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Item 7. Management’s Discussion and Analysis

2025-02-19 compared with 2024-02-21 · 151 added, 138 removed, 361 unchanged (44% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included elsewhere in this Annual Report on Form 10-K.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-K, including information with respect to our plans, strategies, objectives, expectations and intentions for our business and related financing, includes forward-looking statements that involve risks and uncertainties.

As a result of many factors, including those factors set forth in the “Risk Factors” section of this Form 10-K, our actual results could differ materially from the results described in or implied by these forward-looking statements.

Please also see the section titled “Disclosure Regarding Forward-Looking Statements.”

We are North America’s leading provider of environmental and industrial services supporting our customers in finding environmentally responsible solutions to further their sustainability goals in today's world.

Everywhere industry meets the environment, we strive to provide eco-friendly products and services that protect and restore North America's natural environment.

Everywhere industry meets the environment, we strive to provide eco-friendly services and products that protect and restore North America’s natural environment.

We believe we operate, in the aggregate, the largest number of hazardous waste incinerators, landfills and treatment, storage and disposal facilities (“TSDFs”) in North America.

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The following is a discussion of how management evaluates its segments in regards to other factors including key performance indicators that management uses to assess the segments’ results, as well as certain macroeconomic trends and influences that impact each reportable segment:

• Environmental Services - Environmental Services segment results are predicated upon the demand by our customers for our wide variety of services, waste volumes managed by delivering such services and project work for which responsible waste handling and/or disposal is required.

• Environmental Services - The Environmental Services segment results are driven by the customer demand for our wide variety of services, the volume of waste managed and project work requiring responsible waste handling and disposal.

Environmental Services results are also impacted by the demand for planned and unplanned industrial related cleaning and maintenance services at customer sites, environmental cleanup services on a scheduled or emergency basis, including response to large scale events such as major chemical spills, natural disasters, or other instances where immediate and specialized services are required.

The Environmental Services segment results include the Safety-Kleen branches' core environmental service offerings of containerized waste disposal, parts washer and vacuum services.

The Environmental Services segment results also include the Safety-Kleen branches’ core environmental service offerings of containerized waste disposal, parts washer and vacuum services.

These results are driven by the volumes of waste collected from these customers, the overall number of parts washers placed at customer sites and the demand for and frequency of other offered services.

The results and integration of the acquired operations of HEPACO Blocker, Inc.

and its subsidiaries (collectively, “HEPACO”), which we acquired in March, 2024, also impact the overall segment results as we integrated this business into our Field Services operations.

In managing the business and evaluating performance, management tracks the volumes and mix of waste handled and disposed of or recycled, generally through our incinerators, TSDFs and landfills, the utilization rates of our incinerators, equipment and workforce, including billable hours, and the number of parts washer services performed, and pricing realized by our business and peer companies as well as other key metrics.

Levels of activity and ultimate performance associated with this segment can be impacted by several factors including overall U.S.

industrial production, economic conditions in the general manufacturing, chemical and automotive markets, including efforts and economic incentives to increase domestic operations, available capacity at waste disposal outlets, weather conditions, efficiency of our operations, technology, changing regulations, competition, market pricing of our services, costs incurred to deliver our services and the management of our related operating costs.

Levels of activity and ultimate performance associated with this segment can be impacted by several factors including overall North American GDP, U.S.

industrial production, economic conditions in the general manufacturing, chemical and automotive markets including efforts and economic incentives to increase domestic operations, available capacity at waste disposal outlets, demand for industrial cleaning and related industrial services, weather conditions, efficiency of our operations, technology, changing regulations, competition, market pricing of our services, costs incurred to deliver our services and the management of our related operating costs.

• Safety-Kleen Sustainability Solutions - Safety-Kleen Sustainability Solutions (“SKSS”) segment results are impacted by our customers’ demand for high-quality, environmentally responsible recycled oil products and their demand for our related service and product offerings.

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Segment results are also predicated on the demand for other SKSS product and service offerings including collection services for used oil, used oil filters and other automotive fluids.

The used oil collected is used as feedstock in our oil re-refining to produce our base and blended oil products and other hydraulic oils, lubricants and recycled fuel oil or are integrated into the Clean Harbors' recycling and disposal network.

disposal network.

The results and integration of the acquired operations of Noble Oil Services, Inc.

and its subsidiaries (collectively “Noble”) also impact the overall segment results.

In operating the business and evaluating performance, management tracks the volumes and relative percentages of base and blended oil sales along with various pricing metrics associated with the commodity driven margin between product pricing and the overall costs associated with the collection of used oil.

Levels of activity and ultimate performance associated with this segment can be impacted by economic conditions in the manufacturing and automotive services markets, efficiency of our operations, technology, weather conditions, changing regulations, competition and the management of our related operating costs.

Costs incurred in connection with the collection of used oil and other raw materials associated with the segment’s oil related products can also be volatile and can be impacted by global events and their relative impact on commodity products and pricing.

Overall product pricing and costs incurred in connection with the collection of used oil and other raw materials associated with the segment’s oil related products can also be volatile and can be impacted by global events and their relative impact on commodity products and pricing.

The overall market price of oil and regulations that change the possible usage of used oil or burning of used oil as a fuel, impact the premium the segment can charge for used oil collections.

Total direct revenues for 2024 increased 8.9% or $480.8 million to $5,890.0 million, compared with $5,409.2 million in 2023.

Our Environmental Services segment direct revenues increased $339.7 million or 8.1% in 2023 compared with 2022 driven by continued growth across all our service offerings, most predominately in our Safety-Kleen branches' core environmental services offerings and our industrial service offerings, including the incremental revenues from the acquisition of Thompson Industrial on March 31, 2023.

Direct revenues recorded by our SKSS Segment decreased $97.1 million in 2023 compared to 2022 primarily due lower market-based pricing on our base oil product sales despite higher volumes sold.

The SKSS Segment increased the pricing on our collection of used oil services, which partially offset the impact of the lower base oil pricing on direct revenues.

Our Environmental Services segment direct revenues increased $493.3 million or 10.9% in 2024 compared with 2023 driven by growth in Field and Emergency Response Services, including the contributions from the acquisition of HEPACO, as well as growth in our Technical Services and Safety-Kleen branch core service offerings.

Direct revenues recorded by our SKSS segment decreased $12.5 million in 2024 compared to 2023 primarily due to lower market-based pricing on our base and blended oil product sales as well as reduced volumes of these products sold.

