Segment Reporting | 11. 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, Rhode Island, South Carolina, eastern Tennessee, Vermont, Virginia 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, Québec and Saskatchewan; 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 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 11. Summarized financial information concerning the Company’s reportable segments for the three and six months ended June 30, 2018 and 2017, is shown in the following tables: Three Months Ended June 30, 2018 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 321,051 $ (37,941) $ 283,110 $ 68,787 Western 295,730 (32,031) 263,699 81,175 Eastern 324,888 (53,945) 270,943 74,795 Canada 211,787 (24,949) 186,838 67,305 Central 202,725 (27,705) 175,020 63,132 E&P 61,765 (1,407) 60,358 31,231 Corporate (a) - - - 260 $ 1,417,946 $ (177,978) $ 1,239,968 $ 386,685 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 289,082 (46,015) 243,067 70,668 Canada 209,874 (26,334) 183,540 67,792 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 Six Months Ended June 30, 2018 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 630,007 $ (73,558) $ 556,449 $ 137,694 Western 570,850 (61,988) 508,862 153,832 Eastern 612,727 (99,905) 512,822 142,229 Canada 403,475 (46,662) 356,813 126,571 Central 377,925 (49,116) 328,809 121,553 E&P 119,385 (3,041) 116,344 59,910 Corporate (a) - - - (6,083) $ 2,714,369 $ (334,270) $ 2,380,099 $ 735,706 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 559,756 (87,720) 472,036 135,297 Canada 397,829 (48,735) 349,094 125,914 Central 346,593 (42,866) 303,727 113,368 E&P 87,742 (4,351) 83,391 35,637 Corporate (a) - - - (26,783) $ 2,585,321 $ (318,486) $ 2,266,835 $ 682,154 ____________________ (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, 2018 and December 31, 2017, were as follows: June 30, 2018 December 31, 2017 Southern $ 2,777,535 $ 2,718,296 Western 1,563,670 1,573,955 Eastern 2,339,444 2,024,527 Canada 2,526,702 2,677,557 Central 1,437,434 1,297,118 E&P 971,047 981,980 Corporate 408,712 741,248 Total Assets $ 12,024,544 $ 12,014,681 The following tables show changes in goodwill during the six months ended June 30, 2018 and 2017, by reportable segment: Southern Western Eastern Canada Central E&P Total Balance as of December 31, 2017 $ 1,436,320 $ 397,508 $ 804,133 $ 1,575,538 $ 468,275 $ - $ 4,681,774 Goodwill acquired 4,909 666 120,979 - 39,155 - 165,709 Impact of changes in foreign currency - - - (74,517) - - (74,517) Balance as of June 30, 2018 $ 1,441,229 $ 398,174 $ 925,112 $ 1,501,021 $ 507,430 $ - $ 4,772,966 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 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, 2018 2017 2018 2017 Southern segment EBITDA $ 68,787 $ 67,168 $ 137,694 $ 136,108 Western segment EBITDA 81,175 87,045 153,832 162,613 Eastern segment EBITDA 74,795 70,668 142,229 135,297 Canada segment EBITDA 67,305 67,792 126,571 125,914 Central segment EBITDA 63,132 60,716 121,553 113,368 E&P segment EBITDA 31,231 21,092 59,910 35,637 Subtotal reportable segments 386,425 374,481 741,789 708,937 Unallocated corporate overhead 260 (11,162) (6,083) (26,783) Depreciation (142,450) (132,827) (275,634) (258,067) Amortization of intangibles (26,474) (24,762) (52,573) (50,272) Impairments and other operating items (7,073) 1,180 (8,104) (140,501) Interest expense (32,426) (31,160) (64,796) (60,291) Interest income 1,056 1,026 2,210 1,474 Other income, net 2,031 834 1,644 1,852 Foreign currency transaction gain (loss) 30 (1,048) (190) (1,638) Income before income tax provision $ 181,379 $ 176,562 $ 338,263 $ 174,711 |