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 the third quarter of 2017, the Company moved a district from the Eastern segment to the Canada segment as a significant amount of its revenues are received from Canadian-based customers. The segment information presented herein reflects the realignment of this district. 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, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, eastern Tennessee, Vermont and Wisconsin; the Company’s Canada segment services customers located in the state of Michigan and 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 nine months ended September 30, 2017 and 2016, is shown in the following tables: Three Months Ended September 30, 2017 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 317,059 $ (36,531) $ 280,528 $ 63,171 Western 292,222 (30,345) 261,877 84,861 Eastern 292,124 (45,857) 246,267 74,018 Canada 224,166 (27,111) 197,055 74,369 Central 190,210 (23,850) 166,360 64,607 E&P 56,209 (1,818) 54,391 27,881 Corporate (a) - - - (5,751) $ 1,371,990 $ (165,512) $ 1,206,478 $ 383,156 Three Months Ended September 30, 2016 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 317,727 $ (37,818) $ 279,909 $ 62,189 Western 276,941 (30,050) 246,891 84,214 Eastern 226,680 (34,701) 191,979 57,699 Canada 207,003 (26,431) 180,572 66,235 Central 176,109 (20,842) 155,267 58,079 E&P 33,785 (3,481) 30,304 8,919 Corporate (a) - - - (18,299) $ 1,238,245 $ (153,323) $ 1,084,922 $ 319,036 Nine Months Ended September 30, 2017 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 957,506 $ (111,472) $ 846,034 $ 199,280 Western 845,176 (90,217) 754,959 247,475 Eastern 851,880 (133,578) 718,302 209,315 Canada 621,995 (75,846) 546,149 200,283 Central 536,803 (66,716) 470,087 177,975 E&P 143,951 (6,169) 137,782 63,518 Corporate (a) - - - (32,535) $ 3,957,311 $ (483,998) $ 3,473,313 $ 1,065,311 Nine Months Ended September 30, 2016 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 497,863 $ (60,485) $ 437,378 $ 98,906 Western 789,716 (87,160) 702,556 237,839 Eastern 519,165 (81,361) 437,804 135,456 Canada 281,660 (35,949) 245,711 91,471 Central 468,004 (53,130) 414,874 154,510 E&P 97,883 (8,965) 88,918 21,953 Corporate (a) - - - (102,653) $ 2,654,291 $ (327,050) $ 2,327,241 $ 637,482 ____________________ (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 September 30, 2017 and December 31, 2016, were as follows: September 30, 2017 December 31, 2016 Southern $ 2,726,600 $ 2,869,841 Western 1,560,023 1,516,870 Eastern 1,999,928 1,519,576 Canada 2,697,750 2,554,324 Central 1,312,209 1,302,900 E&P 989,081 1,068,086 Corporate 624,684 272,328 Total Assets $ 11,910,275 $ 11,103,925 The following tables show changes in goodwill during the nine months ended September 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 7,484 20,906 272,501 7,127 1,013 - 309,031 Goodwill divested (31,543) - (4,276) - (667) - (36,486) Impairment loss - - - - - (77,343) (77,343) Goodwill adjustment for assets sold 2,205 - 321 - - - 2,526 Goodwill adjustment for assets held for sale (11,080) - - - - - (11,080) Impact of changes in foreign currency - - - 111,439 - - 111,439 Balance as of September 30, 2017 $ 1,437,089 $ 397,443 $ 801,706 $ 1,583,840 $ 468,270 $ - $ 4,688,348 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 1,338,806 2,696 75,769 1,465,720 48,232 - 2,931,223 Impact of changes in foreign currency - - - (2,878) - - (2,878) Balance as of September 30, 2016 $ 1,434,516 $ 376,516 $ 535,301 $ 1,462,842 $ 464,652 $ 77,343 $ 4,351,170 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 September 30, Nine months ended September 30, 2017 2016 2017 2016 Southern segment EBITDA $ 63,171 $ 62,189 $ 199,280 $ 98,906 Western segment EBITDA 84,861 84,214 247,475 237,839 Eastern segment EBITDA 74,018 57,699 209,315 135,456 Canada segment EBITDA 74,369 66,235 200,283 91,471 Central segment EBITDA 64,607 58,079 177,975 154,510 E&P segment EBITDA 27,881 8,919 63,518 21,953 Subtotal reportable segments 388,907 337,335 1,097,846 740,135 Unallocated corporate overhead (5,751) (18,299) (32,535) (102,653) Depreciation (136,941) (125,744) (395,008) (270,988) Amortization of intangibles (26,613) (26,944) (76,886) (48,719) Impairments and other operating items (832) (7,682) (141,333) (4,634) Interest expense (32,471) (27,621) (92,763) (65,291) Interest income 1,656 171 3,131 447 Other income (expense), net 1,709 500 3,561 (268) Foreign currency transaction gain (loss) (1,864) (350) (3,502) 339 Income before income tax provision $ 187,800 $ 131,366 $ 362,511 $ 248,368 The following tables reflect a breakdown of the Company’s revenue and inter-company eliminations for the periods indicated: Three months ended September 30, 2017 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 815,344 $ (2,484) $ 812,860 67.4% Solid waste disposal and transfer 416,764 (157,280) 259,484 21.5 Solid waste recycling 43,864 (2,295) 41,569 3.5 E&P waste treatment, recovery and disposal 57,797 (3,082) 54,715 4.5 Intermodal and other 38,221 (371) 37,850 3.1 Total $ 1,371,990 $ (165,512) $ 1,206,478 100.0% Three months ended September 30, 2016 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 760,281 $ (2,472) $ 757,809 69.9% Solid waste disposal and transfer 377,998 (144,459) 233,539 21.5 Solid waste recycling 32,138 (2,523) 29,615 2.7 E&P waste treatment, recovery and disposal 33,673 (3,608) 30,065 2.8 Intermodal and other 34,155 (261) 33,894 3.1 Total $ 1,238,245 $ (153,323) $ 1,084,922 100.0% Nine months ended September 30, 2017 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 2,380,821 $ (7,075) $ 2,373,746 68.3% Solid waste disposal and transfer 1,189,965 (459,659) 730,306 21.0 Solid waste recycling 131,445 (7,229) 124,216 3.6 E&P waste treatment, recovery and disposal 147,662 (8,921) 138,741 4.0 Intermodal and other 107,418 (1,114) 106,304 3.1 Total $ 3,957,311 $ (483,998) $ 3,473,313 100.0% Nine months ended September 30, 2016 Revenue Intercompany Revenue Reported Revenue % of Reported Revenue Solid waste collection $ 1,619,827 $ (5,571) $ 1,614,256 69.4% Solid waste disposal and transfer 804,928 (307,308) 497,620 21.4 Solid waste recycling 60,876 (4,554) 56,322 2.4 E&P waste treatment, recovery and disposal 97,259 (9,228) 88,031 3.8 Intermodal and other 71,401 (389) 71,012 3.0 Total $ 2,654,291 $ (327,050) $ 2,327,241 100.0% |