March 31, 2021																	Balance at March 31, 2021	54,551		546			555,966			(199,529)		991,467		1,348,450

Net income																	Net income	—		—			—			—		67,075		67,075
Other comprehensive income																	Other comprehensive income	—		—			—			10,640		—		10,640
Stock-based compensation																	Stock-based compensation	—		—			3,305			—		—		3,305
Issuance of common stock for restricted share vesting, net of employee tax withholdings																	Issuance of common stock for restricted share vesting, net of employee tax withholdings	42		—			(1,020)			—		—		(1,020)
Repurchases of common stock																	Repurchases of common stock	(200)		(2)			(18,861)			—		—		(18,863)

Balance at June 30, 2020		55,613	$	556		$	629,755	$	(251,829)		$	875,489		$	1,253,971
Balance at June 30, 2021																	Balance at June 30, 2021	54,393		$	544		$	539,390		$	(188,889)	$	1,058,542	$	1,409,587

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,”~~Harbors” or the “Company” ~~or "we"~~) 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, ~~2020.~~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, ~~2020.~~2021. There have been no material changes in these policies or their application ~~except for the changes described below.~~

~~Changes in Operating Segments~~

During the first quarter of 2021, the Company reorganized its Safety-Kleen business. The collection services for waste oil, used oil filters, antifreeze and related items and bulk blended oil sales operations were combined with the Safety-Kleen Oil business to form the Safety-Kleen Sustainability Solutions business. Under this structure, Safety-Kleen Sustainability Solutions will encompass both sides of the spread the Company manages in its re-refinery business, and the Company expects this change to drive additional growth in its sustainable lubricant products and related services.

Concurrently with this change, the Company consolidated the Safety-Kleen Environmental branches' core offerings, including containerized waste, parts washer and vacuum services, into the legacy Clean Harbors Environmental Services sales and service operations. The Company expects this change to foster enhanced cross-selling opportunities within the environmental businesses and increase market presence with small quantity generators of hazardous waste.

In restructuring the operations of the Company in this manner, the information that the chief operating decision maker regularly reviews for purposes of allocating resources and assessing performance changed to conform to this new operating structure of the business and the Company reevaluated the identification of its operating segments. In accordance with ASC 280, ~~Segment Reporting,~~ ~~Environmental Services and Safety-Kleen Sustainability Solutions are the Company's operating segments and reportable segments starting in the first quarter of 2021,~~with the operations not managed through the Company's operating segments described above continuing to be recorded as Corporate Items. See Note 17, "Segment Reporting" for more information. The amounts presented for the three and six months ended June 30, 2020 and any segment information presented as of December 31, 2020 have been recast to reflect the impact of such changes. In addition, certain intercompany transactions previously recorded in Corporate Items have been allocated to the segments. These reclassifications and adjustments had no effect on the consolidated statements of operations, consolidated statements of comprehensive income (loss), consolidated statements of cash flows or consolidated statements of stockholders' equity for any ofduring the periods presented.

(3) REVENUES

The ~~Company generates~~Company’s third-party revenues ~~through its Environmental Services~~are disaggregated by geographic location and ~~Safety-Kleen Sustainability Solutions operating segments.~~source of revenue as management believes these categories depict how revenue and cash flows are affected by economic factors. The Company's ~~Environmental Services operating segment has 4~~significant sources of revenue ~~and the Safety-Kleen Sustainability Solutions operating segment has 2 sources of revenue.~~include:

Technical Services—Technical Services contribute to the revenues of the Environmental Services operating segment. ~~These~~Revenues for these services are generated from fees charged for waste material management and disposal services including onsite environmental management services, large remediation projects, 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

~~Table of Contents~~

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~~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 ~~utilities,~~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, manhole/vault clean outs, product recovery and transfer and vacuum services. Additional services include filtration and water treatment services. Response services for environmental ~~contamination or pandemic related~~ emergencies ~~include~~of any scale range from man-made disasters such as oil spills to natural disasters such as ~~hurricanes~~hurricanes. Emergency response services also include spill cleanup on land and ~~more recently, projects involving~~water, 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 ~~service~~services as they are being performed and the Company has a right to payment for performance completed to date. The

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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 ~~satisfying~~executing the ~~related performance obligations.~~revenue contracts. Revenues from providing containerized waste handling and disposal services, parts washer services and vacuum services, referred to collectively as the Safety-Kleen ~~Environmental~~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 ~~service related~~ 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.

~~Table of Contents~~

Safety-Kleen Oil—Safety-Kleen Oil ~~revenues~~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.

~~Disaggregation~~

Table of ~~Revenue~~Contents

~~We disaggregate~~The following tables present the Company's ~~third party revenues~~third-party revenue disaggregated by ~~geographic location and~~ source of revenue ~~as we believe these categories depict how revenue~~ and ~~cash flows are affected by economic factors~~geography (in thousands):


		For the Three Months Ended June 30, 2021									For the Three Months Ended June 30, 2022
		Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total			Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total
Primary Geographical Markets	Primary Geographical Markets									Primary Geographical Markets
United States	United States	$	616,585	$	180,216	$	79	$	796,880	United States	$	945,579	$	236,879	$	79	$	1,182,537
Canada	Canada	106,562		23,016		0		129,578		Canada	138,927		34,848		—		173,775
Total third-party revenues	Total third-party revenues	$	723,147	$	203,232	$	79	$	926,458	Total third-party revenues	$	1,084,506	$	271,727	$	79	$	1,356,312

Sources of Revenue	Sources of Revenue									Sources of Revenue
Technical Services	Technical Services	$	306,865	$	0	$	0	$	306,865	Technical Services	$	387,019	$	—	$	—	$	387,019
Field and Emergency Response Services(1)	Field and Emergency Response Services(1)	106,986		0		0		106,986		Field and Emergency Response Services(1)	144,860		—		—		144,860
Industrial Services and Other(2)	Industrial Services and Other(2)	150,367		0		79		150,446		Industrial Services and Other(2)	360,870		—		79		360,949
Safety-Kleen Environmental Services	Safety-Kleen Environmental Services	158,929		40,453		0		199,382		Safety-Kleen Environmental Services	191,757		49,381		—		241,138
Safety-Kleen Oil	Safety-Kleen Oil	0		162,779		0		162,779		Safety-Kleen Oil	—		222,346		—		222,346
Total third-party revenues	Total third-party revenues	$	723,147	$	203,232	$	79	$	926,458	Total third-party revenues	$	1,084,506	$	271,727	$	79	$	1,356,312

For the Three Months Ended June 30, 2020
Environmental Services Safety-Kleen Sustainability Solutions Corporate Total
Primary Geographical Markets
United States $ 543,785 $ 88,004 $ (160) $ 631,629
Canada 68,935 9,220 216 78,371
Total third-party revenues $ 612,720 $ 97,224 $ 56 $ 710,000
Sources of Revenue
Technical Services $ 241,929 $ 0 $ 0 $ 241,929
Field and Emergency Response Services 127,353 0 0 127,353
Industrial Services and Other 95,072 0 56 95,128
Safety-Kleen Environmental Services 148,366 46,506 0 194,872
Safety-Kleen Oil 0 50,718 0 50,718
Total third-party revenues $ 612,720 $ 97,224 $ 56 $ 710,000
_____________

(1) Includes approximately $34.2 million of third-party revenues from the operations of the HydroChemPSC business

(2) Includes approximately $173.7 million of third-party revenues from the operations of the HydroChemPSC business


	For the Three Months Ended June 30, 2021
	Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total
Primary Geographical Markets
United States	$	616,585	$	180,216	$	79	$	796,880
Canada	106,562		23,016		—		129,578
Total third-party revenues	$	723,147	$	203,232	$	79	$	926,458

Sources of Revenue
Technical Services	$	306,865	$	—	$	—	$	306,865
Field and Emergency Response Services	106,986		—		—		106,986
Industrial Services and Other	150,367		—		79		150,446
Safety-Kleen Environmental Services	158,929		40,453		—		199,382
Safety-Kleen Oil	—		162,779		—		162,779
Total third-party revenues	$	723,147	$	203,232	$	79	$	926,458

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		For the Six Months Ended June 30, 2021									For the Six Months Ended June 30, 2022
		Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total			Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total
Primary Geographical Markets	Primary Geographical Markets									Primary Geographical Markets
United States	United States	$	1,192,093	$	319,206	$	158	$	1,511,457	United States	$	1,780,257	$	439,409	$	151	$	2,219,817
Canada	Canada	183,932		39,217		0		223,149		Canada	245,047		60,557		—		305,604
Total third-party revenues	Total third-party revenues	$	1,376,025	$	358,423	$	158	$	1,734,606	Total third-party revenues	$	2,025,304	$	499,966	$	151	$	2,525,421

Sources of Revenue	Sources of Revenue									Sources of Revenue
Technical Services	Technical Services	$	578,905	$	0	$	0	$	578,905	Technical Services	$	710,675	$	—	$	—	$	710,675
Field and Emergency Response Services(1)	Field and Emergency Response Services(1)	212,154		0		0		212,154		Field and Emergency Response Services(1)	277,219		—		—		277,219
Industrial Services and Other(2)	Industrial Services and Other(2)	270,177		0		158		270,335		Industrial Services and Other(2)	669,708		—		151		669,859
Safety-Kleen Environmental Services	Safety-Kleen Environmental Services	314,789		79,431		0		394,220		Safety-Kleen Environmental Services	367,702		93,769		—		461,471
Safety-Kleen Oil	Safety-Kleen Oil	0		278,992		0		278,992		Safety-Kleen Oil	—		406,197		—		406,197
Total third-party revenues	Total third-party revenues	$	1,376,025	$	358,423	$	158	$	1,734,606	Total third-party revenues	$	2,025,304	$	499,966	$	151	$	2,525,421

For the Six Months Ended June 30, 2020
Environmental Services Safety-Kleen Sustainability Solutions Corporate Total
Primary Geographical Markets
United States $ 1,150,895 $ 227,441 $ (462) $ 1,377,874
Canada 166,861 23,220 608 190,689
Total third-party revenues $ 1,317,756 $ 250,661 $ 146 $ 1,568,563
Sources of Revenue
Technical Services $ 517,202 $ 0 $ 0 $ 517,202
Field and Emergency Response Services 233,265 0 0 233,265
Industrial Services and Other 241,991 0 146 242,137
Safety-Kleen Environmental Services 325,298 84,055 0 409,353
Safety-Kleen Oil 0 166,606 0 166,606
Total third-party revenues $ 1,317,756 $ 250,661 $ 146 $ 1,568,563
_____________

(1) Includes approximately $62.2 million of third-party revenues from the operations of the HydroChemPSC business

(2) Includes approximately $329.8 million of third-party revenues from the operations of the HydroChemPSC business


	For the Six Months Ended June 30, 2021
	Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total
Primary Geographical Markets
United States	$	1,192,093	$	319,206	$	158	$	1,511,457
Canada	183,932		39,217		—		223,149
Total third-party revenues	$	1,376,025	$	358,423	$	158	$	1,734,606

Sources of Revenue
Technical Services	$	578,905	$	—	$	—	$	578,905
Field and Emergency Response Services	212,154		—		—		212,154
Industrial Services and Other	270,177		—		158		270,335
Safety-Kleen Environmental Services	314,789		79,431		—		394,220
Safety-Kleen Oil	—		278,992		—		278,992
Total third-party revenues	$	1,376,025	$	358,423	$	158	$	1,734,606

Contract Balances


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		(in thousands)	June 30, 2022		December 31, 2021
Receivables	Receivables	$	659,364	$	611,534	Receivables	$	1,005,488	$	792,734
Contract assets (unbilled receivables)	Contract assets (unbilled receivables)	59,446		55,681		Contract assets (unbilled receivables)	134,173		94,963
Contract liabilities (deferred revenue)	Contract liabilities (deferred revenue)	83,733		74,066		Contract liabilities (deferred revenue)	94,531		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.

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(4) BUSINESS COMBINATIONS

2022 Acquisition

On June 17, 2022, the Company acquired a privately-owned company for an all-cash purchase price of approximately $73.8 million, net of cash acquired and subject to working capital adjustments. The operations of the newly acquired company expand the Safety-Kleen Sustainability Solutions segment's waste oil collection capabilities and re-refining business throughout the southeast region of the United States, including the addition of a re-refinery in Georgia.

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 June 17, 2022. 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 June 17, 2022
Accounts receivable	$	1,079
Inventories and supplies	5,737
Prepaid expenses and other current assets	269
Property, plant and equipment	23,270
Permits and other intangibles	16,750
Operating lease right-of-use assets	585
Other non-current assets	42
Current liabilities	(2,756)
Current portion of operating lease liabilities	(186)
Operating lease liabilities, less current portion	(399)


Total identifiable net assets	44,391
Goodwill	29,375
Total purchase price	$	73,766

Intangible assets acquired include supplier relationships, permits, customer relationships and trademarks/tradenames and are anticipated to have estimated useful lives of between five and 20 years with a weighted average useful life of approximately 17 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, 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.

The operations included in the Company's financial statements for the period ended June 30, 2022 and pro forma revenue and earnings amounts on a combined basis as if this acquisition had been completed on January 1, 2021 ~~Acquisition~~are immaterial to the consolidated financial statements of the Company.

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. In the first quarter of 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

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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, 2021		Measurement Period Adjustments		At Acquisition Date As Reported June 30, 2022
Accounts receivable, including unbilled receivables	$	131,924	$	(395)	$	131,529
Inventories and supplies	3,162		—		3,162
Prepaid expenses and other current assets	16,016		363		16,379
Property, plant and equipment	313,540		—		313,540
Other intangibles	289,000		—		289,000
Operating lease right-of-use assets	34,347		68		34,415
Other non-current assets	1,045		(60)		985
Current liabilities	(115,704)		(883)		(116,587)
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 assets	546,950		1,453		548,403
Goodwill (i)	683,463		(6,453)		677,010
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 $677.0 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 June 30, 2021		Six Months Ended June 30, 2021
Pro forma combined revenues	$	1,121,121	$	2,107,309
Pro forma combined net income	74,526		102,078

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.

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 swaps that the Company put in place in early 2022.

On March 27, 2021, the Company also acquired a privately-owned business for ~~$22.9~~$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 ~~preliminary~~final goodwill amount of ~~$16.0~~$16.3 million was recognized.

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~~2021 Proposed Acquisitions~~(5) DISPOSITION OF BUSINESS

On June ~~29, 2021,~~30, 2022, the Company ~~signed~~completed the sale of a ~~definitive agreement with Vertex Energy, Inc. to acquire~~line of business as part of its continuous focus on divesting certain ~~assets related to Vertex's used motor oil collection and re-refinery~~non-core operations. The divested line of business ~~in an all-cash transaction for $140.0 million, subject to working capital and other adjustments.~~was previously included within the Sales & Services reporting unit of the Environmental Services segment. The Company ~~intends to fund~~determined that the ~~acquisition~~disposition did not constitute a strategic shift and that the impact on the Company's overall operations and financial results will not be material. Accordingly, the operations associated with ~~available cash.~~the disposal are not reported in discontinued operations. The ~~acquisition will include re-refineries in Marrero, Louisiana~~line of business was sold for $19.5 million and ~~Columbus, Ohio and service locations throughout the Midwest and Gulf Coast, as well as certain associated equipment and an assembled workforce. The acquisition~~ is subject to ~~approval by U.S. regulators~~customary post-closing conditions. The gain on sale of $8.9 million, after accounting for the assets sold, liabilities transferred upon sale and ~~Vertex shareholders,~~transaction costs, is included in gain on sale of business in the Company’s consolidated statement of operations for the three and other customary closing conditions and is currently anticipated to close later in 2021. The acquisition will expand the Safety-Kleen Sustainability Solutions segment's oil re-refining capacity and collection and distribution network.

On August 3, 2021, the Company signed a definitive agreement to acquire HydroChemPSC ("HPC"), a privately-owned company. With more than 5,000 employees, over 240 service locations and a fleet of specialized vehicles and equipment, HPC is a leading U.S. provider of industrial cleaning, specialty maintenance and utility services. The acquisition will enhance the Company's Environmental Services segment.

Under the terms of the agreement, at the closing of the transaction, the Company will pay cash consideration in an amount equal to $1.25 billion, subject to customary purchase price adjustments. The Company plans to finance the acquisition of HPC with a combination of cash on hand and long-term debt. The Company has obtained a financing commitment from Goldman Sachs Bank USA, for term loan debt financing. The acquisition is subject to approval by regulators, as well as other customary closing conditions, and is anticipated to close later in 2021.

~~2020 Acquisition~~

On April 17, 2020, the Company acquired a privately-owned business for $8.8 million cash consideration. The acquired company expands the Safety-Kleen Sustainability Solutions segment's oil re-refining operations to the northeast United States. In connection with this acquisition, a goodwill amount of $1.4 million was recognized.

six months ended June 30, 2022.

~~(5)~~(6) INVENTORIES AND SUPPLIES

Inventories and supplies consisted of the following (in thousands):


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Oil and oil related products	Oil and oil related products	$	75,162	$	76,209	Oil and oil related products	$	112,656	$	101,965
Supplies	Supplies	119,388		120,007		Supplies	136,038		126,602
Solvent and solutions	Solvent and solutions	8,976		8,812		Solvent and solutions	11,304		8,099

Other	Other	12,199		15,470		Other	15,698		14,026
Total inventories and supplies	Total inventories and supplies	$	215,725	$	220,498	Total inventories and supplies	$	275,696	$	250,692

Supplies ~~consists~~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 ~~consists~~consist primarily of parts washer components, cleaning fluids, absorbents and automotive fluids, such as windshield washer fluid and antifreeze.

~~Table of Contents~~

~~(6)~~(7) PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following (in thousands):


		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Land	Land	$	148,749	$	139,776	Land	$	174,744	$	165,010
Asset retirement costs (non-landfill)	Asset retirement costs (non-landfill)	17,851		16,407		Asset retirement costs (non-landfill)	19,598		19,105
Landfill assets	Landfill assets	196,156		191,687		Landfill assets	214,558		205,873
Buildings and improvements (1)	Buildings and improvements (1)	523,136		509,804		Buildings and improvements (1)	571,078		551,795
Camp equipment	Camp equipment	157,554		159,021		Camp equipment	124,672		127,680
Vehicles (2)	Vehicles (2)	867,498		844,026		Vehicles (2)	950,754		912,836
Equipment (3)	Equipment (3)	1,821,298		1,807,235		Equipment (3)	2,136,376		2,092,395
Furniture and fixtures	Furniture and fixtures	7,195		7,082		Furniture and fixtures	6,574		6,444
Construction in progress	Construction in progress	44,555		24,378		Construction in progress	98,189		60,447
		3,783,992		3,699,416			4,296,543		4,141,585
Less - accumulated depreciation and amortization	Less - accumulated depreciation and amortization	2,252,703		2,174,118		Less - accumulated depreciation and amortization	2,383,398		2,278,410
Total property, plant and equipment, net	Total property, plant and equipment, net	$	1,531,289	$	1,525,298	Total property, plant and equipment, net	$	1,913,145	$	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 ~~in both periods.~~respectively.

(2) Balances inclusive of gross ROU assets classified as finance leases o~~f $66.0~~of $85.3 million and ~~$47.2~~$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 $75.6 million and $147.7 million for the three and six months ended June 30, 2022, respectively. Depreciation expense, inclusive of landfill and finance lease amortization, was $63.8 million and $128.4 million for the three and six months ended June 30, 2021, respectively. ~~Depreciation expense, inclusive of landfill and finance lease amortization, was $63.7 million and $129.0 million for the three and six months ended June 30, 2020, respectively.~~

~~(7)~~

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(8) GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in goodwill by segment for the six months ended June 30, ~~2021~~2022 were as follows (in thousands):


		Environmental Services		Safety-Kleen Sustainability Solutions		Totals			Environmental Services		Safety-Kleen Sustainability Solutions		Totals
Balance at January 1, 2021		$	401,918	$	125,105	$	527,023
Balance at January 1, 2022								Balance at January 1, 2022	$	1,085,534	$	141,508	$	1,227,042
Increase from current period acquisition	Increase from current period acquisition	0		15,958		15,958		Increase from current period acquisition	—		29,375		29,375

Measurement period adjustments from prior period acquisition								Measurement period adjustments from prior period acquisition	(6,453)		—		(6,453)
Decrease from disposition of business								Decrease from disposition of business	(4,412)		—		(4,412)
Foreign currency translation	Foreign currency translation	1,218		440		1,658		Foreign currency translation	(659)		(238)		(897)
Balance at June 30, 2021		$	403,136	$	141,503	$	544,639
Balance at June 30, 2022								Balance at June 30, 2022	$	1,074,010	$	170,645	$	1,244,655

The ~~balances in~~decrease from disposition of business relates to the ~~table above have been recast to reflect the Company's segment change in the first quarter of 2021. As~~divestiture discussed in Note ~~17, "Segment Reporting,~~5, "Disposition of Business." The Company assesses goodwill on an annual basis as ~~a result~~ of ~~operational and managerial~~December 31 or at an interim date when events or changes in the ~~Company changed its operating segments in accordance with ASC 280,~~ ~~Segment Reporting. In addition,~~business environment (“triggering events”) would more likely than not reduce the ~~Company concluded that, for purposes~~fair value of reviewing for potential goodwill impairment, it now has 3 reporting units. The Environmental Services operating segment has 2 reporting units consisting of (i) Environmental Sales and Service which includes the legacy Environmental Sales and Servicea reporting unit ~~and certain operations previously included within Safety-Kleen Environmental Services including~~below its carrying value. During the core service offerings of containerized waste, parts washer and vacuum services and (ii) Environmental Facilities, unchanged from prior year. The Safety-Kleen Sustainability Solutions operating segment is a single reporting unit which includes the legacy Safety-Kleen Oil reporting unit and the remaining operations of the legacy Safety-Kleen Environmental Services reporting unit primarily consisting of collection services for waste oil, anti-freeze and used oil filters as well as the sale of bulk blended re-refined oil and other automotive related finished fluid products. The Company allocated goodwill to the newly identified reporting units using a relative fair value approach. In addition, the Company completed an assessment of any potential goodwill impairment for all reporting units immediately prior and subsequent to the reallocation and determined that 0 impairment existed.

~~Table of Contents~~

period ended June 30, 2022, no such triggering events were identified.

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company's intangible assets consisted of the following (in thousands):


		June 30, 2021						December 31, 2020						June 30, 2022						December 31, 2021
		Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net				Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Permits	Permits	$	186,292	$	99,143	$	87,149	$	183,766	$	95,033	$	88,733		Permits	$	189,675	$	105,957	$	83,718	$	187,519	$	102,408	$	85,111
Customer and supplier relationships	Customer and supplier relationships	366,913		207,196		159,717		382,083		211,895		170,188			Customer and supplier relationships	589,192		229,277		359,915		576,474		214,776		361,698
Other intangible assets	Other intangible assets	21,223		17,309		3,914		39,287		34,744		4,543			Other intangible assets	95,688		25,100		70,588		94,271		19,359		74,912
Total amortizable permits and other intangible assets	Total amortizable permits and other intangible assets	574,428		323,648		250,780		605,136		341,672		263,464			Total amortizable permits and other intangible assets	874,555		360,334		514,221		858,264		336,543		521,721
Trademarks and trade names	Trademarks and trade names	123,450		—		123,450		123,156		—		123,156			Trademarks and trade names	123,033		—		123,033		123,191		—		123,191
Total permits and other intangible assets	Total permits and other intangible assets	$	697,878	$	323,648	$	374,230	$	728,292	$	341,672	$	386,620		Total permits and other intangible assets	$	997,588	$	360,334	$	637,254	$	981,455	$	336,543	$	644,912

Amortization expense of permits, customer and supplier relationships and other intangible assets was $12.3 million and $24.5 million in the three and six months ended June 30, 2022, respectively. Amortization expense of permits, customer and supplier relationships and other intangible assets was $7.8 million and $15.4 million in the three and six months ended June 30, 2021, respectively. Amortization expense of permits, customer and supplier relationships and other intangible assets was $8.8 million and $18.0 million in the three and six months ended June 30, 2020, respectively. The net decrease in total amortizable permits and other intangible assets is attributable to writing off fully amortized intangible assets with a cost of $35.4 million during the six months ended June 30, 2021.

The expected amortization of the net carrying amount of finite-lived intangible assets at June 30, ~~2021~~2022 was as follows (in thousands):

Years Ending December 31, Expected Amortization
2021 (six months) $ 15,119
2022 30,075
2023 25,735
2024 24,231
2025 23,254
Thereafter 132,366
$ 250,780

~~(8) ACCRUED EXPENSES~~

~~Accrued expenses consisted of the following (in thousands):~~

June 30, 2021 December 31, 2020
Accrued insurance $ 78,708 $ 77,514
Accrued interest 19,760 19,697
Accrued compensation and benefits 94,856 81,437
Accrued income, real estate, sales and other taxes 25,616 25,843
Interest rate swap liability 25,929 33,630
Accrued other 66,787 57,702
$ 311,656 $ 295,823


Years Ending December 31,	Expected Amortization
2022 (six months)	$	24,966
2023	45,728
2024	40,256
2025	39,051
2026	37,167
Thereafter	327,053
	$	514,221

1213

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(9) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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


	June 30, 2022		December 31, 2021
Accrued insurance	$	96,642	$	102,853
Accrued interest	19,763		19,785
Accrued compensation and benefits	113,575		133,604
Accrued income, real estate, sales and other taxes	66,071		29,954
Interest rate swap liability	—		17,383
Accrued other	90,996		87,835
	$	387,047	$	391,414

The decrease in the interest rate swap liability balance from December 31, 2021 is due to changes in future interest rate

expectations. As of June 30, 2022, the interest rate swap derivatives are in an asset position and therefore are included within Other Assets on the consolidated balance sheet. For additional information relating to the interest rate swaps, see Note 12, "Financing Arrangements."

~~(9)~~(10) CLOSURE AND POST-CLOSURE LIABILITIES

The changes to closure and post-closure liabilities (also referred to as “asset retirement obligations”) from January 1, ~~2021~~2022 through June 30, ~~2021~~2022 were as follows (in thousands):


		Landfill Retirement Liability		Non-Landfill Retirement Liability		Total			Landfill Retirement Liability		Non-Landfill Retirement Liability		Total
Balance at January 1, 2021		$	48,412	$	39,514	$	87,926
Liabilities assumed in acquisitions		0		451		451
Balance at January 1, 2022								Balance at January 1, 2022	$	53,425	$	45,678	$	99,103

New asset retirement obligations	New asset retirement obligations	1,342		0		1,342		New asset retirement obligations	1,657		—		1,657

Accretion	Accretion	1,781		1,844		3,625		Accretion	2,250		1,993		4,243
Changes in estimates recorded to consolidated statement of operations	Changes in estimates recorded to consolidated statement of operations	0		300		300		Changes in estimates recorded to consolidated statement of operations	329		47		376
Changes in estimates recorded to consolidated balance sheet	Changes in estimates recorded to consolidated balance sheet	0		1,137		1,137		Changes in estimates recorded to consolidated balance sheet	—		504		504
Expenditures	Expenditures	(1,163)		(319)		(1,482)		Expenditures	(2,126)		(622)		(2,748)
Currency translation and other	Currency translation and other	153		42		195		Currency translation and other	(100)		(38)		(138)
Balance at June 30, 2021		$	50,525	$	42,969	$	93,494
Balance at June 30, 2022								Balance at June 30, 2022	$	55,435	$	47,562	$	102,997

In the six months ended June 30, ~~2021,~~2022, there were no significant charges ~~(benefits)~~or benefits resulting from changes in estimates for closure and post-closure liabilities.

New asset retirement obligations incurred during the first six months of ~~2021~~2022 were discounted at the credit-adjusted risk-free rate of ~~4.84%~~5.37%.

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~~(10)~~(11) REMEDIAL LIABILITIES

The changes to remedial liabilities from January 1, ~~2021~~2022 through June 30, ~~2021~~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			Remedial Liabilities for Landfill Sites		Remedial Liabilities for Inactive Sites		Remedial Liabilities (Including Superfund) for Non-Landfill Operations		Total
Balance at January 1, 2021		$	1,865	$	63,060	$	49,888	$	114,813

Balance at January 1, 2022										Balance at January 1, 2022	$	1,780	$	59,787	$	50,306	$	111,873
Liability assumed in acquisition of real estate										Liability assumed in acquisition of real estate	—		—		13,073		13,073
Measurement period adjustment from a prior period acquisition										Measurement period adjustment from a prior period acquisition	—		—		242		242
Accretion	Accretion	45		1,320		836		2,201		Accretion	42		1,264		804		2,110
Changes in estimates recorded to consolidated statement of operations	Changes in estimates recorded to consolidated statement of operations	(22)		312		(145)		145		Changes in estimates recorded to consolidated statement of operations	1		731		124		856
Expenditures	Expenditures	(24)		(2,833)		(2,255)		(5,112)		Expenditures	(25)		(1,676)		(2,579)		(4,280)
Currency translation and other	Currency translation and other	0		(805)		1,212		407		Currency translation and other	—		(9)		(209)		(218)
Balance at June 30, 2021		$	1,864	$	61,054	$	49,536	$	112,454
Balance at June 30, 2022										Balance at June 30, 2022	$	1,798	$	60,097	$	61,761	$	123,656

In the six months ended June 30, ~~2021,~~2022, there were no significant ~~(benefits)~~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 the first quarter of 2022. In purchasing the property, the Company assumed a known associated remedial liability, which was contemplated in the purchase price.

~~Table of Contents~~

~~(11)~~(12) FINANCING ARRANGEMENTS

Long-term Debt

The following table is a summary of the Company’s ~~financing arrangements~~long-term debt (in thousands):


Current Debt:		June 30, 2021		December 31, 2020
Secured senior term loans ("Term Loans")		$	7,535	$	7,535
Current Portion of Long-Term Debt:						Current Portion of Long-Term Debt:	June 30, 2022		December 31, 2021
Secured senior term loans						Secured senior term loans	$	17,535	$	17,535

Long-Term Debt:	Long-Term Debt:					Long-Term Debt:
Secured senior Term Loans due June 30, 2024		$	715,859	$	719,626
Secured senior term loans due June 30, 2024 ("2024 Term Loans")						Secured senior term loans due June 30, 2024 ("2024 Term Loans")	$	708,323	$	712,091
Secured senior term loans due October 8, 2028 ("2028 Term Loans")						Secured senior term loans due October 8, 2028 ("2028 Term Loans")	985,000		990,000
Unsecured senior notes, at 4.875%, due July 15, 2027 ("2027 Notes")	Unsecured senior notes, at 4.875%, due July 15, 2027 ("2027 Notes")	545,000		545,000		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")	Unsecured senior notes, at 5.125%, due July 15, 2029 ("2029 Notes")	300,000		300,000		Unsecured senior notes, at 5.125%, due July 15, 2029 ("2029 Notes")	300,000		300,000
Long-term debt, at par	Long-term debt, at par	$	1,560,859	$	1,564,626	Long-term debt, at par	$	2,538,323	$	2,547,091
Unamortized debt issuance costs and premium, net		(13,461)		(14,985)
Unamortized debt issuance costs and discount, net						Unamortized debt issuance costs and discount, net	(27,360)		(30,067)
Long-term debt, at carrying value	Long-term debt, at carrying value	$	1,547,398	$	1,549,641	Long-term debt, at carrying value	$	2,510,963	$	2,517,024

Financing Activities

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the estimated fair value of the Company’s outstanding long-term debt, including the current portion, was ~~$1.6 billion.~~$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 0no outstanding loan balances as of June 30, ~~2021~~2022 and December 31, ~~2020.~~2021. As of June 30, ~~2021,~~2022, the Company had ~~$287.3~~$290.6 million available to borrow under the revolving credit facility and outstanding letters of credit were ~~$112.7~~$109.4 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.

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Although the interest ~~rate~~rates on the Term Loans isare variable, the Company has effectively fixed the interest rate on $350.0 million ~~aggregate~~ principal ~~amount~~ of the outstanding 2024 Term Loans ~~outstanding~~ by entering into interest rate swap agreements in 2018 with a notional amount of $350.0 ~~million.~~million ("2018 Swaps"). Under the terms of the ~~interest rate swap agreements,~~2018 Swaps, the Company receives interest based on the one-month LIBOR index and pays interest at a weighted average ~~annual interest~~ rate of approximately 2.92%, resulting in ana fixed effective annual interest rate of approximately 4.67%. ~~The~~

In January 2022, the Company entered into interest rate swap agreements ~~terminate~~("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 the one-month LIBOR index and pays interest at a weighted average rate of 0.931%, resulting in ~~2024.~~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 ~~assets~~a net asset, included in Other Assets, or net liability, included in Accrued expenses and other current liabilities, on the consolidated balance ~~sheet~~sheets. As of June 30, 2022, the Company recorded a related derivative asset with a fair value of $33.7 million. As of December 31, 2021, the derivative liability totaled $17.4 million. The change in the fair value of the interest rate swap liability is mainly due to the passage of time and changes in future interest rate expectations.

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.~~ value hierarchy.

No ineffectiveness has been identified on ~~these swaps~~the Swaps and, therefore ~~all unrealized changes~~the change in fair value ~~are~~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 ~~transaction affects~~transactions affect earnings.

As of June 30, 2021 and December 31, 2020, the Company has recorded a derivative liability with a fair value of $25.9 million and $33.6 million, respectively, within accrued expenses in connection with these cash flow hedges.

The fair value of the interest rate swaps is calculated using discounted cash flow valuation methodologies based upon the one-month LIBOR yield curves that are observable at commonly quoted intervals for the full term of the interest rate swaps and as such is considered a Level 2 measure according to the fair value hierarchy.

~~(12)~~(13) 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.

~~Table of Contents~~

The Company’s effective tax rate for the three and six months ended June 30, ~~2021~~2022 was 24.0% and 25.0%, compared to 25.9% and 27.3%~~, compared to 29.0% and 34.7%~~, respectively, for the comparable periods in ~~2020.~~2021.

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had recorded ~~$5.1~~$3.6 million and $5.5 million, respectively, of gross liabilities for unrecognized tax benefits and ~~$2.3~~$1.9 million and ~~$2.1~~$2.3 million, respectively, of accrued interest.

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~~(13)~~(14) EARNINGS PER SHARE

The following are computations of basic and diluted earnings per share (in thousands, except per share amounts):


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
		June 30,				June 30,					June 30,				June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Numerator for basic and diluted earnings per share:	Numerator for basic and diluted earnings per share:									Numerator for basic and diluted earnings per share:
Net income	Net income	$	67,075	$	29,023	$	88,811	$	40,595	Net income	$	148,157	$	67,075	$	193,471	$	88,811

Denominator:	Denominator:									Denominator:
Basic shares outstanding		54,529		55,590		54,625		55,673
Weighted-average basic shares outstanding										Weighted-average basic shares outstanding	54,318		54,529		54,362		54,625
Dilutive effect of outstanding stock awards	Dilutive effect of outstanding stock awards	325		158		320		209		Dilutive effect of outstanding stock awards	279		325		277		320
Dilutive shares outstanding	Dilutive shares outstanding	54,854		55,748		54,945		55,882		Dilutive shares outstanding	54,597		54,854		54,639		54,945

Basic earnings per share:	Basic earnings per share:	$	1.23	$	0.52	$	1.63	$	0.73	Basic earnings per share:	$	2.73	$	1.23	$	3.56	$	1.63

Diluted earnings per share:	Diluted earnings per share:	$	1.22	$	0.52	$	1.62	$	0.73	Diluted earnings per share:	$	2.71	$	1.22	$	3.54	$	1.62

For the three months ended June 30, ~~2021~~2022 and ~~June 30, 2020,~~2021, all then outstanding performance awards and restricted stock awards were included in the calculation of diluted earnings per share except for ~~33,708~~104,700 and ~~96,018,~~33,708, respectively, of performance stock awards for which the performance criteria were not attained at the reporting dates and ~~500~~8,376 and ~~149,460,~~500, respectively, of restricted stock ~~awards and performance~~ awards which were excluded as their inclusion would have an antidilutive effect.

For the six months ended June 30, ~~2021~~2022 and ~~June 30, 2020,~~2021, all then outstanding performance awards and restricted stock awards were included in the calculation of diluted earnings per share except for ~~33,708~~104,700 and ~~96,018,~~33,708, respectively, of performance stock awards for which the performance criteria were not attained at the reporting dates and ~~12,604~~25,876 and ~~14,716,~~12,604, respectively, of restricted stock awards which were excluded as their inclusion would have an antidilutive effect.

~~(14)~~(15) ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in accumulated other comprehensive loss by component and related tax impacts for the six months ended June 30, ~~2021~~2022 were as follows (in thousands):

Foreign Currency Translation Unrealized Gains (Losses) on Available-For-Sale Securities Unrealized (Losses) Gains on Interest Rate Hedge Unrealized Losses on Unfunded Pension Liability Total
Balance at January 1, 2021 $ (176,234) $ 135 $ (33,629) $ (1,749) $ (211,477)
Other comprehensive income (loss) before reclassifications 15,009 (155) 2,759 0 17,613
Amounts reclassified out of accumulated other comprehensive loss 0 0 4,942 0 4,942
Tax benefit 0 33 0 0 33
Other comprehensive income (loss) 15,009 (122) 7,701 0 22,588
Balance at June 30, 2021 $ (161,225) $ 13 $ (25,928) $ (1,749) $ (188,889)

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	Foreign Currency Translation		Unrealized (Loss) Gain on Available-For-Sale Securities		Unrealized (Loss) Gain on Interest Rate Hedge		Unrealized Loss on Unfunded Pension Liability		Total
Balance at January 1, 2022	$	(177,824)	$	(150)	$	(17,383)	$	(655)	$	(196,012)
Other comprehensive (loss) income before reclassifications	(7,326)		(830)		45,685		10		37,539
Amounts reclassified out of accumulated other comprehensive loss	—		—		5,358		—		5,358
Tax benefit (provision)	—		174		(9,761)		—		(9,587)
Other comprehensive (loss) income	(7,326)		(656)		41,282		10		33,310
Balance at June 30, 2022	$	(185,150)	$	(806)	$	23,899	$	(645)	$	(162,702)

The amount ~~reclassified out of accumulated other comprehensive loss into~~realized in the consolidated statement of operations ~~with presentation location,~~ during the three and six months ended June 30, ~~2021~~2022 which was reclassified out of accumulated other comprehensive loss was as follows (in thousands):

Other Comprehensive Income (Loss) Component For the Three Months Ended June 30, 2021 For the Six Months Ended June 30, 2021 Location
Unrealized losses on interest rate hedge $ (2,494) $ (4,942) Interest expense, net of interest income


Other Comprehensive (Loss) Income Component	For the Three Months Ended June 30, 2022		For the Six Months Ended June 30, 2022		Location
Unrealized loss on interest rate hedge	$	(2,164)	$	(5,358)	Interest expense, net of interest income

~~(15)~~(16) STOCK-BASED COMPENSATION

Total stock-based compensation cost charged to selling, general and administrative expenses for the three and six months ended June 30, 2022 was $6.8 million and $12.5 million, respectively. Total stock-based compensation cost charged to selling, general and administrative expenses for the three and six months ended June 30, 2021 was $3.3 million and $6.8 million,

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respectively. ~~Total~~The total income tax benefit recognized in the consolidated statements of operations from stock-based compensation ~~cost charged to selling, general and administrative expenses~~expense for the three and six months ended June 30, ~~2020~~2022 was ~~$2.8~~$1.2 million and ~~$6.1~~$2.3 million, respectively. The total income tax benefit recognized in the consolidated statements of operations from stock-based compensation expense for the three and six months ended June 30, 2021 was $0.8 million and $1.5 million, respectively. The total income tax benefit recognized in the consolidated statements of operations from stock-based compensation expense for the three and six months ended June 30, 2020 was $0.4 million and $1.2 million, respectively.

Restricted Stock Awards

The following table summarizes information about restricted stock awards for the six months ended June 30, ~~2021:~~2022:


Restricted Stock	Restricted Stock	Number of Shares	Weighted Average Grant-Date Fair Value		Restricted Stock	Number of Shares	Weighted Average Grant-Date Fair Value
Balance at January 1, 2021		493,879	$	59.74
Balance at January 1, 2022					Balance at January 1, 2022	452,197	$	76.88
Granted	Granted	51,354	87.86		Granted	137,697	93.00
Vested	Vested	(103,449)	57.35		Vested	(56,068)	75.94
Forfeited	Forfeited	(32,321)	58.87		Forfeited	(15,487)	82.65
Balance at June 30, 2021		409,463	63.94
Balance at June 30, 2022					Balance at June 30, 2022	518,339	81.09

As of June 30, ~~2021,~~2022, there was ~~$17.8~~$30.4 million of total unrecognized compensation cost arising from restricted stock awards. This cost is expected to be recognized over a weighted average period of ~~2.5~~2.8 years. The total fair value of restricted stock vested during the three and six months ended June 30, 2022 was $3.9 million and $5.6 million, respectively. The total fair value of restricted stock vested during the three and six months ended June 30, 2021 was $4.9 million and $8.9 ~~million, respectively. The total fair value of restricted stock vested during the three and six months ended June 30, 2020 was $4.4 million and $9.7~~ million, respectively.

Performance Stock Awards

Performance stock awards are subject to performance criteria established by the Compensation Committee of the Company's Board of Directors prior to or at the date of grant. The vesting of the performance stock awards is based on achieving targets currently based on revenue, Adjusted EBITDA, Adjusted EBITDA Margin, ~~Adjusted Free Cash Flow~~Return on Invested Capital and Total Recordable Incident Rate. In addition, performance stock awards include continued service conditions.

The following table summarizes information about performance stock awards for the six months ended June 30, ~~2021:~~2022:

Performance Stock Number of Shares Weighted Average
Grant-Date
Fair Value
Balance at January 1, 2021 254,449 $ 61.75
Granted 5,897 86.15
Vested (71,815) 62.27
Forfeited (20,003) 61.54
Balance at June 30, 2021 168,528 62.41


Performance Stock	Number of Shares	Weighted Average Grant-Date Fair Value
Balance at January 1, 2022	169,757	$	85.56
Granted	154,172	92.64
Vested	(35,718)	86.14
Forfeited	(5,722)	87.14
Balance at June 30, 2022	282,489	89.32

As of June 30, ~~2021,~~2022, there was ~~$1.8~~$13.1 million of total unrecognized compensation cost arising from unvested performance stock awards deemed probable of vesting. ~~NaN~~No performance awards vested during the three months ended June 30, ~~2021~~2022 and June 30, ~~2020.~~2021. The total fair value of performance awards vested during the six months ended June 30, ~~2021~~2022 and June 30, ~~2020~~2021 was $3.8 million and $6.4 million, ~~and $1.3 million,~~ respectively.

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~~(16)~~(17) COMMITMENTS AND CONTINGENCIES

Legal and Administrative Proceedings

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 governmental authorities and other interested parties. The issues involved in such proceedings generally relate to alleged violations of

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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 June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had recorded reserves of ~~$31.8~~$36.8 million and ~~$29.8~~$36.1 million, respectively, in the Company's financial statements 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. 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 our 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. As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the ~~$31.8~~$36.8 million and ~~$29.8~~$36.1 million, respectively, of reserves consisted of (i) ~~$23.6~~$24.1 million ~~and $24.0 million, respectively,~~for both periods, related to pending legal or administrative proceedings, including Superfund liabilities, which were included in remedial liabilities on the consolidated balance sheets, and (ii) ~~$8.2~~$12.7 million and ~~$5.8~~$12.0 million, respectively, primarily related to federal, state and provincial enforcement actions, which were included in accrued expenses and other current liabilities on the consolidated balance sheets.

As of June 30, ~~2021,~~2022, the Company's principal legal and administrative proceedings ~~in which the Company was involved, or which had been terminated during 2021,~~ were as follows:

Ville Mercier. In September 2002, the Company acquired the stock of a subsidiary (the "Mercier Subsidiary") which owns a hazardous waste incinerator in Ville Mercier, Quebec (the "Mercier Facility"). The property adjacent to the Mercier Facility, which is also owned by the Mercier Subsidiary, is now contaminated as a result of actions dating back to 1968, when the Government of Quebec issued 2 permits to dump organic liquids into lagoons on the property to a company unrelated to the Mercier Subsidiary. In 1999, Ville Mercier and 3 neighboring municipalities filed separate legal proceedings against the Mercier Subsidiary and the Government of Quebec. In 2012, the municipalities amended their existing statement of claim to seek $2.9 million (CAD) in general damages and $10.0 million (CAD) in punitive damages, plus interest and costs, as well as injunctive relief. Both the Government of Quebec and the Company have filed summary judgment motions against the municipalities. The parties are attempting to negotiate a resolution and hearings on the motions have been delayed. In September 2007, the Quebec Minister of Sustainable Development, Environment and Parks issued a notice pursuant to Section 115.1 of the Environment Quality Act, superseding notices issued in 1992, which are the subject of the pending litigation. The more recent notice notifies the Mercier Subsidiary that, if the Mercier Subsidiary does not take certain remedial measures at the site, the Minister intends to undertake those measures at the site and claim direct and indirect costs related to such measures. The Company has accrued for costs expected to be incurred relative to the resolution of this matter and believes this matter will not have future material effect on its financial position, results of operations or cash flows.

~~Safety-Kleen Legal Proceedings.~~ Product Liability Cases.On December 28, 2012, the Company acquired Safety-Kleen, Inc. ("Safety-Kleen") and thereby became subject to the legal proceedings in which Safety-Kleen was a party on that date. In addition to certain Superfund proceedings in which Safety-Kleen has been named as a potentially responsible party as described below under “Superfund Proceedings,” ~~the principal such legal proceedings involving Safety-Kleen which were outstanding as of June 30, 2021 were as follows:~~

~~Product Liability Cases.~~Safety-Kleen has been named as a defendant in various product liability lawsuits that are currently pending in various courts and jurisdictions throughout the United ~~States, including~~States. As of June 30, 2022, Safety-Kleen has been named in approximately 6760 outstanding proceedings (excluding cases which have been settled but not formally dismissed) ~~as of June 30, 2021,~~, wherein persons claim personal injury resulting from the use of Safety-Kleen's parts washer equipment or cleaning products. These proceedings typically involve allegations that the solvent used in Safety-Kleen's parts washer equipment contains contaminants and/or that Safety-Kleen's recycling process does not effectively remove the

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contaminants that become entrained in the solvent during their use. In addition, certain claimants assert that Safety-Kleen failed to adequately warn 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 also believes that these claims lack merit and has historically vigorously defended, and intends to continue to vigorously defend, itself and the safety of its products against all 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 June 30, ~~2021.~~2022. From January 1, ~~2021~~2022 to June 30, ~~2021, 11~~2022, 8 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.

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Superfund Proceedings

The Company has been notified that either the Company 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, 6 (including the BR Facility described below) 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 wastes. Of the 125 third-party sites, 3130 are now settled, 15 are currently requiring expenditures on remediation and 7980 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 liability could exceed $1.0 million at 3 of the 131 Superfund related sites.

BR Facility. The Company acquired in 2002 a former hazardous waste incinerator and landfill in Baton Rouge (the "BR Facility"), for which operations had been previously discontinued by the prior owner. In September 2007, the U.S. Environmental Protection Agency ("EPA") issued a special notice letter to the Company related to the Devil's Swamp Lake Site ("Devil's Swamp") in East Baton Rouge Parish, Louisiana. Devil's Swamp includes a lake located downstream of an outfall ditch where wastewater and storm water have been discharged, and Devil's Swamp is proposed to be included on the National Priorities List due to the presence of Contaminants of Concern ("COC") cited by the EPA. These COCs include substances of the kind found in wastewater and storm water discharged from the BR Facility in past operations. The EPA originally requested COC generators to submit a good faith offer to conduct a remedial investigation feasibility study directed towards the eventual remediation of the site. In 2018, the Company completed performing corrective actions at the BR Facility under an order issued by the Louisiana Department of Environmental Quality and has also completed conducting the remedial investigation feasibility study for Devil's Swamp under the order issued by the EPA at which point the feasibility study, with several remedial alternatives, was submitted to the EPA for review. During 2020, the EPA signed a Record of Decision which defined the remediation alternative selected and approved by the EPA and in return, the Company increased the estimated remedial liability for this inactive site by $3.3 million. Changes in the natural landscape and/or new information identified during the remediation could impact this ~~estimate,~~estimate; however, any such changes are not expected to have a future material effect on the Company's financial position, liquidity or results of operation.

Third-Party Sites. Of the 125 third-party Superfund sites at which the Company has been notified it is a PRP or potential PRP or may have indemnification obligations, ~~Clean Harbors~~the Company has an indemnification agreement at 11a total of these sites with ChemWaste, a former subsidiary of Waste Management, Inc., and at 6 additional of these third-party sites, Safety-Kleen has a similar indemnification agreement with McKesson Corporation.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 and ~~McKesson which had shipped wastes to those sites.~~McKesson. Accordingly, ~~Waste Management or McKesson~~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 the indemnification agreements which the

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Company holds from ChemWaste ~~McKesson~~ and ~~two other entities,~~McKesson, 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 June 30, 2022 and December 31, 2021, there ~~was 1 proceeding~~were 2 proceedings for which the Company reasonably believes that the sanctions could equal or exceed $1.0 ~~million, and NaN as of December 31, 2020.~~million. The Company believes that the fines or other penalties in these or any of the other regulatory proceedings will not, individually or in the aggregate, have a material effect on its financial condition, results of operations or cash flows.

~~(17)~~(18) SEGMENT REPORTING

Segment reporting is prepared on the same basis that the Company's chief executive officer, who is the Company's chief operating decision maker, manages the business, makes operating decisions and assesses performance. ~~As described in the~~ ~~Changes in Operating Segments~~ section of Note 2, "Significant Accounting Policies" during the first quarter of 2021, certain of the Company's businesses undertook a reorganization which included changes to the underlying business and management structures. The Company's chief operating decision maker also requested changes in the information that he regularly reviews for purposes of allocating resources and assessing performance so that the information would align with the new operating structure of the business. Due to these changes the Company reassessed its operating segment conclusions in the first quarter of 2021 which resulted in a change in the operating segments. The Company ~~consolidated~~is managed and

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reports as 2 operating segments; (i) the ~~core services of Safety-Kleen Environmental Services into its~~ Environmental Services segment ~~eliminated its Safety-Kleen segment~~ and ~~created~~(ii) the Safety-Kleen Sustainability Solutions segment. In addition, certain intercompany transactions previously recorded as Corporate Items have been allocated to the segments. All the historical balances presented below have been recast to reflect the impact of these changes.

Third-party revenue is revenue billed to outside customers by a particular segment. Direct revenues 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. Transactions between the segments are accounted for at the Company’s best estimate based on similar transactions with outside customers. 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 table reconciles third-party revenues to direct revenues for the three and six months ended June 30, ~~2021~~2022 and ~~June 30, 2020~~2021 (in thousands):


		For the Three Months Ended June 30, 2021				For the Three Months Ended June 30, 2020						For the Three Months Ended June 30, 2022						For the Three Months Ended June 30, 2021
		Third-party revenues		Intersegment revenues, net		Direct revenues		Third-party revenues		Intersegment revenues, net			Direct revenues			Third-party revenues		Intersegment revenues, net		Direct revenues		Third-party revenues		Intersegment revenues, net		Direct revenues
Environmental Services	Environmental Services	$	723,147	$	950	$	724,097	$	612,720	$	(126)		$	612,594	Environmental Services	$	1,084,506	$	6,237	$	1,090,743	$	723,147	$	950	$	724,097
Safety-Kleen Sustainability Solutions	Safety-Kleen Sustainability Solutions	203,232		(950)		202,282		97,224		126			97,350		Safety-Kleen Sustainability Solutions	271,727		(6,237)		265,490		203,232		(950)		202,282
Corporate Items	Corporate Items	79		—		79		56		—			56		Corporate Items	79		—		79		79		—		79
Total	Total	$	926,458	$	—	$	926,458	$	710,000	$	—		$	710,000	Total	$	1,356,312	$	—	$	1,356,312	$	926,458	$	—	$	926,458

For the Six Months Ended June 30, 2021 For the Six Months Ended June 30, 2020
Third-party revenues Intersegment revenues, net Direct revenues Third-party revenues Intersegment revenues, net Direct revenues
Environmental Services $ 1,376,025 $ 2,674 $ 1,378,699 $ 1,317,756 $ 30 $ 1,317,786
Safety-Kleen Sustainability Solutions 358,423 (2,674) 355,749 250,661 (30) 250,631
Corporate Items 158 — 158 146 — 146
Total $ 1,734,606 $ — $ 1,734,606 $ 1,568,563 $ — $ 1,568,563

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	For the Six Months Ended June 30, 2022				For the Six Months Ended June 30, 2021
	Third-party revenues		Intersegment revenues, net		Direct revenues		Third-party revenues		Intersegment revenues, net		Direct revenues
Environmental Services	$	2,025,304	$	12,884	$	2,038,188	$	1,376,025	$	2,674	$	1,378,699
Safety-Kleen Sustainability Solutions	499,966		(12,884)		487,082		358,423		(2,674)		355,749
Corporate Items	151		—		151		158		—		158
Total	$	2,525,421	$	—	$	2,525,421	$	1,734,606	$	—	$	1,734,606

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, provision for income taxes and excludes other gains, losses or non-cash charges not deemed representative of fundamental segment results and other (income) expense, net. Beginning in the first quarter of 2021, we revised our calculation of reported Adjusted EBITDA to add stock-based compensation, a non-cash item, to other charges which are added back to net income determined in accordance with generally accepted accounting principles ("GAAP") for purposes of calculating Adjusted EBITDA. The amount added back each period matches the line item for stock-based compensation as recorded on the consolidated statements of cash flows. All relevant prior period Adjusted EBITDA amounts were recast to provide comparative information.

The following table presents Adjusted EBITDA information used by management by reported segment (in thousands):


		For the Three Months Ended				For the Six Months Ended					For the Three Months Ended				For the Six Months Ended
		June 30,				June 30,					June 30,				June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Adjusted EBITDA:	Adjusted EBITDA:									Adjusted EBITDA:
Environmental Services	Environmental Services	$	176,041	$	176,241	$	316,295	$	322,099	Environmental Services	$	269,341	$	176,041	$	452,943	$	316,295
Safety-Kleen Sustainability Solutions	Safety-Kleen Sustainability Solutions	63,314		8,431		94,946		32,635		Safety-Kleen Sustainability Solutions	97,010		63,314		148,887		94,946
Corporate Items	Corporate Items	(51,584)		(46,406)		(94,019)		(90,587)		Corporate Items	(57,281)		(51,584)		(112,501)		(94,019)
Total	Total	187,771		138,266		317,222		264,147		Total	309,070		187,771		489,329		317,222
Reconciliation to Consolidated Statements of Operations:	Reconciliation to Consolidated Statements of Operations:									Reconciliation to Consolidated Statements of Operations:
Accretion of environmental liabilities	Accretion of environmental liabilities	2,873		2,766		5,826		5,327		Accretion of environmental liabilities	3,197		2,873		6,353		5,826
Stock-based compensation	Stock-based compensation	3,305		2,786		6,785		6,077		Stock-based compensation	6,835		3,305		12,547		6,785
Depreciation and amortization	Depreciation and amortization	71,592		72,494		143,755		147,027		Depreciation and amortization	87,868		71,592		172,166		143,755
Income from operations	Income from operations	110,001		60,220		160,856		105,716		Income from operations	211,170		110,001		298,263		160,856
Other expense, net		1,480		500		2,708		2,865
Loss on sale of businesses		0		184		0		3,258
Other (income) expense, net										Other (income) expense, net	(1,265)		1,480		(1,969)		2,708
Gain on sale of business										Gain on sale of business	(8,864)		—		(8,864)		—

Interest expense, net of interest income	Interest expense, net of interest income	18,051		18,654		35,969		37,441		Interest expense, net of interest income	26,256		18,051		51,273		35,969
Income before provision for income taxes	Income before provision for income taxes	$	90,470	$	40,882	$	122,179	$	62,152	Income before provision for income taxes	$	195,043	$	90,470	$	257,823	$	122,179

~~The following table presents certain assets by reportable segment and in the aggregate (in thousands):~~

June 30, 2021 December 31, 2020
Property, plant and equipment, net:
Environmental Services $ 1,068,270 $ 1,068,910
Safety-Kleen Sustainability Solutions 371,056 366,160
Corporate Items 91,963 90,228
Total property, plant and equipment, net $ 1,531,289 $ 1,525,298
Goodwill and Permits and other intangibles, net:
Environmental Services
Goodwill $ 403,136 $ 401,918
Permits and other intangibles, net 221,437 228,237
Total Environmental Services 624,573 630,155
Safety-Kleen Sustainability Solutions
Goodwill $ 141,503 $ 125,105
Permits and other intangibles, net 152,793 158,383
Total Safety-Kleen Sustainability Solutions 294,296 283,488
Total $ 918,869 $ 913,643

2021

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~~The following table presents the total assets by geographical area (in thousands):~~

June 30, 2021 December 31, 2020
United States $ 3,566,318 $ 3,447,811
Canada and other foreign 709,561 683,709
Total $ 4,275,879 $ 4,131,520

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, 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, ~~the expected completion and impact of our proposed acquisition of HydroChemPSC ("HPC"), and~~ those items identified as "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 ~~24, 2021,~~23, 2022, 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. Clean Harbors undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements other than through its filings with the SEC, which may be viewed in the "Investors" section of the Clean Harbors website.

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 aover 300,000 customers, including the majority of Fortune 500 companies. This diverse customer base ~~including Fortune 500 companies, across~~includes the chemical, energy, manufacturing and additional markets, as well as numerous government agencies. These customers rely on us to 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~~ the largest re-refiner and recycler of used oil in North America and the largest provider of parts washer and related environmental services to commercial, industrial and automotive customers in North America.

During the first quarter of 2021, we reorganized our Safety-Kleen business. The collection services for waste oil, used oil filters, antifreeze and related items and bulk blended oil sales operations were combined with the Safety-Kleen Oil business to form the Safety-Kleen Sustainability Solutions business. Under this structure, Safety-Kleen Sustainability Solutions encompasses both sides of the spread we manage in our re-refinery business, and we expect this change to drive additional growth in our sustainable lubricant products and related services.

Concurrently with this change, we consolidated the Safety-Kleen Environmental branches' core offerings, including containerized waste, parts washer and vacuum services, into the legacy Clean Harbors Environmental Services sales and service operations. We expect this change to foster enhanced cross-selling opportunities within the environmental businesses and increase market presence with small quantity generators of hazardous waste.

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Performance of our segments is evaluated on several factors of which the primary financial measure is Adjusted ~~EBITDA. Beginning in the first quarter of 2021, we revised~~EBITDA, as reconciled to our ~~calculation of reported Adjusted EBITDA to add back stock-based compensation, a non-cash item, to other charges which are added back to~~ net income ~~determined in accordance with generally accepted accounting principles ("GAAP"). See the Adjusted EBITDA section below for additional details regarding this change~~ and ~~our consideration of this metric. Prior period amounts have been recast to conform to this presentation.~~

described more fully below. The following is a discussion of how management evaluates its segments in regards to 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~~customer demand ~~by our customers~~ for waste services, waste volumes generated by such services and project work for which 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 and environmental cleanup services on a scheduled or emergency basis, including response to national events such as major chemical spills, natural disasters, or other events where immediate and specialized services are ~~required. As a result of the Coronavirus ("COVID-19") pandemic, the business saw increased demand for response services relative to~~required, including our contagion disinfection, decontamination and disposal ~~in 2020 and into 2021.~~services. With the addition of the Safety-Kleen core service offerings, ~~including~~(e.g. containerized waste disposal, parts washer and vacuum ~~services,~~services), the Environmental Services results are further ~~driven~~impacted 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 ~~owned facilities,~~incinerators, TSDFs and landfills, the utilization rates of our incinerators, equipment and workforce, including billable hours, and number of parts washer services performed, among 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 automotive, ~~chemical,~~ manufacturing and other industrial markets, 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.

•Safety-Kleen Sustainability Solutions - Safety-Kleen Sustainability Solutions segment results are impacted by our customers' demand for high-quality, environmentally responsible recycled oil products and their demand for our related service offerings and products. Safety-Kleen Sustainability Solutions offers high quality recycled KLEEN+ base oils and various blended oil products to end users including fleet customers, distributors and manufacturers of oil products.

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Segment results are impacted by overall demand as well as product mix as it relates to these oil products. Segment results are also predicated on the demand for the Safety-Kleen Sustainability Solutions other product and service offerings including collection services for used oil, used oil filters and other automotive fluids. These fluid collections are used as feedstock in our oil re-refining to make our base and blended oil products and our recycled automotive related fluid products 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. Management also tracks the volumes and pricing of used oil and automotive fluid collections. Levels of activity and ultimate performance associated with this segment can be impacted by economic conditions in the automotive services and manufacturing markets, efficiency of our operations, technology, weather conditions, changing regulations, competition, ~~and~~ the management of our related operating ~~costs.~~costs and the availability of raw materials including used oil and additives. 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. The overall market price of oil and regulations that change the possible usage of used oil, including the International Maritime Organization's 2020 regulation ("IMO 2020") and other regulations related to the burning of used motor oil as a fuel, both impact the premium the segment can charge for used oil collections.

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Highlights

Total revenues for the three and six months ended June 30, ~~2021~~2022 were $1,356.3 million and $2,525.4 million, compared with $926.5 million and $1,734.6 ~~million, compared with $710.0 million and $1,568.6~~ million for the three and six months ended June 30, ~~2020. Prior year~~2021. Our Environmental Services segment direct revenues increased $366.6 million and $659.5 million or 50.6% and 47.8% from the comparable periods in 2021. Our acquisition of HydroChemPSC on October 8, 2021, contributed to increases in both our industrial services and field and emergency response service offerings within the Environmental Services segment. The sales and operations of HydroChemPSC have been fully integrated into the Environmental Services segment and we estimate that for the three and six months ended June 30, 2022, total revenues from the HydroChemPSC business were ~~negatively affected by~~approximately $207.9 million and $392.0 million, respectively. Core organic growth within the ~~impact of~~Environmental Services segment also contributed to the ~~COVID-19 pandemic.~~overall increases in direct revenues for the segment in 2022 as compared to the comparable periods in 2021. In the three and six months ended June 30, 2021, our Environmental Services segment direct revenues increased 18.2% and 4.6% from the comparable periods in 2020. Current period results were driven primarily by greater volumes of higher value waste streams at our incinerators and higher demand throughout most of our portfolio of services, most predominantly our industrial services operations, partially offset by lower demand for our COVID-19 decontamination services. In the three and six months ended June 30, 2021,2022, our Safety-Kleen Sustainability Solutions segment direct revenues increased ~~107.8%~~$63.2 million and ~~41.9%~~$131.3 million or 31.2% and 36.9% from the comparable periods in ~~2020~~2021 predominately due to ~~increased~~higher pricing ~~and increased demand for~~of our base and blended oil ~~which increased volumes~~products. Foreign currency translation of ~~products sold. The fluctuation of the~~our Canadian ~~dollar positively~~operations negatively impacted our consolidated direct revenues by ~~$16.2 million and $22.1~~$7.3 million in the three and six months ended June 30, ~~2021, respectively.~~2022.

In the three and six months ended June 30, ~~2021,~~2022, costs have increased in both the Environmental Services and Safety-Kleen Sustainability Solutions segments when comparing to the prior year given the increase in business levels, ~~and~~ revenue mix, ~~combined with lower benefits from~~inflationary pressures seen across several cost categories and supply chain constraints. Our business began seeing the ~~Government Programs. Despite~~impact of macroeconomic factors including inflationary pressures and supply chain constraints in 2021 and these factors continue to impact the ~~increased costs seen~~business operations. Supply chain challenges for additives and other materials used in the ~~current period, gross margins for~~oil re-refining process have delayed production, added costs and shifted the product mix within our Safety-Kleen Sustainability Solutions segment. Similarly within the Environmental Services segment, supply chain challenges have delayed fleet and ~~Safety-Kleen Sustainability Solutions~~equipment delivery, increasing rental and external transportation costs.

Both segments have seen the impact of inflationary pressures, most notably in labor and the cost of certain supplies used in the operations of our businesses, including fuel related costs. In recent quarters, we have executed upon pricing strategies, including fuel surcharges, and cost control initiatives to mitigate, to the greatest extent possible, the impact of these inflationary pressures. As a result of these focused efforts, costs as a percentage of direct revenues for the three months ended June 30, 2022 improved ~~from pre-pandemic levels.~~when compared to previous quarters also impacted by these inflationary pressures.

We reported income from operations for the three and six months ended June 30, ~~2021~~2022 of $211.2 million and $298.3 million, compared with $110.0 million and $160.9 ~~million compared with $60.2 million and $105.7~~ million in the three and six months ended June 30, ~~2020,~~2021, representing increases of $101.2 million and ~~net~~$137.4 million. Net income for the three and six months ended June 30, ~~2021 of $67.1~~2022 was $148.2 million and ~~$88.8~~$193.5 million, compared with net income of ~~$29.0~~$67.1 million and ~~$40.6~~$88.8 million in the three and six months ended June 30, ~~2020.~~2021, representing increases of $81.1 million and $104.7 million.

Adjusted EBITDA, which is the primary financial measure by which our segments are evaluated, increased ~~35.8%~~64.6% to $309.1 million in the three months ended June 30, 2022 from $187.8 million in the three months ended June 30, 2021 ~~from $138.3~~and increased 54.3% to $489.3 million in the ~~three~~six months ended June 30, ~~2020 and increased 20.1% to~~2022 from $317.2 million in the six months ended June 30, ~~2021 from $264.1 million in the six months ended June 30, 2020.~~2021. This improved ~~profitability~~performance was ~~primarily~~ driven by the ~~mix of product sales and~~increased revenue levels in both segments noted above, focused pricing initiatives in the Environmental Services segment's disposal network, strong spread management as it relates to the pricing of base oil products and used motor oil collection services in the Safety-Kleen Sustainability Solutions segment ~~as well as continued~~and cost ~~management.~~control initiatives across the entire

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business. Additional information, including a reconciliation of Adjusted EBITDA to net income, appears below under ~~the heading~~ "Adjusted EBITDA."

Net cash from operating activities for the six months ended June 30, ~~2021~~2022 was $132.0 million, as compared to net cash from operating activities of $265.4 million ~~an increase of $91.9 million from~~in the comparable period ~~in 2020.~~of 2021. Adjusted free cash flow, which management uses to measure our financial strength and ability to generate cash, was ~~$176.9~~an outflow of $13.0 million in the six months ended June 30, ~~2021,~~2022 as compared to ~~$71.9~~positive adjusted free cash flow of $176.9 million in the comparable period of ~~2020.~~2021. These ~~increased~~expected decreases in our cash flows were the result of an increase in working capital arising from our significant growth in the business, comparatively higher incentive compensation and interest payments and higher levels of cash ~~flows are~~spending on the ~~result~~acquisition of ~~greater levels of~~property, plant and equipment, partially offset by higher operating ~~income and improved working capital management in 2021.~~income. Additional information, including a reconciliation of adjusted free cash flow to net cash from operating activities, appears below under ~~the heading~~ "Adjusted Free Cash Flow."

~~Impact of COVID-19~~

During the second quarter of 2021, we continued to see incremental improvements in the demand for our products and services consistent with the lifting of travel and other government restrictions and the ongoing national and state vaccination efforts. Over the last year, our business has been slowly recovering after the sharp decline in the second quarter of 2020. As we exited the second quarter of 2021, both quarter to date and year to date direct revenues and Adjusted EBITDA were comparable or higher than pre-pandemic levels for each of our segments.

In the first six months of 2021, we recognized $39.7 million of direct revenues specifically related to COVID-19 disinfecting, decontamination and disposal related emergency response services. We began to see slower demand in the second quarter of 2021 when we recognized direct revenues of $11.5 million for such work. Although we are uncertain as to the exact level of such services throughout the remainder of 2021, we expect to continue to see slowing demand for these COVID-19 response services as vaccination levels continue to increase.

~~The potential impact of COVID-19 variants (e.g. the Delta variant) remains unknown at this time, however could impact both our business recovery and the demand for our COVID-19 response services.~~

~~Impact of Government Programs~~

In 2020, the Governments of Canada and the United States announced the Canada Emergency Wage Subsidy ("CEWS") and the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), respectively, in response to the widespread economic impact of the COVID-19 pandemic (collectively referred to as "Government Programs"). Both Government Programs have been extended into 2021 and as such, management has continued to consider and analyze the Company's eligibility under such

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Government Programs. During 2021 the Company recognized certain employee wage subsidies under the CEWS and, to a lesser extent, employee retention credits under the CARES Act. We do not anticipate any future significant benefits from the Government Programs given the current status of our operations. The table below summarizes the benefit of the Government Programs recorded in the statement of operations for the three and six months ended June 30, 2021 and June 30, 2020 (in thousands):

Three Months Ended Three Months Ended
June 30, 2021 June 30, 2020
Environmental Services Safety-Kleen Sustainability Solutions Corporate Items Total Environmental Services Safety-Kleen Sustainability Solutions Corporate Items Total
Cost of revenues $ 3,369 $ 256 $ 56 $ 3,681 $ 12,950 $ 911 $ 415 $ 14,276
Selling, general and administrative expenses 1,032 219 263 1,514 6,743 931 1,449 9,123
Total $ 4,401 $ 475 $ 319 $ 5,195 $ 19,693 $ 1,842 $ 1,864 $ 23,399

Six Months Ended Six Months Ended
June 30, 2021 June 30, 2020
Environmental Services Safety-Kleen Sustainability Solutions Corporate Items Total Environmental Services Safety-Kleen Sustainability Solutions Corporate Items Total
Cost of revenues $ 7,136 $ 725 $ 80 $ 7,941 $ 12,950 $ 911 $ 415 $ 14,276
Selling, general and administrative expenses 1,779 545 343 2,667 6,743 931 1,449 9,123
Total $ 8,915 $ 1,270 $ 423 $ 10,608 $ 19,693 $ 1,842 $ 1,864 $ 23,399

~~Proposed acquisition of HydroChemPSC~~

On August 3, 2021, we signed a definitive agreement to acquire HydroChemPSC for $1.25 billion ("HPC Acquisition") in cash consideration subject to customary purchase price adjustments. HPC is a leading U.S. provider of industrial cleaning, specialty maintenance and utility services. The HPC Acquisition is subject to approval by regulators, as well as other customary closing conditions, and is expected to close later this year.

HPC serves customers across a broad range of markets and provides solutions to customers focused on cleaning, maintenance and environmental compliance of essential, mission critical equipment and infrastructure. HPC has more than 5,000 employees, over 240 service locations across the United States and has a fleet of specialized equipment and vehicles as well as technology which will enhance and add to the assets of the Environmental Services segment.

Given the size and complexity of the HPC Acquisition and the required regulatory approval, we cannot definitively state when the HPC Acquisition will be completed. We currently anticipate that the HPC Acquisition will be completed later in 2021, however, consummation will be subject to certain conditions, including, among others, expiration or termination of the applicable Hart-Scott-Rodino antitrust waiting periods. The terms and conditions of any authorization or consent that is granted, if any, may impose requirements, limitations or restrictions that may materially delay the completion of the HPC Acquisition.

We expect to incur significant costs in connection with the HPC Acquisition, including costs related to financing the HPC Acquisition and ultimate integration of the business. We will be subject to capital debt market risks in connection with our plan to finance the portion of the purchase price above the amount of available cash which we plan to use. We have a financing commitment for term loan debt financing from Goldman Sachs Bank USA.

Upon completion of the HPC Acquisition, successful integration of the HPC business and operations into our business will be necessary to realize the anticipated benefits from combining HPC with Clean Harbors. We believe that the combined business will benefit from incremental waste volumes through Clean Harbors' network of facilities, greater customer relationships and cross selling opportunities and synergistic opportunities within customer service, transportation, branch network, asset rentals and vehicle and tank refurbishment among others. The success of the HPC Acquisition will depend, in part, on integration of the financial reporting systems and controls and the focused attention (time and resources) of both Clean Harbors' and HPC's management teams.

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Segment Performance

The primary financial measure by which we evaluate the performance of our segments is Adjusted ~~EBITDA.~~EBITDA, as described below under "Adjusted EBITDA". The following table sets forth certain financial information associated with our results of operations for the three and six months ended June 30, ~~2021~~2022 and June 30, ~~2020~~2021 (in thousands, except percentages):


		Summary of Operations															Summary of Operations
		For the Three Months Ended							For the Six Months Ended								For the Three Months Ended										For the Six Months Ended
		June 30, 2021		June 30, 2020		$ Change		% Change	June 30, 2021		June 30, 2020		$ Change		% Change		June 30, 2022			June 30, 2021			Change			% Change	June 30, 2022			June 30, 2021			Change			% Change
Direct Revenues(1):	Direct Revenues(1):															Direct Revenues(1):
Environmental Services	Environmental Services	$	724,097	$	612,594	$	111,503	18.2%	$	1,378,699	$	1,317,786	$	60,913	4.6%	Environmental Services	$	1,090,743		$	724,097		$	366,646		50.6%	$	2,038,188		$	1,378,699		$	659,489		47.8%
Safety-Kleen Sustainability Solutions	Safety-Kleen Sustainability Solutions	202,282		97,350		104,932		107.8	355,749		250,631		105,118		41.9	Safety-Kleen Sustainability Solutions	265,490			202,282			63,208			31.2	487,082			355,749			131,333			36.9
Corporate Items	Corporate Items	79		56		23		N/M	158		146		12		N/M	Corporate Items	79			79			—			N/M	151			158			(7)			N/M
Total	Total	926,458		710,000		216,458		30.5	1,734,606		1,568,563		166,043		10.6	Total	1,356,312			926,458			429,854			46.4	2,525,421			1,734,606			790,815			45.6
Cost of Revenues(2):	Cost of Revenues(2):															Cost of Revenues(2):
Environmental Services	Environmental Services	487,257		385,113		102,144		26.5	938,512		876,234		62,278		7.1	Environmental Services	743,659			487,257			256,402			52.6	1,428,995			938,512			490,483			52.3
Safety-Kleen Sustainability Solutions	Safety-Kleen Sustainability Solutions	123,025		76,318		46,707		61.2	231,401		190,146		41,255		21.7	Safety-Kleen Sustainability Solutions	151,020			123,025			27,995			22.8	303,037			231,401			71,636			31.0
Corporate Items	Corporate Items	7,604		9,250		(1,646)		N/M	8,509		10,967		(2,458)		N/M	Corporate Items	3,790			7,604			(3,814)			N/M	9,826			8,509			1,317			N/M
Total	Total	617,886		470,681		147,205		31.3	1,178,422		1,077,347		101,075		9.4	Total	898,469			617,886			280,583			45.4	1,741,858			1,178,422			563,436			47.8
Selling, General & Administrative Expenses:	Selling, General & Administrative Expenses:															Selling, General & Administrative Expenses:
Environmental Services	Environmental Services	60,799		51,240		9,559		18.7	123,892		119,453		4,439		3.7	Environmental Services	77,743			60,799			16,944			27.9	156,250			123,892			32,358			26.1
Safety-Kleen Sustainability Solutions	Safety-Kleen Sustainability Solutions	15,943		12,601		3,342		26.5	29,402		27,850		1,552		5.6	Safety-Kleen Sustainability Solutions	17,460			15,943			1,517			9.5	35,158			29,402			5,756			19.6
Corporate Items	Corporate Items	47,364		39,998		7,366		18.4	92,453		85,843		6,610		7.7	Corporate Items	60,405			47,364			13,041			27.5	115,373			92,453			22,920			24.8
Total	Total	124,106		103,839		20,267		19.5	245,747		233,146		12,601		5.4	Total	155,608			124,106			31,502			25.4	306,781			245,747			61,034			24.8
Adjusted EBITDA:	Adjusted EBITDA:															Adjusted EBITDA:
Environmental Services	Environmental Services	176,041		176,241		(200)		(0.1)	316,295		322,099		(5,804)		(1.8)	Environmental Services	269,341			176,041			93,300			53.0	452,943			316,295			136,648			43.2
Safety-Kleen Sustainability Solutions	Safety-Kleen Sustainability Solutions	63,314		8,431		54,883		651.0	94,946		32,635		62,311		190.9	Safety-Kleen Sustainability Solutions	97,010			63,314			33,696			53.2	148,887			94,946			53,941			56.8
Corporate Items	Corporate Items	(51,584)		(46,406)		(5,178)		(11.2)	(94,019)		(90,587)		(3,432)		(3.8)	Corporate Items	(57,281)			(51,584)			(5,697)			(11.0)	(112,501)			(94,019)			(18,482)			(19.7)
Total	Total	$	187,771	$	138,266	$	49,505	35.8%	$	317,222	$	264,147	$	53,075	20.1%	Total	$	309,070		$	187,771		$	121,299		64.6%	$	489,329		$	317,222		$	172,107		54.3%
Adjusted EBITDA as a % of Direct Revenues:																Adjusted EBITDA as a % of Direct Revenues:
Environmental Services																Environmental Services	24.7		%	24.3		%	0.4		%		22.2		%	22.9		%	(0.7)		%
Safety-Kleen Sustainability Solutions																Safety-Kleen Sustainability Solutions	36.5		%	31.3		%	5.2		%		30.6		%	26.7		%	3.9		%
Corporate Items																Corporate Items	N/M			N/M			N/M				N/M			N/M			N/M
Total																Total	22.8		%	20.3		%	2.5		%		19.4		%	18.3		%	1.1		%

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N/M = not meaningful

(1)Direct revenue is revenue allocated to the segment performing the provided service.

(2)Cost of revenue is 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.

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Direct Revenues

There are many factors which have impacted and continue to impact our revenues including, but not limited to: overall levels of industrial activity and economic growth in North America, existence or non-existence of large scale environmental waste and remediation projects, competitive industry pricing, miles driven and related lubricant demand, impacts of acquisitions and divestitures, the level of emergency response services, weather related events, base and blended oil pricing, 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, the number of parts washers placed at customer sites and foreign currency translation. In addition, customer efforts to minimize hazardous waste and changes in regulation can also impact our revenues.

Environmental Services


		For the Three Months Ended								For the Six Months Ended									For the Three Months Ended								For the Six Months Ended
		June 30,				2021 over 2020				June 30,				2021 over 2020					June 30,				2022 over 2021				June 30,				2022 over 2021
(in thousands, except percentages)	(in thousands, except percentages)	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change		(in thousands, except percentages)	2022		2021		Change		% Change		2022		2021		Change		% Change

Direct revenues	Direct revenues	$	724,097	$	612,594	$	111,503	18.2	%	$	1,378,699	$	1,317,786	$	60,913	4.6	%	Direct revenues	$	1,090,743	$	724,097	$	366,646	50.6	%	$	2,038,188	$	1,378,699	$	659,489	47.8	%

Environmental Services direct revenues for the three months ended June 30, ~~2021~~2022 increased ~~$111.5~~$366.6 million from the comparable period in ~~2020~~2021 driven primarily by the incremental business from the HydroChemPSC operations within industrial service and field and emergency response service revenues coupled with organic growth across our other waste disposal service offerings. Direct revenues of our industrial service offerings increased $203.8 million, of which approximately $173.7 million was generated by HydroChemPSC, while the remainder was primarily due to increased demand and pricing for our core industrial services. Technical services revenues increased $91.6 million largely due to higher ~~demand throughout~~throughput at our ~~portfolio of services~~facilities and ~~greater volumes of~~ higher value waste streams coupled with pricing initiatives across the business. Higher volumes at our incinerators drove an increase in utilization from 87% in the second quarter of 2021 to 90% in the second quarter of 2022. We also saw an increase in landfill volumes in the second quarter of 2022 as compared to the second quarter of 2021. Field and ~~landfills, partially offset by lower demand for our~~emergency response services revenues increased approximately $40.1 million despite a $6.3 million decrease in COVID-19 decontamination ~~services. Direct revenues~~service revenues. This overall increase was both related to ~~our industrial services increased $49.6~~contributions from the HydroChemPSC business of $34.2 million ~~predominately due to increased demand for industrial cleanings~~ as ~~overall economic activity began to improve and industrial cleaning services previously delayed due to~~well as organic growth from the ~~impacts of COVID-19 were executed combined with a renewed sales strategy for the business. Demand for our base~~legacy field services ~~excluding any COVID-19 decontamination services, increased approximately $18.2 million from the same period in 2020.~~operations. Direct revenues for the Safety-Kleen core service offerings increased ~~$14.0~~$31.1 million from the comparable period in ~~2020~~2021 due to improved pricing and higher demand for these containerized waste, vacuum and parts washer services. Direct revenues at our incinerators increased $12.8 million when comparing the three months ended June 30, 2021 to the same period in 2020, resulting from greater volumes of higher value waste streams. Overall, incinerator utilization was 87% which was consistent with the same period in 2020 and illustrates the shifting of mix to higher value waste streams. Higher pricing and volumes at our landfill facilities increased direct revenues by $3.9 million. In the three months ended June 30, 2021, lower demand for our ~~COVID-19 decontamination services resulted in a direct revenue decrease of $38.5 million, partially offsetting all of the increases noted above.~~containerized waste and vacuum services. The Canadian operations of the Environmental Services segment were ~~positively~~negatively impacted by ~~$12.9~~$5.8 million due to foreign currency translation.

Environmental Services direct revenues for the six months ended June 30, ~~2021~~2022 increased ~~$60.9~~$659.5 million from the comparable period in ~~2020 driven~~2021. Consistent with the discussion above, a significant portion of this increase is due to the incremental business from the HydroChemPSC operations within industrial service and field and emergency response service revenues and organic growth across our service offerings. Direct revenues of our industrial service offerings increased $388.2 million of which approximately $329.8 million was generated by HydroChemPSC while the remainder was primarily ~~by returning~~due to increased demand and pricing for our core industrial services. Technical services ~~specifically~~revenues increased $155.4 million largely due to higher throughput at our facilities and higher value waste streams coupled with pricing initiatives. Utilization at our incinerators increased to 88% in the ~~three~~six months ~~ended June 30, 2021~~of 2022 largely driven by increased volume and fewer down days as compared to ~~the same period~~utilization of 83% in the prior year. Demand for industrial services increased direct revenues by $19.2 million from the comparable period in the prior year, as overall economic activity began to improve and industrial cleaning services delayed due to the impacts of COVID-19 were executed combined with a renewed sales strategy for the business. Utilization at the incinerators for the six months ended June 30, 2021 which was ~~83% as compared to 86% in the prior year. This lower utilization was generally the result of more down days due to~~impacted by significant weather events ~~which occurred during~~in the first quarter of 2021. ~~Despite the lower utilization, greater volumes of higher value waste streams drove a $9.0 million~~We also saw an increase in ~~direct~~landfill volumes in the six months of 2022 as compared to the first six months of 2021. Field and emergency response services revenues ~~at our incinerator facilities.~~increased approximately $67.4 million despite a $25.8 million decrease in COVID-19 decontamination service revenues. This overall increase was both related to contributions from the HydroChemPSC business of $62.2 million as well as organic growth from increased demand in the legacy field services operations. Direct revenues ~~at our landfill facilities~~for the Safety-Kleen core service offerings increased ~~$2.4~~$48.0 million from the comparable period in ~~2020~~2021 due to higher value waste streams overcoming lower volumes. In the six months ended June 30, 2021, direct revenues from COVID-19 decontamination services decreased by $20.3 million, partially offsetting the increases noted above, due to lowerimproved pricing and greater demand for ~~such services, specifically in the second quarter of 2021. Also impacting the year over year change in direct revenues within this segment was the positive impact of foreign currency translation on~~ our containerized waste and vacuum services. The Canadian operations of ~~$17.6 million.~~

~~Safety-Kleen Sustainability Solutions~~

~~Safety-Kleen Sustainability Solutions direct revenues for~~ the ~~three months ended June 30, 2021 increased $104.9~~Environmental Services segment were negatively impacted by $5.8 million ~~from the comparable period in 2020. A number of price increases experienced throughout the quarter and increased demand and~~due to foreign currency translation.

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resulting volumes of product sold drove an $84.7 million increase in revenue from base oil sales and a $17.5 million increase revenue from blended oil sales. Revenues from contract blending and packaging increased $10.0 million in the three months ended June 30, 2021 when compared to the three months ended June 30, 2021 as well. Pricing increases in recycled fuel oil and refinery byproducts increased revenues by $4.4 million. Revenues from used oil collection services decreased $11.6 million in the second quarter of 2021, when compared to the second quarter of 2020 due to pricing decreases. The prices charged for used oil collection services are generally correlated with base oil pricing and therefore this pricing decrease was expected in light of the overall oil market conditions. The volume of the used oil collected increased from the prior year. Collection volumes for used oil have nearly rebounded to pre-pandemic levels. Foreign currency translation positively impacted the Canadian operations of Safety-Kleen Sustainability Solutions ~~by $3.3 million.~~


	For the Three Months Ended								For the Six Months Ended
	June 30,				2022 over 2021				June 30,				2022 over 2021
(in thousands, except percentages)	2022		2021		Change		% Change		2022		2021		Change		% Change

Direct revenues	$	265,490	$	202,282	$	63,208	31.2	%	$	487,082	$	355,749	$	131,333	36.9	%

Safety-Kleen Sustainability Solutions direct revenues for the three and six months ended June 30, 2022 increased $63.2 million and $131.3 million respectively from the comparable periods in 2021 predominately due to higher pricing of our base and blended oil products. For the three months ended June 30, 2022, base oil sales revenues increased ~~$105.1~~$47.8 million and blended oil sales revenues increased $6.7 million from the comparable period in ~~2020. Due~~2021 both due to ~~the~~ pricing increases ~~and rebounding demand described above relative to the second quarter of 2021, higher pricing and~~which more than offset lower volumes sold. Pricing increases also drove ~~a $91.7 million increase~~increases in ~~revenue from~~ base oil sales ~~and a $12.2~~revenues of $98.2 million ~~increase in revenues from~~and blended oil ~~sales. Revenues from contract blending and packaging increased $11.5~~sales revenue of $17.7 million from the comparable period. As expected in light of the oil market conditions noted above, revenues from used oil collection services decreased $6.9 million due to pricing decreases. Collection volumes for ~~used oil increased during~~ the six months ended June 30, ~~2021~~2022 when compared towith the ~~comparable period in 2020, and have nearly rebounded to pre-pandemic levels. Foreign currency translation positively impacted the~~six months ended June 30, 2021. The Canadian operations of the Safety-Kleen Sustainability Solutions segment were negatively impacted by ~~$4.5 million.~~$1.5 million in both the three and six months ended June 30, 2022 due to foreign currency translation.

Cost of Revenues

We believe that our ability to manage operating costs is important to our ability to remain price competitive. We continue to experience the current macroeconomic inflationary pressures across several cost categories, but most notably related to internal and external labor, transportation, general supplies and energy related costs. We continue to manage these increases through constant cost monitoring as well as our overall customer pricing strategies designed to offset the negative inflationary impacts on our margins.

We also continue to upgrade the quality and efficiency of our services through the development of new technology and continued modifications and expansion at our facilities, invest in new business opportunities and aggressively implement strategic sourcing and logistics solutions ~~as well as other cost reduction initiatives,~~in the face of these inflationary pressures, while also continuing to optimize our management and operating structure in an effort to ~~maintain and increase~~manage our operating margins.

Environmental Services


		For the Three Months Ended											For the Six Months Ended												For the Three Months Ended											For the Six Months Ended
		June 30,						2021 over 2020					June 30,						2021 over 2020						June 30,						2022 over 2021					June 30,						2022 over 2021
(in thousands, except percentages)	(in thousands, except percentages)	2021			2020			$ Change			% Change		2021			2020			$ Change			% Change		(in thousands, except percentages)	2022			2021			Change			% Change		2022			2021			Change			% Change
Cost of revenues	Cost of revenues	$	487,257		$	385,113		$	102,144		26.5	%	$	938,512		$	876,234		$	62,278		7.1	%	Cost of revenues	$	743,659		$	487,257		$	256,402		52.6	%	$	1,428,995		$	938,512		$	490,483		52.3	%
As a % of Direct revenues	As a % of Direct revenues	67.3		%	62.9		%	4.4		%			68.1		%	66.5		%	1.6		%			As a % of Direct revenues	68.2		%	67.3		%	0.9		%			70.1		%	68.1		%	2.0		%

Environmental Services cost of revenues for the three months ended June 30, ~~2021~~2022 increased ~~$102.1~~$256.4 million from the comparable period in ~~2020,~~2021, primarily due to the increase in direct ~~revenues.~~revenues noted above, including additional costs from the HydroChemPSC operations. Cost of revenues as a percentage of direct revenues ~~increased 4.4% from~~for the ~~comparable period in~~three months ended June 30, 2022 remained relatively consistent with the ~~prior year, in part due to a $9.6 million reduction in benefits recognized under the Government Programs in the second quarter of~~three months ended June 30, 2021 ~~as compared to the same period of the prior year. After adjusting for this difference, cost as a percentage of revenues increased 2.8%, primarily due to the mix of services being performed, including~~despite lower COVID-19 decontamination ~~services.~~services and higher industrial services which typically operate at a lower margin than our waste disposal focused offerings. Overall, labor and ~~benefits~~benefit related costs increased ~~$37.5~~$124.8 million, equipment and supply costs increased ~~$35.6~~$61.2 million and external transportation, ~~disposal,~~ vehicle and fuel ~~related~~ costs increased ~~$18.6 million from the comparable period in 2020.~~$51.1 million.

Environmental Services cost of revenues for the six months ended June 30, ~~2021~~2022 increased ~~$62.3~~$490.5 million from the comparable period in ~~2020,~~2021, primarily due to anthe increase in direct ~~revenues.~~revenues noted above, including additional costs from the HydroChemPSC operations. Cost of revenues as a percentage of direct revenues increased ~~1.6%~~2.0% from the comparable period in the prior ~~year. Excluding~~year mainly due to the ~~$5.8 million year over year reduction in benefits recognized under~~mix of services, including lower COVID-19 decontamination services and the ~~Government Programs,~~growth of our industrial services offerings which typically operate at margins lower than our waste disposal focused offerings. Inflationary pressures across several cost categories including labor, transportation, equipment and supply costs have also contributed to the increase of ~~revenues~~these costs as a percentage of ~~direct revenues~~revenues. Overall, labor and benefit related costs increased ~~1.1%. Overall,~~$234.9 million, equipment and supply costs increased ~~$19.0 million, labor and benefits related costs increased $17.3~~$128.5 million and external transportation, ~~disposal,~~ vehicle and fuel related costs increased ~~$15.4~~$91.5 million.

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Safety-Kleen Sustainability Solutions


		For the Three Months Ended											For the Six Months Ended												For the Three Months Ended											For the Six Months Ended
		June 30,						2021 over 2020					June 30,						2021 over 2020						June 30,						2022 over 2021					June 30,						2022 over 2021
(in thousands, except percentages)	(in thousands, except percentages)	2021			2020			$ Change			% Change		2021			2020			$ Change			% Change		(in thousands, except percentages)	2022			2021			Change			% Change		2022			2021			Change			% Change
Cost of revenues	Cost of revenues	$	123,025		$	76,318		$	46,707		61.2	%	$	231,401		$	190,146		$	41,255		21.7	%	Cost of revenues	$	151,020		$	123,025		$	27,995		22.8	%	$	303,037		$	231,401		$	71,636		31.0	%
As a % of Direct revenues	As a % of Direct revenues	60.8		%	78.4		%	(17.6)		%			65.0		%	75.9		%	(10.9)		%			As a % of Direct revenues	56.9		%	60.8		%	(3.9)		%			62.2		%	65.0		%	(2.8)		%

Safety-Kleen Sustainability Solutions cost of revenues for the three months ended June 30, ~~2021~~2022 increased ~~$46.7~~$28.0 million from the comparable period in ~~2020 due~~2021. The cost of raw materials used in production of our oil products increased $17.8 million, driven mainly by increased costs to obtain used oil through our used oil collection services. The increase in base oil pricing in the second quarter of 2022 as compared to the same period in 2021 has resulted in a correlating increase in direct revenues. Cost of revenue as a percentage of direct revenues improved by 17.6% due to production volume efficiencies generated by our re-refineries, some of which were temporarily closed in the prior year due to impacts from COVID-19, lower relative spend on oil additives due to the overall oil product mix and the continuation of the cost ~~management initiatives implemented in the latter half of 2020. In total, costs of~~we now pay for used oil ~~additives and other raw materials increased $25.4 million,~~feedstock. Increased external transportation, vehicle and fuel costs ~~increased $11.2~~of $5.1 million ~~and labor and benefits related costs increased $7.7 million.~~also contributed to the overall increase in cost of revenues, with fuel being the largest component of this increase.

Safety-Kleen Sustainability Solutions cost of revenues for the six months ended June 30, ~~2021~~2022 increased ~~$41.3~~$71.6 million from the comparable period in ~~2020~~2021. The cost of raw materials used in production of our oil products increased $49.5 million, more than half of which was due to increased costs to obtain used oil through our used oil collection services. As noted above, the increase in ~~direct revenues. Cost of revenue as~~base oil pricing has resulted in a ~~percentage of direct revenues improved by 10.9% for reasons consistent with those noted~~correlating increase in the ~~preceding paragraph. In total,~~cost we now pay for used oil feedstock. Other costs that contributed to the overall increase include the cost of ~~oil additives and other raw materials increased $23.9 million,~~external transportation, vehicle and fuel costs which increased ~~$12.1~~$9.6 million and labor and ~~benefits~~benefit related costs which increased ~~$5.3~~$2.8 million.

As a percentage of revenues, Safety-Kleen Sustainability Solutions costs of revenues decreased by 3.9% and 2.8% in the three and six months ended June 30, 2022 as compared to the comparable periods in 2021. This margin improvement was largely driven by the increased pricing of our products which outpaced the increase in cost of revenues as the business continued to capitalize on the favorable market conditions and efficient management of the spread between the pricing of products and the rising costs to obtain oil feedstock, including labor and fuel costs, in this inflationary environment.

Selling, General and Administrative Expenses

We strive to manage our selling, general and administrative ("SG&A") expenses commensurate with the overall performance of our segments and corresponding revenue levels. We believe ~~that~~ our ability to properly align these costs with business performance is reflective of our strong management of the businesses and further promotes our ability to remain competitive in the marketplace.

Environmental Services


		For the Three Months Ended											For the Six Months Ended												For the Three Months Ended											For the Six Months Ended
		June 30,						2021 over 2020					June 30,						2021 over 2020						June 30,						2022 over 2021					June 30,						2022 over 2021
(in thousands, except percentages)	(in thousands, except percentages)	2021			2020			$ Change			% Change		2021			2020			$ Change			% Change		(in thousands, except percentages)	2022			2021			Change			% Change		2022			2021			Change			% Change
SG&A expenses	SG&A expenses	$	60,799		$	51,240		$	9,559		18.7	%	$	123,892		$	119,453		$	4,439		3.7	%	SG&A expenses	$	77,743		$	60,799		$	16,944		27.9	%	$	156,250		$	123,892		$	32,358		26.1	%
As a % of Direct revenues	As a % of Direct revenues	8.4		%	8.4		%	—		%			9.0		%	9.1		%	(0.1)		%			As a % of Direct revenues	7.1		%	8.4		%	(1.3)		%			7.7		%	9.0		%	(1.3)		%

Environmental Services SG&A expenses for the three months ended June 30, 2022 increased $16.9 million from the comparable period in 2021, most predominately due to a $12.9 million increase in labor and benefit related costs. Environmental Services SG&A expenses for the six months ended June 30, ~~2021~~2022 increased ~~$9.6 million and $4.4~~$32.4 million from the comparable ~~periods~~period in ~~2020 while remaining consistent as~~2021, also due to increased labor and benefit related costs of $23.9 million. Increased costs from the HydroChemPSC business operations drove approximately $12.0 million and $24.2 million of the labor and benefit cost increases, respectively. As a percentage of ~~direct revenues. For~~revenue, the Environmental Services SG&A improved by 1.3% in both the three and six months ended June 30, ~~2020, reduced benefits recognized under~~2022, driven both by the ~~Government Programs of $5.7 million and $5.0 million drove the increases in~~HydroChemPSC business operations which have lower SG&A expenses aswhen compared to the ~~relevant period~~business's related revenues and overall improved leverage of SG&A in the ~~prior year. Absent these benefits recognized under Government Programs,~~legacy Environmental Services business. The improved leverage of our SG&A ~~expenses as a percentage~~spending significantly contributed to the overall increase in profitability of ~~revenue remained relatively consistent with~~ the ~~prior year.~~segment.

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Safety-Kleen Sustainability Solutions


		For the Three Months Ended											For the Six Months Ended												For the Three Months Ended											For the Six Months Ended
		June 30,						2021 over 2020					June 30,						2021 over 2020						June 30,						2022 over 2021					June 30,						2022 over 2021
(in thousands, except percentages)	(in thousands, except percentages)	2021			2020			$ Change			% Change		2021			2020			$ Change			% Change		(in thousands, except percentages)	2022			2021			Change			% Change		2022			2021			Change			% Change
SG&A expenses	SG&A expenses	$	15,943		$	12,601		$	3,342		26.5	%	$	29,402		$	27,850		$	1,552		5.6	%	SG&A expenses	$	17,460		$	15,943		$	1,517		9.5	%	$	35,158		$	29,402		$	5,756		19.6	%
As a % of Direct revenues	As a % of Direct revenues	7.9		%	12.9		%	(5.0)		%			8.3		%	11.1		%	(2.8)		%			As a % of Direct revenues	6.6		%	7.9		%	(1.3)		%			7.2		%	8.3		%	(1.1)		%

Safety-Kleen Sustainability Solutions SG&A expenses for the three and six months ended June 30, ~~2021~~2022 increased ~~$3.3~~$1.5 million and ~~$1.6~~$5.8 million from the comparable periods in ~~2020~~2021 primarily attributable ~~to the~~labor and benefit cost increases ~~in direct revenues. Safety-Kleen Sustainability Solutions SG&A expenses as percentage~~ of ~~revenues improved 5.0%~~$1.2 million and ~~2.8%, respectively, due in part, to a $1.8~~$4.6 million, ~~change in an environmental liability estimate for a Superfund site recorded in the second quarter of 2020 which did not recur in 2021. Absent this nonrecurring item, SG&A expenses as~~respectively. As a percentage of ~~revenues~~revenue, these costs improved ~~3.2%~~in both the three and ~~2.1%, respectively, primarily due~~six months ended June 30, 2022 when compared to the ~~continuation of cost management initiatives implemented~~same periods in the ~~latter half of 2020.~~prior year.

Corporate Items


		For the Three Months Ended								For the Six Months Ended									For the Three Months Ended											For the Six Months Ended
		June 30,				2021 over 2020				June 30,				2021 over 2020					June 30,						2022 over 2021					June 30,						2022 over 2021
(in thousands, except percentages)	(in thousands, except percentages)	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change		(in thousands, except percentages)	2022			2021			Change			% Change		2022			2021			Change			% Change
SG&A expenses	SG&A expenses	$	47,364	$	39,998	$	7,366	18.4	%	$	92,453	$	85,843	$	6,610	7.7	%	SG&A expenses	$	60,405		$	47,364		$	13,041		27.5	%	$	115,373		$	92,453		$	22,920		24.8	%
As a % of Total Clean Harbors' Direct revenues																		As a % of Total Clean Harbors' Direct revenues	4.5		%	5.1		%	(0.6)		%			4.6		%	5.3		%	(0.7)		%

We manage our Corporate Items SG&A expenses commensurate with the overall total Company performance and direct revenue levels. Generally, as revenues increase, we would expect some increase in these costs. Corporate Items SG&A expenses for the three and six months ended June 30, ~~2021~~2022 increased ~~$7.4 million~~ from the comparable ~~period~~periods in ~~2020. The most significant driver~~2021, but decreased in both periods as a percentage of ~~this increase was $5.2 million of increased labor related costs due~~total Clean Harbors' direct revenues which has also contributed to ~~increased variable compensation and $1.2 million of lower benefits recognized from the Government Programs in~~Clean Harbors' overall profitability.

For the three months ended June 30, ~~2021 when compared~~2022, the overall cost increase of $13.0 million included a $6.8 million increase in labor and benefits related costs, including higher stock-based compensation costs and human resource related costs. The higher stock-based compensation costs are primarily driven by the timing of grants in 2022. Overall we expect the stock-based grants in the current year to remain relatively consistent with the three months ended June 30, 2020. In addition, information technology costs increased by $2.4 million and fees for mergers and acquisitions, integration and strategic initiatives increased by $2.3 million. Partially offsetting these increases were decreases in bad debt expense of $2.7 million and lower severance costs of $3.0 million.prior year. The remaining net increase is spread across various cost categories.

~~Corporate Items SG&A expenses for~~For the six months ended June 30, ~~2021 increased $6.6~~2022, the overall increase of $22.9 million ~~from the comparable period~~included a $13.3 million increase in ~~2021. The most significant driver of this increase was $8.4 million of increased~~ labor and benefits related costs, ~~both~~including higher stock-based compensation costs, incentive costs and human resource related costs. Similar to the discussion above, the increase in stock-based compensation is mainly due to ~~increased variable compensation~~the timing of grants in 2022, though we expect the overall grants for 2022 to be relatively consistent with 2021. Both bad debt expense and lower benefits recognized from the Government Programs in the six months ended June 30, 2021 when compared to the six months ended June 30, 2020. In addition, fees for mergers and acquisitions, integration and strategic initiatives increased by $3.0 million and information technology/cyber-security related technology costs increased ~~$1.8 million. Partially offsetting these~~$4.0 million, respectively. These increases were ~~decreases in bad debt expense~~partially offset by the $3.0 million breakup fee received related to the termination of ~~$4.9 million and marketing expenses of $4.0 million.~~the proposed asset acquisition from Vertex Energy, Inc. The remaining net increase is spread across various cost categories.

Adjusted EBITDA

Management considers Adjusted EBITDA to be a measurement of performance which provides useful information to both management and investors. Adjusted EBITDA should not be considered an alternative to net income or other measurements under GAAP. Adjusted EBITDA is not calculated identically by all companies and therefore our measurements of Adjusted EBITDA, while defined consistently and in accordance with our ~~historical~~existing credit agreement, may not be comparable to similarly titled measures reported by other companies.

For the Three Months Ended For the Six Months Ended
June 30, 2021 over 2020 June 30, 2021 over 2020
(in thousands, except percentages) 2021 2020 $
Change %
Change 2021 2020 $
Change %
Change
Adjusted EBITDA:
Environmental Services $ 176,041 $ 176,241 $ (200) (0.1) % $ 316,295 $ 322,099 $ (5,804) (1.8) %
Safety-Kleen Sustainability Solutions 63,314 8,431 54,883 651.0 94,946 32,635 62,311 190.9
Corporate Items (51,584) (46,406) (5,178) (11.2) (94,019) (90,587) (3,432) (3.8)
Total $ 187,771 $ 138,266 $ 49,505 35.8 % $ 317,222 $ 264,147 $ 53,075 20.1 %

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	For the Three Months Ended								For the Six Months Ended
	June 30,				2022 over 2021				June 30,				2022 over 2021
(in thousands, except percentages)	2022		2021		Change		% Change		2022		2021		Change		% Change
Adjusted EBITDA:
Environmental Services	$	269,341	$	176,041	$	93,300	53.0	%	$	452,943	$	316,295	$	136,648	43.2	%
Safety-Kleen Sustainability Solutions	97,010		63,314		33,696		53.2		148,887		94,946		53,941		56.8
Corporate Items	(57,281)		(51,584)		(5,697)		(11.0)		(112,501)		(94,019)		(18,482)		(19.7)
Total	$	309,070	$	187,771	$	121,299	64.6	%	$	489,329	$	317,222	$	172,107	54.3	%

We use Adjusted EBITDA to enhance our understanding of our operating performance, which represents our views concerning our performance in the ordinary, ongoing and customary course of our operations. We historically have found it helpful,

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and believe that investors have found it helpful, to consider an operating measure that excludes certain expenses relating to transactions not reflective of our core operations.

The information about our operating performance provided by this financial measure is used by our management for a variety of purposes. We regularly communicate Adjusted EBITDA results to our lenders since our loan covenants are based upon levels of Adjusted EBITDA achieved and to our board of directors and we discuss our interpretation of such results with the board. We also compare our Adjusted EBITDA performance against internal targets as a key factor in determining cash and stock bonus compensation for executives and other employees, largely because we believe that this measure is indicative of how the fundamental business is performing and is being managed.

We also provide information relating to our Adjusted EBITDA so that analysts, investors and other interested persons have the same data that we use to assess our core operating performance. We believe that Adjusted EBITDA should be viewed only as a supplement to the GAAP financial information. We also believe, however, that providing this information in addition to, and together with, GAAP financial information permits the users of our financial statements to obtain a better understanding of our core operating performance and to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance on a standalone and a comparative basis.

The following is a reconciliation of net income to Adjusted EBITDA for the following periods (in thousands, except percentages):

For the Three Months Ended For the Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Net income $ 67,075 $ 29,023 $ 88,811 $ 40,595
Accretion of environmental liabilities 2,873 2,766 5,826 5,327
Stock-based compensation 3,305 2,786 6,785 6,077
Depreciation and amortization 71,592 72,494 143,755 147,027
Other expense, net 1,480 500 2,708 2,865
Loss on sale of businesses — 184 — 3,258
Interest expense, net of interest income 18,051 18,654 35,969 37,441
Provision for income taxes 23,395 11,859 33,368 21,557
Adjusted EBITDA $ 187,771 $ 138,266 $ 317,222 $ 264,147
As a % of Direct revenues 20.3 % 19.5 % 18.3 % 16.8 %

Beginning in the first quarter of 2021, we revised our calculation of reported Adjusted EBITDA to add stock-based compensation, a non-cash item, to other charges which are added back to GAAP net income for purposes of calculating Adjusted EBITDA. We made this change in order to be more consistent with how certain of our peer group companies report their non-GAAP results, to align with how management will evaluate the operating performance of the Company and performance metrics for certain incentive compensation awards to be issued in 2021, and to be consistent with the definition of “Adjusted EBITDA” now used for covenant compliance purposes in our outstanding financing agreements as amended to date. The amount added back each period is expected to match the line item for stock-based compensation as recorded on the Company's GAAP consolidated statements of cash flows. In the future, when we report our results, all relevant prior period Adjusted EBITDA amounts will be recast to provide comparative information.


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net income	$	148,157		$	67,075		$	193,471		$	88,811
Accretion of environmental liabilities	3,197			2,873			6,353			5,826
Stock-based compensation	6,835			3,305			12,547			6,785
Depreciation and amortization	87,868			71,592			172,166			143,755
Other (income) expense, net	(1,265)			1,480			(1,969)			2,708
Gain on sale of business	(8,864)			—			(8,864)			—
Interest expense, net of interest income	26,256			18,051			51,273			35,969
Provision for income taxes	46,886			23,395			64,352			33,368
Adjusted EBITDA	$	309,070		$	187,771		$	489,329		$	317,222
As a % of Direct revenues	22.8		%	20.3		%	19.4		%	18.3		%

Table of Contents

Depreciation and Amortization


		For the Three Months Ended								For the Six Months Ended									For the Three Months Ended								For the Six Months Ended
		June 30,				2021 over 2020				June 30,				2021 over 2020					June 30,				2022 over 2021				June 30,				2022 over 2021
(in thousands, except percentages)	(in thousands, except percentages)	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change		(in thousands, except percentages)	2022		2021		Change		% Change		2022		2021		Change		% Change
Depreciation of fixed assets and amortization of landfills and finance leases	Depreciation of fixed assets and amortization of landfills and finance leases	$	63,828	$	63,656	$	172	0.3	%	$	128,402	$	129,021	$	(619)	(0.5)	%	Depreciation of fixed assets and amortization of landfills and finance leases	$	75,616	$	63,828	$	11,788	18.5	%	$	147,674	$	128,402	$	19,272	15.0	%
Permits and other intangibles amortization	Permits and other intangibles amortization	7,764		8,838		(1,074)		(12.2)		15,353		18,006		(2,653)		(14.7)		Permits and other intangibles amortization	12,252		7,764		4,488		57.8		24,492		15,353		9,139		59.5
Total depreciation and amortization	Total depreciation and amortization	$	71,592	$	72,494	$	(902)	(1.2)	%	$	143,755	$	147,027	$	(3,272)	(2.2)	%	Total depreciation and amortization	$	87,868	$	71,592	$	16,276	22.7	%	$	172,166	$	143,755	$	28,411	19.8	%

Depreciation and amortization for the three and six months ended June 30, ~~2021 decreased~~2022 increased by $16.3 million and $28.4 million from the comparable periods in ~~2020 primarily~~2021 due to ~~certain~~the depreciation and amortization of the HydroChemPSC tangible and intangible assets ~~becoming fully amortized.~~which were acquired in in the fourth quarter of 2021.

Gain on Sale of Business


	For the Three Months Ended								For the Six Months Ended
	June 30,				2022 over 2021				June 30,				2022 over 2021
	2022		2021		Change		% Change		2022		2021		Change		% Change
Gain on sale of business	$	8,864	$	—	$	8,864	100.0	%	$	8,864	$	—	$	8,864	100.0	%

During the three and six months ended June 30, 2022, we recorded a $8.9 million gain on the sale of a non-core line of business within our Environmental Services segment. For additional information regarding this gain on sale of business, see Note 5, "Disposition of Business," to the accompanying financial statements.

Provision for Income Taxes


		For the Three Months Ended											For the Six Months Ended												For the Three Months Ended											For the Six Months Ended
		June 30,						2021 over 2020					June 30,						2021 over 2020						June 30,						2022 over 2021					June 30,						2022 over 2021
(in thousands, except percentages)	(in thousands, except percentages)	2021			2020			$ Change			% Change		2021			2020			$ Change			% Change		(in thousands, except percentages)	2022			2021			Change			% Change		2022			2021			Change			% Change
Provision for income taxes	Provision for income taxes	$	23,395		$	11,859		$	11,536		97.3	%	$	33,368		$	21,557		$	11,811		54.8	%	Provision for income taxes	$	46,886		$	23,395		$	23,491		100.4	%	$	64,352		$	33,368		$	30,984		92.9	%
Effective tax rate	Effective tax rate	25.9		%	29.0		%	(3.1)		%			27.3		%	34.7		%	(7.4)		%			Effective tax rate	24.0		%	25.9		%	(1.9)		%			25.0		%	27.3		%	(2.3)		%

The provision for income taxes for the three and six months ended June 30, ~~2021~~2022 increased ~~$11.5~~$23.5 million and ~~$11.8~~$31.0 million ~~respectively,~~ from the comparable periods in ~~2020,~~2021, due to an increase in income before provision for income taxes. Our effective tax rates for the three and six months ended June 30, ~~2021~~2022 decreased ~~by 3.1%~~1.9% and ~~7.4%~~2.3%, respectively, ~~from~~when compared to the ~~comparable periods~~three and six months ended June 30, 2021. The decrease in ~~2020.~~our effective tax rate is largely due to the utilization of previous unbenefited losses in certain of our Canadian entities.

In recent ~~years,~~periods, certain Canadian entities which have historically generated net operating losses and for which we have ~~incurred losses in certain Canadian operations and have not~~ recognized ~~tax benefits related to those losses. In the first three months of 2021, certain Canadian operations with~~ valuation allowances, ~~generated~~have been operating at a profit. This recent profitability and associated utilization of previous unbenefited losses is due to operational improvements and tax strategies as well as government subsidies and the gain on sale of ~~approximately $5.9 million for which no tax benefit was recognized. Through~~a line of business. As of June 30, ~~2021, these certain Canadian operations are profitable, primarily due~~2022, we do not yet believe that sufficient positive evidence exists to ~~the employee wage subsidies received in accordance with CEWS and increased operational performance. As~~support that this return to profitability will continue for a ~~result~~sustained period. We will continue to evaluate this on an ongoing basis to determine when, if at all, to release some or all of the ~~positive second quarter earnings related to these certain Canadian operations and therefore the absence~~associated remaining valuation allowances.

Table of unbenefited tax losses relative to these Canadian operations, the Company posted an overall lower effective rate of 25.9% for the three months. Additionally, this reduction in unbenefited losses in the six months ended 2021 is also driving the 7.4% improvement in the effective tax rate when compared to 2020.Contents

Liquidity and Capital Resources

Six Months Ended
June 30,
(in thousands) 2021 2020
Net cash from operating activities $ 265,432 $ 173,486
Net cash used in investing activities (132,340) (141,685)
Net cash (used in) from financing activities (60,534) 47,017

~~Net cash from operating activities~~

Net cash from operating activities for the six months ended June 30, 2021 was $265.4 million, an increase of $91.9 million from the comparable period in 2020. The increase in operating cash flows from the comparable period of 2020 resulted from greater levels of operating income and improved working capital management in 2021 despite a $31.0 million increase in the amount of cash taxes paid in the six months ended June 30, 2021 when compared to the six months ended June 30, 2020. This increase in cash taxes was primarily due to the deferral of federal tax payments from the second quarter of 2020 to the third quarter of 2020 as allowable under COVID relief guidance from the Internal Revenue Service in 2020.

~~Table of Contents~~

~~Net cash used in investing activities~~

Net cash used in investing activities for the six months ended June 30, 2021 was $132.3 million, a decrease of $9.3 million from the comparable period in 2020. The decrease in net cash used in investing activities was most notably due to a $33.7 million reduction in capital expenditure levels in 2021. Capital expenditures for the six months ended June 30, 2020 included the $21.1 million nonrecurring purchase of our corporate headquarters. Offsetting this decrease in capital expenditures is an increase of $14.1 million in cash paid for acquisitions and a reduction of $7.8 million in proceeds from the sale of businesses.

~~Net cash (used in) from financing activities~~

Net cash used in financing activities for the six months ended June 30, 2021 was $60.5 million, compared to net cash from financing activities of $47.0 million for the comparable period in 2020. This decrease of $107.6 million was mostly due to $75.0 million of net borrowings from our revolving credit facility during the first six months of 2020 and an increase in repurchases of common stock of $28.1 million during the first six months of 2021. For additional information regarding our financing activities, see Note 11, "Financing Arrangements," to the accompanying unaudited consolidated financial statements.

~~AdjustedFree Cash Flow~~

Management considers adjusted free cash flow to be a measurement of liquidity which provides useful information to both management, creditors and investors about our financial strength and our ability to generate cash. Additionally, adjusted free cash flow is a metric on which a portion of management incentive compensation is based. We define adjusted free cash flow as net cash from operating activities, less additions to property, plant and equipment plus proceeds from sales or disposals of fixed assets. We exclude cash impacts of items derived from non-operating activities such as taxes paid in connection with divestitures and have also excluded cash paid in connection with the purchase of our corporate headquarters and certain capital improvements to the site as these expenditures are considered one-time in nature. Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP. Adjusted free cash flow is not calculated identically by all companies, and therefore our measurements of adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

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

Six Months Ended
June 30,
2021 2020
Net cash from operating activities $ 265,432 $ 173,486
Additions to property, plant and equipment (91,988) (125,721)
Purchase and capital improvements of corporate headquarters — 21,080
Proceeds from sale and disposal of fixed assets 3,479 3,101
Adjusted free cash flow $ 176,923 $ 71,946

~~Summary of Capital Resources including Financing Arrangements~~

At June 30, 2021, cash and cash equivalents and marketable securities totaled $666.3 million, compared to $571.0 million at December 31, 2020. At June 30, 2021, cash and cash equivalents held by our foreign subsidiaries totaled $135.5 million. The cash and cash equivalents and marketable securities balance for our U.S. operations was $530.8 million at June 30, 2021, and our U.S. operations had net operating cash flows of $268.0 million for the six months ended June 30, 2021. Additionally, we have a $400.0 million revolving credit facility of which, as of June 30, 2021, approximately $287.3 million was available to borrow and letters of credit under the credit facility in the amount of $112.7 million were outstanding. Based on the above and on our current plans, we believe that our operations have and will continue to have adequate financial resources to satisfy current liquidity needs.

~~Financing arrangements are discussed in Note 11, “Financing Arrangements,” to our unaudited consolidated financial statements included in this report.~~ We assess our liquidity in terms of our ability to generate cash to fund our operating, investing, and financing activities. Our primary ongoing cash requirements will be to fund operations, capital expenditures, interest payments and investments in line with our business strategy. We believe our future operating cash flows will be sufficient to meet our future operating and internal investing cash needs. We monitor our actual needs and forecasted cash flows, our liquidity and our capital resources, enabling us to plan our present needs and fund items that may arise during the year as a result of changing business conditions or opportunities. Furthermore, our existing cash balance and the availability of additional borrowings under our revolving credit facility provide additional potential sources of liquidity should they be required.

Summary of Cash Flow Activity


	Six Months Ended
	June 30,
(in thousands)	2022		2021
Net cash from operating activities	$	131,970	$	265,432
Net cash used in investing activities	(187,482)		(132,340)
Net cash used in financing activities	(51,431)		(60,534)

Net cash from operating activities

Net cash from operating activities for the six months ended June 30, 2022 was $132.0 million as compared to $265.4 million in the comparable period of 2021. The decrease in operating cash flows from the comparable period of 2021 was attributable to an increase in working capital caused by the significant growth in the business, and higher incentive compensation and interest payments in the first six months of 2022, partially offset by greater levels of operating income.

Net cash used in investing activities

Net cash used in investing activities for the six months ended June 30, 2022 was $187.5 million, an increase of $55.1 million from the comparable period in 2021. The increase in net cash used in investing activities as compared to the same prior year period was primarily due to a $56.1 million increase in additions to property, plant and equipment, inclusive of $13.5 million of capital spending for our new incinerator construction in Kimball, Nebraska and a $45.8 million increase in acquisitions, net of cash acquired. These increases were partially offset by a $28.8 million cash increase related to the timing of transactions within our wholly owned captive insurance company and a $17.5 million cash inflow from the disposition of a line of business.

Net cash used in financing activities

Net cash used in financing activities for the six months ended June 30, 2022 was $51.4 million, as compared to $60.5 million in the comparable period in 2021. This decrease of $9.1 million was primarily due to an $11.7 million decrease in repurchases of common stock during the first six months of 2022 partially offset by a $5.0 million increase in debt principal payments required by the new term loans executed in the fourth quarter of 2021.

AdjustedFree Cash Flow

Management considers adjusted free cash flow to be a measure of liquidity which provides useful information to both management, creditors and investors about our financial strength and our ability to generate cash. Additionally, adjusted free cash flow is a metric on which a portion of management incentive compensation is based. We ~~continue~~define adjusted free cash flow as net cash from operating activities excluding cash impacts of items derived from non-operating activities, such as taxes paid in connection with divestitures, less additions to ~~monitor~~property, plant and equipment plus proceeds from sales or disposals of fixed assets. Adjusted free cash flow is not calculated identically by all companies, and therefore our ~~debt instruments and evaluate opportunities where it~~measurements of adjusted free cash flow may not be ~~beneficial~~comparable to ~~refinance or reallocate the portfolio.~~similarly titled measures reported by other companies.

Table of Contents

~~On August 3, 2021, we signed~~The following is a ~~definitive agreement~~reconciliation from net cash from operating activities to ~~acquire HydroChemPSC,~~adjusted free cash flow for the following periods (in thousands):


	Six Months Ended
	June 30,
	2022		2021
Net cash from operating activities	$	131,970	$	265,432
Additions to property, plant and equipment	(148,042)		(91,988)

Proceeds from sale and disposal of fixed assets	3,023		3,479
Adjusted free cash flow	$	(13,049)	$	176,923

Summary of Capital Resources

At June 30, 2022, cash and cash equivalents and marketable securities totaled $415.4 million, compared to $534.3 million at December 31, 2021. At June 30, 2022, cash and cash equivalents held by our foreign subsidiaries totaled $52.3 million. The cash and cash equivalents and marketable securities balance for our U.S. operations was $363.1 million at June 30, 2022. Our U.S. operations had net operating cash inflows of $139.6 million for the six months ended June 30, 2022.

We also maintain a ~~leading U.S. provider~~$400.0 million revolving credit facility of ~~industrial cleaning, specialty maintenance and utility services, for $1.25 billion. We expect to fund the HPC Acquisition with cash on hand and long-term debt and~~which, as ~~such we contemporaneously entered into a commitment letter with Goldman Sachs Bank USA~~of June 30, 2022, approximately $290.6 million was available to borrow upand letters of credit under the credit facility in the amount of $109.4 million were outstanding.

Material Capital Requirements

Capital Expenditures

Capital expenditures during the first six months of 2022 were $148.0 million as compared to ~~$1.0 billion~~$92.0 million during the six months of ~~term loan debt to fund the HPC Acquisition.~~2021. We anticipate that 2022 capital spending, net of disposals, will be in the range of $320.0 million to $340.0 million. This includes approximately $45.0 million to $50.0 million of capital spending for our ~~future~~new incinerator construction in Kimball, Nebraska, of which $13.5 million has been spent during the first six months of 2022.

As always, unanticipated changes in environmental regulations could require us to make significant capital expenditures for our facilities and could adversely affect our results of operations and cash flows provided by operating activities will provide the necessary funds on a short and long term basis to meet our operating cash requirements, including servicing the incremental debt used to fund the HPC Acquisition.flow.

Financing Arrangements

As of June 30, 2022, our financing arrangements include (i) $715.9 million of senior secured term loans due 2024, (ii) $545.0 million of 4.875% senior unsecured notes due 2027, (iii) $995.0 million of senior secured term loans due 2028 and (iv) $300.0 million of 5.125% senior unsecured notes due 2029. We also maintain our $400.0 million revolving credit facility. As of June 30, 2022, under the revolving credit facility, we had no outstanding loan balance, $290.6 million available to borrow and outstanding letters of credit of $109.4 million. We obtain standby letters of credit as security for financial assurances we have been required to provide to regulatory bodies for our hazardous waste facilities and which would be called only in the event that we fail to satisfy closure, post-closure and other obligations under the permits issued by those regulatory bodies for such licensed facilities.

The material terms of these arrangements are discussed further in Note 12, “Financing Arrangements,” to our consolidated financial statements included in Item 8 of this report.

As of December 31, 2021, we were in compliance with the covenants of all of our debt agreements, and we believe ~~it is reasonably likely that~~ we will continue to meet such covenants.

Common Stock Repurchases Pursuant to Publicly Announced Plan

The Company's common stock repurchases are made pursuant to the previously authorized board approved plan to repurchase up to $600.0 million of the Company's common stock. During the three and six months ended June 30, 2022, the Company repurchased and retired a total of approximately 0.3 million and 0.4 million shares of the Company's common stock, respectively, for total expenditures of approximately $30.0 million and $33.7 million, respectively. During the three and six months ended June 30, 2021, the Company repurchased and retired a total of approximately 0.2 million and 0.5 million ~~respectively,~~shares of the Company's common stock, respectively, for total expenditures of approximately $18.9 million and $45.4 million, respectively. During the three months ended June 30, 2020, the Company did not repurchase any shares of its common stock. During the six months ended June 30, 2020, the Company repurchased and retired a total of approximately 0.3 million of the Company's common stock for total costs of approximately $17.3 million.

Through June 30, ~~2021,~~2022, the Company has repurchased and retired a total of approximately ~~7.6~~8.0 million shares of its common stock for approximately ~~$435.6~~$478.3 million under this program. As of June 30, ~~2021,~~2022, an additional ~~$164.4~~$121.7 million remained available for repurchase of shares under this program.

Table of Contents

Environmental Liabilities


(in thousands, except percentages)	(in thousands, except percentages)	June 30, 2021		December 31, 2020		Change		% Change		(in thousands, except percentages)	June 30, 2022		December 31, 2021		Change		% Change
Closure and post-closure liabilities	Closure and post-closure liabilities	$	93,494	$	87,926	$	5,568	6.3	%	Closure and post-closure liabilities	$	102,997	$	99,103	$	3,894	3.9	%
Remedial liabilities	Remedial liabilities	112,454		114,813		(2,359)		(2.1)		Remedial liabilities	123,656		111,873		11,783		10.5
Total environmental liabilities	Total environmental liabilities	$	205,948	$	202,739	$	3,209	1.6	%	Total environmental liabilities	$	226,653	$	210,976	$	15,677	7.4	%

Total environmental liabilities as of June 30, ~~2021~~2022 were ~~$205.9~~$226.7 million, an increase of ~~$3.2~~$15.7 million compared to December 31, ~~2020,~~2021, primarily due to ~~accretion of $5.8 million,~~ new liabilities, including those assumed in ~~acquisitions,~~acquisition, of ~~$1.8~~$14.7 million and ~~changes in estimates recorded to the consolidated balance sheet~~accretion of ~~$1.1~~$6.4 million, partially offset by expenditures of ~~$6.6~~$7.0 million. The majority of the new liabilities relate to a real estate acquisition in 2022 for which we are assuming a remedial liability. The remedial liability was contemplated when arriving at the amount paid to acquire the property.

We anticipate our environmental liabilities, substantially all of which we assumed in connection with our acquisitions, will be payable over many years and that cash flow from operations will generally be sufficient to fund the payment of such liabilities when required.

Events not anticipated (such as future changes in environmental laws and regulations) could require that ~~such~~ payments to satisfy our environmental liabilities be made earlier or in greater amounts than currently anticipated, which could adversely affect our results of operations, cash flow and financial condition. Conversely, the development of new treatment technologies or other circumstances may arise in the future which may reduce amounts ultimately paid.

~~Capital Expenditures~~

Capital expenditures in the first six months of 2021 were $92.0 million as compared to $125.7 million in the same period of 2020. This decrease was primarily due to the nonrecurring purchase of our corporate headquarters in January of 2020. We anticipate that 2021 capital spending, net of disposals, will be in the range of $190.0 million to $210.0 million. We are currently in the process of permitting a new incinerator at our Kimball, Nebraska facility, which we intend to construct with an estimated completion date in early 2025. We are endeavoring upon this project in response to continued increasing demand for disposal outlets of regulated waste materials and we expect the new incinerator to have an annual practical capacity of approximately 70,000 tons. Unanticipated changes in environmental regulations could require us to make significant capital expenditures for our facilities and adversely affect our results of operations and cash flow.

Critical Accounting Policies and Estimates

Other than as described below, there were no material changes in the first six months of ~~2021~~2022 to the information provided under the heading “Critical Accounting Policies and Estimates” included in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

~~Table of Contents~~

~~Goodwill.~~ Goodwill is reviewed for impairment annually as of December 31 or when events or changes in the business environment indicate the carrying value of a reporting unit may exceed its fair value. This review is performed by comparing the fair value of each reporting unit to its carrying value, including goodwill. If the fair value is less than the carrying amount, a loss is recorded for the excess of the carrying value over the fair value up to the carrying amount of goodwill.

We conducted our annual impairment test of goodwill for all of our reporting units to which goodwill is allocated as of December 31, 2020 and determined that no adjustment to the carrying value of goodwill for any reporting unit was then necessary. As a result of changes in our organizational structure and resulting change in our operating segments discussed above, we concluded that, for purposes of reviewing for potential goodwill impairment, we now have three reporting units. The Environmental Services operating segment has two reporting units consisting of (i) Environmental Sales and Service which includes the legacy Environmental Sales and Service reporting unit and certain operations previously included within Safety-Kleen Environmental Services including the core service offerings of containerized waste, parts washer and vacuum services and (ii) Environmental Facilities, unchanged from prior year. The Safety-Kleen Sustainability Solutions operating segment is a single reporting unit which includes the legacy Safety-Kleen Oil reporting unit and the remaining operations of the legacy Safety-Kleen Environmental Services reporting unit primarily consisting of collection services for waste oil, anti-freeze and used oil filters as well as the sale of bulk blended re-refined oil and other automotive related finished fluid products. The Company allocated goodwill to the newly identified reporting units using a relative fair value approach. In addition, the Company completed an assessment of any potential goodwill impairment for all reporting units immediately prior and subsequent to the reallocation and determined that no impairment existed.2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes in the first six months of ~~2021~~2022 to the information provided under Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined under Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were effective as of June 30, ~~2021~~2022 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that was conducted during the six months ended June 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

PART ~~II—~~II��OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note ~~16,~~17, “Commitments and Contingencies,” to the unaudited consolidated financial statements included in Item 1 of this report, which description is incorporated herein by reference.

ITEM 1A. RISK FACTORS

~~In light of signing a definitive agreement~~There have been no material changes to ~~acquire HydroChemPSC ("HPC"),~~ the ~~following supplements and updates~~risk factors from the information provided in Item 1A1A. in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

~~Risks Related to our Proposed Acquisition of HydroChemPSC~~

The proposed acquisition of HydroChemPSC ("HPC Acquisition") is subject to conditions, some of which are outside of the control of the Company. We cannot assure that the proposed HPC Acquisition will be completed or completed on a timely basis primarily due to the required government approval of this transaction. Failure to complete the HPC Acquisition, or complete it in a timely manner, could have material adverse effects on Clean Harbors.

On August 3, 2021, we entered into a definitive agreement to acquire HydroChemPSC for cash consideration in an amount equal to $1.25 billion, subject to customary purchase price adjustments. We anticipate that the acquisition will close later in 2021. Consummation of the HPC Acquisition will be subject to certain conditions, including, among others, expiration or termination of the applicable Hart-Scott-Rodino antitrust waiting period, the absence of any order, injunction, or other judgment by any governmental authority of competent jurisdiction, and the accuracy of the representations and warranties of the parties. We cannot assure you that the required conditions will be met or that the proposed HPC Acquisition will be completed. In connection with the required approvals, circumstances could arise which would require divestiture of certain assets of HPC, Clean Harbors or some combination thereof. Additionally, in certain circumstances, conditions could arise which may result in the Company paying a termination fee of $50 million. Potential divestitures or termination fees could impact the cash flows and results of operations of the Company.

In connection with our plan to finance a portion of the purchase price above the amount of available cash we plan to use, we will be subject to capital market risks until the closing of the HPC Acquisition-related financing. In addition, we must pay costs related to the HPC Acquisition, including, among others, legal, accounting and financial advisory fees, as well as fees and expenses with respect to the financing commitment we have obtained, whether or not the HPC Acquisition is completed. We also could be subject to litigation related to the failure to complete the HPC Acquisition. These costs, which could increase if the HPC Acquisition is not completed in a timely manner on the conditions discussed above, could have a significant impact on the cash flows and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Common Stock Repurchase Program

The following table provides information with respect to the shares of common stock repurchased by us for the periods indicated.

Period
Total Number of Shares Purchased (1)
Average Price Paid Per Share (2)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
(in thousands) (3)
April 1, 2021 through April 30, 2021 6,951 $ 86.15 — $ 183,306
May 1, 2021 through May 31, 2021 242 88.96 — 183,306
June 1, 2021 through June 30, 2021 204,243 94.32 200,000 164,442
Total 211,436 94.04 200,000


Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (3)
April 1, 2022 through April 30, 2022	6,481	$	112.93	—	$	151,748
May 1, 2022 through May 31, 2022	183,132	90.97		183,089	135,093
June 1, 2022 through June 30, 2022	151,817	87.94		151,768	121,748
Total	341,430	90.04		334,857

________________

(1) Includes ~~11,436~~6,573 shares withheld by us from employees to satisfy employee tax obligations upon vesting of restricted stock granted to our employees under the Company's equity incentive plans.

~~Table of Contents~~

(2) The average price paid per share of common stock repurchased under the stock repurchase program includes the commissions paid to brokers.

(3) Our board of directors has authorized the repurchase of up to $600.0 million of our common stock. We have funded and intend to fund the repurchases through available cash resources. The stock repurchase program authorizes us to purchase our common stock on the open market or in privately negotiated transactions periodically in a manner that complies with applicable U.S. securities laws. The number of shares purchased and the timing of the purchases has depended and will depend on several factors, including share price, cash required for business plans, trading volume and other conditions. We maintain a repurchase plan in accordance with Rule 10b5-1 promulgated under the Securities Exchange Act of 1934, as amended. ~~Future repurchases will be made~~During the three months ended June 30, 2022, no shares were repurchased under the Rule 10b5-1 ~~plan as well~~plan. Future repurchases may be made as open market or privately negotiated transactions as described above. We have no obligation to repurchase stock under this program and may suspend or terminate the repurchase program at any time.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable

ITEM 5. OTHER INFORMATION

None

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ITEM 6. EXHIBITS

Item No.

Description

Location

31.1

Rule 13a-14a/15d-14(a) Certification of the CEO Alan S. McKim

Filed herewith

31.2

Rule 13a-14a/15d-14(a) Certification of the CFO Michael L. Battles

Filed herewith

Section 1350 Certifications

Filed herewith

101

Interactive Data Files Pursuant to Rule 405 of Regulation S-T: Financial statements from the quarterly report on Form 10-Q of Clean Harbors, Inc. for the ~~quarter~~quarterly period ended June 30, ~~2021,~~2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Unaudited Consolidated Statements of Operations, (iii) Unaudited Consolidated Statements of Comprehensive Income, ~~(Loss),~~ (iv) Unaudited Consolidated Statements of Cash Flows, (v) Unaudited Consolidated Statements of Stockholders’ Equity and (vi) Notes to Unaudited Consolidated Financial Statements.

104

The cover page from the Company's Quarterly Report on Form 10-Q for the ~~quarter~~quarterly period ended June 30, ~~2021,~~2022, formatted in iXBRL and contained in Exhibit 101.

_______________________

* Interactive data files are furnished and deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

Table of Contents

CLEAN HARBORS, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		CLEAN HARBORS, INC.
		Registrant

		By:	/s/ ALAN S. MCKIM
			Alan S. McKim
			Chairman, President and Chief Executive Officer

Date:	August ~~4, 2021~~3, 2022

		By:	/s/ MICHAEL L. BATTLES
			Michael L. Battles
			Executive Vice President and Chief Financial Officer

Date:	August ~~4, 2021~~3, 2022


	For the Six Months Ended June 30, 2020
	Environmental Services		Safety-Kleen Sustainability Solutions		Corporate		Total
Primary Geographical Markets
United States	$	1,150,895	$	227,441	$	(462)	$	1,377,874
Canada	166,861		23,220		608		190,689
Total third-party revenues	$	1,317,756	$	250,661	$	146	$	1,568,563

Sources of Revenue
Technical Services	$	517,202	$	0	$	0	$	517,202
Field and Emergency Response Services	233,265		0		0		233,265
Industrial Services and Other	241,991		0		146		242,137

Safety-Kleen Environmental Services	325,298		84,055		0		409,353
Safety-Kleen Oil	0		166,606		0		166,606
Total third-party revenues	$	1,317,756	$	250,661	$	146	$	1,568,563


Years Ending December 31,	Expected Amortization
2021 (six months)	$	15,119
2022	30,075
2023	25,735
2024	24,231
2025	23,254
Thereafter	132,366
	$	250,780


	Foreign Currency Translation		Unrealized Gains (Losses) on Available-For-Sale Securities		Unrealized (Losses) Gains on Interest Rate Hedge		Unrealized Losses on Unfunded Pension Liability		Total
Balance at January 1, 2021	$	(176,234)	$	135	$	(33,629)	$	(1,749)	$	(211,477)
Other comprehensive income (loss) before reclassifications	15,009		(155)		2,759		0		17,613
Amounts reclassified out of accumulated other comprehensive loss	0		0		4,942		0		4,942
Tax benefit	0		33		0		0		33
Other comprehensive income (loss)	15,009		(122)		7,701		0		22,588
Balance at June 30, 2021	$	(161,225)	$	13	$	(25,928)	$	(1,749)	$	(188,889)


	June 30, 2021		December 31, 2020
Property, plant and equipment, net:
Environmental Services	$	1,068,270	$	1,068,910
Safety-Kleen Sustainability Solutions	371,056		366,160
Corporate Items	91,963		90,228
Total property, plant and equipment, net	$	1,531,289	$	1,525,298

Goodwill and Permits and other intangibles, net:
Environmental Services
Goodwill	$	403,136	$	401,918
Permits and other intangibles, net	221,437		228,237
Total Environmental Services	624,573		630,155

Safety-Kleen Sustainability Solutions
Goodwill	$	141,503	$	125,105
Permits and other intangibles, net	152,793		158,383
Total Safety-Kleen Sustainability Solutions	294,296		283,488

Total	$	918,869	$	913,643