CLEAN HARBORS INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page No Report of Independent Registered Public Accounting Firm (PCA OB ID No. 34 ) 49 Consolidated Balance Sheets 51 Consolidated Statements of Operations 52 Consolidated Statements of Comprehensive Income 53 Consolidated Statements of Cash Flows 54 Consolidated Statements of Stockholders' Equity 55 Notes to Consolidated Financial Statements 56 (1) Operations 56 (2) Significant Accounting Policies 56 (3) Revenues 64 (4) Business Combinations 67 (5) Disposition of Business 71 (6) Inventories and Supplies 71 (7) Property, Plant and Equipment 71 (8) Goodwill and Other Intangible Assets 72 (9) Accrued Expenses 73 (10) Closure and Post-Closure Liabilities 74 (11) Remedial Liabilities 75 (12) Financing Arrangements 77 (13) Income Taxes 80 (14) Earnings Per Share 80 (15) Stockholders' Equity 82 (16) Accumulated Other Comprehensive Loss 83 (17) Stock Based Compensation 83 (18) Commitments and Contingencies 85 (19) Leases 87 (20) Segment Reporting 88 48 Table Of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Clean Harbors, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Clean Harbors, Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, cash flows, and stockholders’ equity, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Remedial Liabilities - Refer to Note 2, "Significant Accounting Policies", and Note 11, "Remedial Liabilities", to the financial statements Critical Audit Matter Description Remedial liabilities include the costs of removal or containment of contaminated material, the treatment of potentially contaminated groundwater and maintenance and monitoring costs necessary to comply with regulatory requirements. The estimate of remedial liabilities involves an analysis of numerous factors that are inherently difficult to estimate and involve a significant amount of judgment. The Company routinely reviews and evaluates the sites for which remedial liabilities have been recognized to determine if there should be changes in the cost estimates. As a result, the valuation of liabilities is subject to material changes as additional information becomes available, particularly as it relates to changes in technologies and changes in laws and regulations that govern the remediation efforts. Total remedial liabilities recorded as of December 31, 2023 were $111.2 million. Given the subjectivity and judgment involved in measuring remedial liabilities, auditing remedial liabilities involved especially subjective judgment and an increased extent of effort, including the need to involve our specialists who have expertise in environmental remediation. 49 Table Of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to remedial liabilities included the following, among others: • We tested the effectiveness of controls related to the recognition and measurement of remedial liabilities, including those controls over changes in estimates. • We evaluated the methods and assumptions used by management to estimate the remedial liabilities by confirming specific facts and circumstances related to a selection of sites with project managers and other Company personnel responsible for monitoring these sites, including legal counsel. • With the assistance of auditor specialists who have expertise in environmental matters and specialized skills and training, we evaluated the reasonableness of the Company’s estimates by: – Searching for information in the public domain for completeness of sites identified for remediation. – Assessing the completeness of the Company’s cost estimates for a selection of sites, specifically, comparing the cost estimates to relevant regulatory guidelines and specifications. – Testing the accuracy of the amounts recorded for a selection of sites, specifically, verifying the mathematical accuracy of the calculation, agreeing cost components to supporting documents, and/or developing an independent range of cost estimates. /s/ Deloitte & Touche LLP Boston, Massachusetts February 21, 2024 We have served as the Company's auditor since 2005. 50 Table Of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in thousands) As of December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 444,698 $ 492,603 Short-term marketable securities 106,101 62,033 Accounts receivable, net of allowances aggregating $ 42,209 and $ 45,253 , respectively 983,111 964,603 Unbilled accounts receivable 107,859 107,010 Inventories and supplies 327,511 324,994 Prepaid expenses and other current assets 82,939 82,518 Total current assets 2,052,219 2,033,761 Property, plant and equipment, net 2,193,318 1,980,302 Other assets: Operating lease right-of-use assets 187,060 166,181 Goodwill 1,287,736 1,246,878 Permits and other intangibles, net 602,797 620,782 Other long-term assets 59,739 81,803 Total other assets 2,137,332 2,115,644 Total assets $ 6,382,869 $ 6,129,707 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 10,000 $ 10,000 Accounts payable 451,806 446,629 Deferred revenue 95,230 94,094 Accrued expenses and other current liabilities 397,157 396,716 Current portion of closure, post-closure and remedial liabilities 26,914 23,123 Current portion of operating lease liabilities 56,430 49,532 Total current liabilities 1,037,537 1,020,094 Other liabilities: Closure and post-closure liabilities, less current portion of $ 13,556 and $ 13,205 , respectively 105,044 105,596 Remedial liabilities, less current portion of $ 13,358 and $ 9,918 , respectively 97,885 106,372 Long-term debt, less current portion 2,291,717 2,414,828 Operating lease liabilities, less current portion 131,743 119,259 Deferred tax liabilities 353,107 350,389 Other long-term liabilities 118,330 90,847 Total other liabilities 3,097,826 3,187,291 Commitments and contingent liabilities (See Note 18) Stockholders' equity: Common stock, $ 0.01 par value: Authorized 80,000,000 shares; issued and outstanding 53,929,703 and 54,064,797 shares, respectively 539 541 Additional paid-in capital 459,728 504,240 Accumulated other comprehensive loss ( 175,339 ) ( 167,181 ) Retained earnings 1,962,578 1,584,722 Total stockholders' equity 2,247,506 1,922,322 Total liabilities and stockholders' equity $ 6,382,869 $ 6,129,707 The accompanying notes are an integral part of these consolidated financial statements. 51 Table Of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except per share amounts) For the years ended December 31, 2023 2022 2021 Revenues: Service revenues $ 4,449,542 $ 4,133,184 $ 3,048,019 Product revenues 959,610 1,033,421 757,547 Total revenues 5,409,152 5,166,605 3,805,566 Cost of revenues: (exclusive of items shown separately below) Service revenues 3,054,594 2,892,726 2,105,043 Product revenues 691,530 651,204 504,794 Total cost of revenues 3,746,124 3,543,930 2,609,837 Selling, general and administrative expenses 671,161 627,391 537,962 Accretion of environmental liabilities 13,667 12,943 11,745 Depreciation and amortization 365,761 347,594 298,135 Income from operations 612,439 634,747 347,887 Other income (expense), net 2,315 2,472 ( 515 ) Loss on early extinguishment of debt ( 2,880 ) ( 422 ) — Gain on sale of business — 8,864 — Interest expense, net of interest income of $ 11,930 , $ 4,607 and $ 2,218 , respectively ( 108,595 ) ( 107,663 ) ( 77,657 ) Income before provision for income taxes 503,279 537,998 269,715 Provision for income taxes 125,423 126,254 66,468 Net income $ 377,856 $ 411,744 $ 203,247 Earnings per share: Basic $ 6.99 $ 7.59 $ 3.73 Diluted $ 6.95 $ 7.56 $ 3.71 Shares used to compute earnings per share — Basic 54,071 54,223 54,514 Shares used to compute earnings per share — Diluted 54,382 54,487 54,761 The accompanying notes are an integral part of these consolidated financial statements. 52 Table Of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) For the years ended December 31, 2023 2022 2021 Net income $ 377,856 $ 411,744 $ 203,247 Other comprehensive (loss) income, net of tax: Unrealized gain (loss) on available-for-sale securities 559 ( 413 ) ( 285 ) Unrealized gain on fair value of interest rate hedges 5,163 61,124 6,235 Reclassification adjustment for interest rate hedge amounts realized in net income ( 16,425 ) ( 683 ) 10,011 Reclassification adjustment for settlement of interest rate hedges ( 5,905 ) — — Pension adjustments ( 550 ) 318 1,094 Foreign currency translation adjustments 9,000 ( 31,515 ) ( 1,590 ) Other comprehensive (loss) income, net of tax ( 8,158 ) 28,831 15,465 Comprehensive income $ 369,698 $ 440,575 $ 218,712 The accompanying notes are an integral part of these consolidated financial statements. 53 Table Of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the years ended December 31, 2023 2022 2021 Cash flows from operating activities: Net income $ 377,856 $ 411,744 $ 203,247 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 365,761 347,594 298,135 Allowance for doubtful accounts 5,956 7,783 8,018 Amortization of deferred financing costs and debt discount 5,309 6,301 4,245 Accretion of environmental liabilities 13,667 12,943 11,745 Changes in environmental liability estimates 4,828 8,272 2,979 Deferred income taxes 12,685 17,549 1,482 Other (income) expense, net ( 2,315 ) ( 2,472 ) 515 Stock-based compensation 20,703 26,844 18,839 Loss on early extinguishment of debt 2,880 422 — Gain on sale of business — ( 8,864 ) — Environmental expenditures ( 28,960 ) ( 13,946 ) ( 15,506 ) Changes in assets and liabilities, net of acquisitions: Accounts receivable and unbilled accounts receivable 2,453 ( 201,087 ) ( 96,551 ) Inventories and supplies ( 4,312 ) ( 74,547 ) ( 31,689 ) Other current and non-current assets ( 22,645 ) ( 17,303 ) 9,268 Accounts payable ( 27,425 ) 74,460 108,398 Other current and long-term liabilities 8,111 30,521 22,872 Net cash from operating activities 734,552 626,214 545,997 Cash flows used in investing activities: Additions to property, plant and equipment ( 422,300 ) ( 345,056 ) ( 241,856 ) Proceeds from sale and disposal of fixed assets 9,650 8,779 22,156 Acquisitions, net of cash acquired ( 119,596 ) ( 86,278 ) ( 1,253,232 ) Proceeds from sale of business, net of transaction costs 750 16,811 — Additions to intangible assets including costs to obtain or renew permits ( 2,649 ) ( 1,966 ) ( 3,848 ) Purchases of available-for-sale securities ( 158,264 ) ( 49,845 ) ( 129,234 ) Proceeds from sale of available-for-sale securities 117,359 68,611 98,412 Net cash used in investing activities ( 575,050 ) ( 388,944 ) ( 1,507,602 ) Cash flows (used in) from financing activities: Change in uncashed checks 2,759 552 ( 1,806 ) Tax payments related to withholdings on vested restricted stock ( 13,838 ) ( 8,801 ) ( 10,805 ) Repurchases of common stock ( 51,164 ) ( 50,183 ) ( 54,410 ) Deferred financing costs paid ( 6,736 ) ( 410 ) ( 13,737 ) Payments on finance leases ( 15,937 ) ( 12,821 ) ( 8,458 ) Principal payments on debt ( 623,975 ) ( 115,652 ) ( 7,535 ) Proceeds from issuance of debt, net of discount 500,000 — 995,000 Borrowing from revolving credit facility 114,000 — — Payment on revolving credit facility ( 114,000 ) — — Net cash (used in) from financing activities ( 208,891 ) ( 187,315 ) 898,249 Effect of exchange rate change on cash 1,484 ( 9,927 ) ( 3,170 ) (Decrease) increase in cash and cash equivalents ( 47,905 ) 40,028 ( 66,526 ) Cash and cash equivalents, beginning of year 492,603 452,575 519,101 Cash and cash equivalents, end of year $ 444,698 $ 492,603 $ 452,575 Supplemental information: Cash payments for interest and income taxes: Interest paid $ 114,560 $ 105,643 $ 73,440 Income taxes paid, net of refunds 132,314 78,526 65,192 Non-cash investing activities: Property, plant and equipment accrued 52,376 30,950 19,264 Remedial liability assumed in acquisition of property, plant and equipment — 8,092 — The accompanying notes are an integral part of these consolidated financial statements. 54 Table Of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Total Stockholders' Equity Number of Shares $ 0.01 Par Value Retained Earnings Balance at January 1, 2021 54,773 $ 548 $ 582,749 $ ( 211,477 ) $ 969,731 $ 1,341,551 Net income — — — — 203,247 203,247 Other comprehensive income — — — 15,465 — 15,465 Stock-based compensation — — 18,839 — — 18,839 Issuance of common stock for restricted share vesting, net of employee tax withholdings 235 2 ( 10,807 ) — — ( 10,805 ) Repurchases of common stock ( 589 ) ( 6 ) ( 54,404 ) — — ( 54,410 ) Balance at December 31, 2021 54,419 544 536,377 ( 196,012 ) 1,172,978 1,513,887 Net income — — — — 411,744 411,744 Other comprehensive income — — — 28,831 — 28,831 Stock-based compensation — — 26,844 — — 26,844 Issuance of common stock for restricted share vesting, net of employee tax withholdings 183 2 ( 8,803 ) — — ( 8,801 ) Repurchases of common stock ( 537 ) ( 5 ) ( 50,178 ) — — ( 50,183 ) Balance at December 31, 2022 54,065 541 504,240 ( 167,181 ) 1,584,722 1,922,322 Net income — — — — 377,856 377,856 Other comprehensive loss — — — ( 8,158 ) — ( 8,158 ) Stock-based compensation — — 20,703 — — 20,703 Issuance of common stock for restricted share vesting, net of employee tax withholdings 193 1 ( 13,839 ) — — ( 13,838 ) Repurchases of common stock ( 328 ) ( 3 ) ( 51,376 ) — — ( 51,379 ) Balance at December 31, 2023 53,930 $ 539 $ 459,728 $ ( 175,339 ) $ 1,962,578 $ 2,247,506 The accompanying notes are an integral part of these consolidated financial statements. 55 Table Of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) OPERATIONS Clean Harbors, Inc., through its subsidiaries (collectively, the "Company"), is a leading provider of sustainable environmental and industrial services throughout North America. The Company is also the largest re-refiner and recycler of used oil and the premier provider of parts cleaning and related environmental services to commercial, industrial and automotive customers in North America. (2) SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements of the Company reflect the application of certain significant accounting policies as described below: Principles of Consolidation The accompanying consolidated financial statements include the accounts of Clean Harbors, Inc. and its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP), requires management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Management bases its estimates on historical experience and other assumptions that it believes to be reasonable at the time. Actual results could differ from those estimates, and any such differences may be material to the consolidated financial statements. Estimates and assumptions are reviewed periodically and the effects of changes, if any, are reflected in our consolidated financial statements in the period they are determined. Cash, Cash Equivalents, Marketable Securities and Uncashed Checks Cash consists primarily of cash on deposit and money market accounts. The Company, through its wholly-owned captive insurance subsidiary, invests in marketable securities. Marketable securities with maturities of three months or less from the date of purchase are classified as cash equivalents. As of December 31, 2023 and 2022, the Company had total marketable securities as follows (in thousands): December 31, 2023 December 31, 2022 Commercial paper $ 27,542 $ 5,035 U.S. Treasury securities — 28,973 Total cash equivalents 27,542 34,008 Municipal bonds — 1,930 Commercial paper 56,172 24,075 Corporate notes and bonds 49,929 36,028 Total marketable securities 106,101 62,033 Total $ 133,643 $ 96,041 Realized gains and losses on sales of available-for-sale marketable securities in the years presented were immaterial. The majority of the marketable securities have a remaining maturity of less than one year and fair value approximates cost. The Company's cash management program with its revolving credit lender allows the Company to maintain a zero balance in the U.S. bank disbursement accounts that are used to issue vendor and payroll checks. When checks are presented to the bank for payment, cash deposits in amounts sufficient to fund the checks are made, at the Company's discretion, either from funds provided by other accounts or under the terms of the Company's revolving credit facility. Checks that have been written to vendors or employees but have not yet been presented for payment at the Company's bank are classified as uncashed checks in accounts payable and changes in the balance are reported as a financing activity in the consolidated statements of cash flows. 56 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Allowance for Doubtful Accounts and Revenue Allowance On a regular basis, the Company evaluates its accounts receivable and establishes the allowance for doubtful accounts based on an evaluation of certain criteria and evidence of collection uncertainty including historical collection trends, reasonable expectations of future collections, current economic trends and changes in customer payment patterns. Past-due receivable balances are written off when the Company's collection efforts have been deemed unsuccessful in collecting the outstanding balance due. Due to the nature of the Company's businesses and the invoices that result from the services provided, customers may withhold payments and attempt to renegotiate amounts invoiced. In addition, for some of the services provided, the Company's invoices are based on quotes that, in limited instances, can result in adjustments to revenue subsequent to billing. Based on industry knowledge and historical trends, the Company records a revenue allowance in anticipation of these expected adjustments. This practice causes the volume of activity flowing through the revenue allowance during the year to be higher than the balance at the end of the year. The revenue allowance is intended to cover the net amount of revenue adjustments that may need to be credited to customers' accounts in future periods. Management determines the appropriate total revenue allowance by evaluating the following factors on an invoice-by-invoice basis as well as on a consolidated level: trends in adjustments to previously billed amounts, existing economic conditions, communications with customers and other information as deemed applicable. Revenue allowance estimates can differ from the actual adjustments, but historically the revenue allowance has been sufficient to cover the net amount of the reserve adjustments issued in subsequent reporting periods. The following table reflects the activity in the allowance for doubtful accounts and revenue allowance (in thousands): Allowance for Doubtful Accounts Revenue Allowance 2023 2022 2021 2023 2022 2021 Balance at January 1, $ 24,659 $ 24,136 $ 24,634 $ 20,594 $ 16,004 $ 20,115 Additions charged to earnings 5,956 7,783 8,018 46,467 54,836 34,319 Deductions from reserves, net of recoveries ( 8,047 ) ( 7,260 ) ( 8,516 ) ( 47,420 ) ( 50,246 ) ( 38,430 ) Balance at December 31, $ 22,568 $ 24,659 $ 24,136 $ 19,641 $ 20,594 $ 16,004 Credit Concentration Concentration of credit risks in accounts receivable is limited due to the large number of customers comprising the Company's customer base throughout North America. The Company maintains policies over credit extension that include credit evaluations, credit limits and collection monitoring procedures on a customer-by-customer basis. However, the Company generally does not require collateral before services are performed. No individual customer accounted for more than 10% of accounts receivable or more than 10% of total third-party revenues in the periods presented. Inventories and Supplies Inventories are stated at the lower of cost or market. The cost of oil and oil products as well as the cost of supplies and drums, solvent and solution and other inventories is principally determined on a first-in, first-out ("FIFO") basis. The Company continually reviews its inventories for obsolete or unsalable items and adjusts its carrying value to reflect estimated realizable values. Property, Plant and Equipment, net (excluding landfill assets and finance lease right-of-use assets) Property, plant and equipment, net is stated at cost less accumulated depreciation. Expenditures for major renewals and improvements which extend the life or usefulness of the asset are capitalized. Items of an ordinary repair or maintenance nature are charged directly to operating expense as incurred. During the construction and development period of an asset, the costs incurred, including interest expense, are classified as construction-in-progress. When the asset is ready for its intended use, the asset is reclassified to an appropriate asset classification and depreciation or amortization commences. 57 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company depreciates and amortizes the capitalized cost of these assets, using the straight-line method as follows: Asset Classification Estimated Useful Life Buildings and building improvements Buildings 20 - 42 years Leasehold and building improvements 2 - 45 years Vehicles 2 - 15 years Equipment Capitalized software and computer equipment 3 - 5 years Containers and railcars 8 - 16 years All other equipment 4 - 30 years Furniture and fixtures 5 - 8 years Gains and losses on the sale of property, plant and equipment are included in Other income (expense), net. Fully depreciated assets are retained in property, plant and equipment and accumulated depreciation until they are removed from service. The Company tests asset groups for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment in the carrying value of long-lived assets is recognized if the expected future undiscounted cash flows derived from the assets, or group of assets, are less than their carrying value. The Company did not record any impairment charges related to long-lived assets in the periods presented. Business Combinations In accordance with the acquisition method of accounting, the purchase price paid for an acquisition is allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill. As required, a preliminary fair value is determined once a business is acquired, with the final determination of the fair value being completed no later than one year from the date of acquisition. Goodwill Goodwill is comprised of the purchase price of business acquisitions in excess of the fair value of the net assets acquired. 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. The Company determines its reporting units by identifying the components of each operating segment. As of December 31, 2023, the Company had four reporting units consisting of, Environmental Sales and Service, Industrial Services, Environmental Facilities and Safety-Kleen Sustainability Solutions ("SKSS"). See Note 8, "Goodwill and Other Intangible Assets," for additional information related to the Company's goodwill impairment tests. Permits and Other Intangibles Costs related to acquiring licenses, permits and intangible assets, such as legal fees, site surveys, engineering costs and other expenditures are capitalized. Other intangible assets consist primarily of customer and supplier relationships, trademarks and trade names and developed technology. Permits relating to landfills are amortized on a units-of-consumption basis. All other permits are amortized over periods ranging from five to 30 years on a straight-line basis. Finite-lived other intangible assets are amortized on a straight-line basis over their respective useful lives, which range from two to 25 years. All finite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. When such factors and circumstances exist, management compares the projected undiscounted future cash flows associated with the related asset or group of assets to the carrying amount. The impairment loss, if any, is measured as the excess of the carrying amount over the fair value of the asset or group of assets. 58 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Indefinite-lived intangible assets are not amortized but are reviewed for impairment annually as of December 31, or when events or changes in the business environment indicate that the carrying value may be impaired. If the fair value of the asset is less than the carrying amount, the impairment loss is measured as the excess of the carrying value of the asset over its fair value. Landfill Accounting The Company amortizes landfill improvements and certain landfill-related permits over the estimated useful lives. The units-of-consumption method is used to amortize land, landfill cell construction, asset retirement costs and remaining landfill cells and sites. The Company also utilizes the units-of-consumption method to record closure and post-closure obligations for landfill cells and sites. Under the units-of-consumption method, the Company includes future estimated construction and asset retirement costs, as well as costs incurred to date, in the amortization base of the landfill assets. Additionally, where appropriate, as described below, the Company includes probable expansion airspace that has yet to be permitted in the calculation of the total remaining useful life of the landfill. If it is determined that expansion capacity should no longer be considered in calculating the recoverability of a landfill asset, the Company may be required to recognize an asset impairment or incur significantly higher amortization expense. If at any time the Company makes the decision to abandon the expansion effort, the capitalized costs related to the expansion effort are expensed immediately. Landfill assets —Landfill assets include the costs of landfill site acquisition, permits and cell construction incurred to date. These amounts are recorded at cost, which includes capitalized interest as applicable. Landfill assets, net of amortization, are combined with management's estimate of the costs required to complete construction of the landfill to determine the amount to be amortized over the remaining estimated useful economic life of a site. Amortization of landfill assets is recorded on a units-of-consumption basis, such that the landfill assets should be completely amortized at the date the landfill ceases accepting waste. Amortization totaled $ 18.6 million, $ 16.2 million and $ 13.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. Changes in the determination of when the landfill will cease accepting waste, either through a business decision by the Company, determination that expansion capacity should no longer be considered probable or changes in estimates on annual airspace consumption, will impact the amortization expense of the landfill assets. Changes in estimated costs to complete construction are applied prospectively to the amortization rate. Landfill capacity —Landfill capacity, which is the basis for the amortization of landfill assets and for the accrual of final closure and post-closure obligations, represents total permitted airspace plus unpermitted airspace that management believes is highly probable of ultimately being permitted. As of December 31, 2023, there were no unpermitted expansions included in the Company's landfill accounting model. If actual expansion airspace is significantly different from management's estimate of expansion airspace, the amortization rates used for the units-of-consumption method would change, therefore impacting the Company's profitability. As of December 31, 2023, the Company had eight active landfill sites (including the Company's non-commercial landfill), which have estimated remaining lives (based on anticipated waste volumes and the remaining highly probable airspace) as follows: Facility Name Location Remaining Lives (Years) Permitted Remaining Highly Probable Airspace (cubic yards) (in thousands) Buttonwillow California 20 4,999 Deer Trail Colorado 21 1,420 Grassy Mountain Utah 34 4,320 Kimball Nebraska 23 547 Lambton Ontario, Canada 46 4,350 Lone Mountain Oklahoma 16 3,165 Ryley Alberta, Canada 30 5,692 Sawyer North Dakota 65 3,260 27,753 In 2023, as expected, the Company's non-commercial landfill at Deer Park, Texas reached permitted capacity and is in the process of closing. This landfill has been excluded from the table above. At December 31, 2023 and 2022, the Company had no cubic yards of permitted, but not highly probable, airspace. 59 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table presents the remaining highly probable airspace from January 1, 2022 through December 31, 2023 (in thousands of cubic yards): 2023 2022 Remaining capacity, beginning of year 28,270 23,784 Changes in highly probable airspace, net 464 5,579 Consumed ( 981 ) ( 1,093 ) Remaining capacity, end of year 27,753 28,270 In the year ended December 31, 2023 the Company received a permit for expansion of its Kimball, Nebraska landfill. In the year ended December 31, 2022, the Company received a permit for the expansion of its Ryley landfill in Alberta, Canada. Amortization of cell construction costs and accrual of cell closure obligations —Landfills are typically comprised of a number of cells, which are constructed within a defined acreage (or footprint). The cells are typically discrete units, which require both separate construction and separate capping and closure procedures. Cell construction costs are the costs required to excavate and construct the landfill cell. These costs are typically amortized on a units-of-consumption basis, such that they are completely amortized when the specific cell ceases accepting waste. In some instances, the Company has landfills that are engineered and constructed as "progressive trenches." In progressive trench landfills, a number of contiguous cells form a progressive trench. In those instances, the Company amortizes cell construction costs over the airspace within the entire trench, such that the cell construction costs will be fully amortized at the end of the trench useful life. The design and construction of a landfill does not create a landfill asset retirement obligation. Rather, the asset retirement obligation for cell closure (the cost associated with capping each cell) is incurred in relatively small increments as waste is placed in the landfill. Therefore, the cost required to construct the cell cap is capitalized as an asset retirement cost and a liability of an equal amount is established, based on the discounted cash flow associated with each capping event, as airspace is consumed. Spending for cell capping is reflected as environmental expenditures within operating activities in the consolidated statements of cash flows. Landfill final closure and post-closure liabilities —The balance of landfill final closure and post-closure liabilities at December 31, 2023 and 2022 was $ 59.4 million and $ 62.3 million, respectively. The Company has material financial commitments for the costs associated with requirements of the Environmental Protection Agency ("EPA") and the comparable regulatory agency in Canada for landfill final closure and post-closure activities. The Company develops estimates for the cost of these activities based on an evaluation of site-specific facts and circumstances, including the Company's interpretation of current regulatory requirements and proposed regulatory changes. Such estimates may change in the future due to various circumstances including, but not limited to, permit modifications, changes in legislation or regulations, technological changes and results of environmental studies. Final closure costs are the costs incurred after the site ceases to accept waste, but before the landfill is certified as closed by the applicable state regulatory agency. These costs generally include the costs required to cap the final cell of the landfill (if not included in cell closure), the costs required to dismantle certain structures for landfills and other landfill improvements, and regulation-mandated groundwater monitoring and leachate management. Post-closure costs involve the maintenance and monitoring of a landfill site that has been certified closed by the applicable regulatory agency. These costs generally include groundwater monitoring and leachate management. Regulatory post-closure periods are generally 30 years after landfill closure. Final closure and post-closure obligations are accrued on a units-of-consumption basis, such that the present value of the final closure and post-closure obligations are fully accrued at the date the landfill ceases accepting waste. Cell closure, final closure and post-closure costs (also referred to as "asset retirement obligations") are calculated by estimating the total obligation in current dollars, adjusted for future inflation estimates and discounted at the Company's credit-adjusted risk-free interest rate ( 6.51 % and 5.37 % during 2023 and 2022, respectively). Non-Landfill Closure and Post-Closure Liabilities The balance of non-landfill closure and post-closure liabilities at December 31, 2023 and 2022 was $ 59.2 million and $ 56.6 million, respectively. Non-landfill closure and post-closure obligations arise when the Company commences non-landfill facility operations and include costs required to dismantle and decontaminate certain structures and other costs incurred during the closure process. Post-closure costs, if required, include associated maintenance and monitoring costs as required by the closure permit. Post-closure periods are performance-based and are not typically specified in terms of years in the closure permit, but generally range from 10 to 30 years or more. 60 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company records its non-landfill closure and post-closure liability by: (i) estimating the current cost of closing a non-landfill facility and the post-closure care of that facility, if required, based upon the closure plan that the Company is required to follow under its operating permit, or in the event the facility operates with a permit that does not contain a closure plan, based upon legally enforceable closure commitments made by the Company to various government agencies; (ii) estimates as to when future operations may cease; (iii) cost estimates of closing the non-landfill facility using the inflation rate to the time of closing; and (iv) discounting the future value back to the present using the credit-adjusted risk-free interest rate. The estimates for non-landfill closure and post-closure liabilities are inherently uncertain due to the possibility that permit and regulatory requirements will change in the future, impacting the estimation of total costs and the timing of the expenditures. Management reviews non-landfill closure and post-closure liabilities for changes to key assumptions that would impact the amount of the recorded liabilities. Changes that would prompt management to revise a liability estimate include changes in legal requirements that impact the Company's expected closure plan or scope of work, in the market price of a significant cost item, in the estimate as to when future operations at a location might cease or in the expected timing of the costs. Changes in estimates for non-landfill closure and post-closure events immediately impact the liability and the value of the corresponding asset. If a change is made to a fully-amortized asset, the adjustment is charged immediately to expense. When a change in estimate relates to an asset that has not been fully amortized, the adjustment to the asset is recognized in income prospectively as a component of amortization. Historically, changes to non-landfill closure and post-closure estimates have not been material. Remedial Liabilities The balance of remedial liabilities at December 31, 2023 and 2022 was $ 111.2 million and $ 116.3 million, respectively. Remedial liabilities, including Superfund liabilities, include the costs of removal or containment of contaminated material, treatment of potentially contaminated groundwater and maintenance and monitoring costs necessary to comply with regulatory requirements. Most of the Company's remedial liabilities relate to the active and inactive hazardous waste treatment and disposal facilities which the Company acquired and Superfund sites owned by third-parties for which 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. The Company's estimate of remedial liabilities involves an analysis of such factors as: (i) the nature and extent of environmental contamination (if any); (ii) the terms of applicable permits and agreements with regulatory authorities as to cleanup procedures and whether modifications to such permits and agreements will likely need to be negotiated; (iii) the cost of performing anticipated cleanup activities based upon current technology; and (iv) in the case of Superfund and other sites where other parties will also be responsible for a portion of the cleanup costs, the likely allocation of such costs and the ability of such other parties to pay their share. The measurement of remedial liabilities is reviewed at least quarterly and changes in estimates are recognized in the consolidated statements of operations when identified. Where the Company concludes that it is probable that a liability has been incurred and an amount can be estimated, a liability is recognized. Remedial liabilities are inherently difficult to estimate. Estimating remedial liabilities requires that the existing environmental contamination be understood. There are risks that the actual quantities of contaminants differ from the results of the site investigation, and that contaminants exist that have not been previously identified. In addition, the value of the remedial liabilities is dependent on the remedial method selected. There is a risk that funds will be expended on a remedial solution that is not successful, which could result in the Company incurring the incremental costs of an alternative solution. Such estimates, which are subject to change, are subsequently revised if and when additional or new information becomes available. Remedial liabilities are discounted when the timing of the payments is determinable and the amounts are estimable. In the case of remedial liabilities assumed in connection with acquisitions, acquired liabilities are recorded at fair value as of the dates of the acquisitions calculated by inflating costs in current dollars using an estimate of future inflation rates as of the respective acquisition dates until the expected time of payment, and then discounting the amount of the payments to their present value using a risk-free discount rate as of the acquisition dates. Discount rates used in the present value determination of the Company's remedial liabilities range from 1.37 % to 4.90 %. Self-Insurance Liabilities The Company self-insures a significant portion of expected losses related to workers' compensation, employee medical, comprehensive general liability and vehicle liability. Liabilities associated with these losses are recorded based on the Company's estimates of the ultimate cost to settle incurred claims. These recorded liabilities are estimated based on independent 61 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) actuarial estimates and judgments which consider the frequency and settlement amount of historical claims data and are discounted to present value using a risk-free interest rate. Revenue Recognition The Company recognizes revenue when control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The majority of the Company’s revenues are for services, which are recognized based on time and materials incurred at contractually agreed-upon rates. Product revenues are recognized when the products are delivered and control transfers to the customer. The Company’s payment terms vary by the type of customers and the products or services offered. The periods between invoicing and when payments are due are not significant. Amounts billed to customers related to shipping and handling are classified as revenue, and the Company's shipping and handling costs are included in costs of revenues. In the course of operations, the Company collects sales tax and other excise taxes from its customers and recognizes a current liability, which is then relieved when the taxes are remitted to the appropriate government authorities. The Company excludes sales and other excise taxes that it collects from customers from its revenues. Foreign Currency The Company has international operations in Canada and administrative support services located in India. The functional currencies of foreign operations are the local currency and therefore assets and liabilities of those foreign operations are translated to U.S. Dollars at the exchange rate in effect at the balance sheet date and revenue and expenses at the average exchange rate for the period. Gains and losses from the translation of the consolidated financial statements of foreign subsidiaries into U.S. Dollars are included in stockholders' equity as a component of accumulated other comprehensive loss. Gains and losses from transactions not denominated in the functional currency of an entity are recognized in the consolidated statements of operations. Recorded balances that are denominated in a currency other than the functional currency are remeasured to the functional currency using the exchange rate at the balance sheet date and gains or losses are recorded in the consolidated statements of operations. Defined Contribution Plan The Company has defined contribution plans under which eligible employees may contribute up to the maximum amount as provided by law. The Company matches a portion of these employee contributions and contributed $ 28.8 million, $ 25.3 million and $ 20.5 million in 2023, 2022 and 2021 respectively. Advertising Expense Advertising costs are expensed as incurred. Advertising expense was $ 10.9 million in 2023, $ 9.4 million in 2022 and $ 6.0 million in 2021. Stock-Based Compensation Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which generally represents the vesting period. In addition, the Company issues awards with performance targets established prior to or at the grant date. The expense for these awards is recognized over the requisite service period when management believes it is probable those performance targets will be achieved. The fair value of the Company's grants are based on the closing price of the Company's common stock on the respective dates of grant. Forfeitures are recognized as they occur. Stock-based compensation is recognized in selling, general and administrative expense. Interest Rate Derivatives The Company enters into interest rate derivative agreements as part of the overall strategy to hedge against fluctuations in variable interest rates. These interest rate derivatives swap a variable interest rate for a fixed interest rate and have been designated as cash flow hedges. The Company assesses the hedge’s effectiveness at the inception of the hedge and at regular intervals throughout the life of the derivative. To the extent that the interest rate swap is highly effective, changes in fair value are recorded in stockholders’ equity as a component of accumulated other comprehensive loss. Amounts are reclassified from accumulated other comprehensive loss into interest expense on the consolidated statement of operations in the same period or periods during which the hedged transactions affect earnings. Although it was determined that the interest rate swaps will be a highly effective hedge, any portion of the interest rate swaps subsequently determined to be ineffective will be recognized in 62 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) earnings. Further, if it becomes probable that a forecasted transaction designated as the hedged item will not occur, any gain or loss deferred is recognized in interest expense at that time. The fair value of the interest rate swaps is calculated using discounted cash flow valuation methodologies based upon the one-month variable rate 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. The Company recognizes the fair value of the derivative instruments by counterparty as either a net asset, included in Other long-term assets, or net liability, included in Accrued expenses and other current liabilities, on the consolidated balance sheets. Income Taxes Current income tax expense approximates cash to be paid or refunded for taxes for the applicable period. Deferred tax expense or benefit is the result of changes between deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based upon the temporary differences between the financial statement basis and tax basis of assets and liabilities as well as from net operating loss and tax credit carryforwards as measured by the enacted tax rates which will be in effect when these differences reverse. The effect of a change in tax rates on deferred tax assets and liabilities is generally recognized in income in the period that includes the enactment date. The Company evaluates the recoverability of future tax deductions and credits and a valuation allowance is established by tax jurisdiction when, based on an evaluation of both positive and negative objective verifiable evidence, it is more likely than not that some portion or all of deferred tax assets will not be realized. The Company recognizes and measures a tax benefit from uncertain tax positions when it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The Company recognizes a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the current estimate or future recognition of an unrecognized benefit. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. Liabilities for unrecognized tax benefits are included within other long-term liabilities in the consolidated balance sheets. The Company recognizes interest and penalties related to unrecognized tax benefits within the provision for income taxes line in the consolidated statements of operations. Accrued interest and penalties are included within the other long-term liabilities line in the consolidated balance sheets. Earnings per Share ("EPS") Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all potentially dilutive common shares that were outstanding during the period. Leases The Company’s leases predominately relate to real estate, equipment, such as vehicles and industrial equipment utilized in operations, and rail cars utilized in connection with the Company’s transportation needs. Contracts are reviewed at inception to determine if the arrangement is a lease and, if so, whether it is an operating or finance lease. For all of its leases, the Company has elected not to separate lease and nonlease components, such as common area maintenance. The Company generally enters into long-term real estate leases with two to ten-year terms and long-term non-real estate leases with three to eight-year terms. In the normal course of business, the Company also enters into short-term leases having terms of one year or less. These leases are generally equipment leases entered into for short periods of time (e.g. daily, weekly or monthly) to satisfy immediate and/or short-term operational needs of the business which can arise based upon the nature of particular services performed. The Company has elected not to recognize right-of-use ("ROU") assets and lease liabilities for these short-term leases. Operating and finance leases with terms exceeding one year are recognized as ROU assets and lease liabilities and measured at commencement date based on the present value of the future lease payments over the lease term. Certain of the Company's real estate leases contain escalating future lease payments. Escalating lease payments that are based upon explicit amounts contained in the lease or an index (e.g., consumer price index) are included in the Company's determination of future lease payments to determine the ROU asset and lease liability recognized at the commencement date. Any differences in the future lease payments from initial recognition are not anticipated to be material and will be recorded as variable lease cost in the period incurred. The variable lease cost will also include the Company’s portion of property tax, utilities and common area maintenance. A significant portion of the Company’s real estate lease agreements include renewal periods at the Company’s option. The Company includes these renewal periods in the lease term only when renewal is 63 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) reasonably certain based upon facts and circumstances specific to the lease and known by the Company. Certain of the equipment and rail car leases transfer ownership upon the conclusion of the lease term and as such, are classified as finance leases. Leases containing purchase options are classified as finance leases only when it is reasonably certain that the Company will execute such options. The Company uses its incremental borrowing rate on collateralized debt based on the information available at the lease commencement date in determining the present value of future lease payments as the implicit rate is typically not readily determinable. For operating leases, lease cost is recognized on a straight-line basis over the lease term and is included in cost of revenues or selling, general and administrative expenses depending on the use of the asset. For finance leases, ROU assets are amortized on a straight-line basis and interest expense is recognized based on the incremental borrowing rate. Finance lease amortization is recognized in depreciation and amortization and finance lease related interest expense is recognized in interest expense, net of interest income. Accounting Pronouncements Not Yet Adopted In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effective for the annual periods beginning the year ended December 31, 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting this new pronouncement on its consolidated financial statements disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which enhances income tax disclosures related to the tax rate reconciliation and income taxes paid. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact of adopting this new pronouncement on its consolidated financial statements disclosures. (3) REVENUES The Company generates revenues through the following operating segments: Environmental Services and Safety-Kleen Sustainability Solutions ("SKSS"). The Company's Environmental Services operating segment generally has four sources of revenue and the SKSS operating segment has two sources of revenue. The Company disaggregates third-party revenues by geographic location and source of revenue as management believes these categories depict how revenue and cash flows are affected by economic factors. The Company's significant sources of revenue include: Technical Services —Technical Services contribute to the revenues of the Environmental Services operating segment. Revenues for these services are generated from fees charged for waste material management and disposal services including onsite environmental management services, collection and transportation, packaging, recycling, treatment and disposal of waste and remediation projects. These services handle hazardous and/or non-hazardous waste, including per- and polyfluoroalkyl substances ("PFAS"). Revenue is primarily generated by short-term projects, most of which are governed by master service agreements that are long-term in nature. These master service agreements are typically entered into with the Company's larger customers and outline the pricing and legal frameworks for such arrangements. Services are provided based on purchase orders or agreements with the customer and include prices based upon units of volume of waste, material and personnel costs as well as transportation and other fees. Collection and transportation revenues are recognized over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. The Company uses the input method to recognize revenue over time, based on time and materials incurred as a basis for measuring the satisfaction of the performance obligation. Revenues for treatment and disposal of waste are recognized upon completion of treatment, final disposition in a landfill or incinerator, or when the waste is shipped to a third-party for processing and disposal. The Company periodically enters into bundled arrangements for the collection and transportation and disposal of waste. For such arrangements, transportation and disposal are considered distinct performance obligations and the Company allocates revenue to each based on the relative standalone selling price (i.e., the estimated price that a customer would pay for the services on a standalone basis). Revenues and the related costs from waste that is not yet completely processed and disposed of are deferred. The deferred revenues and costs are recognized when the services are completed. The period between collection and transportation and the final processing and disposal ranges depending on the location of the customer, but generally is measured in days. 64 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Industrial Services —Industrial Services contribute to the revenues of the Environmental Services operating segment. These revenues are primarily generated from industrial and specialty services provided to refineries, chemical plants, manufacturing facilities, power generation companies and other industrial customers throughout North America. Services include in-plant cleaning and maintenance services, plant outage and turnaround services, specialty cleaning services including chemical cleaning, pigging and high and ultra-high pressure water cleaning, leak detection and repair, daylighting, production services and upstream energy services. Services are provided based on purchase orders or agreements with the customer and include prices based upon daily, hourly or job rates for equipment, materials and personnel. The Company recognizes revenue for these services over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. The Company uses the input method to recognize revenue over time, based on time and materials incurred. Field and Emergency Response Services —Field and Emergency Response Services contribute to the revenues of the Environmental Services operating segment. Field Services revenues are generated from cleanup services at customer sites, including those managed by municipalities and utility providers, or other locations on a scheduled or emergency response basis. Services include confined space entry for tank cleaning, site decontamination, remediation, 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 emergencies of any scale range from man-made disasters such as oil spills to natural disasters like hurricanes. Emergency response services also include spill cleanup on land and water, as well as contagion disinfection, decontamination and disposal services. Field and emergency response services are provided based on purchase orders or agreements with customers and include prices generally based upon daily, hourly or job rates for equipment, materials and personnel. The Company recognizes revenue for these services over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. The Company uses the input method to recognize revenue over time, based on time and materials incurred. The duration of such services can be over a number of hours, several days or even months for larger scale projects. Safety-Kleen Environmental Services —Safety-Kleen Environmental Services revenues contribute both to the Environmental Services operating segment and the SKSS operating segment depending upon the nature of such revenues and operating responsibilities relative to executing the revenue contracts. Revenues from providing containerized waste handling and disposal services, parts washer services and vacuum services, referred to collectively as the Safety-Kleen branches' core service offerings, contribute to the revenues of the Environmental Services operating segment. In addition, sales of packaged blended oil products and other complementary product sales contribute to the revenues of the Environmental Services operating segment. Revenues generated from waste oil, anti-freeze and oil filter collection services, sales of bulk blended oil products and sales of bulk automotive fluids contribute to the SKSS operating segment. Generally, the revenue from services is recognized over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. The duration of such services can be over a number of hours or several days. The Company uses the input method to recognize revenue over time, based on time and materials incurred. Product revenue is recognized upon the transfer of control whereby control transfers when the products are delivered to the customer. Containerized waste services consist of profiling, collecting, transporting and recycling or disposing of a wide variety of waste. Related collection and transportation revenues are recognized over time, as the customer receives and consumes the benefits of the services as they are being performed and the Company has a right to payment for performance completed to date. Parts washer services include customer use of the Company's parts washer equipment, cleaning and maintenance of the parts washer equipment and removal and replacement of used cleaning fluids. Parts washer services are considered a single performance obligation due to the highly integrated and interdependent nature of the arrangement. Revenue from parts washer services is recognized over the service interval as the customer receives the benefit of the services. Safety-Kleen Oil —Safety-Kleen Oil related sales contribute to the revenues of the SKSS segment. These revenues are generated from sales of high-quality base and blended lubricating oils to third-party distributors, government agencies, fleets, railroads and industrial customers. The business also sells recycled fuel oil to asphalt plants, industrial plants and pulp and paper companies. The used oil is also processed into vacuum gas oil which can be further re-refined into lubricant base oils or sold directly into the marine diesel oil fuel market. Revenue for oil products is recognized at a point in time, upon the transfer of control. Control transfers when the products are delivered to the customer. 65 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following tables present the Company's third-party revenue disaggregated by source of revenue and geography (in thousands): For the year ended December 31, 2023 Environmental Services Safety-Kleen Sustainability Solutions Corporate Total Primary Geographical Markets United States $ 4,022,394 $ 846,339 $ 447 $ 4,869,180 Canada 447,515 92,457 — 539,972 Total third-party revenues $ 4,469,909 $ 938,796 $ 447 $ 5,409,152 Sources of Revenue Technical Services $ 1,563,847 $ — $ — $ 1,563,847 Industrial Services and Other 1,418,938 — 447 1,419,385 Field and Emergency Response Services 609,913 — — 609,913 Safety-Kleen Environmental Services 877,211 224,830 — 1,102,041 Safety-Kleen Oil — 713,966 — 713,966 Total third-party revenues $ 4,469,909 $ 938,796 $ 447 $ 5,409,152 For the year ended December 31, 2022 Environmental Services Safety-Kleen Sustainability Solutions Corporate Total Primary Geographical Markets United States $ 3,675,880 $ 899,780 $ 507 $ 4,576,167 Canada 469,093 121,345 — 590,438 Total third-party revenues $ 4,144,973 $ 1,021,125 $ 507 $ 5,166,605 Sources of Revenue Technical Services $ 1,495,264 $ — $ — $ 1,495,264 Industrial Services and Other 1,311,072 — 507 1,311,579 Field and Emergency Response Services 575,300 — — 575,300 Safety-Kleen Environmental Services 763,337 199,360 — 962,697 Safety-Kleen Oil — 821,765 — 821,765 Total third-party revenues $ 4,144,973 $ 1,021,125 $ 507 $ 5,166,605 For the year ended December 31, 2021 Environmental Services Safety-Kleen Sustainability Solutions Corporate Total Primary Geographical Markets United States $ 2,631,112 $ 693,542 $ 299 $ 3,324,953 Canada 394,795 85,818 — 480,613 Total third-party revenues $ 3,025,907 $ 779,360 $ 299 $ 3,805,566 Sources of Revenue Technical Services $ 1,209,624 $ — $ — $ 1,209,624 Industrial Services and Other 705,999 — 299 706,298 Field and Emergency Response Services 466,380 — — 466,380 Safety-Kleen Environmental Services 643,904 161,587 — 805,491 Safety-Kleen Oil — 617,773 — 617,773 Total third-party revenues $ 3,025,907 $ 779,360 $ 299 $ 3,805,566 66 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Contract Balances (in thousands) December 31, 2023 December 31, 2022 Receivables $ 983,111 $ 964,603 Contract assets (unbilled receivables) 107,859 107,010 Contract liabilities (deferred revenue) 95,230 94,094 The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets) and customer advances and deposits or deferred revenue (contract liabilities) on the consolidated balance sheet. Generally, billing occurs subsequent to revenue recognition, as a right to payment is not just subject to passage of time, resulting in contract assets, which are generally classified as current. The Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. The contract liability balances at the beginning of each period presented were generally fully recognized in the subsequent three-month period. Variable Consideration The nature of the Company's contracts give rise to certain types of variable consideration, including in limited cases volume discounts. Accordingly, management establishes a revenue allowance to cover the estimated amounts of revenue that may need to be credited to customers' accounts in future periods. The Company estimates the amount of variable consideration included in the estimated transaction price based on historical experience, anticipated performance and management's best judgment at the time. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. There have been no material changes in estimates of variable consideration in the periods presented. Contract Costs Contract costs include direct and incremental costs to obtain or fulfill a contract. Parts washer costs include costs of solvent, commissions paid relating to revenue generated from parts washer services, and transportation costs associated with transferring the product picked up from the service as it is brought to the Company’s facilities or third-party sites. Costs related to the treatment of waste include costs for waste receiving, drum movement and storage, waste consolidation and transportation between facilities. The Company’s contract costs that are subject to capitalization are comprised of costs associated with parts washer services and with the treatment and disposal of waste. As of December 31, 2023 and 2022, the Company's deferred contract costs totaled $ 29.9 million and $ 29.7 million, respectively. Deferred parts washer costs are recognized over the service interval as the customer receives the benefit of the services, and deferred costs related to treatment and disposal of waste are recognized when the corresponding waste is disposed. Deferred costs are included within total current assets in the Company’s consolidated balance sheets. The deferred contract cost balances at the beginning of each period presented were fully recognized in cost of revenue in the subsequent three-month period. (4) BUSINESS COMBINATIONS Proposed 2024 Acquisition On February 2, 2024, the Company signed a definitive agreement with Gryphon Investors, Inc. to acquire HEPACO, a leading provider of specialized environmental and emergency response services in the Eastern United States, for $ 400.0 million in cash, subject to working capital and other adjustments. The Company intends to fund the acquisition with a combination of available cash and incremental borrowings under our term loan facility. The acquisition will expand field services operations within the Environmental Services segment and is expected to close in the first half of 2024, subject to regulatory approval and other customary closing conditions. 2023 Acquisition On March 31, 2023, the Company acquired Thompson Industrial Services, LLC ("Thompson Industrial") for an all-cash purchase price of $ 110.9 million, net of cash acquired. The operations of Thompson Industrial expand the Environmental Services segment's industrial service operations in the southeastern region of the United States. 