Contributions from the acquisition of Noble partially offset these decreases.

Foreign currency translation of our Canadian operations negatively impacted our consolidated direct revenues by $9.0 million in 2024 as compared to 2023.

Income from operations in 2023 was $612.4 million as compared with $634.7 million in 2022.

Income from operations in 2024 was $670.2 million as compared with $612.4 million in 2023, an increase of 9.4%.

We reported net income in 2024 and 2023 of $402.3 million and $377.9 million, respectively.

Adjusted EBITDA, which is the primary financial measure by which we evaluate our segments was $1,012.6 million in 2023 and $1,022.1 million in 2022, a decrease driven by the results of the SKSS Segment, which was largely offset by continued growth in our Environmental Services segment.

Additional information regarding Adjusted EBITDA, which is a non-GAAP measure, including a reconciliation of Adjusted EBITDA to net income, appears below under "Adjusted EBITDA."

Adjusted EBITDA, which is the primary financial measure by which we evaluate our operations, was $1,116.9 million in 2024 and $1,012.6 million in 2023, an increase of over 10%, driven by the results of our Environmental Services segment.

Additional information regarding Adjusted EBITDA, which is a non-GAAP measure, including a reconciliation of net income to Adjusted EBITDA, appears below under “Adjusted EBITDA.”

Net cash from operating activities for 2024 was $777.8 million, an increase of $43.2 million from 2023.

Adjusted free cash flow, which management uses to measure our financial strength and ability to generate cash, was $357.9 million in 2024, which represented a $32.7 million increase over 2023.

This increase is due to incremental net cash generated by operating activities, partially offset by higher spend on property plant and equipment, net of proceeds from the sale and disposal of fixed assets.

Additional information regarding adjusted free cash flow, which is a non-GAAP measure, including a reconciliation of adjusted free cash flow to net cash from operating activities, appears below under " Adjusted Free Cash Flow ."

This increase was due to incremental net cash generated by operating activities, partially offset by higher spend on property plant and equipment, net of proceeds from the sale and disposal of fixed assets.

Additional information regarding adjusted free cash flow, which is a non-GAAP measure, including a reconciliation of net cash from operating activities to adjusted free cash flow, appears below under “Adjusted Free Cash Flow .

Segment Performance

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Safety-Kleen Sustainability Solutions 884,798 897,263 994,392 (12,465) (1.4) (97,129) (9.8)

Corporate Items 447 507 299 (60) N/M 208 N/M

Corporate 407 447 507 (40) N/M (60) N/M

Total 5,889,952 5,409,152 5,166,605 480,800 8.9 242,547 4.7

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Safety-Kleen Sustainability Solutions 659,217 646,301 615,303 12,916 2.0 30,998 5.0

Corporate Items 36,780 25,648 18,385 11,132 N/M 7,263 N/M

Corporate 36,131 36,780 25,648 (649) N/M 11,132 N/M

Total 4,061,370 3,746,124 3,543,930 315,246 8.4 202,194 5.7

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Safety-Kleen Sustainability Solutions 78,575 78,089 72,762 486 0.6 5,327 7.3

Corporate Items 246,281 238,955 211,219 7,326 3.1 27,736 13.1

Corporate 261,810 225,578 212,111 36,232 16.1 13,467 6.3

Total 711,648 650,458 600,547 61,190 9.4 49,911 8.3

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Safety-Kleen Sustainability Solutions 147,006 172,873 306,327 (25,867) (15.0) (133,454) (43.6)

Corporate Items (261,911) (237,252) (210,466) (24,659) (10.4) (26,786) (12.7)

Corporate (297,534) (261,911) (237,252) (35,623) (13.6) (24,659) (10.4)

Total $ 1,116,934 $ 1,012,570 $ 1,022,128 $ 104,364 10.3% $ (9,558) (0.9)%

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16.6 % 19.3 % 30.8 % (2.7) % (11.5) %

Corporate Items (4)

Corporate (5)

(5.1) % (4.8) % (4.6) % (0.3) % (0.2) %

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

(2) Cost of revenue is shown exclusive of items presented separately on the consolidated statements of operations, which consist of (i) accretion of environmental liabilities and (ii) depreciation and amortization.

(2) Cost of revenues is shown exclusive of (i) accretion of environmental liabilities and (ii) depreciation and amortization which are presented separately on the consolidated statements of operations.

Additionally, in 2024, cost of revenue is shown exclusive of $4.3 million of Kimball startup costs which are presented in Cost of revenue on the Company’s Consolidated Statements of Operations but are not included in the Company’s measurement of Adjusted EBITDA.

See Adjusted EBITDA section below for a reconciliation of net income to Adjusted EBITDA.

(3) Selling, general and administrative expenses is shown exclusive of stock-based compensation which is presented in Selling, general and administrative expenses on the Company’s Consolidated Statements of Operations but is not included in the Company’s measurement of Adjusted EBITDA.

See Adjusted EBITDA section below for a reconciliation of net income to Adjusted EBITDA.

(4) Calculated as a percentage of individual segment direct revenue.

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There are many factors which can impact our revenues including, but not limited to:

overall levels of industrial activity and economic growth in North America, competitive industry pricing, overall market incineration capacity including captive incineration closures, impacts of acquisitions and divestitures, the level of emergency response services, government infrastructure investment, existence or non-existence of large scale environmental waste and remediation projects, weather related events, the number of parts washers placed at customer sites, miles driven and related lubricant demand, base and blended oil pricing, market supply for base oil products, market changes relative to the collection of used oil, our ability to manage the spread between oil product prices, and prices for the collection of used oil and foreign currency translation.

overall levels of industrial activity and economic growth in North America, changes in the regulatory environment including those related to per- and polyfluoroalkyl substances (“PFAS”), impacts of acquisitions and divestitures, competitive industry pricing, overall market incineration capacity including the closure of captive incinerators, the level of emergency response services, government infrastructure investment, reshoring industrial production and manufacturing, existence or non-existence of large scale environmental waste and remediation projects, weather related events, the number of parts washers placed at customer sites, miles driven and related lubricant demand, base and blended oil pricing, market supply for base oil products, market changes relative to the collection of used oil, our ability to manage the spread between oil product prices, and prices for the collection of used oil and foreign currency translation.

In addition, customer efforts to minimize hazardous waste and changes in regulation can impact our revenues.

