What changed in this filing

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Item 1A. Risk Factors

2024-02-21 compared with 2023-03-01 · 59 added, 62 removed, 174 unchanged (41% of the section changed)

3 unchanged sentences

Our businesses are subject to operational and safety risks.

Providing our suite of services to our customers and operating our facilities involves risks such as equipment defects, malfunctions and failures and natural or man-made disasters, which could potentially result in releases of hazardous materials, damage to or total loss of our property or assets, injury or death of our employees, subcontractors or others or a need to shut down or reduce operation of our facilities while remedial actions are undertaken.

Failure to limit our exposure to such risks could have an adverse impact on our results.

Providing our suite of services to our customers and operating our facilities involves risks such as equipment defects, malfunctions and failures and natural or man-made disasters, which could potentially result in releases of hazardous materials, damage to or total loss of our property or assets, injury or death of our employees, subcontractors or others, reduced perceived value of our brand or damage to our reputation, or a need to shut down or reduce operation of our facilities while remedial actions are undertaken.

Our employees and subcontractors, when necessary, often work under potentially hazardous conditions.

These risks expose us to potential liability for pollution and other environmental damages, personal injury, loss of life, business interruption and property damage or destruction.

We must also maintain a solid safety record in order to remain a preferred supplier to our major customers.

We must also maintain a solid safety record in order to remain a preferred supplier to our major customers and protect the value of our brand in the marketplace.

While we seek to minimize our exposure to such risks primarily through (i) comprehensive training programs, (ii) utilizing proper equipment and the latest technologies, (iii) our Environmental Compliance Internal Audit Program, (iv) vehicle and equipment maintenance programs, (v) subcontracting with reputable third-parties (vi) industrial control systems and (vii) insurance, such actions and insurance may not be adequate to cover all of our potential liabilities which could negatively impact our results of operations and cash flows.

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Our information technology systems are critical to our operations, customer experience and financial reporting.

Malfunctions of these technologies, including disruptions due to natural or man-made disasters (e.g., terrorism or cyber intrusion), could interrupt operations, create incremental operational and safety risks such as those noted above or negatively impact our service to our customers and hurt our business reputation.

System failures could also impede our ability to collect and report financial results timely or comply with regulations associated with our operations.

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Research and development of new technologies may require significant spending which may negatively impact our operating results and cash flows.

Failure to innovate and focus on new technologies that provide superior alternatives to traditional environmental services, waste disposal or oil collection and re-refining service offerings may negatively impact our financial results.

A cyber-security incident could negatively impact our business and our relationships with customers.

Failure to innovate and focus on new

technologies that provide superior alternatives to traditional environmental services, waste disposal or oil collection and re-refining service offerings may negatively impact our financial results.

A cybersecurity incident could negatively impact our business, operations and relationships with customers.

We use technology in substantially all aspects of our business operations.

Mobile devices and other online technologies connect our employees to our customers and our networks.

Such uses give rise to cyber-security risks, including security breach, espionage, system disruption, theft, disruption of our business operations, remediation costs for repairs of system damage and inadvertent release of information.

Such uses give rise to cybersecurity risks, including security breach, espionage, system disruption, theft, disruption of our business operations, remediation costs for repairs of system damage and inadvertent release of information.

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.

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.

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

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

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

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

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.

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.

We believe that no such attack has resulted in any material adverse consequences.

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 cybersecurity risks and business interruption, our insurance coverage may not always cover all related costs or losses.

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.

Residual and lingering macroeconomic effects from such events could 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.

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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, financial position, results of operations and cash flows.

Our ability to retain key personnel and/or attract new qualified personnel may have an impact on our business and financial results and competition for experienced personnel in the labor market may result in increased costs for wages, overtime and employee recruitment.

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.

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.

As of December 31, 2023, we have recorded closure, post-closure and remedial liabilities valued at $229.8 million, substantially all of which we assumed in connection with certain acquisitions.

We calculate these environmental liabilities on a present value basis in accordance with generally accepted accounting principles, which take into consideration both the estimated cost to remediate such liabilities and the estimated timing of the remediation.

We anticipate our environmental liabilities will be payable over many years and that cash flows generated from our operations will generally be sufficient to fund the payment of such liabilities when required.

However, events not now anticipated (including future changes in environmental laws and regulations or their enforcement) could require that such payments be made earlier or in greater amounts than we now estimate, which could adversely affect our financial condition, results of operations and cash flows.

However, events not now anticipated (including future changes in environmental laws and regulations) could require that such payments be made earlier or in greater amounts than we now estimate, which could adversely affect our financial condition, results of operations and cash flows.

We may also assume additional environmental liabilities as part of future acquisitions.

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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.

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.

Our operations, predominately within the Safety-Kleen Sustainability Solutions segment, involve collecting used oil, re-refining a portion of such used oil into base and blended lubricating oils and then selling both base and blended oil products to customers.

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

Our operations, predominately within the Safety-Kleen Sustainability Solutions ("SKSS") segment, involve collecting used oil, re-refining a portion of such used oil into base and blended lubricating oils and then selling both base and blended oil products to customers.

Reduced demand for oil products, whether temporary due to market conditions or a lasting long-term trend, may also lower demand for our services of collecting used oil and, in turn, reduce our feedstock oil volumes for processing through our re-refineries.

There are significant fixed costs associated with operating our re-refinery facilities and should production volumes at these facilities decrease, our results of operations and profitability may be materially impacted.

Other businesses, including the Safety-Kleen branches' core service offerings of containerized waste collection services, parts washer services and vacuum services, are inextricably connected to the automotive industry.

Factors such as geopolitical developments, supply and demand imbalances and macroeconomic shifts may contribute to heightened oil price volatility in global oil markets.

This volatility may lead to reduced profitability and increased operating costs in our oil operations and also may impact the cost of fuels throughout our transportation network and facilities.

These volatility impacts may affect the Company's financial condition, results of operations and cash flows.

Other businesses, including our Safety-Kleen branches' core service offerings of containerized waste collection services, parts washer services and vacuum services, are inextricably connected to the automotive industry.

Miles driven and routine automotive maintenance, along with other automotive industry trends, impact demand for parts-washer services, containerized waste collections and vacuum services.

8 unchanged sentences

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 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.

Regulators, in addition to investors, customers and the public in general, have been increasingly focused on environmental, social and cybersecurity practices of companies.

We may be subject to additional regulations and disclosure requirements in the future arising from the increased focus these areas, including the SEC's recent disclosure proposal on climate change.

In addition, customers, including the U.S.

3 unchanged sentences

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.

In particular, if we fail to comply with government regulations governing the transport, handling and disposal of hazardous materials, such failure could negatively impact our ability to collect, process and ultimately dispose of hazardous waste generated by our customers.

Efforts to conduct our operations in compliance with all applicable laws and regulations, including environmental rules and regulations, require programs to promote compliance, such as training employees and customers, purchasing health and safety equipment and in some cases hiring outside consultants and lawyers.

Even with these programs, we and other companies in the environmental services industry are routinely faced with government enforcement proceedings, which can result in fines or other sanctions and require expenditures for remedial work on waste management facilities and contaminated sites.

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 outlined in the "Government Regulations" section in Item 1 of this report on Form 10-K.

If we fail to comply with regulations governing the transport, handling and disposal of hazardous materials, such failure could negatively impact our ability to collect, process and ultimately dispose of hazardous waste generated by our customers.

Efforts to conduct our operations in compliance with all applicable laws and regulations, require programs to promote compliance, such as training employees and customers, purchasing health and safety equipment and in some cases hiring outside consultants and lawyers.

Certain of these laws impose strict and, under certain circumstances, joint and several liability on current and former owners and operators of facilities that release regulated materials or that generate those materials and arrange for their disposal or treatment at contaminated sites.

Such liabilities can relate to required cleanup of releases of regulated materials and related natural resource damages.

The landscape of environmental regulation to which we are subject can change.

Changes to environmental regulation often present new business opportunities for us;

however, such changes may also result in increased operating and compliance costs or, in more significant cases, changes to how our facilities are able to operate.

We constantly monitor the landscape of environmental regulation;

however, our ability to navigate through any changes to such regulations may result in a material effect on our operations, cash flows or financial condition.

From time to time, fines and/or penalties have been levied upon the Company in government environmental enforcement proceedings.

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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.

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

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We are now, and may in the future be, a defendant in lawsuits brought by parties alleging environmental damage, personal injury and/or property damage, which may result in our payment of significant amounts.

The landscape of environmental regulation to which we are subject can change.

Changes to environmental regulation often present new business opportunities for us;

however, such changes may also result in increased operating and compliance costs or, in more significant cases, changes to how our facilities are able to operate.

We constantly monitor the landscape of environmental regulation;

however, our ability to navigate through any changes to such regulations may result in a material effect on our operations, cash flows or financial condition.

Environmental and land use laws also impact our ability to expand our facilities.

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Environmental laws and regulations have adversely affected and may adversely affect parts cleaning and other solvent related services.

In connection with its parts cleaning and other solvent related services, we have been subject to fines and certain orders requiring us to take environmental remedial action.

In connection with our parts cleaning and other solvent related services, we have been subject to fines and certain orders requiring us to take environmental remedial action.

Recent and potential changes in environmental laws and regulations may also adversely affect future parts cleaning and other solvent related services.

2 unchanged sentences

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, 2023, the Company was involved in 70 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.

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We maintain insurance that we believe will provide coverage for these claims (over amounts accrued for self-insured retentions and deductibles in certain limited cases), though this insurance may not provide coverage for potential awards of punitive damages.

Although we have vigorously defended and will continue to vigorously defend the Company and the safety of its products against all of these claims, these lawsuits are subject to many uncertainties and outcomes cannot be predicted with assurance.

We may also be named in additional product liability lawsuits in the future, including claims for which insurance coverage may not be available.

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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.

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We carry a range of insurance policies intended to protect our assets and operations, including general liability insurance, property damage, business interruption and environmental risk insurance.

While we endeavor to purchase insurance coverage appropriate to our risk assessment, we are unable to predict with certainty the frequency, nature or magnitude of claims for direct or consequential damages, and as a result our insurance program may not fully cover us for losses we may incur.

While we endeavor to purchase insurance coverage

appropriate to our risk assessment, we are unable to predict with certainty the frequency, nature or magnitude of claims for direct or consequential damages, and as a result our insurance program may not fully cover us for losses we may incur.

As a result of a number of catastrophic weather and other events, insurance companies have incurred substantial losses and in many cases they have substantially reduced the nature and amount of insurance coverage available to the market, have broadened exclusions and/or have substantially increased the cost of such coverage.

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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, Mexico, Puerto Rico and various state and local jurisdictions.

We are subject to various taxes in the United States, Canada, India, Mexico, Puerto Rico and certain 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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We earn revenues, pay expenses, own assets and incur liabilities in countries using currencies other than the U.S.

In particular, we recorded approximately 13.0% of our fiscal 2022 direct revenues in Canada.

In particular, we recorded approximately 11.5% of our fiscal 2023 direct revenues in Canada and employ approximately 7.0% of our full time active employees at our Global Capabilities Center in India.

Because our consolidated financial statements are presented in U.S.

Dollars, we must translate revenues, income and expenses as well as assets and liabilities into U.S.

Dollars, we must translate revenues, expenses and income, as well as assets and liabilities, into U.S.

Dollars at exchange rates in effect during or at the end of each reporting period.

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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.

As of December 31, 2023, our long-term debt consisted of $1,345.0 million of unsecured senior notes and $980.0 million of secured senior term loans, with letters of credit of $134.3 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;

• 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 unsecured senior 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 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;

• subject us to variable interest rate risk on $380.0 million of our $980.0 million secured senior term loans for which the variable rate had not been fixed via an interest rate swap as of December 31, 2023 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;

• limit our ability to adjust to rapidly changing market conditions, reduce our ability to withstand competitive pressures and make us more vulnerable to a downturn in general economic conditions of our business than our competitors with less debt.

Our ability to make scheduled payments of principal or interest with respect to our debt, including our outstanding senior unsecured notes, our senior secured term loans, any revolving loans and our finance leases, and to pay fee obligations with respect to our letters of credit, will depend on our ability to generate cash and our future financial results.

Our ability to make scheduled payments of principal or interest with respect to our debt, including our outstanding unsecured senior notes, our secured senior term loans, any revolving loans and our finance leases, and to pay fee obligations with respect to our letters of credit, will depend on our ability to generate cash and our future financial results.

If we were unable to generate sufficient cash flow from operations in the future to service our debt and letter of credit fee obligations, we might be required to refinance all or a portion of our existing debt and letter of credit facilities or to obtain new or additional such facilities.

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

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.

In particular, as of December 31, 2022, we had up to approximately $288.6 million available for additional borrowings and letters of credit under our revolving credit facility.

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.

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

The covenants in our debt agreements restrict our ability to operate our business and might lead to a default under our debt agreements.

The covenants in our debt agreements may restrict our ability to operate our business and might lead to a default under our debt agreements.

Our revolving credit agreement and the indenture and loan agreement governing our other outstanding debt limit, among other things, the extent to which the Company or our restricted subsidiaries can:

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Sections 8.06 and 7.02 of the Massachusetts Business Corporation Act provide that Massachusetts corporations which are publicly-held must have a staggered board of directors and that written demand by holders of at least 40% of the outstanding shares of each relevant voting group of stockholders is required for stockholders to call a special meeting unless such corporations take certain actions to affirmatively "opt-out" of such requirements.

In accordance with these provisions, our By-Laws provide for a staggered board of directors which consists of three classes of directors of which one class is elected each year for a three-year term, and require that written application by holders of at least 25% (which is less than the 40% which would otherwise be applicable without such a specific provision in our By-Laws) of our outstanding shares of common stock is required for stockholders to call a special meeting.

In accordance with these provisions, our By-

Laws provide for a staggered board of directors which consists of three classes of directors of which one class is elected each year for a three-year term, and require that written application by holders of at least 25% (which is less than the 40% which would otherwise be applicable without such a specific provision in our By-Laws) of our outstanding shares of common stock is required for stockholders to call a special meeting.

In addition, our By-Laws prohibit the removal by the stockholders of a director except for cause.

1 unchanged sentence

A takeover transaction would frequently afford stockholders an opportunity to sell their shares at a premium over then market prices.

UNRESOLVED STAFF COMMENTS

Not applicable.

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