Segment Reporting | 10. SEGMENT REPORTING The Company’s revenues are generated from the collection, transfer, recycling and disposal of non-hazardous solid waste and the treatment, recovery and disposal of non-hazardous E&P waste. No single contract or customer accounted for more than 10% of the Company’s total revenues at the consolidated or reportable segment level during the periods presented. The Company manages its operations through five geographic operating segments and its E&P segment , which includes the majority of the Company’s E&P waste treatment and disposal operations. The Company’s five geographic operating segments and its E&P segment comprise the Company’s reportable segments. Each operating segment is responsible for managing several vertically integrated operations, which are comprised of districts. In June 2016, as a result of the Progressive Waste acquisition, described in Note 6, the Company formed two new geographic operating segments, Canada and Southern, and realigned its reporting structure at its existing Central and Eastern segments. The Company’s segment realignment consisted of the transfer of certain operations in Texas and Louisiana from its Central segment to its Southern segment and the transfer of certain operations in Tennessee, Mississippi and Alabama from its Eastern segment to its Southern segment. The Progressive Waste acquisition did not impact the Company’s Western or E&P segments. The segment information presented herein reflects the realignment of these districts. Under the current orientation, the Company’s Southern segment services customers located in Alabama, Arkansas, Florida, Louisiana, Mississippi, southern Oklahoma, western Tennessee and Texas; the Company’s Western segment services customers located in Alaska, California, Idaho, Montana, Nevada, Oregon, Washington and western Wyoming; the Company’s Eastern segment services customers located in Illinois, Iowa, Kentucky, Maryland, Massachusetts, Michigan, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, eastern Tennessee, Vermont and Wisconsin; the Company’s Canada segment services customers located in the provinces of Alberta, British Columbia, Manitoba, Ontario and Québec; and the Company’s Central segment services customers located in Arizona, Colorado, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Oklahoma, South Dakota, western Texas, Utah and eastern Wyoming. The E&P segment services E&P customers located in Arkansas, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, Wyoming and along the Gulf of Mexico. The Company’s Chief Operating Decision Maker (“CODM”) evaluates operating segment profitability and determines resource allocations based on several factors, of which the primary financial measure is segment EBITDA. The Company defines segment EBITDA as earnings before interest, taxes, depreciation, amortization, impairments and other operating items, other income (expense) and foreign currency transaction gain (loss). Segment EBITDA is not a measure of operating income, operating performance or liquidity under GAAP and may not be comparable to similarly titled measures reported by other companies. The Company’s management uses segment EBITDA in the evaluation of segment operating performance as it is a profit measure that is generally within the control of the operating segments. A reconciliation of segment EBITDA to Income before income tax provision is included at the end of this Note 10. Summarized financial information concerning the Company’s reportable segments for the three months ended March 31, 2017 and 2016, is shown in the following tables: Three Months Ended March 31, 2017 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 317,339 $ (37,216) $ 280,123 $ 68,940 Western 264,001 (28,411) 235,590 75,569 Eastern 273,297 (41,810) 231,487 65,450 Canada 185,331 (22,296) 163,035 57,300 Central 163,812 (19,503) 144,309 52,652 E&P 39,066 (2,344) 36,722 14,545 Corporate (a) - - - (15,621) $ 1,242,846 $ (151,580) $ 1,091,266 $ 318,835 Three Months Ended March 31, 2016 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 42,967 $ (6,048) $ 36,919 $ 9,489 Western 246,864 (27,630) 219,234 73,789 Eastern 128,216 (20,421) 107,795 34,614 Central 133,898 (13,961) 119,937 43,853 E&P 33,095 (2,300) 30,795 6,549 Corporate (a) - - - (8,488) $ 585,040 $ (70,360) $ 514,680 $ 159,806 ____________________ (a) Corporate functions include accounting, legal, tax, treasury, information technology, risk management, human resources, training and other administrative functions. Amounts reflected are net of allocations to the six operating segments. (b) Intercompany revenues reflect each segment’s total intercompany sales, including intercompany sales within a segment and between segments. Transactions within and between segments are generally made on a basis intended to reflect the market value of the service. (c) For those items included in the determination of segment EBITDA, the accounting policies of the segments are the same as those described in the Company’s most recent Annual Report on Form 10-K. Total assets for each of the Company’s reportable segments at March 31, 2017 and December 31, 2016, were as follows: March 31, 2017 December 31, 2016 Southern $ 2,813,993 $ 2,869,841 Western 1,502,583 1,516,870 Eastern 1,941,755 1,541,854 Canada 2,533,253 2,532,046 Central 1,296,480 1,302,900 E&P 985,634 1,068,086 Corporate 395,734 272,328 Total Assets $ 11,469,432 $ 11,103,925 The following tables show changes in goodwill during the three months ended March 31, 2017 and 2016, by reportable segment: Southern Western Eastern Canada Central E&P Total Balance as of December 31, 2016 $ 1,470,023 $ 376,537 $ 533,160 $ 1,465,274 $ 467,924 $ 77,343 $ 4,390,261 Goodwill acquired 11,736 - 246,491 3,316 370 - 261,913 Impairment loss - - - - - (77,343) (77,343) Goodwill adjustment for assets sold - - 321 - - - 321 Impairment loss related to assets held for sale (29,000) - - - - - (29,000) Goodwill reclassified as assets held for sale (29,295) - - - - - (29,295) Impact of changes in foreign currency - - - 12,788 - - 12,788 Balance as of March 31, 2017 $ 1,423,464 $ 376,537 $ 779,972 $ 1,481,378 $ 468,294 $ - $ 4,529,645 Southern Western Eastern Central E&P Total Balance as of December 31, 2015 $ 95,710 $ 373,820 $ 459,532 $ 416,420 $ 77,343 $ 1,422,825 Goodwill acquired 190 1,421 7 148 - 1,766 Balance as of March 31, 2016 $ 95,900 $ 375,241 $ 459,539 $ 416,568 $ 77,343 $ 1,424,591 A reconciliation of the Company’s primary measure of segment profitability (segment EBITDA) to Income before income tax provision in the Condensed Consolidated Statements of Net Income is as follows: Three months ended March 31, 2017 2016 Southern segment EBITDA $ 68,940 $ 9,489 Western segment EBITDA 75,569 73,789 Eastern segment EBITDA 65,450 34,614 Canada segment EBITDA 57,300 - Central segment EBITDA 52,652 43,853 E&P segment EBITDA 14,545 6,549 Subtotal reportable segments 334,456 168,294 Unallocated corporate overhead (15,621) (8,488) Depreciation (125,240) (60,897) Amortization of intangibles (25,510) (7,694) Impairments and other operating items (141,681) (236) Interest expense (29,131) (17,184) Other income, net 1,466 222 Foreign currency transaction loss (590) - Income (loss) before income tax provision $ (1,851) $ 74,017 The following tables reflect a breakdown of the Company’s revenue and inter-company eliminations for the periods indicated: Three months ended March 31, 2017 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 768,346 $ (2,200) $ 766,146 70.2% Solid waste disposal and transfer 357,025 (143,441) 213,584 19.6 Solid waste recycling 43,889 (2,584) 41,305 3.8 E&P waste treatment, recovery and disposal 39,821 (2,968) 36,853 3.4 Intermodal and other 33,765 (387) 33,378 3.0 Total $ 1,242,846 $ (151,580) $ 1,091,266 100.0% Three months ended March 31, 2016 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 356,598 $ (1,321) $ 355,277 69.0% Solid waste disposal and transfer 170,083 (66,034) 104,049 20.2 Solid waste recycling 10,619 (639) 9,980 2.0 E&P waste treatment, recovery and disposal 32,851 (2,366) 30,485 5.9 Intermodal and other 14,889 - 14,889 2.9 Total $ 585,040 $ (70,360) $ 514,680 100.0% |