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Direct revenues $ 5,004,747 $ 4,511,442 $ 4,171,706 $ 493,305 10.9 % $ 339,736 8.1 %

Environmental Services direct revenues for the year ended December 31, 2024 increased $493.3 million from the comparable period in 2023 driven by incremental revenues from legacy operations combined with acquisitive growth.

Field and emergency response service revenues increased $285.2 million from 2023 driven by approximately $220.4 million of incremental revenue from the acquisition of HEPACO as well as contributions from legacy operations.

Technical services revenue increased $169.7 million with contributions across our portfolio of waste disposal services driven by favorable volumes of waste disposed, most notably in our incinerators and TSDFs, and favorable pricing.

Utilization at our incinerators for 2024 was 88% as compared to 84% in the prior year.

Revenue from our Safety-Kleen branches' core service offerings increased $76.9 million as both pricing and demand increased for our containerized waste, vacuum and parts washer services.

Revenue from our industrial services operations declined $41.4 million due to lower turnaround activity and related high-value services compared to 2023.

The Canadian operations of the Environmental Services segment were negatively impacted by $7.4 million due to foreign currency translation.

Environmental Services direct revenues for the year ended December 31, 2023 increased $339.7 million from the comparable period in 2022 due to growth across our service offerings.

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The Canadian operations of the Environmental Services segment were negatively impacted by $18.5 million due to foreign currency translation.

Environmental Services direct revenues for the year ended December 31, 2022 increased $1,139.3 million from the comparable period in 2021, split almost equally between growth of the legacy operations and incremental revenues from the HydroChemPSC operations acquired on October 8, 2021.

More specifically, direct revenues of our industrial service offerings increased $605.1 million, most predominately in revenue streams associated with the HydroChemPSC operations.

Technical services and Safety-Kleen Environmental services revenues, which were not impacted by the acquisition of HydroChemPSC, grew by 23.6% and 18.5%, respectively.

Technical services revenues increased $285.6 million with revenue growth across our portfolio of waste disposal facilities driven by higher throughput, higher value waste streams at our incinerators and broad based pricing initiatives, including fuel surcharges.

In 2022, utilization at our incinerators was 86% as compared to 85% in 2021, largely due to increased volumes and throughput efficiencies offsetting an increase in down days due to weather related events, most notably in the fourth quarter of 2022.

We also saw a 29% increase in landfill volumes in 2022 when compared with 2021.

Direct revenues for the Safety-Kleen core service offerings increased $119.4 million from the comparable period in 2021 due to improved pricing and greater demand for our containerized waste, vacuum services and parts washer services.

Field and emergency response services revenues increased $108.9 million largely due to contributions from the HydroChemPSC operations and as legacy base business returned to pre-pandemic levels despite a $39.3 million decrease in decontamination services.

The Canadian operations of the Environmental Services segment were negatively impacted by $19.4 million due to foreign currency translation.

Safety-Kleen Sustainability Solutions

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Direct revenues $ 884,798 $ 897,263 $ 994,392 $ (12,465) (1.4) % $ (97,129) (9.8) %

SKSS direct revenues for the year ended December 31, 2024 decreased $12.5 million from the comparable period in 2023 largely due to a reduction in revenues from base oil and blended oil sales of $33.5 million and $17.8 million, respectively, driven by lower pricing and to a lesser extent, lower volumes sold.

Revenues from contract packaging services decreased $11.1 million and revenues generated from the sale of other products decreased $5.3 million when compared with the prior year.

Revenues from the sale of vacuum gas oil and specialty refinery products increased $46.8 million as the revenues generated from the Noble operations, acquired in March 2024, more than offset decreases in these product sales from the legacy business.

Overall, the operations of Noble added approximately $70 million of direct revenues to the SKSS segment in 2024, the majority coming from the sale of vacuum gas oil and specialty refinery products.

Revenues from the collection of used oil also increased $5.7 million.

The Canadian operations of the SKSS segment were negatively impacted by $1.6 million in 2024 due to foreign currency translation.

SKSS direct revenues for the year ended December 31, 2023 decreased $97.1 million from the comparable period in 2022.

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The Canadian operations of the SKSS segment were negatively impacted by $4.8 million in 2023 due to foreign currency translation.

SKSS direct revenues for the year ended December 31, 2022 increased $221.6 million from the comparable period in 2021.

The overall growth was largely driven by a $154.1 million increase in base oil revenue predominately due to higher pricing across slightly lower volumes sold.

Revenues from recycled fuel oil and refinery byproducts increased $53.1 million and revenues from blended oil sales increased $30.0 million due to higher pricing which more than offset a 22% decrease of gallons sold.

During 2022, the volume of used oil collected increased in line with the expansion of our network through two acquisitions, (see Note 4, "Business Combinations," to our consolidated financial statements included in Item 8 of this report), however, revenue from the collection of used oil decreased $10.0 million.

The Canadian operations of the SKSS segment were negatively impacted by $6.7 million in 2022 due to foreign currency translation.

Cost of Revenues

We believe that management of operating costs is vital to our ability to remain price competitive.

We continue to experience the current macroeconomic inflationary pressures across several cost categories, but most notably related to internal and external labor, transportation, general supplies and energy related costs.

We continue to experience inflationary pressures across several cost categories, but most notably related to transportation, energy related costs and internal and external labor costs.

We aim to manage these increases through constant cost monitoring and a focus on cost saving areas, including lowering employee turnover, as well as our overall customer pricing strategies designed to offset the negative inflationary impacts on our margins.

We continue to upgrade the quality and efficiency of our services through the development of new technology and continued modifications and expansion at our facilities.

We invest in new business opportunities and aggressively implement strategic sourcing and logistics solutions in the face of inflationary pressures, while also continuing to optimize our management and operating structure in an effort to manage our operating margins.

We continue to upgrade the quality and efficiency of our services through the development of new technology and continued modifications and expansion at our facilities while also leveraging certain fixed costs of our operating infrastructure.

We invest in new business opportunities and aggressively implement strategic sourcing and logistics solutions, while also continuing to optimize our management and operating structure in an effort to manage our operating margins.

Environmental Services

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As a % of Direct revenues 67.3 % 67.9 % 69.6 % (0.6) % (1.7) %

Environmental Services cost of revenues for the year ended December 31, 2024 increased $303.0 million from the comparable period in 2023, while improving as a percentage of revenues.

Overall, labor and benefit related costs increased $170.3 million, equipment and supply costs increased $95.2 million and external transportation, vehicle, and fuel costs increased $24.6 million.

These cost increases were generally in line with the revenue growth in the business and the addition of the acquired operations in 2024.

However better leverage of our costs and increases in revenues further improved our cost efficiency as a percentage of revenues.

Environmental Services cost of revenues for the year ended December 31, 2023 increased $160.1 million from the comparable period in 2022, but as a percentage of revenues, these costs improved 1.7%.

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These cost increases were generally commensurate with the revenue growth in the business, however better leverage of our costs drove the cost improvement as a percentage of revenues.

Environmental Services cost of revenues for the year ended December 31, 2022 increased $796.2 million from the comparable period in 2021 primarily due to the increase in direct revenues noted above, including additional costs from the HydroChemPSC operations.

Cost of revenues as a percentage of direct revenues remained relatively consistent with 2021 despite lower decontamination services and the growth of our industrial services offerings which typically operate at a lower margin than our waste disposal focused offerings.

Overall, labor and benefit related costs, including travel, increased $386.4 million, equipment and supply costs increased $199.7 million and external transportation, vehicle and fuel costs increased $132.8 million.

These increases were driven by a combination of overall business growth, including the addition of HydroChemPSC, and inflationary pressures.

Safety-Kleen Sustainability Solutions

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As a % of Direct revenues 74.5 % 72.0 % 61.9 % 2.5 % 10.1 %

SKSS cost of revenues for the year ended December 31, 2023 increased $31.0 million from 2022 and as a percentage of revenues, these costs increased 10.1%, mainly driven by the reduced revenue discussed above.

SKSS cost of revenues for the year ended December 31, 2024 increased $12.9 million from 2023 and as a percentage of revenues, these costs increased 2.5%.

The cost increase is due to additional expenses from the Noble operations, which were partially offset by reduced costs resulting from the lower revenue volumes noted above.

Total cost of revenues as a percentage of direct revenues increased primarily due to the market related pricing decreases discussed in the revenue section, higher cost per gallon of base oil products sold and the overall mix of products and services sold during 2024 as compared to the prior year.

SKSS cost of revenues for the year ended December 31, 2023 increased $31.0 million from the comparable period in 2022 and as a percentage of revenues, these costs increased 10.1%, mainly driven by the reduced revenue discussed above.

Overall, external transportation, rail, vehicle and fuel costs increased $23.5 million, labor and benefit related costs increased $11.8 million and equipment and supply costs increased $5.5 million.

Cost of materials, including oil additives and other raw materials decreased by $16.2 million mainly driven by a lower cost of obtaining used oil though our oil collection services.

Cost of materials, including oil additives and other raw materials decreased by $16.2 million mainly driven by a lower cost of obtaining used oil through our oil collection services.

The remaining cost spread across various cost categories.

SKSS cost of revenues for the year ended December 31, 2022 increased $130.6 million from the comparable period in 2021 and as a percentage of revenue continued to improve.

The cost of raw materials used in production of our oil products

increased $74.5 million, more than half of which was due to increased costs to obtain used oil through our used oil collection services.

The increase in base oil pricing resulted in a correlating increase in the cost we paid for used oil feedstock.

Other primary costs that contributed to the overall increase include external transportation, vehicle and fuel costs which increased $25.3 million, labor and benefit related costs, including travel, which increased $9.7 million and equipment and supply costs which increased $2.8 million.

Selling, General and Administrative Expenses

We strive to manage our selling, general and administrative ("SG&A") expenses commensurate with the overall performance of our segments and corresponding revenue levels.

We aim to manage our selling, general and administrative ("SG&A") expenses in line with the overall performance of our segments and corresponding revenue levels.

This is achieved through enhanced technology, process improvements and strategic expense management.

Expanding our support functions globally has led to both profitability and productivity improvements.

We believe our ability to properly align these costs with business performance is reflective of our strong management of the businesses and further promotes our ability to remain competitive in the marketplace.

The SG&A balances in this section exclude stock-based compensation expense which is presented in SG&A on the Company’s Consolidated Statement of Operations but is not included in the Company’s measurement of Adjusted EBITDA.

For a discussion on significant changes in consolidated stock-based compensation expense, please refer to the separate section below.

Environmental Services

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As a % of Direct revenues 7.4 % 7.7 % 7.6 % (0.3) % 0.1 %

Environmental Services SG&A expenses for the year ended December 31, 2024 increased $24.5 million from the comparable period in 2023, and slightly improved as a percentage of revenues by maintaining leverage of our SG&A base in the midst of the revenue growth discussed above.

Overall, labor and benefit related costs increased $13.2 million primarily driven by additional costs from the HEPACO operations.

The remaining increases were spread across various cost categories and were driven by overall growth in the segment results.

Environmental Services SG&A expenses for the year ended December 31, 2023 increased $31.1 million from the comparable period in 2022, but remained relatively consistent as a percentage of revenues by maintaining leverage of our SG&A base in the midst of the revenue growth discussed above.

Overall, labor and benefit related costs, including travel, increased $32.0 million primarily driven by incremental headcount, including the acquisitions occurring during the periods, and higher incentive compensation.

Environmental Services SG&A expenses for the year ended December 31, 2022 increased $49.7 million from the comparable period in 2021, but improved 1.2% as a percentage of revenues driven by leveraging our SG&A base in the midst of the revenue growth discussed above.

Increased labor and benefits related cost, including travel, of $35.4 million was the largest contributor to the overall cost increase, predominantly due to the addition of the HydroChemPSC business operations, investments in our employees and higher incentive compensation.

The remaining increases were spread across various other cost categories.

Safety-Kleen Sustainability Solutions

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As a % of Direct revenues 8.9 % 8.7 % 7.3 % 0.2 % 1.4 %

SKSS SG&A expenses for the year ended December 31, 2024 remained relatively consistent with the comparable period in 2023 both in dollar amount and as a percentage of revenues.

SKSS SG&A expenses for the year ended December 31, 2023 increased $5.3 million from the comparable period in 2022 and as a percentage of revenues these costs increased mainly due to the revenue reductions discussed above.

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The higher labor and benefit costs were primarily driven by the expanded sales team established in late 2022 which remained relatively consistent through 2023.

SKSS SG&A expenses for the year ended December 31, 2022 increased $12.0 million from the comparable period in 2021 primarily due to a $9.9 million increase in labor and benefit costs, including travel, as we expanded our sales team for the segment and made other incremental workforce investments to support its growth.

The remaining increases were spread across various cost categories.

As a percentage of revenue, these costs improved slightly when compared to the same period in the prior year.

Corporate Items

For the years ended December 31, 2024 over 2023 2023 over 2022

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We manage our Corporate SG&A expenses commensurate with the overall total Company performance and direct revenue levels.

As a percentage of revenue these costs remained relatively consistent in 2023 after a decrease from 2021 to 2022.

In total, Corporate Items SG&A expenses increased by $7.3 million in 2023;

As a percentage of total Company revenues these costs remained relatively consistent in 2024, 2023 and 2022.

In total, Corporate SG&A expenses increased by $36.2 million in 2024;

however, as noted above, these costs remained relatively consistent as a percentage of revenues.

In general, the overall cost increase was driven by higher labor and benefit related expenses, professional fees and cybersecurity/ information technology costs of $5.6 million, $3.9 million and $3.2 million, respectively, partially offset by lower stock-based compensation expense of $6.1 million.

Corporate Items SG&A expenses for the year ended December 31, 2022 increased by $27.7 million in 2021.

Overall cost increases included a $23.3 million increase in labor, benefits and travel related expenses, including incentive compensation, driven by investments in our workforce, and an $8.0 million increase from higher stock-based compensation costs.

The increase in stock-based compensation expense was driven by the timing of grants issued in 2022 and higher expense associated with the achievement of performance metrics.

Overall grants for 2022 were slightly lower than for 2021.

Additional drivers of the overall increase in Corporate Items SG&A included a $6.7 million increase in cybersecurity information technology related costs and a $2.2 million closure reserve estimate increase for an inactive non-landfill site.

Partially offsetting these cost increases were a reduction in professional fees of $6.8 million and a reduction in severance costs of $6.0 million, both related to costs from the acquisition of HydroChemPSC in 2021 which did not recur in 2022.

Additionally, in 2022 we recognized a $3.0 million breakup fee received for the termination of the proposed asset acquisition from Vertex Energy, Inc.

In general, the overall cost increase included a $29.4 million increase in labor and benefit related expenses predominately driven by incremental headcount from the operations acquired during 2024.

Additionally, information technology costs increased by $5.1 million.

Severance and integration related costs increased $4.9 million to a total of $14.3 million in 2024.

Corporate SG&A expenses increased by $13.5 million in 2023;

however, as noted above, these costs remained relatively consistent as a percentage of revenues.

Adjusted EBITDA

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Depreciation and amortization 400,922 365,761 347,594

Other (income) expense, net (2,315) (2,472) 515

Kimball startup costs 4,343 — —

Other expense (income), net

1,454 (2,315) (2,472)

Loss on early extinguishment of debt 371 2,880 422

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As a % of Direct revenues 19.0 % 18.7 % 19.8 %

Stock-based Compensation

For the years ended December 31, 2024 over 2023 2023 over 2022

(in thousands, except percentages) 2024 2023 2022 Change % Change Change % Change

Stock-based compensation

$ 27,981 $ 20,703 $ 26,844 $ 7,278 35.2 % $ (6,141) (22.9) %

Stock-based compensation for the year ended December 31, 2024 increased $7.3 million from the comparable period in 2023.

This increase was driven by recent stock price appreciation and higher expenses related to the achievement of performance metrics in 2024.

Stock-based compensation for the year ended December 31, 2023 decreased $6.1 million from the comparable period in 2022.

This reduction was due to certain performance targets not being met in 2023, leading to lower share-based compensation costs compared with 2022.

Depreciation and Amortization

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Total depreciation and amortization $ 400,922 $ 365,761 $ 347,594 $ 35,161 9.6 % $ 18,167 5.2 %

Depreciation and amortization for the year ended December 31, 2024 increased $35.2 million from the comparable period in 2023 due to incremental depreciation and amortization associated with the HEPACO and Noble acquisitions completed in March 2024 as well as incremental finance lease amortization.

Depreciation and amortization for the year ended December 31, 2023 increased $18.2 million from the comparable period in 2022 due to incremental depreciation and amortization associated with the Thompson Industrial assets acquired on March 31, 2023 and increased finance lease and landfill amortization in the period.

For additional information regarding the acquired balances, see Note 4, "Business Combinations," to our consolidated financial statements included in Item 8 of this report.

Depreciation and amortization for the year ended December 31, 2022 increased $49.5 million from the comparable period in 2021 predominately due to the depreciation and amortization of the HydroChemPSC tangible and intangible assets as well as increased depreciation and amortization associated with the acquisition completed in the second quarter of 2022.

Other Income (Expense), net

Other (Expense) Income, net

For the years ended December 31, 2024 over 2023 2023 over 2022

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Change Change %

Other income (expense), net $ 2,315 $ 2,472 $ (515) $ (157) (6.4) % $ 2,987 (580.0) %

For the year ended December 31, 2023, other income (expense), net remained relatively consistent with the comparable period in 2022.

For the year ended December 31, 2022, other income (expense), net increased $3.0 million primarily due to gains recognized on the sale of fixed assets in 2022.

Other (expense) income, net

$ (1,454) $ 2,315 $ 2,472 $ (3,769) (162.8) % $ (157) (6.4) %

For the year ended December 31, 2024, other expense, net was $1.5 million due to recognized losses on the sale or disposal of fixed assets.

In contrast, for the years ended December 31, 2023 and December 31, 2022, the other income, net amounts were $2.3 million and $2.5 million, respectively, largely driven by gains on similar disposals.

Loss on Early Extinguishment of Debt

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Loss on early extinguishment of debt $ (371) $ (2,880) $ (422) $ 2,509 (87.1) % $ (2,458) 582.5 %

For the year ended December 31, 2023, loss on early extinguishment of debt increased $2.5 million from the comparable period in 2022 due to losses recognized for the repayment of Term Loans due in 2024 and repricing of the Term Loans due in 2028.

The increase in the loss on early extinguishment of debt for the year ended December 31, 2023 was due to the loss recognized for the repayment of certain Term Loans.

In all of the periods presented, we also recognized small losses driven by the repricing of certain of our debt in 2024 and 2023 and the repayment of a portion of our outstanding debt in late 2022.

For additional information regarding our current portfolio of long-term debt and related significant activity, see Note 12, “Financing Arrangements,” to our consolidated financial statements included in Item 8 of this report.

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Interest expense, net of interest income $ 134,964 $ 108,595 $ 107,663 $ 26,369 24.3 % $ 932 0.9 %

Interest expense, net of interest income for the year ended December 31, 2023 remained relatively consistent with the comparable period in 2022 as higher interest rates on our portfolio of debt obligations were partially offset by recognizing an $8.3 million benefit from settling certain interest rate swaps in January 2023 and higher interest income realized, generally on our cash investments.

Interest expense, net of interest income for the year ended December 31, 2024 increased by $26.4 million from the comparable period in 2023.

During the year ended December 31, 2023 interest expense, net of interest income included a $8.3 million benefit from settling certain interest rate swaps in January 2023.

Absent this benefit, interest expense, net of interest income increased $18.1 million due to higher levels of outstanding debt as a result of the 2024 Incremental Term Loans entered into on March 22, 2024 in connection with completed acquisitions, partially offset by a $7.5 million increase in interest income, generally on our cash investments, for the year ended December 31, 2024.

The effective interest rates on our long-term debt for the years ended December 31, 2024 and December 31, 2023 were 5.40% and 5.19%, respectively.

Interest expense, net of interest income, increased $30.0 million in 2022 when compared to 2021.

This increase was primarily due to the incremental interest associated with the $1.0 billion of secured senior term loans issued in October 2021 in connection with the acquisition of HydroChemPSC.

Increases in the variable rates on our existing debt during the period was offset by increased interest income and capitalized interest.

Interest expense, net of interest income for the year ended December 31, 2023 remained relatively consistent with the comparable period in 2022 as higher interest rates on our portfolio of debt obligations were partially offset by the $8.3 million benefit noted above and higher interest income realized.

The effective interest rates on our long-term debt for the years ended December 31, 2023 and December 31, 2022 were 5.19% and 4.05%, respectively.

As we exit 2024, the effective rate on our debt is approximately 5.38% given the current interest rate environment and our portfolio of long-term debt and related interest rate swaps.

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Effective tax rate 24.6 % 24.9 % 23.5 % (0.3) % 1.4 %

For the year ended December 31, 2024, the provision for income taxes increased $5.7 million from the comparable period in 2023 driven by the increase in pre-tax income.

The effective tax rate remained relatively consistent.

For the year ended December 31, 2023, the provision for income taxes was relatively consistent with the comparable period in 2022 despite a decrease in pre-tax earnings.

The effective tax rate for 2023 was 24.9% which is higher than the 2022 effective tax rate of 23.5% primarily due to the utilization of unbenefited losses in 2022, which reduced the effective tax rate in that period.

For the year ended December 31, 2022, provision for income taxes increased $59.8 million from the comparable period in 2021, largely due to the increase in pre-tax earnings.

The effective tax rate for 2022 was 23.5% which is relatively consistent with the 2021 effective tax rate of 24.6%.

The 2022 and 2021 effective tax rates benefited from the utilization of previously unbenefited losses in certain of our Canadian entities for which we had previously recognized valuation allowances.

These entities had historically generated operating losses but began to generate profits due to discrete events, including government subsidies and the gain on sale of a business, but more recently due to operational profits.

The 2022 effective tax rates benefited from the utilization of previously unbenefited losses in certain of our Canadian entities for which we had previously recognized valuation allowances.

As of December 31, 2022, these net operating losses were fully utilized and any remaining valuation allowance, which was nominal, was released.

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We believe our future operating cash flows will be sufficient to meet our future operating and internal investing cash needs.

We monitor our actual needs and forecasted cash flows, our liquidity and our capital resources, enabling us to plan our present needs and fund items that may arise during the year as a result of changing business conditions

or opportunities.

We monitor our actual needs and forecasted cash flows, our liquidity and our capital resources,

enabling us to plan our present needs and fund items that may arise during the year as a result of changing business conditions or opportunities.

Furthermore, our existing cash balance and the availability of additional borrowings under our revolving credit facility provide additional potential sources of liquidity should they be required.

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Net cash used in investing activities (903,674) (575,050) (388,944)

Net cash (used in) from financing activities (208,891) (187,315) 898,249

Net cash from (used in) financing activities 377,032 (208,891) (187,315)

Net cash from operating activities

Net cash from operating activities for the year ended December 31, 2024 was $777.8 million as compared to $734.6 million for year ended December 31, 2023.

This $43.2 million increase in operating cash flows was attributable to higher operating income and lower cash paid for environmental expenditures which was partially offset by higher cash paid for interest and working capital balances.

Net cash from operating activities for the year ended December 31, 2023 was $734.6 million, as compared to $626.2 million for the year ended December 31, 2022.

This $108.3 million increase in operating cash flows was attributable to improvement in working capital balances, partially offset by higher cash paid for income taxes, environmental expenditures and interest.

Net cash from operating activities for the year ended December 31, 2022 was $626.2 million, an increase of $80.2 million compared to the year ended December 31, 2021.

The operating cash flows were most notably impacted by greater levels of operating income partially offset by an increase in working capital caused by the recent significant growth in the business, strategic inventory management and higher payments for interest, income taxes and incentive compensation.

With approximately 30% of our debt being subject to variable interest rates during 2022, the LIBOR rate increases during the year, as well as a full year of interest payments for the incremental debt issued in October of 2021, resulted in the increase in interest payments when compared to the prior year.

The increased tax payments were attributable to increased profits.

Net cash used in investing activities

Net cash used in investing activities for the year ended December 31, 2024 was $903.7 million, an increase of $328.6 million compared to the year ended December 31, 2023.

Amounts spent on additions to property, plant and equipment, net of proceeds from the sale and disposal of fixed assets increased $76.4 million, primarily driven by incremental spend on the new incinerator being built in Kimball, Nebraska.

Total spending in 2023 related to the construction of the new incinerator was $82.6 million compared to $44.9 million spent on the project in 2022.

Cash used for acquisitions increased $358.4 million, primarily because we invested more capital in the acquisitions of HEPACO and Noble compared to the amount spent on acquiring Thompson Industrial in 2023.

A $6.3 million net sale of marketable securities in 2024 as compared to a $40.9 million net purchase of marketable securities in 2023 partially offset the additional cash spent on acquisitions.

Amou nts spent on additions to property, plant and equipment, net of proceeds from the sale and disposal of fixed assets increased $10.5 million , largely driven by notable project spend including $15.9 million spent on the Baltimore, Maryland facility partially offset by lower spend on the Kimball incinerator.

Construction on the Kimball incinerator began in 2021 and the project was completed in the fourth quarter of 2024.

Net cash used in investing activities for the year ended December 31, 2023 was $575.1 million, an increase of $186.1 million compared to the year ended December 31, 2022.

Total spending in 2023 related to the construction of the Kimball incinerator was $82.6 million compared to $44.9 million spent on the project in 2022.

Also contributing to the overall increase in cash used in investing activities was a $40.9 million cash outflow from the net purchase of marketable securities in 2023 compared to a $18.8 million cash inflow from the net sale of marketable securities in 2022.

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The cash flows in 2022 also include $16.8 million of proceeds from the sale of a business which didn't recur in 2023.

Net cash used in investing activities for the year ended December 31, 2022 was $388.9 million, a decrease of $1,118.7 million compared to the year ended December 31, 2021.

Cash paid for acquisitions, net reflected a decrease of $1,167.0 million due to the acquisition of HydroChemPSC in 2021 for $1.23 billion compared to $86.3 million paid for acquisitions in 2022.

Also contributing to the overall decrease was an $18.8 million cash inflow from the net sale of marketable securities compared to a $30.8 million cash outflow from the net purchase of marketable securities in 2021.

This change in cash flows is largely due to timing.

In 2022 we received $16.8 million for the sale of a business which decreased the net cash used in investing activities for 2022.

Amounts spent on additions to property, plant and equipment, net of proceeds from the sale and disposal of fixed assets increased $116.6 million which partially offset these decreases.

The higher spending on property, plant and equipment was driven by incremental spend on the new incinerator being built in Kimball, Nebraska as well as for the HydroChemPSC operations.

Total spend in 2022 related to the construction of the new incinerator in Kimball, Nebraska was $44.9 million.

Net cash (used in) from financing activities

Net cash from (used in) financing activities

Net cash from financing activities for the year ended December 31, 2024 was $377.0 million as compared net cash used in financing activities of $208.9 million for the year ended December 31, 2023.

The primary driver of this change was the incurrence of additional term loans, net of discount, of $499.4 million in 2024.

This debt issuance, along with the principal repayments during 2024, resulted in a net cash inflow of $484.3 million in 2024 as compared to a net debt repayment of $124.0 million in 2023.

For more information on the debt transactions during 2024 and 2023 refer to Note 12, "Financing Arrangements" to our consolidated financial statements included in Item 8 of this report.

Additionally, the company paid $14.9 million more in principal payments on finance leases in 2024 as compared to 2023.

Net cash used in financing activities for the year ended December 31, 2023 was $208.9 million as compared to $187.3 million for the year ended December 31, 2022.

The total increase of $21.6 million during 2023 is due to $8.3 million of incremental debt repayments, $6.3 million of incremental deferred financing costs paid and a $5.0 million increase in withholdings paid for taxes on vested restricted stock.

For more information on the debt transactions during the year, refer to Note 12, "Financing Arrangements" to our consolidated financial statements included in Item 8 of this report.

The total increase of $21.6 million during 2023 is due to $8.3 million of incremental debt repayments, $6.3 million of incremental deferred financing costs paid and a $5.0 million increase in

withholdings paid for taxes on vested restricted stock.

The increase in the withholdings paid on vested restricted stock is due to the higher share prices at vesting during 2023.

Net cash from financing activities for the year ended December 31, 2022 was $187.3 million, as compared to net cash from financing activities of $898.2 million for the year ended December 31, 2021.

The primary drivers of this change were the

$995.0 million of cash received in 2021 from the issuance of debt, net of discount, which did not recur in 2022, and the $108.1 million of higher principal payments of long term debt in 2022.

In addition to $10.0 million of incremental principal payments required for the aforementioned debt, in November 2022 we also repaid $100.0 million of long term debt due in 2024.

Partially offsetting these were higher deferred financing costs paid in 2021 associated with the debt issuance.

Adjusted Free Cash Flow

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Additionally, adjusted free cash flow is a metric on which a portion of management incentive compensation is based.

We define adjusted free cash flow as net cash from operating activities excluding cash impacts of items derived from non-operating activities, less additions to property, plant and equipment plus proceeds from sales or disposals of fixed assets.

We define adjusted free cash flow as net cash from operating activities, less additions to property, plant and equipment plus proceeds from sales or disposals of fixed assets.

When necessary, management adjusts for the cash impact of items derived from non-operating activities.

Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP.

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Proceeds from sale and disposal of fixed assets 9,099 9,650 8,779

Kimball startup costs 3,253 — —

Adjusted free cash flow $ 357,882 $ 321,902 $ 289,937

The increases in Additions to property, plant and equipment in 2024 and 2023 in the table above were primarily driven by the incremental spend on strategic growth initiatives including the Kimball incinerator and, in 2024, the expansion of our Baltimore facility.

Total spending on the Kimball, Nebraska incinerator construction through December 31, 2024 was $210.9 million with $76.2 million spent in 2024, $82.6 million spent in 2023 and $44.9 million spent in 2022.

In 2024, we spent $15.9 million on the Baltimore, Maryland facility.

Summary of Capital Resources

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Capital Expenditures

In 2023, our capital expenditures were $412.7 million.

In 2024, our net capital expenditures were $423.1 million inclusive of $76.2 million in capital spending on the construction of the Kimball, Nebraska incinerator and $15.9 million spent on the Baltimore, Maryland facility.

We anticipate that 2025 capital spending, net of disposals, will be in the range of $360.0 million to $390.0 million.

This projected amount is inclusive of capital expenditures of approximately $65.0 million to finish the Kimball, Nebraska incinerator project and $15.0 million to $20.0 million for a strategic project in Baltimore, Maryland.

This includes a long term growth investment of $15 million that we plan to invest in a Phoenix facility.

We anticipate that the capital spending will be funded by cash from our operations.

Unanticipated changes in environmental regulations could require us to make significant capital expenditures for our facilities and adversely affect our results of operations and cash flow.

In 2023, capital spending on the construction of our new incinerator at our Kimball, Nebraska facility was approximately $82.6 million.

Total spending on the project through December 31, 2023, was $134.7 million.

We expect the remaining spending for this project to be approximately $65.0 million and we anticipate it will be complete in late 2024.

We have increased the total expected spend on the project to incorporate enhancements including more direct burn bays and specialized lines designed to process incremental high hazard waste.

On February 2, 2024, the Company signed an 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.

Financing Arrangements

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

In 2024, we expect to pay $10.0 million in principal payments on the secured senior term loans and approximately $120 million interest payments on the entire portfolio of financing arrangements, assuming the variable rate remains consistent throughout 2024.

In 2025, we expect to pay $15.1 million in principal payments on the secured senior term loans and approximately $150 million in interest payments on the entire portfolio of financing arrangements, assuming the variable rate remains consistent throughout 2025.

We expect that future payments of interest will continue to be funded through cash flows from operations and any principal payments will either be funded through available cash from operations or through available financing alternatives.

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Total environmental liabilities $ 241,533 $ 229,843 $ 11,690 5.1 %

Total environmental liabilities as of December 31, 2023 were $229.8 million, a decrease of $5.2 million compared to December 31, 2022.

This decrease was primarily due to expenditures of $29.0 million made during 2023 and decreases in environmental liability estimates recorded to the consolidated balance sheet of $2.1 million.

These decreases were partially offset by annual accretion of $13.7 million, changes in environmental liability estimates resulting in charges to the consolidated statement of operations of $4.8 million and new liabilities, including those recognized as a result of recent acquisitions of $6.7 million.

Total environmental liabilities as of December 31, 2024 were $241.5 million, an increase of $11.7 million compared to December 31, 2023.

This increase was primarily due to new environmental liabilities, including those recognized as a result of recent acquisitions of $18.7 million, annual accretion of $13.5 million and an $8.9 million increase in environmental liability estimates.

These increases were partially offset by expenditures of $27.5 million made during 2024.

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

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We obtain standby letters of credit as security for financial assurances we have been required to provide to regulatory bodies for our hazardous waste facilities and which would be called only in the event that we fail to satisfy closure, post-closure and other obligations under the permits issued by those regulatory bodies for such licensed facilities.

As of December 31, 2023, there were $134.3 million outstanding letters of credit.

As of December 31, 2024, there were $130.0 million of outstanding letters of credit.

See Note 12, "Financing Arrangements," to the accompanying financial statements included in Item 8 of this report for further discussion of our standby letters of credit and other financing arrangements.

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We believe the estimates set forth below may involve a higher degree of judgment and complexity in their application than our other accounting estimates and represent the critical accounting estimates used in the preparation of our consolidated financial statements.

Our accounting

policies related to these estimates are discussed in Note 2, "Significant Accounting Policies," to our consolidated financial statements included in Item 8 of this report.

Our accounting policies related to these estimates are discussed in Note 2, "Significant Accounting Policies," to our consolidated financial statements included in Item 8 of this report.

We believe our judgments related to these accounting estimates are appropriate.

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Landfill Final Closure and Post-Closure Liabilities.

Landfill final closure and post-closure liabilities recorded at December 31, 2023 and 2022 were $59.4 million and $62.3 million, respectively.

Landfill final closure and post-closure liabilities recorded at December 31, 2024 and 2023 were $59.4 million in both periods.

We have material financial commitments for the costs associated with requirements of the EPA and the comparable regulatory agency in Canada for landfill final closure and post-closure activities.

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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.

Changes in the determination of when the landfill will cease accepting waste, either through a business decision by management, determination that expansion

capacity should no longer be considered probable or changes in estimates on annual airspace consumption, will accelerate accrual of these costs.

Changes in the determination of when the landfill will cease accepting waste, either through a business decision by management, determination that expansion capacity should no longer be considered probable or changes in estimates on annual airspace consumption, will accelerate accrual of these costs.

Non-Landfill Closure and Post-Closure Liabilities.

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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, material changes to non-landfill closure and post-closure estimates have been infrequent.

Changes to non-landfill closure and post-closure estimates have not been material.

See Note 10, "Closure and Post-Closure Liabilities," to our consolidated financial statements included in Item 8 of this report for the changes to these Landfill and Non-Landfill Closure and Post-Closure liabilities during the years ended December 31, 2024 and 2023.

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We routinely review and evaluate the sites for which we have established estimated environmental liabilities reserves to determine if there should be changes in the established reserves.

The changes in

estimates are reflected as adjustments in the ordinary course of business in the period when we determine that an adjustment is appropriate as new information becomes available.

The changes in estimates are reflected as adjustments in the ordinary course of business in the period when we determine that an adjustment is appropriate as new information becomes available.

Upon demonstration of the effectiveness of the alternative technology and applicable regulatory approval, we update our estimated cost of remediating the affected sites.

Changes in our estimates for remedial liabilities have not been material.

See Note 11, "Remedial Liabilities," to our consolidated financial statements included in Item 8 of this report for the changes to the remedial liabilities during the years ended December 31, 2024 and 2023.

The changes in our estimates have not been material.

Acquisitions.

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.

Intangible assets acquired in a business combination may consist of patents, trademarks and tradenames, developed technology, customer relationships and other intangibles.

the purchase price over the net assets acquired recorded as goodwill.

Intangible assets acquired in a business combination may consist of patents, trademarks and trade names, developed technology, customer relationships and other intangibles.

The fair value for acquired customer relationship intangibles is determined as of the acquisition date based on estimates and judgments regarding expectations for the future after-tax cash flows arising from the follow-on revenue from customer relationships that existed on the acquisition date over their estimated lives, including the probability of expected future revenue from these customers, less a contributory assets charge, all of which is discounted to present value.

The fair value of the trademark and tradename intangible assets as well as the developed technology intangible assets are determined utilizing the relief from royalty method which is a form of the income approach.

Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the tradename or technology and discounted to present value using an appropriate discount rate.

The fair value of the trademark and trade name intangible assets as well as the developed technology intangible assets are determined utilizing the relief from royalty method which is a form of the income approach.

Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the trade name or technology and discounted to present value using an appropriate discount rate.

Tangible assets acquired in a business combination include real estate and personal property.

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When no amount within a range of estimates is more likely, the minimum is accrued.

As of December 31, 2023, we had reserves of $32.4 million consisting of (i) $25.0 million 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 primarily related to legal claims as well as federal, state and provincial enforcement actions, which were included in accrued expenses on the consolidated balance sheets.

As of December 31, 2024, we had reserves of $29.8 million consisting of (i) $23.3 million related to pending legal or administrative proceedings, including Superfund liabilities, which were included in remedial

liabilities on the consolidated balance sheets and (ii) $6.5 million related to federal, state and provincial enforcement actions as well as legal claims, which were included in accrued expenses on the consolidated balance sheets.

The inherent uncertainty related to the outcome of these matters can result in amounts materially different from any provisions made with respect to their resolution.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis