What changed in this filing

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Item 1A. Risk Factors

2023-03-01 compared with 2022-02-23 · 48 added, 56 removed, 188 unchanged (36% of the section changed)

An investment in our securities involves certain risks, including those described below.

You should consider carefully these risk factors together with all of the information included in or incorporated by reference in this report before investing in our securities.

One should carefully consider these risk factors together with all of the information included or incorporated by reference in this report before investing in our securities.

OPERATIONAL RISKS

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Our business involves operational technology integral to our day to day business and the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property including, but not limited to, private information about employees and financial and strategic information about our Company and our business partners.

Furthermore, as we pursue our strategy to grow through acquisitions and new initiatives

that improve our operations and cost structure, we are also expanding and improving our information technologies, resulting in a larger technological presence and corresponding exposure to cyber security risk.

Furthermore, as we pursue our strategy to grow through acquisitions and new initiatives that improve our operations and cost structure, we are also expanding and improving our information technologies, resulting in a larger technological presence and corresponding exposure to cyber-security risk.

We actively assess our cyber-security and technology risks and modify our operational response to such risks as circumstances and technology change.

For example, to avoid the collection and housing of customer payment records, we partner with a Payment Card Industry compliant third party to handle our business customers’ credit card transactions in a secure a manner.

If we fail to assess and identify current cyber-security risks and those associated with acquisitions and new initiatives, we may become increasingly vulnerable to such risks.

We have implemented measures to prevent security breaches and cyber incidents, including the establishment of processes, procedures and systems focused on response readiness, planning, disaster recovery and business continuity.

Despite these best efforts, our preventative measures and incident response efforts may not be entirely effective.

The theft, destruction, loss, misappropriation or release of sensitive and/or confidential information or intellectual property, or interference with our operational technology, information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, damage to our assets, brand reputational damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage, which could have a material adverse effect on our financial position, results of operations or cash flows.

Despite our best efforts, our preventative measures and incident response efforts may not be entirely effective.

The theft, destruction, loss, misappropriation or release of sensitive and/or confidential information or

intellectual property, or interference with our operational technology, information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, damage to our assets, brand reputational damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage, which could have a material adverse effect on our financial position, results of operations or cash flows.

Like many companies, we have experienced third-party attacks on our computer systems which resulted in some business disruption while we responded, but we believe that no such attack has resulted in any material disruptions or had any of the other material adverse consequences described above in this paragraph.

Furthermore, while we maintain what we believe is sufficient insurance coverage that may (subject to certain policy terms and conditions, including deductibles) cover certain aspects of third-party security and cyber-security risks and business interruption, our insurance coverage may not always cover all our costs or losses.

Natural disasters or other catastrophic events, including pandemics and their residual macroeconomic effects, could negatively affect our business, financial condition and results of operations.

Natural disasters such as hurricanes, tornados or earthquakes or other catastrophic events including public health threats or outbreaks of communicable diseases such as the COVID-19 pandemic could negatively affect our operations and financial performance.

The direct and indirect impact of such events could include physical damage to one or more of our facilities or equipment, the temporary lack of an adequate workforce in a market and the temporary disruption in rail or truck transportation services upon which we rely.

These events could prevent or delay shipments from suppliers or to customers and reduce both volumes and revenue.

Residual and lingering macroeconomic effects from such events could continue to impact our supply chain, distribution network and/or work force via longer disruptions or increased costs.

These impacts could have a material effect on our business, financial condition and results of operations.

Natural disasters or other catastrophic events, including effects of climate change and pandemics as well as their residual macroeconomic effects, could negatively affect our business.

Natural disasters such as hurricanes, tornados or earthquakes or other catastrophic events including public health threats could negatively affect our operations and financial performance and harm our reputation.

The direct and indirect impact of such events could include physical damage to one or more of our facilities, equipment or locations in which we operate, the temporary lack of an adequate workforce in a market and the temporary disruption in rail or truck transportation services upon which we rely.

These events could prevent or delay shipments to and collections from customers and those from suppliers.

Residual and lingering macroeconomic effects from such events could continue to impact our supply chain, distribution network and/or workforce via longer disruptions or increased costs.

These impacts could have a material effect on our business, financial condition, results of operations and cash flows.

Weather conditions and other event driven special projects also cause interim variations in our results.

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If we lose key personnel and are unable to hire additional qualified personnel in a timely manner, our business may be harmed.

A change or deterioration in our relations with our employees could have a materially adverse effect on our business, financial condition and results of operations.

A change or deterioration in our relations with our employees could have a materially adverse effect on our business.

Our ability to continue to grow, operate our facilities and provide our services is dependent upon the expertise of certain key managerial and technical personnel.

The market for skilled and experienced personnel is highly competitive.