67 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 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 the acquisition date. The Company continues to obtain information to complete the valuation of these balances and the associated income tax accounting. Measurement period adjustments will reflect new information obtained about facts and circumstances that existed as of the acquisition date. The following table summarizes the preliminary determination and recognition of assets acquired and liabilities assumed (in thousands): At Acquisition Date As Reported December 31, 2023 Accounts receivable $ 25,233 Inventories and supplies 228 Prepaid expenses and other current assets 1,302 Property, plant and equipment 26,719 Permits and other intangibles 28,900 Operating lease right-of-use assets 4,716 Other long-term assets 72 Current liabilities ( 10,385 ) Current portion of operating lease liabilities ( 1,653 ) Operating lease liabilities, less current portion ( 3,063 ) Other long-term liabilities ( 560 ) Total identifiable net assets 71,509 Goodwill 39,346 Total purchase price $ 110,855 Permits and other intangible assets acquired include customer relationships, trademarks/tradenames and non-compete agreements and are anticipated to have estimated useful lives of between five and 15 years with a weighted average useful life of approximately 13 years. The excess of the total purchase price, which includes the aggregate cash consideration paid in excess of the fair value of the tangible and intangible assets acquired and liabilities assumed, was recorded as goodwill. The goodwill recognized is attributable to the 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 year ended December 31, 2023, and pro forma revenue and earnings amounts on a combined basis as if this acquisition had been completed on January 1, 2022 are immaterial to the consolidated financial statements of the Company. 2022 Acquisitions On June 17, 2022, the Company acquired a privately-owned company for an all-cash purchase price of approximately $ 78.9 million, net of cash acquired. The operations of the newly acquired company expand the SKSS segment's waste oil collection capabilities and re-refining business throughout the southeastern region of the United States, including the addition of a re-refinery in Georgia. 68 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company finalized the purchase accounting for this acquisition in the second quarter of 2023. The allocation of the purchase price was based on estimates of the fair value and assets acquired and liabilities assumed as of June 17, 2022. The following table summarizes the final determination and recognition of assets acquired and liabilities assumed (in thousands): Preliminary Allocation As Reported December 31, 2022 Measurement Period Adjustments Final Allocation As Reported December 31, 2023 Accounts receivable $ 1,111 $ ( 22 ) $ 1,089 Inventories and supplies 5,816 ( 71 ) 5,745 Prepaid expenses and other current assets 144 — 144 Property, plant and equipment 19,605 2,626 22,231 Permits and other intangibles 23,500 — 23,500 Operating lease right-of-use assets 585 — 585 Other long-term assets 13 — 13 Current liabilities ( 3,271 ) ( 104 ) ( 3,375 ) Current portion of operating lease liabilities ( 186 ) — ( 186 ) Operating lease liabilities, less current portion ( 399 ) — ( 399 ) Other long-term liabilities ( 55 ) ( 2,626 ) ( 2,681 ) Total identifiable net assets 46,863 ( 197 ) 46,666 Goodwill 32,015 197 32,212 Total purchase price $ 78,878 $ — $ 78,878 Permits and other 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 18 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 December 31, 2022 and pro forma revenue and earnings amounts on a combined basis as if this acquisition had been completed on January 1, 2021 were not material in 2022 to the consolidated financial statements of the Company. On December 9, 2022, the Company acquired a privately-owned business for $ 12.6 million cash consideration. The acquired company expands the SKSS segment's oil collection operations in the southeastern United States. In connection with this acquisition, goodwill of $ 2.7 million was recognized. The results of operations for the acquired business were not material in 2022 to the consolidated financial statements of the Company. HydroChemPSC On October 8, 2021, the Company completed its 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 fully 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 Company finalized the purchase accounting for the acquisition of HydroChemPSC in the third quarter of 2022. The allocation of the purchase price was based on estimates of the fair value of assets acquired and liabilities assumed as of October 69 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8, 2021. The following table summarizes the final determination and recognition of assets acquired and liabilities assumed (in thousands): Final Allocation Accounts receivable, including unbilled receivables $ 131,516 Inventories and supplies 3,162 Prepaid expenses and other current assets 16,291 Property, plant and equipment 314,397 Other intangibles 289,000 Operating lease right-of-use assets 34,415 Other long-term assets 962 Current liabilities ( 118,854 ) Current portion of operating lease liabilities ( 11,277 ) Operating lease liabilities, less current portion ( 26,344 ) Deferred tax liabilities ( 80,386 ) Other long-term liabilities ( 4,170 ) Total identifiable net assets 548,712 Goodwill (i) 676,701 Total purchase price $ 1,225,413 _____________ (i) Goodwill represents the excess of the fair value of the net assets acquired over the purchase price. Goodwill of $ 676.7 million 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. Final Goodwill was assigned to the Environmental Sales and Service reporting unit, see Note 8, "Goodwill and Other Intangible Assets" for details on reporting unit change as of December 31, 2023. Unaudited Pro Forma Financial Information The following table presents unaudited pro forma combined summary financial information for the year ended December 31, 2021, and assumes the acquisition of HydroChemPSC occurred on January 1, 2020 (in thousands): 2021 Pro forma combined revenues $ 4,380,724 Pro forma combined net income 229,807 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 secured senior 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 in both periods did not contemplate the interest rate swap that the Company put in place in early 2022. See Note 12, "Financing Arrangements." Other 2021 Acquisition Activity On March 27, 2021, the Company acquired a privately-owned business for $ 22.8 million cash consideration. The acquired company increases the SKSS segment's network within the south central United States. In connection with this acquisition, a goodwill amount of $ 16.3 million was recognized. The results of operations for this acquired business were not material in 2021. On June 29, 2021, the Company signed a definitive agreement with Vertex Energy, Inc. ("Vertex") to acquire certain assets related to Vertex's used motor oil collection and re-refinery business in an all-cash transaction for $ 140.0 million, subject 70 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) to working capital and other adjustments. On January 25, 2022, Vertex and the Company mutually agreed to terminate the planned acquisition. Pursuant to the agreement, Vertex paid Clean Harbors a breakup fee of $ 3.0 million in early 2022 in connection with the termination. (5) DISPOSITION OF BUSINESS On June 30, 2022, the Company completed the sale of a line of business as part of its continuous focus on divesting certain non-core operations. The divested line of business was previously included within the Environmental Sales & Service reporting unit of the Environmental Services segment. The Company determined that the disposition did not constitute a strategic shift and that the impact on the Company's overall operations and financial results was not material. Accordingly, the operations associated with the disposal were not reported in discontinued operations. The final purchase price for the line of business was $ 18.8 million, after settling working capital, of which $ 1.5 million was held in escrow, half of which was received in 2023, and the remaining amount received in early 2024. The gain on sale of $ 8.9 million, after accounting for the assets sold, liabilities transferred upon sale and transaction costs, was included in gain on sale of business in the Company's consolidated statement of operations for the year ended December 31, 2022. (6) INVENTORIES AND SUPPLIES Inventories and supplies consisted of the following (in thousands): December 31, 2023 December 31, 2022 Oil and oil related products $ 118,600 $ 151,519 Supplies 177,217 143,743 Solvent and solutions 11,795 11,994 Other 19,899 17,738 Total inventories and supplies $ 327,511 $ 324,994 The balance of oil and oil related products has decreased due to lower volumes of base and blended oil on hand at December 31, 2023 when compared with December 31, 2022 and overall price decreases for the oil inventory and additives. Supplies inventories consist primarily of critical spare parts to support the Company's incinerator and re-refinery operations and other general supplies used in our normal day-to-day operations. Other inventories consist primarily of parts washer components, cleaning fluids, absorbents and automotive fluids, such as windshield washer fluid and antifreeze. (7) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following (in thousands): December 31, 2023 December 31, 2022 Land $ 174,891 $ 172,579 Asset retirement costs (non-landfill) 27,167 22,001 Landfill assets 253,180 232,872 Buildings and improvements (1) 630,525 591,397 Vehicles (2) 1,276,567 1,112,188 Equipment (3) 2,388,370 2,195,064 Construction in progress 213,601 140,328 4,964,301 4,466,429 Less - accumulated depreciation and amortization 2,770,983 2,486,127 Total property, plant and equipment, net $ 2,193,318 $ 1,980,302 ___________________________________ (1) Balances inclusive of gross ROU assets classified as finance leases of $ 8.0 million. (2) Balances inclusive of gross ROU assets classified as finance leases of $ 151.7 million and $ 106.7 million, respectively. (3) Balances inclusive of gross ROU assets classified as finance leases of $ 9.2 million. Depreciation expense, inclusive of landfill and finance lease amortization was $ 315.5 million, $ 297.4 million and $ 263.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Company recorded $ 6.6 million and $ 3.4 71 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) million capitalized interest in 2023 and 2022, respectively, mainly due to the construction of a new incinerator in Kimball, Nebraska . Capitalized interest in 2021 was negligible. (8) GOODWILL AND OTHER INTANGIBLE ASSETS The changes in goodwill for the years ended December 31, 2023 and 2022 were as follows (in thousands): Environmental Services Safety-Kleen Sustainability Solutions Total Balance at January 1, 2022 $ 1,085,534 $ 141,508 $ 1,227,042 Increase from current period acquisitions — 34,510 34,510 Measurement period adjustments from prior period acquisition ( 6,762 ) — ( 6,762 ) Decrease from disposition of business ( 4,412 ) — ( 4,412 ) Foreign currency translation ( 2,514 ) ( 986 ) ( 3,500 ) Balance at December 31, 2022 $ 1,071,846 $ 175,032 $ 1,246,878 Increase from current period acquisition 39,346 — 39,346 Measurement period adjustments from prior period acquisitions — 360 360 Foreign currency translation 821 331 1,152 Balance at December 31, 2023 $ 1,112,013 $ 175,723 $ 1,287,736 The Company assesses goodwill for impairment on an annual basis as of December 31 or at an interim date when it is more likely than not that events or changes in the business environment (“triggering events”) would reduce the fair value of a reporting unit below its carrying value. The Company did not identify any triggering events in the years presented. During the fourth quarter of 2023, the Company changed reporting units, separating the historical Environmental Sales and Service reporting unit into two reporting units, Environmental Sales and Service and Industrial Services. This change required goodwill in the Environmental Sales and Services reporting unit to be allocated to the new reporting units based on relative fair value. The Company tested goodwill of the new reporting units for impairment both before and following the change in reporting unit structure, and no impairment was identified. The Company conducted its annual impairment test of goodwill as of December 31, 2023 and determined that no adjustment to the carrying value of goodwill for any reporting unit was then necessary because the fair values of the reporting units exceeded their respective carrying values. The fair value of all reporting units was determined using an income approach based upon estimates of future discounted cash flows. The resulting estimates of fair value were validated through the consideration of other factors such as the fair value of comparable companies to the reporting units and a reconciliation of the sum of all estimated fair values of the reporting units to the Company’s overall market capitalization. In all cases, the estimated fair values of the reporting units significantly exceeded the respective carrying values. Significant judgments and unobservable inputs, categorized as Level 3 in the fair value hierarchy, are inherent in the impairment tests performed and include assumptions about the amount and timing of expected future cash flows, growth rates, and the determination of appropriate discount rates. Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. The Company believes that the assumptions used in its impairment tests are reasonable, but variations in any of the assumptions may result in different measurements of fair values. The impacts of any adverse business and market conditions which may impact the overall performance of the Company's reporting units will continue to be monitored. If the Company's reporting units do not achieve the financial performance that the Company expects, or if there is a significant prolonged change in demand for the Company's products and services, it is possible that goodwill impairment charges may result. Therefore, there can be no assurance that future events will not result in an impairment of goodwill. 72 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) As of December 31, 2023 and 2022, the Company's intangible assets consisted of the following (in thousands): December 31, 2023 December 31, 2022 Cost Accumulated Amortization Net Cost Accumulated Amortization Net Permits $ 191,747 $ 117,556 $ 74,191 $ 188,373 $ 109,036 $ 79,337 Customer and supplier relationships 604,994 258,879 346,115 583,709 229,368 354,341 Other intangible assets 100,068 37,862 62,206 89,388 24,818 64,570 Total amortizable permits and other intangible assets 896,809 414,297 482,512 861,470 363,222 498,248 Trademarks and trade names 120,285 — 120,285 122,534 — 122,534 Total permits and other intangible assets $ 1,017,094 $ 414,297 $ 602,797 $ 984,004 $ 363,222 $ 620,782 During the periods presented, there were no events or changes in circumstances which would indicate that the carrying values of the Company's asset groups would not be recoverable and thus no impairment charges were recorded . If expectations of future cash flows were to decrease in the future as a result of worse than expected or prolonged periods of depressed activity, future impairments may become evident. Amortization expense of permits, customer and supplier relationships and other intangible assets for the years ended December 31, 2023, 2022 and 2021 were $ 50.3 million, $ 50.2 million and $ 34.7 million, respectively. The expected amortization of the net carrying amount of finite-lived intangible assets at December 31, 2023 was as follows (in thousands): Years ending December 31, Expected Amortization 2024 $ 46,639 2025 43,231 2026 41,385 2027 39,245 2028 37,975 Thereafter 274,037 $ 482,512 (9) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2023 December 31, 2022 Accrued insurance $ 107,658 $ 92,909 Accrued interest 33,857 20,033 Accrued compensation and benefits 113,236 123,226 Accrued income, real estate, sales and other taxes 44,752 61,442 Accrued other 97,654 99,106 $ 397,157 $ 396,716 As of December 31, 2023 and 2022, accrued insurance included employee medical insurance costs of $ 22.8 million and $ 16.4 million, respectively, and accruals for losses under workers' compensation, comprehensive general liability and vehicle liability self-insurance programs of $ 82.7 million and $ 74.9 million, respectively. The increase in accrued interest is due to the timing of interest payments associated with debt issued in 2023. Refer to Note 12, "Financing Arrangements" for more information. The decrease in accrued compensation and benefits is primarily due to a decrease in accrued incentive compensation. 73 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (10) CLOSURE AND POST-CLOSURE LIABILITIES The changes to closure and post-closure liabilities (also referred to as "asset retirement obligations") from January 1, 2022 through December 31, 2023 were as follows (in thousands): Landfill Retirement Liability Non-Landfill Retirement Liability Total Balance at January 1, 2022 $ 53,425 $ 45,678 $ 99,103 Liabilities assumed in acquisitions — 55 55 Measurement period adjustments from prior period acquisitions — 1,148 1,148 New asset retirement obligations 3,743 — 3,743 Accretion 4,605 4,147 8,752 Changes in estimates recorded to consolidated statement of operations 1,063 5,712 6,775 Changes in estimates recorded to consolidated balance sheet 3,219 1,742 4,961 Environmental expenditures ( 3,373 ) ( 1,778 ) ( 5,151 ) Currency translation and other ( 431 ) ( 154 ) ( 585 ) Balance at December 31, 2022 62,251 56,550 118,801 Liabilities assumed in acquisitions — 574 574 Measurement period adjustments from prior period acquisitions — 3,015 3,015 New asset retirement obligations 3,092 — 3,092 Accretion 4,958 4,519 9,477 Changes in estimates recorded to consolidated statement of operations 1,147 53 1,200 Changes in estimates recorded to consolidated balance sheet ( 3,706 ) 1,600 ( 2,106 ) Environmental expenditures ( 8,478 ) ( 7,206 ) ( 15,684 ) Currency translation and other 179 52 231 Balance at December 31, 2023 $ 59,443 $ 59,157 $ 118,600 During the first quarter of 2023, the Company's non-commercial landfill at the Deer Park, Texas incineration facility reached its permitted capacity, as expected. The Company has commenced closure activities; however, there have been no changes to the liabilities related to this location. In the year ended December 31, 2023, there were no significant benefits or charges resulting from changes in estimates for closure and post-closure liabilities. Anticipated payments (based on current estimated costs and anticipated timing of necessary regulatory approvals to commence work on closure and post-closure activities) for each of the next five years and thereafter are as follows (in thousands): Years ending December 31, 2024 $ 15,698 2025 16,694 2026 14,750 2027 3,955 2028 13,628 Thereafter 252,110 Undiscounted closure and post-closure liabilities 316,835 Less: Discount at credit-adjusted risk-free rate ( 114,325 ) Less: Undiscounted estimated closure and post-closure liabilities relating to airspace not yet consumed ( 83,910 ) Present value of closure and post-closure liabilities $ 118,600 74 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (11) REMEDIAL LIABILITIES The changes to remedial liabilities from January 1, 2022 through December 31, 2023 were as follows (in thousands): Remedial Liabilities for Landfill Sites Remedial Liabilities for Inactive Sites Remedial Liabilities (Including Superfund) for Non-Landfill Operations Total Balance at January 1, 2022 $ 1,780 $ 59,787 $ 50,306 $ 111,873 Liabilities assumed in acquisition of real estate — — 8,092 8,092 Measurement period adjustments from prior period acquisition — — 338 338 Accretion 86 2,498 1,607 4,191 Changes in estimates recorded to consolidated statement of operations 8 877 612 1,497 Environmental expenditures ( 50 ) ( 3,370 ) ( 5,375 ) ( 8,795 ) Currency translation and other — ( 43 ) ( 863 ) ( 906 ) Balance at December 31, 2022 1,824 59,749 54,717 116,290 Accretion 89 2,540 1,561 4,190 Changes in estimates recorded to consolidated statement of operations 19 1,713 1,896 3,628 Expenditures ( 52 ) ( 3,840 ) ( 9,384 ) ( 13,276 ) Currency translation and other — 115 296 411 Balance at December 31, 2023 $ 1,880 $ 60,277 $ 49,086 $ 111,243 In the year ended December 31, 2023, the Company increased its remedial liabilities for an inactive site and an active site by $ 1.1 million each due to changes in the estimates of the related liabilities to account for new information obtained regarding the ultimate remediation of these sites. In the year ended December 31, 2022, the $ 8.1 million liability assumed in acquisition relates to real estate that the Company acquired in 2022. In purchasing the property, the Company assumed a known associated remedial liability, which was contemplated in the purchase price. Anticipated payments at December 31, 2023 (based on current estimated costs and anticipated timing of necessary regulatory approvals to commence work on remedial activities) for each of the next five years and thereafter were as follows (in thousands): Years ending December 31, 2024 $ 13,898 2025 19,253 2026 9,006 2027 7,001 2028 7,767 Thereafter 71,737 Undiscounted remedial liabilities 128,662 Less: Discount at risk free rates ( 17,419 ) Total remedial liabilities $ 111,243 75 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table presents the Company's estimated remedial liabilities and reasonably possible additional liabilities as of December 31, 2023 disaggregated by facility/site type (in thousands, except percentages): Type of Facility or Site Remedial Liabilities % of Total Reasonably Possible Additional Liabilities (1) Inactive facilities not used in active conduct of the Company's business, most of which were assumed through prior period acquisitions ( 24 facilities) $ 60,277 54.2 % $ 11,585 Facilities now used in active conduct of the Company's business ( 45 facilities) 43,299 38.9 9,080 Superfund sites ( 13 sites) 7,667 6.9 1,150 Total $ 111,243 100.0 % $ 21,815 ___________________________________ (1) Amounts represent the high end of the range of management's best estimate of the reasonably possible additional liabilities. The following table presents the Company's estimated remedial liabilities and reasonably possible additional liabilities as of December 31, 2023 disaggregated by facilities/sites which represent at least 5 % of the total and with all other facilities/ sites combined (in thousands, except percentages): Location Type of Facility or Site Remedial Liabilities (1) % of Total Reasonably Possible Additional Liabilities (2) Baton Rouge, LA Closed incinerator and landfill $ 27,883 25.1 % $ 4,868 Bridgeport, NJ Closed incinerator 17,472 15.7 3,288 Mercier, Quebec Idled incinerator 11,501 10.3 1,735 Linden, NJ Operating solvent recycling center 9,614 8.6 2,187 Various All other incinerators, landfills, wastewater treatment facilities and service centers ( 65 facilities) 37,106 33.4 8,587 Various Superfund sites (each representing less than 5 % of total liabilities) ( 13 sites) 7,667 6.9 1,150 Total $ 111,243 100.0 % $ 21,815 _________________________________ (1) $ 25.0 million of the $ 111.2 million remedial liabilities include estimates related to the legal and administrative proceedings discussed in Note 18, "Commitments and Contingencies." (2) Amounts represent the high end of the range of management's best estimate of the reasonably possible additional liabilities. Revisions to remediation reserve requirements may result in upward or downward adjustments to income from operations in any given period. The Company believes that its extensive experience in the environmental services business, as well as its involvement with a large number of sites, provides a reasonable basis for estimating its aggregate liability. It is possible, however, that future changes in available technology, regulatory or enforcement developments, the results of environmental studies or other factors could necessitate the recording of additional liabilities or the revision of currently recorded liabilities that could be material. Since the Company's satisfaction of the liabilities will occur over many years, the Company cannot reasonably predict the nature or extent of possible future events or the impact that those events, if any, might have on the current estimates of remedial liabilities. 76 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (12) FINANCING ARRANGEMENTS Long-term Debt The following table is a summary of the Company's long-term debt (in thousands): December 31, 2023 December 31, 2022 Current Portion of Long-Term Debt: Secured senior term loans $ 10,000 $ 10,000 Long-Term Debt: Secured senior term loans due June 30, 2024 ("2024 Term Loans") $ — $ 613,975 Secured senior term loans due October 8, 2028 ("2028 Term Loans") 970,000 980,000 Unsecured senior notes, at 4.875 %, due July 15, 2027 ("2027 Notes") 545,000 545,000 Unsecured senior notes, at 5.125 %, due July 15, 2029 ("2029 Notes") 300,000 300,000 Unsecured senior notes, at 6.375 %, due February 1, 2031 ("2031 Notes") 500,000 — Long-term debt, at par 2,315,000 2,438,975 Unamortized debt issuance costs and discount, net ( 23,283 ) ( 24,147 ) Long-term debt, at carrying value $ 2,291,717 $ 2,414,828 As of December 31, 2023 and 2022, the estimated fair value of the Company’s outstanding long-term debt, including the current portion, was $ 2.3 billion and $ 2.4 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 quotation or alternative pricing sources with reasonable levels of price transparency for similar assets and liabilities. The sections below will outline the key terms of the outstanding debt, including any changes occurring during the period: Secured Senior Term Loans As of December 31, 2023, the 2028 Term Loans had an aggregate principal amount outstanding of $ 980.0 million under the Fourth Amendment to the Company's existing Credit Agreement dated as of June 30, 2017 (the "Term Loan Agreement"). Interest on the 2028 Term Loans is paid monthly. On December 27, 2023, the Term Loan Agreement was amended to reduce the interest rate margin by 25 basis points. After giving effect to this amendment, the 2028 Term Loan bears interest, at the Company’s election, at either of the following rates: (a) the sum of the Term SOFR Rate (as defined) plus 0.11448 % (the one-month Term SOFR adjustment as defined) plus a 1.75 % margin, or (b) the sum of the Base Rate (as defined) plus 0.75 % margin. The Term SOFR Rate is subject to a floor of 0.00 % and the Base Rate is subject to a floor of 1.00 %. The Term Loan Agreement provides for Term SOFR adjustments for other interest periods; however, the Company elects one-month Term SOFR for interest payments on that debt resulting in total interest on the 2028 Term Loans of one-month Term SOFR plus 1.86448 %. The 2028 Term Loans are prepayable at any time without premium or penalty, other than customary breakage costs. The 2028 Term Loan amendment in December 2023 reset the six month soft call period for repricing transactions. On January 24, 2023, the Company repaid the $ 614.0 million outstanding of 2024 Term Loans using net proceeds from the issuance of $ 500.0 million of unsecured 2031 Senior Notes, as described below, borrowing $ 114.0 million under the Company's Revolving Credit Facility, also discussed below, and available cash. During the year, the Company recognized a loss on early extinguishment of debt of $ 2.9 million due to this transaction and the 2028 Term Loan amendment noted above. The Company's obligations under the Term Loan Agreement are guaranteed by all of the Company's domestic restricted subsidiaries and secured by the liens on substantially all of the assets of the Company and the guarantors. Unsecured Senior Notes On July 2, 2019, the Company completed a private placement of $ 545.0 million aggregate principal amount of 2027 Notes and $ 300.0 million aggregate principal amount of 2029 Notes. The 2027 Notes will mature on July 15, 2027 and the 2029 Notes will mature on July 15, 2029. Interest payments on the 2027 and 2029 Notes are paid semiannually on January 15 and July 15. 77 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) On January 24, 2023, the Company completed a private placement of $ 500.0 million aggregate principal amount of 2031 Notes which will mature on February 1, 2031 (collectively referred to with the 2027 Notes and 2029 Notes as the "Notes"). As noted above, the proceeds from this were used toward the repayment of the 2024 Term Loans. The interest rate on the 2031 Notes is paid semiannually on February 1 and August 1 of each year and commenced on August 1, 2023. The tables below depict the redemption prices of the Notes if redeemed during the twelve-month period commencing on the dates below, plus accrued and unpaid interest, if any, to but not including the redemption date. 2027 Notes Percentage July 15, 2023 101.219 % July 15, 2024 and thereafter 100.000 % 2029 Notes Percentage July 15, 2024 102.563 % July 15, 2025 101.281 % July 15, 2026 and thereafter 100.000 % 2031 Notes Percentage February 1, 2026 103.188 % February 1, 2027 101.594 % February 1, 2028 and thereafter 100.000 % The Company may also redeem all or any portion of the 2029 Notes prior to July 15, 2024 or the 2031 Notes prior to February 1, 2026, at a redemption price equal to 100 % of the principal amount redeemed plus a make whole premium as of the date of redemption including accrued and unpaid interest, if any, up to but not including the date of redemption. Additionally, subject to certain limitations, prior to February 1, 2026, the Company may use net cash proceeds of one or more equity offerings to redeem up to 40 % in aggregate principal of the 2031 Notes at a redemption price equal to 106.375 % of the principal amount thereof plus accrued and unpaid interest thereon, if any, up to but not including the date of redemption. The Notes and the related indentures contain various customary non-financial covenants and are guaranteed by substantially all of the Company’s current and future domestic subsidiaries. The Notes are effectively subordinated to the Company's Term Loans, revolving credit facility and finance lease obligations to the extent of the value of the assets securing such secured indebtedness. The Notes are also effectively subordinated to all indebtedness and other liabilities of the Company's subsidiaries that are not guarantors of the Notes. Revolving Credit Facility. On October 28, 2020, the Company and one of the Company's subsidiaries (the "Canadian Borrower") entered into an amended and restated credit agreement for the Company's revolving credit facility with Bank of America, N.A. (“BofA”), as agent for the lenders under the facility (the "Agent"). Under the amended and restated facility, the Company has the right to obtain revolving loans and letters of credit for a combined maximum of up to $ 350.0 million (with a sub-limit of $ 250.0 million for letters of credit) and the Canadian Borrower has the right to obtain revolving loans and letters of credit for a combined maximum of up to $ 50.0 million. Availability under the U.S. line is subject to a borrowing base primarily comprised of 85 % of the eligible accounts receivable of the Company and its U.S. subsidiaries plus 100 % of cash deposited in a controlled account with the Agent, and availability under the Canadian line is subject to a borrowing base primarily comprised of 85 % of the eligible accounts receivable of the Company’s Canadian subsidiaries plus 100 % of cash deposited in a controlled account with the Agent’s Canadian affiliate. Subject to certain conditions, the revolving credit facility will expire on October 28, 2025. On April 28, 2023, the Company entered into an amendment to the credit agreement for the revolving credit facility. As amended, the terms of the agreement are substantially the same as prior to the amendment except for certain updates required to transition the agreement to include a defined LIBOR successor rate. Under the amended agreement, borrowings under the revolving credit facility will bear interest at a rate, at the Company’s option, of either (i) “Term SOFR” (as defined in the amended agreement) plus an applicable margin ranging from 1.50 % to 1.75 % per annum based primarily on the level of the Company’s average liquidity for the most recent 30 day period or (ii) BofA’s base rate plus an applicable margin ranging from 78 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 0.50 % to 0.75 % per annum based primarily on such average liquidity. The amended agreement also continues to provide (i) for an unused line fee payable to the lenders, calculated on the then unused portion of the lenders’ $ 400.0 million maximum commitments, ranging from 0.25 % to 0.375 % per annum of the unused commitment, and (ii) for outstanding letters of credit, a fee payable to the lenders equal to the then applicable margin for Term SOFR borrowings described above, and to the issuing banks a standard fronting fee and customary fees and charges in connection with all amendments, extensions, draws and other actions with respect to letters of credit. Letters of credit issued under the revolving credit facility are utilized primarily as security for the Company's insurance program that includes casualty and financial assurance. The Company’s obligations under the revolving credit facility (including revolving loans and reimbursement obligations for outstanding letters of credit) are guaranteed by substantially all of the Company’s U.S. subsidiaries and secured by a first lien on the Company’s and its U.S. subsidiaries’ accounts receivable. The Canadian Borrower’s obligations under the facility are guaranteed by substantially all of the Company’s Canadian subsidiaries and secured by a first lien on the accounts receivable of the Canadian subsidiaries. The revolving credit facility had no outstanding loan balances at December 31, 2023 and had availability of $ 265.7 million and outstanding letters of credit of $ 134.3 million. The Company also had no outstanding loan balances as of December 31, 2022. As noted above, on January 24, 2023, the Company borrowed $ 114.0 million under the revolving credit facility. Proceeds from this borrowing were used toward the repayment of the 2024 Term Loans. This borrowing was repaid during the second quarter of 2023. Cash Flow Hedges The Company's strategy to hedge against fluctuations in variable interest rates involves entering into interest rate derivative agreements. The Company effectively fixed the interest rate on $ 350.0 million principal of the previously outstanding 2024 Term Loans by entering into interest rate swap agreements in 2018 with a notional amount of $ 350.0 million ("2018 Swaps"). On January 24, 2023, concurrently with the repayment of the 2024 Term Loans, the Company received a settlement payment of $ 8.3 million from the 2018 Swap counterparties. As a result of the settlement, the Company also reclassified the amounts previously deferred in accumulated other comprehensive loss and recognized a settlement gain of $ 8.3 million in interest expense in 2023. In 2022, the Company entered into interest rate swap agreements with a notional amount of $ 600.0 million ("2022 Swaps") 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 receives interest based upon the variable rates on the 2028 Term Loans and pays a fixed amount of interest. The fixed rate on these instruments was 0.931 % through June 30, 2023 which, together with the original 2.00 % interest rate margin for the 2028 Term Loans, resulted in an effective annual interest rate of approximately 2.931 % through June 30, 2023. The fixed rate on these instruments increased to 1.9645 % on July 1, 2023 and the variable rate became linked to Term SOFR to mirror the variable interest payments for the 2028 Term Loans. The 2022 Swaps expire September 30, 2027. Including the 2.00 % interest rate margin for borrowings on the 2028 Term Loans and the 0.11448 % SOFR adjustment per the 2028 Term Loans, beginning July 1, 2023, the effective annual interest rate of this $ 600.0 million increased to 4.07898 %. With the 2028 Term Loan amendment in December 2023 reducing the margin from 2.00 % to 1.75 %, discussed in the Term Loans section above, the effective annual interest rate on the swapped portion of 2028 Term Loans outstanding decreased to 3.82898 %. At the inception of these instruments, the Company designated both the 2018 Swaps and the 2022 Swaps (collectively referred to as the “Swaps”) as cash flow hedges. As of December 31, 2023 the Company recorded a derivative asset with a fair value of $ 35.5 million comprised only of the 2022 Swaps as the 2018 Swaps were settled in early 2023, as noted above. The balance in the derivative asset as of December 31, 2022 was $ 60.6 million, which included both of the Swaps. No ineffectiveness has been identified on the Swaps and, therefore the change in fair value is recorded in stockholders' equity as a component of accumulated other comprehensive loss. Amounts are reclassified from accumulated other comprehensive loss into interest expense on the consolidated statement of operations in the same period or periods during which the hedged transactions affect earnings. 79 CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (13) INCOME TAXES The domestic and foreign components of income before provision for income taxes were as follows (in thousands): For the years ended December 31, 2023 2022 2021 Domestic $ 401,912 $ 406,206 $ 223,438 Foreign 101,367 131,792 46,277 Total $ 503,279 $ 537,998 $ 269,715 The provision for income taxes consisted of the following (in thousands, except percentages): For the years ended December 31, 2023 2022 2021 Current: Federal $ 64,164 $ 52,237 $ 42,480 State 25,496 26,980 18,126 Foreign 23,078 29,488 4,380 112,738 108,705 64,986 Deferred Federal 18,251 32,199 2,275 State ( 9,049 ) ( 2,432 ) ( 4,777 ) Foreign 3,483 ( 12,218 ) 3,984 12,685 17,549 1,482 Provision for income taxes $ 125,423 $ 126,254 $ 66,468 Effective tax rate 24.9 % 23.5 % 24.6 % The Company's effective income tax rate varied from the amount computed using the statutory federal income tax rate of 21% as follows (in thousands): For the years ended December 31, 2023 2022 2021 Tax expense at U.S. statutory rate $ 105,689 $ 112,980 $ 56,640 State income taxes, net of federal benefit 18,067 19,831 12,101 Foreign rate differential 4,213 6,196 1,922 Valuation allowance ( 7,699 ) ( 18,769 ) ( 9,139 ) Uncertain tax position interest and penalties ( 7 ) ( 2,454 ) 263 Tax credits expired 1,653 2,768 2,530 Non-deductible compensation 2,898 2,754 2,326 Other 609 2,948 ( 175 ) Provision for income taxes $ 125,423 $ 126,254 $ 66,468 The valuation allowance benefits recognized in 2023 are predominantly the result of cumulative profitable earnings at certain US entities with historic State operating losses. As of December 31, 2023, management determined that there is sufficient positive evidence to conclude that it is more likely than not that additional deferred taxes associated with these State net operating losses are realizable. Therefore, the valuation allowance was reduced accordingly. The valuation allowance benefits recognized in 2022 were the result of cumulative profitable earnings at certain Canadian entities with historic operating losses. The 2022 earnings were sufficient to utilize substantially all of the net operating losses, and as of December 31, 2022, the Company released any remaining valuation allowances associated with these entities, which were nominal. The valuation allowance benefits recognized in 2021 were predominately related to taxable earnings in certain Canadian entities that benefited from amounts received under the Canada Emergency Wage Subsidiary. In addition, foreign tax credits 80 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) that expired in the period presented had full valuation allowances which were also written off, contributing to the valuation allowance benefits in the table above. The foreign tax credit expirations and associated valuation allowance write-offs had no net impact to the provision for income taxes in any year. The components of the total net deferred tax assets and liabilities as of December 31, 2023 and 2022 were as follows (in thousands): 2023 2022 Deferred tax assets: Provision for doubtful accounts $ 10,882 $ 11,544 Closure, post-closure and remedial liabilities 31,944 31,837 Operating lease liabilities 46,784 42,255 Accrued expenses 14,963 19,311 Accrued compensation and benefits 15,058 20,171 Net operating loss carryforwards (1) 39,042 41,585 Tax credit carryforwards (2) 6,531 8,903 Stock-based compensation 3,516 3,988 Other 4,843 7,487 Total deferred tax assets 173,563 187,081 Deferred tax liabilities: Property, plant and equipment ( 284,997 ) ( 281,131 ) Operating lease right-of-use assets ( 46,584 ) ( 41,939 ) Interest rate swap asset ( 9,576 ) ( 17,587 ) Permits and other intangible assets ( 130,391 ) ( 132,681 ) Prepaid expenses ( 12,372 ) ( 12,088 ) Total deferred tax liabilities ( 483,920 ) ( 485,426 ) Total net deferred tax liability before valuation allowance ( 310,357 ) ( 298,345 ) Less valuation allowance ( 35,272 ) ( 42,509 ) Net deferred tax liabilities $ ( 345,629 ) $ ( 340,854 ) ___________________________________ (1) As of December 31, 2023, the net operating loss carryforwards included (i) state net operating loss carryforwards of $ 229.9 million which will begin to expire in 2024, (ii) federal net operating loss carryforwards of $ 26.6 million which will begin to expire in 2024 and (iii) foreign net operating loss carryforwards of $ 83.2 million which will begin to expire in 2024. (2) As of December 31, 2023, the foreign tax credit carryforwards of $ 4.4 million will begin to expire in 2024. The Company previously recognized the U.S. federal income taxes related to the operations in Canada and has not accrued for any remaining undistributed foreign earnings. These amounts continue to be indefinitely reinvested. The amount of tax associated with those unrepatriated earnings is not expected to be material. 81 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A valuation allowance is required to be established when, based on an evaluation of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The components of the total valuation allowance as of December 31, 2023 and 2022 were as follows (in thousands): 2023 2022 Allowance related to: Foreign tax credits $ 4,422 $ 7,666 Federal net operating losses 3,783 3,783 State net operating loss carryforwards 4,809 9,928 Foreign net operating loss carryforwards 17,464 15,488 Deferred tax assets of a Canadian subsidiary 4,489 5,339 Realized and unrealized capital losses 305 305 Total valuation allowance $ 35,272 $ 42,509 The Company files U.S. federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The Company may be subject to examination by the Internal Revenue Service for calendar years 2018 through 2022. The Company may be subject to examination by Canadian federal and provincial authorities for calendar years 2016 through 2022 and by state and local revenue authorities for calendar years 2017 through 2022. The Company has ongoing U.S., state and local jurisdictional audits, as well as Canadian federal and provincial audits, all of which the Company believes will not result in material liabilities. The Company has not identified any material uncertain tax positions in the periods presented. (14) EARNINGS PER SHARE The following are computations of basic and diluted earnings per share (in thousands, except for per share amounts): For the years ended December 31, 2023 2022 2021 Numerator for basic and diluted earnings per share: Net income $ 377,856 $ 411,744 $ 203,247 Denominator: Weighted basic shares outstanding 54,071 54,223 54,514 Dilutive effect of equity-based compensation awards 311 264 247 Weighted dilutive shares outstanding 54,382 54,487 54,761 Basic earnings per share $ 6.99 $ 7.59 $ 3.73 Diluted earnings per share $ 6.95 $ 7.56 $ 3.71 The Company included all outstanding performance awards and restricted stock awards in the calculation of diluted earnings per share except for as shown in the table below: For the years ended December 31, 2023 2022 2021 Antidilutive restricted stock awards 12,247 10,250 67,981 Performance stock awards for which performance criteria was not attained at reporting date 88,876 — 14,237 (15) STOCKHOLDERS' EQUITY On December 5, 2023, the Board of Directors of Clean Harbors authorized a $ 500.0 million expansion of the Company’s current share repurchase program resulting in $ 554.1 million available at December 31, 2023. The repurchase program authorizes the Company to purchase the Company's 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 have depended and will depend on a number of factors including share price, cash required for future business plans, trading volume and other conditions. The Company has no obligation to repurchase stock under this program and may suspend or terminate the repurchase program at any time. 82 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) During the years ended December 31, 2023, 2022 and 2021, the Company repurchased and retired a total of 0.3 million, 0.5 million and 0.6 million shares, respectively, of the Company's common stock for total costs of $ 51.2 million, $ 50.2 million and $ 54.4 million, respectively. (16) ACCUMULATED OTHER COMPREHENSIVE LOSS The changes in accumulated other comprehensive loss by component and related tax impacts for the years ended December 31, 2023, 2022 and 2021 were as follows (in thousands): Foreign Currency Translation Adjustments Unrealized Gain (Loss) on Available-For-Sale Securities Unrealized (Loss) Gain on Fair Value of Interest Rate Hedges Unrealized Loss on Pension Total Balance at January 1, 2021 $ ( 176,234 ) $ 135 $ ( 33,629 ) $ ( 1,749 ) $ ( 211,477 ) Other comprehensive (loss) income before reclassifications ( 1,590 ) ( 361 ) 6,235 1,411 5,695 Amounts reclassified out of accumulated other comprehensive loss — — 10,011 — 10,011 Tax benefit (provision) — 76 — ( 317 ) ( 241 ) Other comprehensive (loss) income ( 1,590 ) ( 285 ) 16,246 1,094 15,465 Balance at December 31, 2021 ( 177,824 ) ( 150 ) ( 17,383 ) ( 655 ) ( 196,012 ) Other comprehensive (loss) income before reclassifications ( 31,515 ) ( 523 ) 78,711 415 47,088 Amounts reclassified out of accumulated other comprehensive loss — — ( 683 ) — ( 683 ) Tax benefit (provision) — 110 ( 17,587 ) ( 97 ) ( 17,574 ) Other comprehensive (loss) income ( 31,515 ) ( 413 ) 60,441 318 28,831 Balance at December 31, 2022 ( 209,339 ) ( 563 ) 43,058 ( 337 ) ( 167,181 ) Other comprehensive income (loss) before reclassifications 9,000 708 5,094 ( 741 ) 14,061 Amounts reclassified out of accumulated other comprehensive loss — — ( 30,273 ) — ( 30,273 ) Tax (provision) benefit — ( 149 ) 8,012 191 8,054 Other comprehensive income (loss) 9,000 559 ( 17,167 ) ( 550 ) ( 8,158 ) Balance at December 31, 2023 $ ( 200,339 ) $ ( 4 ) $ 25,891 $ ( 887 ) $ ( 175,339 ) The amounts realized in the consolidated statements of operations during the years ended December 31, 2023, 2022 and 2021 which were reclassified out of accumulated other comprehensive loss were as follows (in thousands): For the years ended December 31, Other Comprehensive Loss Component 2023 2022 2021 Location Unrealized (Loss) Gain on Fair Value of Interest Rate Hedges (1) $ 30,273 $ 683 $ ( 10,011 ) Interest expense, net of interest income ___________________________________ (1) For the year ended December 31, 2023, the balance is inclusive of an $ 8.3 million gain realized in connection with the settlement of the 2018 Swaps. For more information on this transaction, see Note 12, "Financing Arrangements." (17) STOCK-BASED COMPENSATION Stock-Based Compensation In 2020, the Company's shareholders approved the Clean Harbors, Inc. 2020 Stock Incentive Plan (the "2020 Plan"). The 2020 Plan provides for future awards of up to 2.5 million shares of the Company’s common stock (subject to certain anti-dilution adjustments) in the form of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The 2020 Plan is administered by the Compensation and Human Capital Committee of the Company’s Board of Directors. 83 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company grants restricted stock awards and performance stock awards. The restricted stock awards generally vest over three to five years subject to continued employment. The performance stock awards vest depending on the satisfaction of certain performance conditions typically based on revenue, Adjusted EBITDA margin, return on invested capital and a measure of workplace safety. In addition, performance stock awards include continued service conditions subsequent to the attainment of any performance conditions. Total stock-based compensation cost recognized for the years ended December 31, 2023, 2022 and 2021 was $ 20.7 million, $ 26.8 million and $ 18.8 million, respectively. The total income tax benefit recognized in the consolidated statements of operations from stock-based compensation expense was $ 3.5 million, $ 5.0 million and $ 3.5 million for the years ended December 31, 2023, 2022 and 2021, respectively. Restricted Stock Awards The following table summarizes information about restricted stock awards for the year ended December 31, 2023: Restricted Stock Number of Shares Weighted Average Grant-Date Fair Value Balance at January 1, 2023 427,142 $ 84.64 Granted 209,431 140.32 Vested ( 170,060 ) 76.26 Forfeited ( 51,890 ) 102.11 Balance at December 31, 2023 414,623 $ 114.02 As of December 31, 2023, there was $ 34.5 million of total unrecognized compensation cost arising from restricted stock awards. This cost is expected to be recognized over a weighted average period of 2.9 years. The total fair value of restricted stock vested during 2023, 2022 and 2021 was $ 26.5 million, $ 16.4 million and $ 17.7 million, respectively. Performance Stock Awards Performance stock awards are subject to performance criteria established by the Compensation and Human Capital 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 Margin, 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 year ended December 31, 2023: Performance Stock Number of Shares Weighted Average Grant-Date Fair Value Balance at January 1, 2023 213,679 $ 91.62 Granted 120,765 131.18 Vested ( 111,924 ) 90.56 Forfeited ( 41,236 ) 111.50 Balance at December 31, 2023 181,284 $ 114.10 As of December 31, 2023, there was $ 3.3 million of total unrecognized compensation cost arising from unvested performance stock awards deemed probable of vesting. The total fair value of performance awards vested during 2023, 2022 and 2021 was $ 17.0 million, $ 11.1 million and $ 15.0 million, respectively. 84 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (18) COMMITMENTS AND CONTINGENCIES 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 government authorities and other interested parties. The issues involved in such proceedings generally relate to alleged violations of 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 December 31, 2023 and 2022, the Company had recorded reserves of $ 32.4 million and $ 37.1 million, respectively, 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. As of December 31, 2023 and 2022, the $ 32.4 million and $ 37.1 million, respectively, of reserves consisted of (i) $ 25.0 million and $ 24.1 million, respectively, related to pending legal or administrative proceedings, including Superfund liabilities, which were included in remedial liabilities on the consolidated balance sheets, and (ii) $ 7.4 million and $ 13.0 million, respectively, primarily related to federal, state and provincial enforcement actions, which were included in accrued expenses on the consolidated balance sheets. 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 the Company's 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. Legal or Administrative Proceedings As of December 31, 2023, the principal legal and administrative proceedings in which the Company was involved, or which had been terminated during 2023, relate to Safety-Kleen product liability cases and Superfund proceedings. Safety-Kleen Product Liability Cases: Safety-Kleen, Inc. ("Safety-Kleen"), which is a legal entity acquired by the Company in 2012, has been named as a defendant in certain product liability cases that are currently pending in various courts and jurisdictions throughout the United States. As of December 31, 2023, there were approximately 70 proceedings (excluding cases which have been settled but not formally dismissed) wherein persons claim personal injury resulting from the use of Safety-Kleen's parts cleaning equipment or cleaning products. These proceedings typically involve allegations that the solvent used in Safety-Kleen's parts cleaning equipment contains contaminants and/or that Safety-Kleen's recycling process does not effectively remove the contaminants that become entrained in the solvent during their use. In addition, certain claimants assert that Safety-Kleen failed to warn adequately 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 historically has vigorously defended, and intends to continue to vigorously defend, itself and the safety of its products against all of 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 December 31, 2023. From January 1, 2023 to December 31, 2023, 24 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. 85 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Superfund Proceedings: The Company has been notified that either the Company (which, since December 28, 2012, has included Safety-Kleen) or the prior owners of certain of the Company's facilities for which the Company may have certain indemnification obligations have been identified as 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, six 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 waste. Of the 125 third-party sites, 30 are now settled, 13 are currently requiring expenditures on remediation and 82 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 monetary liability could exceed $1.0 million at three of the 131 Superfund related sites. Of the 125 third-party sites at which the Company has been notified it is a PRP or potential PRP or may have indemnification obligations, the Company has indemnification agreements at a total of 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 waste to those sites. Accordingly, 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 those indemnification agreements discussed, 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 December 31, 2023, there were no proceedings for which the Company believes it is possible that the sanctions could equal or exceed $1.0 million. The Company believes that the fines or other penalties in this or any of the other regulatory proceedings will, individually or in the aggregate, not have a material effect on its financial condition, results of operations or cash flows. Self-Insurance Liabilities Under the Company's insurance programs, coverage is obtained for catastrophic exposures, as well as those risks required to be insured by law or contract. The Company's policy is to retain a significant portion of certain expected losses related to workers' compensation, employee medical, comprehensive general liability and vehicle liability. A portion of these self-insured liabilities are managed through its wholly-owned captive insurance subsidiary. Provisions for losses expected under these programs are recorded based upon the Company's estimates of the aggregate liability for claims. The current deductible per participant per year for the employee medical insurance policy is $ 0.9 million. The current deductible per occurrence for workers' compensation is $ 1.0 million, general liability is $ 2.0 million and vehicle liability is $ 2.0 million. The retention per claim for the environmental impairment policy is $ 1.0 million. At December 31, 2023 and 2022, the Company had accrued $ 82.7 million and $ 74.9 million, respectively, for its self-insurance liabilities (exclusive of employee medical insurance) using a risk-free discount rate of 4.86 % and 4.36 %, respectively. 86 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Anticipated payments for contingencies related to workers' compensation, comprehensive general liability and vehicle liability related claims at December 31, 2023 for each of the next five years and thereafter were as follows (in thousands): Years ending December 31, 2024 $ 33,954 2025 19,675 2026 14,663 2027 9,153 2028 6,275 Thereafter 9,650 Undiscounted self-insurance liabilities 93,370 Less: Discount ( 10,670 ) Total self-insurance liabilities (included in accrued expenses and other current liabilities) $ 82,700 (19) LEASES The Company’s lease portfolio is predominately operating leases for real estate, vehicles and industrial equipment utilized in operations and rail cars. The Company presents operating lease balances separately on the consolidated balance sheets. The Company's finance leases relate to vehicles, rail cars and certain real estate. The following table presents the Company's finance lease balances and their classification on the consolidated balance sheets (in thousands): Finance Lease Balances (Classification) December 31, 2023 December 31, 2022 ROU assets (Property, plant and equipment, net) $ 126,292 $ 96,207 Current portion of lease liabilities (Accrued expenses and other current liabilities) 16,975 12,767 Long-term portion of lease liabilities (Other long-term liabilities) 113,486 86,390 The Company’s lease expense was as follows (in thousands): For the years ended December 31, 2023 2022 2021 Operating lease cost $ 69,156 $ 59,041 $ 50,264 Finance lease cost: Amortization of ROU assets 17,183 13,239 9,504 Interest on lease liabilities 4,051 3,011 2,544 Total finance lease cost 21,234 16,250 12,048 Short-term lease cost 167,379 158,736 102,913 Variable lease cost 4,887 4,353 3,546 Total lease cost $ 262,656 $ 238,380 $ 168,771 Other information related to leases was as follows: Weighted Average Remaining Lease Term (years) December 31, 2023 December 31, 2022 Operating leases 3.8 4.2 Finance leases 7.1 7.5 Weighted Average Discount Rate December 31, 2023 December 31, 2022 Operating leases 4.68 % 4.08 % Finance leases 3.96 % 3.53 % 87 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the years ended December 31, Supplemental Cash Flow Related Disclosures (in thousands) 2023 2022 2021 Cash paid for amounts related to lease liabilities: Operating cash flows from operating leases $ 71,185 $ 61,014 $ 50,963 Operating cash flows from finance leases 4,051 3,011 2,544 Financing cash flows from finance leases 15,937 12,821 8,458 ROU assets obtained in exchange for operating lease liabilities 82,392 58,230 55,556 ROU assets obtained in exchange for finance lease liabilities 47,238 29,205 30,476 At December 31, 2023, the Company's future lease payments under non-cancelable leases that have lease terms in excess of one year were as follows (in thousands): Years ending December 31, December 31, 2023 Operating Leases Finance Leases 2024 $ 66,372 $ 23,703 2025 53,215 23,017 2026 38,927 23,029 2027 28,011 23,016 2028 12,925 19,040 Thereafter 9,408 41,681 Total future lease payments 208,858 153,486 Amount representing interest ( 20,685 ) ( 23,025 ) Total lease liabilities $ 188,173 $ 130,461 At December 31, 2023, none of the Company's executed leases that had not yet commenced will create significant rights or obligations in the future and sublease transactions are not material. Additionally, the Company does not have any related party leases, and there were no restrictions or covenants imposed by its leases. (20) SEGMENT REPORTING Segment reporting is prepared on the same basis that the Company's chief operating decision maker, which is a committee comprised of the Company's Co-Chief Executive Officers, manages the business, makes operating decisions and assesses performance. The Company is managed and reports as two operating segments; (i) the Environmental Services segment and (ii) the Safety-Kleen Sustainability Solutions segment. 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. 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 tables reconcile third-party revenues to direct revenues for the years ended December 31, 2023, 2022 and 2021 (in thousands): For the year ended December 31, 2023 Environmental Services Safety-Kleen Sustainability Solutions Corporate Items Total Third-party revenues $ 4,469,909 $ 938,796 $ 447 $ 5,409,152 Intersegment revenues (expense), net 41,533 ( 41,533 ) — — Direct revenues $ 4,511,442 $ 897,263 $ 447 $ 5,409,152 88 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For the year ended December 31, 2022 Environmental Services Safety-Kleen Sustainability Solutions Corporate Items Total Third-party revenues $ 4,144,973 $ 1,021,125 $ 507 $ 5,166,605 Intersegment revenues (expense), net 26,733 ( 26,733 ) — — Direct revenues $ 4,171,706 $ 994,392 $ 507 $ 5,166,605 For the year ended December 31, 2021 Environmental Services Safety-Kleen Sustainability Solutions Corporate Items Total Third-party revenues $ 3,025,907 $ 779,360 $ 299 $ 3,805,566 Intersegment revenues (expense), net 6,547 ( 6,547 ) — — Direct revenues $ 3,032,454 $ 772,813 $ 299 $ 3,805,566 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 and provision for income taxes and excludes other gains, losses and non-cash charges not deemed representative of fundamental segment results and other (income) expense, net. Transactions between the segments are accounted for at the Company’s best estimate based on similar transactions with outside customers. The following table presents Adjusted EBITDA information used by management by reported segment (in thousands): For the years ended December 31, 2023 2022 2021 Adjusted EBITDA: Environmental Services $ 1,101,608 $ 953,053 $ 659,718 Safety-Kleen Sustainability Solutions 172,873 306,327 227,354 Corporate Items ( 261,911 ) ( 237,252 ) ( 210,466 ) Total 1,012,570 1,022,128 676,606 Reconciliation to Consolidated Statements of Operations: Accretion of environmental liabilities 13,667 12,943 11,745 Stock-based compensation 20,703 26,844 18,839 Depreciation and amortization 365,761 347,594 298,135 Income from operations 612,439 634,747 347,887 Other (income) expense, net ( 2,315 ) ( 2,472 ) 515 Loss on early extinguishment of debt 2,880 422 — Gain on sale of business — ( 8,864 ) — Interest expense, net of interest income 108,595 107,663 77,657 Income from operations before provision for income taxes $ 503,279 $ 537,998 $ 269,715 89 Table of Contents CLEAN HARBORS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table presents assets by reported segment and in the aggregate (in thousands): December 31, 2023 December 31, 2022 Property, plant and equipment, net Environmental Services $ 1,651,026 $ 1,467,641 Safety-Kleen Sustainability Solutions 411,415 398,660 Corporate Items 130,877 114,001 Total property, plant and equipment, net $ 2,193,318 $ 1,980,302 Goodwill and Permits and other intangibles, net Environmental Services Goodwill $ 1,112,013 $ 1,071,846 Permits and other intangibles, net 454,919 462,050 Total Environmental Services 1,566,932 1,533,896 Safety-Kleen Sustainability Solutions Goodwill $ 175,723 $ 175,032 Permits and other intangibles, net 147,878 158,732 Total Safety-Kleen Sustainability Solutions 323,601 333,764 Total $ 1,890,533 $ 1,867,660 Geographic Information As of December 31, 2023 and 2022, the Company had property, plant and equipment, net of depreciation and amortization and permits and other intangible assets, net of amortization in the following geographic locations (in thousands): December 31, 2023 December 31, 2022 Total % of Total Total % of Total Property, plant and equipment, net United States $ 1,972,221 89.9 % $ 1,765,291 89.1 % Canada and other foreign 221,097 10.1 215,011 10.9 Total property, plant and equipment, net $ 2,193,318 100.0 % $ 1,980,302 100.0 % Permits and other intangibles, net United States $ 570,049 94.6 % $ 585,887 94.4 % Canada 32,748 5.4 34,895 5.6 Total permits and other intangibles, net $ 602,797 100.0 % $ 620,782 100.0 % The following table presents the total assets by geographical area (in thousands): December 31, 2023 December 31, 2022 United States $ 5,786,937 $ 5,595,255 Canada and other foreign 595,932 534,452 Total $ 6,382,869 $ 6,129,707 90 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.