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. 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 and six months ended June 30, 2017 and 2016, is shown in the following tables: Three Months Ended June 30, 2017 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 323,108 $ (37,725) $ 285,383 $ 67,168 Western 288,953 (31,461) 257,492 87,045 Eastern 292,327 (46,017) 246,310 72,095 Canada 206,629 (26,332) 180,297 66,365 Central 182,781 (23,363) 159,418 60,716 E&P 48,677 (2,008) 46,669 21,092 Corporate (a) - - - (11,162) $ 1,342,475 $ (166,906) $ 1,175,569 $ 363,319 Three Months Ended June 30, 2016 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 137,169 $ (16,618) $ 120,551 $ 27,228 Western 265,911 (29,480) 236,431 79,835 Eastern 168,824 (26,240) 142,584 44,824 Canada 70,103 (9,518) 60,585 23,555 Central 157,997 (18,327) 139,670 52,578 E&P 31,002 (3,184) 27,818 6,485 Corporate (a) - - - (75,865) $ 831,006 $ (103,367) $ 727,639 $ 158,640 Six Months Ended June 30, 2017 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 640,447 $ (74,942) $ 565,505 $ 136,108 Western 552,954 (59,872) 493,082 162,613 Eastern 565,624 (87,827) 477,797 137,546 Canada 391,960 (48,627) 343,333 123,665 Central 346,593 (42,866) 303,727 113,368 E&P 87,743 (4,352) 83,391 35,637 Corporate (a) - - - (26,783) $ 2,585,321 $ (318,486) $ 2,266,835 $ 682,154 Six Months Ended June 30, 2016 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 180,135 $ (22,665) $ 157,470 $ 36,717 Western 512,775 (57,111) 455,664 153,625 Eastern 297,040 (46,660) 250,380 79,438 Canada 70,103 (9,518) 60,585 23,555 Central 291,895 (32,288) 259,607 96,431 E&P 64,098 (5,485) 58,613 13,034 Corporate (a) - - - (84,353) $ 1,416,046 $ (173,727) $ 1,242,319 $ 318,447 ____________________ (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 June 30, 2017 and December 31, 2016, were as follows: June 30, 2017 December 31, 2016 Southern $ 2,801,661 $ 2,869,841 Western 1,518,397 1,516,870 Eastern 1,944,737 1,541,854 Canada 2,583,098 2,532,046 Central 1,304,610 1,302,900 E&P 986,957 1,068,086 Corporate 515,903 272,328 Total Assets $ 11,655,363 $ 11,103,925 The following tables show changes in goodwill during the six months ended June 30, 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 10,335 - 249,724 7,128 711 - 267,898 Impairment loss - - - - - (77,343) (77,343) Goodwill adjustment for assets sold 2,205 - 321 - - - 2,526 Impairment loss related to assets held for sale (27,311) - - - - - (27,311) Goodwill reclassified as assets held for sale (17,215) - - - - - (17,215) Impact of changes in foreign currency - - - 50,757 - - 50,757 Balance as of June 30, 2017 $ 1,438,037 $ 376,537 $ 783,205 $ 1,523,159 $ 468,635 $ - $ 4,589,573 Southern Western Eastern Canada 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 1,241,419 2,673 70,723 1,510,220 42,113 - 2,867,148 Impact of changes in foreign currency - - - 9,490 - - 9,490 Balance as of June 30, 2016 $ 1,337,129 $ 376,493 $ 530,255 $ 1,519,710 $ 458,533 $ 77,343 $ 4,299,463 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 June 30, Six months ended June 30, 2017 2016 2017 2016 Southern segment EBITDA $ 67,168 $ 27,228 $ 136,108 $ 36,717 Western segment EBITDA 87,045 79,835 162,613 153,625 Eastern segment EBITDA 72,095 44,824 137,546 79,438 Canada segment EBITDA 66,365 23,555 123,665 23,555 Central segment EBITDA 60,716 52,578 113,368 96,431 E&P segment EBITDA 21,092 6,485 35,637 13,034 Subtotal reportable segments 374,481 234,505 708,937 402,800 Unallocated corporate overhead (11,162) (75,865) (26,783) (84,353) Depreciation (132,827) (84,348) (258,067) (145,245) Amortization of intangibles (24,762) (14,081) (50,272) (21,775) Impairments and other operating items 1,180 3,284 (140,501) 3,048 Interest expense (31,160) (20,485) (60,291) (37,670) Other income (expense), net 1,860 (714) 3,326 (492) Foreign currency transaction gain (loss) (1,048) 689 (1,638) 689 Income before income tax provision $ 176,562 $ 42,985 $ 174,711 $ 117,002 The following tables reflect a breakdown of the Company’s revenue and inter-company eliminations for the periods indicated: Three months ended June 30, 2017 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 797,131 $ (2,392) $ 794,739 67.6% Solid waste disposal and transfer 416,176 (158,937) 257,239 21.9 Solid waste recycling 43,693 (2,351) 41,342 3.5 E&P waste treatment, recovery and disposal 50,043 (2,870) 47,173 4.0 Intermodal and other 35,432 (356) 35,076 3.0 Total $ 1,342,475 $ (166,906) $ 1,175,569 100.0% Three months ended June 30, 2016 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 502,948 $ (1,778) $ 501,170 68.9% Solid waste disposal and transfer 256,847 (96,815) 160,032 22.0 Solid waste recycling 18,119 (1,393) 16,726 2.3 E&P waste treatment, recovery and disposal 30,734 (3,253) 27,481 3.8 Intermodal and other 22,358 (128) 22,230 3.0 Total $ 831,006 $ (103,367) $ 727,639 100.0% Six months ended June 30, 2017 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 1,565,478 $ (4,592) $ 1,560,886 68.9% Solid waste disposal and transfer 773,201 (302,378) 470,823 20.8 Solid waste recycling 87,581 (4,935) 82,646 3.6 E&P waste treatment, recovery and disposal 89,864 (5,838) 84,026 3.7 Intermodal and other 69,197 (743) 68,454 3.0 Total $ 2,585,321 $ (318,486) $ 2,266,835 100.0% Six months ended June 30, 2016 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 859,546 $ (3,099) $ 856,447 68.9% Solid waste disposal and transfer 426,929 (162,849) 264,080 21.3 Solid waste recycling 28,738 (2,031) 26,707 2.1 E&P waste treatment, recovery and disposal 63,586 (5,620) 57,966 4.7 Intermodal and other 37,247 (128) 37,119 3.0 Total $ 1,416,046 $ (173,727) $ 1,242,319 100.0% |