Clean Harbors Inc: Form 10-Q for the period ended Sep 30, 2025

Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements, which are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “seeks,” “aims,” “will,” “should,” “estimates,” “projects,” “may,” “likely,” “potential” or similar expressions. Such statements may include, but are not limited to, statements about our future financial and operating results, plans, strategy, objectives and goals, cost management initiatives, pricing and productivity initiatives, contingent liabilities, liquidity, business, economic and market conditions, trends, customer demand, impacts of tariffs and new legislation, acquisitions, capital spending, growth opportunities, expectations, challenges and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of our management as of the date of this report only and are subject to certain risks and uncertainties that could cause actual results, performance or achievements to differ materially, including, without limitation: operational and safety risks; risks relating to the failure of new or existing technologies; cybersecurity risks; the occurrence of natural disasters or other catastrophic events, as well as their residual macroeconomic effects; risks associated with retaining and hiring key personnel; environmental liability and product liability risks relating to hazardous waste management and other components of our business; negative economic, industry or other developments, including market volatility or economic downturns; risks associated with our assumptions relating to expansion of our landfills; reductions in the demand for emergency response services at industrial facilities or on roadways, railways or waterways, and other remedial projects and regulatory developments; reductions in the demand for oil products and automotive services and volatility in oil prices in the markets we serve; changes in statutory and regulatory requirements and risks relating to extensive environmental laws and regulations; risks associated with existing and potential litigation; risks associated with our identification and execution of strategic acquisitions and divestitures and their related liabilities; risks relating to the availability and sufficiency of our insurance coverage, self-insurance, surety bonds, letters of credit and other forms of financial assurance; impact of new tax legislation or changes in tax regulations and interpretations; the imposition of trade sanctions or tariffs; fluctuations in interest rates and foreign currency exchange rates; risks relating to our indebtedness and covenants in our debt agreements; risks associated with certain anti-takeover provisions under the Massachusetts Business Corporation Act and our By-Laws; and those items discussed elsewhere in this report or identified as “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 19, 2025, and in other documents we file from time to time with the SEC. Forward-looking statements are neither historical facts nor assurances of future performance. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.

Overview

We are North America’s leading provider of environmental and industrial services, supporting our customers in finding environmentally responsible solutions to further their sustainability goals. 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. We serve over 350,000 customers, including the majority of Fortune 500 companies, across various markets including chemical and manufacturing, as well as numerous government agencies. These customers rely on us to safely deliver a broad range of services, including, but not limited to end-to-end hazardous waste management, emergency response, industrial cleaning and maintenance and recycling services. We are also a leading provider of parts cleaning and related environmental services to general manufacturing, automotive and commercial customers in North America and the largest re-refiner and recycler of used oil in North America.

Performance of our segments is evaluated on several factors of which the primary financial measure is Adjusted EBITDA, a non-GAAP measure that is reconciled to our GAAP net income and described more fully below. The following is a discussion of how management evaluates our 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 - The Environmental Services segment results are driven by the customer demand for our wide variety of services, the volume, pricing and mix 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 and 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. 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, 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 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 - The 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. SKSS offers high-quality recycled base and blended oil products and other automotive and industrial lubricants to end users including fleet customers, distributors, manufacturers of oil products and industrial plants. Segment results are impacted by market pricing, overall demand and the mix of our oil products sales. 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 our recycling and disposal network. The results and integration of the acquired operations of 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 revenue generation and 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. Overall product pricing as well as revenues generated and/or 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.