Our ability to retain key personnel and/or attract new qualified personnel may have an impact on our business and financial results.

Our ability to retain key personnel and/or attract new qualified personnel may have an impact on our business, financial position, results of operations and cash flows.

We put the safety of our employees at the heart of what we do and believe we have a positive relationship with our workforce.

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The hazardous waste management business is subject to significant environmental liabilities.

We have accrued environmental liabilities valued as of December 31, 2021 at $211.0 million, substantially all of which we assumed in connection with certain acquisitions.

As of December 31, 2022, we have recorded environmental liabilities valued at $235.1 million, substantially all of which we assumed in connection with certain acquisitions.

We calculate our environmental liabilities on a present value basis in accordance with generally accepted accounting principles, which take into consideration both the amount of such liabilities and the timing when we project that we will be required to pay them.

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We do not control such factors and, as a result, our revenue and income can vary from quarter to quarter, and past financial results for certain quarters may not be a reliable indicator of future results for comparable quarters in subsequent years.

If our assumptions relating to expansion of our landfills should prove inaccurate, our results of operations and cash flow could be adversely affected.

When we include permitted or probable expansion airspace in our calculation of available airspace, we adjust our landfill liabilities to the present value of projected costs for cell closure and landfill closure and post-closure.

It is possible that our estimates or assumptions could ultimately turn out to be significantly different from actual results.

In some cases we may be unsuccessful in obtaining an expansion permit or we may determine that an expansion permit is no longer probable.

To the extent that such estimates, or the assumptions used to make those estimates, prove to be significantly different than actual results, or our beliefs that we will receive expansion permits change adversely in a significant manner, our landfill assets, including the assets incurred in the pursuit of the expansion, may be subject to impairment.

Furthermore, lower prospective profitability may result due to increased interest accretion and depreciation or asset impairment charges related to the removal of previously included expansion airspace, in addition to the loss of future revenue related to the loss of probable airspace.

Further, if our assumptions concerning expansion airspace should prove inaccurate, certain of our cash expenditures for closure of landfills could be accelerated and adversely affect our results of operations and cash flow.

Reductions in the demand for oil products and automotive services in the markets we serve may negatively affect certain of our businesses.

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Future statutory and regulatory requirements, including any legislation focused on combating climate change, may require significant cost to comply or may require changes to our products or services.

Regulators, in addition to investors, customers and the public in general, have been increasingly focused on Environmental, Social and Governance and cyber-security practices of companies.

We may be subject to additional regulations and disclosure requirements in the future arising from the increased focus on ESG and cyber-security responsibility.

In addition, customers may require us to implement or report on certain ESG responsible procedures or standards to continue doing business with us.

Regulators, in addition to investors, customers and the public in general, have been increasingly focused on ESG and cyber-security practices of companies.

We may be subject to additional regulations and disclosure requirements in the future arising from the increased focus on ESG and cyber-security responsibility, including the SEC's recent disclosure proposals on climate change and cyber-security reporting.

In addition, customers, including the U.S.

government, may require us to implement or report on certain ESG data, procedures or standards to continue doing business with us.

The occurrence of any of the foregoing could have a material impact on our financial condition or results of operations.

Further, although we are very committed to compliance and safety, we could be subject to significant fines and penalties, our reputation could be adversely affected and/or we may incur significant costs to maintain or improve our compliance, if our businesses, or third-parties with whom we have a relationship, were to fail to comply with such statutory and regulatory requirements.

The extensive environmental regulations to which we are subject may increase our costs and potential liabilities and limit our ability to operate and expand our facilities.

The extensive environmental regulations to which we are subject, including potential climate change legislation and regulations, may increase our costs and potential liabilities and limit our ability to operate and expand our facilities.

Our operations and those of others in the environmental services industry are subject to extensive federal, state, provincial and local environmental requirements in both the United States and Canada, including those relating to emissions to air, discharged wastewater, storage, treatment, transport and disposal of regulated materials and cleanup of soil and groundwater contamination.

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Some environmental laws and regulations impose liability and responsibility on present and former owners, operators or users of facilities and sites for contamination at such facilities and sites without regard to causation or knowledge of contamination.

Past practices have resulted in releases of regulated materials at and from certain of our facilities, or the disposal of regulated materials at third-party sites, which may require investigation and remediation, and potentially result in claims of personal injury, property damage and damages to natural resources.

personal injury, property damage and damages to natural resources.

In addition, we occasionally evaluate various alternatives with respect to our facilities, including possible dispositions or closures.

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On the other hand, in some cases if new laws and regulations are less stringent, our customers or competitors may be able to manage waste more effectively themselves, which could decrease the demand for parts cleaning and other solvent related services or increase competition, which could adversely affect the results of operations, most predominately within the Environmental Services segment.

We are subject to existing and potential product liability lawsuits relating to the parts washer services.

We are subject to existing and potential product liability lawsuits relating to parts washer services.

Clean Harbors, through its Safety-Kleen branded operations within the Environmental Services segment, from time to time has been named as a defendant in product liability lawsuits in various courts and jurisdictions throughout the United States.

As of December 31, 2021, the Company was involved in approximately 61 such proceedings (including cases which have been settled but not formally dismissed) wherein persons claim personal injury resulting from the use of its parts cleaning equipment or cleaning products.

As of December 31, 2022, the Company was involved in 54 such proceedings (including cases which have been settled but not formally dismissed) wherein persons claim personal injury resulting from the use of its parts cleaning equipment or cleaning products.

These proceedings typically involve allegations that the solvents used in the parts cleaning equipment contain contaminants or that the solvent recycling process does not effectively remove the contaminants that become entrained in the solvents during their use.

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If we are unable to successfully identify, integrate and develop acquired businesses, we could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could have a material adverse effect on our financial results.

We also continually review our portfolio of assets to determine the extent to which assets or groups of assets are contributing to our objectives and growth strategy.

We also continually review

our portfolio of assets to determine the extent to which assets or groups of assets are contributing to our objectives and growth strategy.

When we decide to sell a business or specific asset group, we may be unable to do so on satisfactory terms and within our anticipated time frame.

If we are unable to successfully integrate the business and operations of HydroChemPSC and realize synergies in the expected time frame, our future results could be adversely affected.

On October 8, 2021, we completed the previously announced acquisition of HydroChemPSC for a cash purchase price of $1.23 billion.

Much of the potential benefit of the acquisition will depend on our integration of the business and operations of the acquired company into our business and operations through implementation of appropriate management and financial reporting systems and controls.

We may experience difficulties in such integration, and the integration process may be costly and time-consuming.

Such integration will require the focused attention of both Clean Harbors' and HydroChemPSC's management teams, including a significant commitment of their time and resources, which could have a material impact on the

revenues and operating results of the combined company.

The success of the acquisition will depend, in part, on the combined company's ability to realize the anticipated benefits from combining the businesses of Clean Harbors and the acquired businesses through cost reductions in overhead, greater efficiencies, cross-selling opportunities, increased utilization of support facilities and the adoption of mutual best practices.

To realize these anticipated benefits, however, the businesses of Clean Harbors and HydroChemPSC must be successfully combined.

If the combined company is not able to achieve these objectives, the anticipated benefits to us of the acquisition may not be realized fully or at all or may take longer to realize than expected.

It is possible that the integration processes could result in the loss of key employees, as well as the disruption of each company's ongoing businesses, failure to implement the business plan for the combined company, unanticipated issues in integrating operating, logistics, information, communications and other systems, unanticipated changes in applicable laws and regulations, operating risks inherent in our business or inconsistencies in standards, controls, procedures and policies or other unanticipated issues, expenses and liabilities, any or all of which could adversely affect our ability to maintain relationships with our and HydroChemPSC's' customers and employees or to achieve the anticipated benefits of the acquisition.

Our acquisition of HydroChemPSC and any future acquisitions of companies may expose us to unknown liabilities.

If there are unknown liabilities or other obligations, including contingent liabilities, arising from our acquisitions of HydroChemPSC and other potential acquired companies, our business could be materially affected.

We may learn additional information about HydroChemPSC and other potential acquired companies that adversely affects us, such as unknown liabilities or other issues relating to internal controls over financial reporting, issues that could affect our ability to comply with the Sarbanes-Oxley Act or issues that could affect our ability to comply with other applicable laws.

Future acquisitions of companies may expose us to unknown liabilities.

If there are unknown liabilities or other obligations, including contingent liabilities, arising from potential acquisitions, our business could be materially affected.

We may learn additional information about potential acquired companies that adversely affects us, such as unknown liabilities or other issues relating to internal controls over financial reporting, issues that could affect our ability to comply with the Sarbanes-Oxley Act or issues that could affect our ability to comply with other applicable laws.

INSURANCE, ACCOUNTING AND TAX RELATED RISKS

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We are required to provide substantial amounts of financial assurance to government agencies for closure and post-closure care of our licensed hazardous waste treatment facilities and certain other permitted facilities should those facilities cease operation, and we are also occasionally required to post surety, bid and performance bonds in connection with certain customer projects.

As of December 31, 2021, our total estimated closure and post-closure costs requiring financial assurance by regulators were $502.4 million for our U.S.

facilities and $57.4 million for our Canadian facilities.

We have obtained all of the required financial assurance for our facilities through a combination of surety bonds and insurance from qualified insurance companies.