Highlights

Total direct revenues for the three and nine months ended September 30, 2025 were $1,549.3 million and $4,531.1 million, compared with $1,529.4 million and $4,458.8 million for the three and nine months ended September 30, 2024, respectively. For the three months ended September 30, 2025, our Environmental Services segment direct revenues increased $34.1 million or 2.6% from the comparable period in 2024, driven by strong demand for our waste disposal services within Technical Services and Safety-Kleen core services, offset by lower contributions from our Field and Emergency Response Services operations and our Industrial Services organization. For the nine months ended September 30, 2025, our Environmental Services segment direct revenues increased $113.4 million or 3.0% from the comparable period in 2024, driven by growth in Technical Services, Safety-Kleen core services and Field and Emergency Response Services, specifically incremental contributions from the acquisition of HEPACO, offset by lower contributions from our Industrial Services organization. For the three and nine months ended September 30, 2025, our SKSS segment direct revenues decreased $14.1 million and $41.0 million or 6.1% and 6.0%, respectively, from the comparable periods in 2024, driven predominantly by lower pricing of base and blended oil products. These decreases were partially offset by higher charge for oil revenue for the three and nine months ended September 30, 2025 and incremental contributions from Noble for the nine months ended September 30, 2025. Foreign currency translation of our Canadian operations negatively impacted our consolidated direct revenues by $1.6 million and $11.7 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods in 2024.

Income from operations for the three and nine months ended September 30, 2025 was $193.0 million and $514.9 million, compared with $192.3 million and $533.3 million in the three and nine months ended September 30, 2024, respectively. Depreciation and amortization expense for the three and nine months ended September 30, 2025 was $14.7 million and $47.4 million higher, respectively, than the comparable period in 2024, which impacted comparative operating income. Net income for the three months ended September 30, 2025 was $118.8 million, an increase of $3.6 million, or 3.1%, as compared with net income of $115.2 million in the three months ended September 30, 2024. Net income for the nine months ended September 30, 2025 was $304.4 million, a decrease of $13.9 million, or 4.4%, as compared with net income of $318.3 million in the nine months ended September 30, 2024.

Adjusted EBITDA, which is the primary financial measure by which we evaluate the operating performance of our segments, increased $18.3 million and $31.5 million or 6.1% and 3.7%, from $301.8 million and $859.7 million in the three and nine months ended September 30, 2024 to $320.2 million and $891.3 million in the three and nine months ended September 30, 2025, respectively. 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 the nine months ended September 30, 2025 increased $37.8 million from $473.8 million in 2024 to $511.6 million primarily due to the impact of improved working capital in 2025 as compared to the prior year period, lower environmental expenditures and lower cash paid for taxes. Adjusted free cash flow, which management uses to measure our financial strength and ability to generate cash, was $248.1 million in the nine months ended September 30, 2025 as compared to $110.4 million in the comparable period of 2024, mainly due to higher cash flow from operating activities and lower cash paid for additions to property, plant and equipment net of proceeds from the sale 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

The primary financial measure by which we evaluate the performance of our segments is Adjusted EBITDA. The following table sets forth certain financial information associated with our results of operations (in thousands, except percentages):

N/M = not meaningful

(1) Direct revenues are allocated to the segment performing the provided service or selling the product.

(2) Cost of revenues are shown exclusive of (i) accretion of environmental liabilities and (ii) depreciation and amortization which are presented separately on the Consolidated Statements of Operations.

(3) Selling, general and administrative expenses in this table are 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.

(5) Calculated as a percentage of total Company direct revenue.

Direct Revenues

There are many factors that 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, changes in the regulatory environment including those related to per- and polyfluoroalkyl substances (“PFAS”), impacts of acquisitions and divestitures, the level of emergency response services, government infrastructure investment, reshoring of domestic 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 and foreign currency fluctuations. In addition, customer efforts to minimize hazardous waste and changes in regulation can impact our revenues.

Environmental Services

(in thousands, except percentages)

Environmental Services direct revenues for the three months ended September 30, 2025 increased $34.1 million from the comparable period in 2024. Technical Services revenue increased $53.6 million from the comparable period in the prior year with contributions across our portfolio of waste disposal services, including stronger volumes at our incinerator and landfill facilities as well as higher revenues from waste and remediation projects. On a comparative basis and excluding the impacts of the new incinerator in Kimball, Nebraska which is not expected to be running at full utilization until 2026, utilization at our incinerators was 92% in the three months ended September 30, 2025 as compared to 89% in the same period in 2024. Including the new Kimball incinerator, utilization at our incinerators was 88% during the three months ended September 30, 2025. Revenues for Safety-Kleen core service offerings for the three months ended September 30, 2025 grew by $18.8 million from the comparable period in 2024 due to improved overall pricing and demand for our containerized waste, vacuum and parts washer services. Field and Emergency Response service revenues decreased $27.9 million driven by fewer emergency response events in the three months ended September 30, 2025 as compared to the same period in 2024. Revenue from our Industrial Services operations also decreased $13.5 million due to lower turnaround activity and related high-value services as compared to 2024. Direct revenues for Canadian operations of the Environmental Services segment decreased by $1.3 million due to foreign currency translation.

Environmental Services direct revenues for the nine months ended September 30, 2025 increased $113.4 million from the comparable period in 2024 driven by incremental revenues from our legacy operations and acquisitive growth. Technical Services revenue increased $92.1 million from the comparable prior year period driven primarily by higher incineration and landfill volumes. On a comparative basis and excluding the impacts of the new incinerator in Kimball, Nebraska, utilization at our incinerators was 90% in the first nine months of 2025 as compared to 85% in the same period in 2024. Including the new Kimball incinerator, utilization at our incinerators was 85% during the nine months ended September 30, 2025. Revenues from Safety-Kleen core service offerings for the nine months ended September 30, 2025 grew by $51.6 million from the comparable period in 2024 due to improved pricing for our containerized waste, vacuum and parts washer services. Field and Emergency Response Services revenues for the nine months ended September 30, 2025 increased $14.2 million from the comparable period in 2024 driven by incremental revenue from the acquisition of HEPACO in late March 2024, partially offset by lower revenues from emergency response events in the second and third quarters. Revenue from our Industrial Services operations decreased $48.4 million due to lower turnaround activity and related high-value services as compared to 2024. Direct revenues for Canadian operations of the Environmental Services segment decreased by $9.4 million due to foreign currency translation.

Safety-Kleen Sustainability Solutions

(in thousands, except percentages)

In the three months ended September 30, 2025, SKSS direct revenues decreased $14.1 million compared to the same period in 2024. Revenues from the sale of base oil products decreased $18.1 million, resulting from lower pricing despite higher volumes sold. Revenues from the sale of blended oil products decreased $8.5 million, due to lower volumes sold and, to a lesser extent, lower pricing. These decreases were partially offset by a $12.2 million increase in revenue from the collection of used oil as we increased the pricing for these collection services starting in late 2024 and throughout 2025.

In the nine months ended September 30, 2025, SKSS direct revenues decreased $41.0 million compared to the same period in 2024. Revenues from the sale of base and blended oil products decreased $56.6 million and $27.8 million, respectively, resulting from lower pricing and lower volumes sold. Revenues from contract packaging services decreased $12.4 million from the same period in 2024. These decreases were partially offset by a $28.9 million increase in revenue from the collection of used oil attributed to the higher pricing for these collection services noted above and a $20.8 million increase in revenues from vacuum gas oil and specialty refinery products, driven by the acquisition of Noble in March 2024. Direct revenues for Canadian operations of the SKSS segment decreased by $2.3 million 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 inflationary pressures across several cost categories, but most notably related to internal and external labor, healthcare, transportation, maintenance and energy related costs. We are also subject to uncertainties and cost increases due to the changing regulatory landscape, including trade restrictions and tariffs. We aim to manage these increases through constant cost monitoring and a focus on cost savings areas, including lowering employee turnover, as well as our overall customer pricing strategies designed to offset the 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 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 workforce and operating structure in an effort to manage our operating margins.

Environmental Services

(in thousands, except percentages)

Environmental Services cost of revenues for the three months ended September 30, 2025 decreased $2.9 million from the comparable period in 2024, and improved 1.9% as a percentage of revenues. The decrease in cost of revenues for the three months ended September 30, 2025, compared to the same period in 2024, was primarily attributable to a $10.4 million reduction in third-party labor costs reflecting the benefits of our ongoing workforce management strategies as well as a $3.0 million reduction in equipment and supply costs. These cost savings were partially offset by a $10.9 million increase in transportation, vehicle and fuel costs resulting from volume growth associated with waste and remediation projects in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Environmental Services cost of revenues for the nine months ended September 30, 2025 increased $51.3 million from the comparable period in 2024, but slightly declined as a percentage of revenues. Commensurate with the revenue growth in the business and the acquisition of HEPACO discussed above, labor and benefits related costs increased $31.4 million, transportation, vehicle and fuel costs increased $12.7 million and equipment and supply costs increased $9.0 million for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. The remaining cost increase was spread across various cost categories and was driven by the incremental operations of the HEPACO acquisition. Partially offsetting these cost increases was a decrease of $22.6 million in third-party labor costs due to labor internalization efforts.

Safety-Kleen Sustainability Solutions

(in thousands, except percentages)

SKSS cost of revenues for the three months ended September 30, 2025 decreased $12.6 million from the comparable period in 2024, and as a percentage of revenues, these costs improved 1.0%. The overall cost decreases were driven by lower acquisition costs of used oil feedstock and a $2.5 million decrease in labor costs due to strategic headcount management actions implemented in the second quarter of 2025. Additional savings were realized through the targeted plant idling initiatives carried out in late 2024 and early 2025 which further reduced production costs. Collectively, these cost management efforts along with the lower revenue noted above, contributed to the overall improvement as a percentage of revenue.

SKSS cost of revenues for the nine months ended September 30, 2025 decreased $19.9 million from the comparable period in 2024, but increased 1.5% as a percentage of revenues. The overall cost decrease was driven by the lower sales volumes, discussed above, lower acquisition costs of used oil feedstock in the nine months ended September 30, 2025 compared to the prior period and a $2.8 million decrease in labor costs due to strategic headcount management actions implemented in the second quarter of 2025. These decreases were partially offset by incremental expenses from the Noble acquisition. As a percentage of revenues, these costs increased primarily due to market-related volume and pricing decreases discussed above in the SKSS direct revenues section and the overall mix of products sold during the nine months ended September 30, 2025 as compared to the same period in the prior year.

Selling, General and Administrative Expenses

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. Our goal is to achieve this 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 expenses set forth below 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.

Environmental Services

(in thousands, except percentages)

Environmental Services SG&A expenses for the three months ended September 30, 2025 increased $12.3 million from the comparable period in 2024, and as a percentage of revenue increased slightly. Overall, labor and benefits related costs, including the impact of higher healthcare costs, increased $9.6 million with the remaining increase spread across various cost categories.

Environmental Services SG&A expenses for the nine months ended September 30, 2025 increased $11.0 million from the comparable period in 2024, remaining relatively consistent as a percentage of revenue. Overall, labor and benefits related costs increased $21.3 million compared to the same period in 2024, including higher employee healthcare costs and incremental costs related to the acquired HEPACO operations. The results for the nine months ended September 30, 2025 include the impact of reducing the estimated costs to remediate a site by approximately $10 million in the first quarter of 2025 to reflect our conclusion that loss was no longer probable based on the evaluation of available evidence.

Safety-Kleen Sustainability Solutions

(in thousands, except percentages)

SKSS SG&A expenses for the three months ended September 30, 2025 decreased $1.2 million due to lower labor and benefit related costs. Despite the revenue decreases noted above, SKSS SG&A expenses as a percentage of revenue remained consistent, primarily driven by cost reduction initiatives that were executed late in 2024 and strategic headcount management actions implemented in the second quarter of 2025.

SKSS SG&A expenses for the nine months ended September 30, 2025 decreased $6.2 million and, despite the revenue decreases noted above, remained relatively consistent, as a percentage of revenues, as compared to the same period in 2024. Labor and benefit related costs decreased $5.4 million in the nine months ended September 30, 2025 as compared to the same period in 2024, mainly driven by the cost reduction initiatives noted above.

Corporate

(in thousands, except percentages)

We manage our Corporate SG&A expenses commensurate with the overall total Company performance and direct revenue levels. Corporate SG&A expenses for the three months ended September 30, 2025 decreased $2.4 million when compared to the same period in 2024 and decreased slightly as a percentage of total Company revenues. The decrease in Corporate SG&A expenses was driven by reductions across several cost categories including professional and legal fees and severance and integration costs. These reductions were partially offset by a $2.1 million increase in expenditures related to system investments.

Corporate SG&A expenses for the nine months ended September 30, 2025 decreased $5.7 million as compared to the same period in the prior year and decreased slightly as a percentage of total Company revenues. The reduction in Corporate SG&A expenses was primarily attributable to a $6.2 million decrease in environmental and legal reserve costs, reflecting higher costs incurred in the prior year related to changes in estimates for a remedial liability associated with a Superfund site. Additionally, severance and integration-related expenses were $6.1 million lower year-over-year. These reductions were partially offset by a $6.3 million increase in expenditures related to systems investments.

Adjusted EBITDA

Management considers Adjusted EBITDA to be a measurement of performance that provides useful information to both management and investors. Adjusted EBITDA should not be considered an alternative to net income or other measurements under generally accepted accounting principles (“GAAP”). As reflected in the reconciliation below, we define Adjusted EBITDA as net income plus accretion of environmental liabilities, stock-based compensation, depreciation and amortization, net other expense, net interest expense and provision for income taxes. Adjusted EBITDA is not calculated identically by all companies, and therefore our measurements of Adjusted EBITDA, while defined consistently and in accordance with our existing credit agreement, may not be comparable to similarly titled measures reported by other companies.

We use Adjusted EBITDA to enhance our understanding of our operating performance, which represents our views concerning our performance in the ordinary, ongoing and customary course of our operations. We historically have found it helpful, and believe that investors have found it helpful, to consider an operating measure that excludes certain expenses relating to transactions not reflective of our core operations.

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

We also provide information relating to our Adjusted EBITDA so that analysts, investors and other interested persons have the same data that we use to assess our core operating performance. We believe that Adjusted EBITDA should be viewed only as a supplement to the GAAP financial information. We also believe, however, that providing this information in addition to, and together with, GAAP financial information provides a better understanding of our core operating performance and how management evaluates and measures our performance.

The following is a reconciliation of net income to Adjusted EBITDA for the following periods:

(in thousands, except percentages)

Depreciation and Amortization

(in thousands, except percentages)

Depreciation and amortization for the three months ended September 30, 2025 increased by $14.7 million from the comparable period in 2024 due to higher amortization of landfill assets due to increased volumes, depreciation for the new Kimball incinerator, which was placed in service in December 2024, incremental depreciation for assets placed in service to support the growth of the business and higher finance lease amortization.

Depreciation and amortization for the nine months ended September 30, 2025 increased by $47.4 million from the comparable period in 2024 due to depreciation of fixed assets and amortization of intangible assets acquired from the March 2024 HEPACO and Noble acquisitions, higher amortization of landfill assets due to increased volumes, depreciation for the new Kimball incinerator, which was placed in service in December 2024, incremental depreciation for assets placed in service to support the growth of the business, and higher finance lease amortization.

Interest Expense, Net of Interest Income

(in thousands, except percentages)

Interest expense, net of interest income for the three months ended September 30, 2025 remained relatively consistent with the comparable period in 2024.

Interest expense, net of interest income for the nine months ended September 30, 2025 increased $8.1 million from the comparable period in 2024 primarily due to higher levels of outstanding debt during the period resulting from the issuance of incremental debt on March 22, 2024. Interest expense was partially offset by a $4.0 million increase in interest income in the nine months ended September 30, 2025 compared to the same period in 2024.

As of September 30, 2025, the effective interest rate on our debt was 5.3%. For the remainder of 2025, and including the impact of the refinancing transactions that occurred in October 2025, we expect interest expense, net of interest income to remain relatively consistent with the prior year. For additional information regarding our current portfolio of long-term debt, see Note 11, “Financing Arrangements,” to the accompanying unaudited consolidated financial statements.

Provision for Income Taxes

(in thousands, except percentages)

For the three months ended September 30, 2025, the increase in the provision for income taxes is consistent with the increase in pre-tax income, while our effective tax rate was relatively consistent with the same period in 2024.

For the nine months ended September 30, 2025, the provision for income taxes decreased $8.1 million compared to the same period in 2024. This decrease was driven by both lower pre-tax income as well as a slightly lower effective tax rate in 2025. The decrease in our effective tax rate for the nine months ended September 30, 2025 was driven by the write-off of a deferred tax asset with a full valuation allowance associated with the remedial liability change in estimate discussed above, which occurred in the first quarter of 2025.

Liquidity and Capital Resources

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

Summary of Cash Flow Activity

(in thousands)

Net cash from operating activities

Net cash from operating activities for the nine months ended September 30, 2025 was $511.6 million as compared to $473.8 million in the same period of 2024. This $37.8 million increase in operating cash flows was primarily due to improvement in working capital balances as compared to the prior year period, lower environmental expenditures and lower cash paid for taxes for the nine months ended September 30, 2025 compared to the same period in 2024.

Net cash used in investing activities

Net cash used in investing activities for the nine months ended September 30, 2025 was $276.6 million, a decrease of $536.4 million from the comparable period in 2024. In the nine months ended September 30, 2024, we paid $474.0 million for acquisitions, including the purchase of HEPACO and Noble. Additions to property, plant and equipment, net of proceeds from sale and disposal of fixed assets, decreased $75.6 million, primarily due to notable project spend of $63.3 million on the Kimball incinerator strategic project in the nine months ended September 30, 2024. Partially offsetting these lower cash outflows was a $13.5 million lower cash inflow due to the timing of transactions within our wholly owned captive insurance company.

Net cash (used in) from financing activities

Net cash used in financing activities for the nine months ended September 30, 2025 was $166.5 million, as compared to net cash from financing activities of $408.6 million for the nine months ended September 30, 2024. The primary difference in financing activities was the incurrence of term loans net of discount and deferred financing costs of $491.1 million in 2024 to fund the acquisitions executed during the period. Additionally, in 2025, the Company paid $86.8 million more for repurchases of common stock while also receiving an additional $3.4 million in proceeds from the ESPP.

Adjusted Free Cash Flow

Management considers adjusted free cash flow, a non-GAAP measure, to be a measure of liquidity that provides useful information to management, creditors and investors about our financial strength and our ability to generate cash. Additionally, adjusted free cash flow is a metric on which a portion of management incentive compensation is based. We define adjusted free cash flow as net cash from operating activities, less additions to property, plant and equipment, plus proceeds from sales or disposals of fixed assets. When necessary, management adjusts for the cash impact of items derived from non-operating activities. Additionally, adjusted free cash flow excludes significant one-time growth investments, as they are not indicative of free cash flow generation for the current period. For 2025, these significant one-time growth investments include the early stages of construction of a solvent de-asphalting unit (“SDA”) and the build out of a hub facility in Phoenix, Arizona (“Phoenix Hub”). We expect to spend approximately $30 million and $15 million, respectively, in 2025 for these projects from which we expect to realize future long-term benefits. Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP. Adjusted free cash flow is not calculated identically by all companies, and therefore our measurements of adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

The following is a reconciliation of net cash from operating activities to adjusted free cash flow for the following periods:

(in thousands)

34

Summary of Capital Resources

At September 30, 2025, cash and cash equivalents and marketable securities totaled $850.4 million, compared to $789.8 million at December 31, 2024. At September 30, 2025, cash and cash equivalents held by our Canadian subsidiaries totaled $94.9 million. The cash and cash equivalents and marketable securities balance for our U.S. operations was $755.5 million at September 30, 2025. Our U.S. operations had net operating cash inflows of $511.5 million for the nine months ended September 30, 2025.

We maintain a $600.0 million revolving credit facility of which, as of September 30, 2025, approximately $473.3 million was available to borrow under the facility, with letters of credit of $126.7 million outstanding.

Material Capital Requirements

Capital Expenditures

Capital expenditures during the first nine months of 2025 were $303.2 million as compared to $369.8 million during the first nine months of 2024. Notable project spend in 2024 included investments of $63.3 million in our Kimball incinerator facility and $15.8 million in our Baltimore, Maryland facility. In 2025, notable project spend includes $11.8 million spent on the SDA and $12.5 million spent for the purchase of a building for our Phoenix Hub. The remaining decrease in capital expenditures in the nine months ended September 30, 2025 as compared to September 30, 2024 is due to the timing of expenditures.

Overall, we expect that 2025 capital spending, net of disposals, will be in the range of $385.0 million to $415.0 million including the long-term growth investment of approximately $30 million for the SDA and $15 million for the Phoenix Hub. The total anticipated spending on the SDA project is expected to be in the range of $210.0 to $220.0 million and we expect that the project will be completed in 2028.

We anticipate that the remaining 2025 capital spending and future spending on the SDA 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.

Financing Arrangements

Financing arrangements are discussed in Note 11, “Financing Arrangements,” to our unaudited consolidated financial statements included in this report. As discussed therein, we refinanced a portion of our debt portfolio in October 2025 whereby we issued $745.0 million aggregate principal amount of 5.750% unsecured senior notes due 2033 and we entered into secured senior term loans with an aggregate principal amount equal to $1,260.0 million, due in 2032. The proceeds of these transactions, together with cash on hand, were used to refinance all existing $1.5 billion secured senior term loans due in 2028 on October 9, 2025, and will be used to redeem all of the $545.0 million aggregate principal amount of outstanding 2027 Notes on October 31, 2025. On October 1, 2025, we issued a redemption notice with a 30 day notice period, as required pursuant to the indenture governing the 2027 Notes, indicating our intent to redeem these notes in full on October 31, 2025. The only amounts due under these new financing arrangements prior to maturity will be interest payments, due monthly for the secured senior term loans and bi-annually for the unsecured senior notes, and annual principal payments of approximately $12.6 million for the secured senior term loans. We expect to fund these interest and principal payments with cash from operations. Subsequent to the October 2025 financing transactions, the earliest maturity of our debt portfolio is 2029. As noted above, we also maintain our $600.0 million revolving credit facility with no amounts owed as of September 30, 2025. We continue to monitor our debt instruments and evaluate opportunities where it may be beneficial to refinance or reallocate the portfolio.

As of September 30, 2025, we were in compliance with the covenants of all of our debt agreements, and we believe we will continue to meet such covenants.

Common Stock Repurchases Pursuant to Publicly Announced Plan

The Company’s board of directors approved a plan to repurchase up to $1.1 billion of the Company’s common stock. During the three and nine months ended September 30, 2025, the Company repurchased and retired 208,206 and 526,336 shares, respectively, of the Company’s common stock for total expenditures of $50.0 million and $116.8 million, respectively. During the three and nine months ended September 30, 2024, the Company repurchased and retired 84,910 and 135,572 shares, respectively, of the Company’s common stock for total expenditures of $20.0 million and $30.0 million, respectively.

From the board’s approval of the repurchase plan through September 30, 2025, the Company has repurchased and retired a total of approximately 9.3 million shares of its common stock for $717.6 million under the board-approved plan, and, as of September 30, 2025, an additional $382.4 million remained available for the repurchase of shares.

Environmental Liabilities

(in thousands, except percentages)

Total environmental liabilities as of September 30, 2025 were $236.7 million, a decrease of $4.9 million compared to December 31, 2024. During the nine months ended September 30, 2025, the environmental liability balance decreased due to expenditures of $11.0 million and reductions in environmental liability estimates of $8.0 million. The reductions in environmental liability estimates were primarily driven by a decrease of approximately $10 million in the remedial liability for a site based on our conclusion that loss was no longer probable based on evaluation of available evidence. This change was recorded in the first quarter of 2025. These decreases were partially offset by accretion of $10.7 million and new environmental liabilities, including those recognized as a result of recent acquisitions, of $3.2 million.

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

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

Letters of Credit

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 September 30, 2025, there were $126.7 million outstanding letters of credit. See Note 11, “Financing Arrangements,” to the accompanying unaudited consolidated financial statements.

Critical Accounting Policies and Estimates

In the first nine months of 2025, there were no material changes to the information provided under the heading “Critical Accounting Estimates” included in our Annual Report on Form 10-K for the year ended December 31, 2024. For more information regarding our accounting policies, please refer to Note 2, “Significant Accounting Policies” to the accompanying unaudited consolidated financial statements.

In the first nine months of 2025, there were no material changes to the information provided under Item 7A. “Quantitative and Qualitative Disclosures about Market Risk,” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of our Co-Chief Executive Officers and Chief Financial Officer, as of the end of the period covered by this Quarterly Report on Form 10-Q, our Co-Chief Executive Officers and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined under Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) were effective as of September 30, 2025 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that was conducted during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no material changes to the risk factors from the information provided in Item 1A. in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.