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Any future difficulty in obtaining insurance could also impair our ability to secure future contracts, which may be conditioned upon the availability of adequate insurance coverage.

In addition, claims associated with risks for which we are to

some extent self-insured (property, workers' compensation, employee medical, comprehensive general liability and vehicle liability) may exceed our recorded reserves, which could negatively impact future earnings.

If our assumptions relating to expansion of our landfills should prove inaccurate, our results of operations and cash flow could be adversely affected.

It is possible that our estimates or assumptions could ultimately turn out to be significantly different from actual results.

In some cases we may be unsuccessful in obtaining an expansion permit or we may determine that an expansion permit is no longer probable.

In addition, claims associated with risks for which we are to some extent self-insured (property, workers' compensation, employee medical, comprehensive general liability and vehicle liability) may exceed our recorded reserves, which could negatively impact future earnings.

Tax interpretations and changes in tax regulations and legislation could adversely affect our results of operations.

We are subject to income taxes in the United States, Canada, India and various state and local jurisdictions.

We are subject to income taxes in the United States, Canada, India, Mexico, Puerto Rico and various state and local jurisdictions.

Tax interpretations, regulations and legislation in the various jurisdictions in which we operate are subject to change and uncertainty and may impact our results of operations and cash flows.

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DEBT AND FINANCING RELATED RISKS

Our substantial levels of outstanding debt and letters of credit could adversely affect our financial condition and ability to fulfill our obligations.

As of December 31, 2021, we had outstanding $845.0 million of senior unsecured notes, $1,719.6 million of senior secured term loans, and $138.6 million of letters of credit.

Our substantial levels of outstanding debt and letters of credit may:

Our levels of outstanding debt and letters of credit could adversely affect our financial condition and ability to fulfill our obligations.

As of December 31, 2022, our long-term debt consisted of $845.0 million of senior unsecured notes and $1,604.0 million of senior secured term loans, with letters of credit of $111.4 million drawn against our revolving credit facility.

Our levels of outstanding debt and letters of credit may:

• adversely impact our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions or other general corporate purposes or to repurchase our senior unsecured notes from holders upon any change of control;

• require us to dedicate a substantial portion of our cash flow to payment of interest on our debt and fees on our letters of credit, which reduces the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes;

• subject us to the risk of increased sensitivity to interest rate increases based upon variable interest rates, including interest on $1,369.6 million of our $1,719.6 million senior secured term loans for which, as of December 31, 2021, we do not have interest rate hedges and borrowings (if any) under our revolving credit facility;

• subject us to variable interest rate risk on $654.0 million of our $1,604.0 million senior secured term loans for which, as of December 31, 2022, we do not have interest rate hedges and borrowings (if any) under our revolving credit facility;

• increase the possibility of an event of default under the financial and operating covenants contained in our debt instruments;

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However, we might not be able to obtain any such new or additional facilities on favorable terms or at all.

Despite our substantial levels of outstanding debt and letters of credit, we could incur substantially more debt and letter of credit obligations in the future.

Should the need arise, we could incur substantially more debt and letter of credit obligations in the future.

Although our revolving credit agreement and the indenture and loan agreement governing our other outstanding debt contain restrictions on the incurrence of additional debt (including, for this purpose, reimbursement obligations under outstanding letters of credit), these restrictions are subject to a number of qualifications and exceptions and the additional debt which we might incur in the future in compliance with these restrictions could be substantial.

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Our revolving credit agreement and the indenture and loan agreement governing our other outstanding debt also allow us to borrow significant amounts of money from other sources.

These restrictions also do not prevent us from incurring obligations (such as operating leases) that do not constitute “debt” or “indebtedness” as defined in the relevant agreements.

These restrictions also do not prevent us from incurring

obligations (such as operating leases) that do not constitute “debt” or “indebtedness” as defined in the relevant agreements.

To the extent we incur in the future additional debt and letter of credit or other obligations, the related risks would increase.

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Upon the occurrence of an event of default, the lenders could elect to declare all amounts outstanding under such debts, including accrued interest or other obligations, to be immediately due and payable.

If amounts outstanding under such debts were accelerated, our assets might not be sufficient to

repay in full those debts.

Our revolving credit agreement and the indenture and loan agreement governing our other outstanding debt also contain cross-default and cross-acceleration provisions.

If amounts outstanding under such debts were accelerated, our assets might not be sufficient to repay in full those debts.

Our revolving credit agreement and the indentures and loan agreement governing our other outstanding debt also contain cross-default and cross-acceleration provisions.

Under these provisions, a default or acceleration under one instrument governing our debt may constitute a default under our other debt instruments that contain cross-default and cross-acceleration provisions, which could result in the related debt and the debt under such other instruments becoming immediately due and payable.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors