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. 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 nine months ended September 30, 2018 and 2017, is shown in the following tables: Three Months Ended September 30, 2018 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 321,306 $ (38,266) $ 283,040 $ 70,159 Western 303,614 (32,596) 271,018 86,174 Eastern 353,844 (64,347) 289,497 83,721 Canada 211,682 (24,628) 187,054 68,819 Central 213,492 (28,221) 185,271 70,288 E&P 67,348 (2,118) 65,230 35,099 Corporate (a) - - - (8,286) $ 1,471,286 $ (190,176) $ 1,281,110 $ 405,974 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 Nine Months Ended September 30, 2018 Revenue Intercompany Revenue (b) Reported Revenue Segment EBITDA (c) Southern $ 951,313 $ (111,824) $ 839,489 $ 207,853 Western 874,464 (94,584) 779,880 240,006 Eastern 966,571 (164,253) 802,318 225,950 Canada 615,157 (71,290) 543,867 195,390 Central 591,417 (77,337) 514,080 191,840 E&P 186,734 (5,159) 181,575 95,009 Corporate (a) - - - (14,368) $ 4,185,656 $ (524,447) $ 3,661,209 $ 1,141,680 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 ____________________ (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, 2018 and December 31, 2017, were as follows: September 30, 2018 December 31, 2017 Southern $ 2,778,123 $ 2,718,296 Western 1,583,561 1,573,955 Eastern 2,348,438 2,024,527 Canada 2,562,659 2,677,557 Central 1,452,607 1,297,118 E&P 974,049 981,980 Corporate 492,629 741,248 Total Assets $ 12,192,066 $ 12,014,681 The following tables show changes in goodwill during the nine months ended September 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 4,800 666 122,136 151 42,197 - 169,950 Goodwill adjustment for assets held for sale 10,194 - - - - - 10,194 Impact of changes in foreign currency - - - (48,622) - - (48,622) Balance as of September 30, 2018 $ 1,451,314 $ 398,174 $ 926,269 $ 1,527,067 $ 510,472 $ - $ 4,813,296 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 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, 2018 2017 2018 2017 Southern segment EBITDA $ 70,159 $ 63,171 $ 207,853 $ 199,280 Western segment EBITDA 86,174 84,861 240,006 247,475 Eastern segment EBITDA 83,721 74,018 225,950 209,315 Canada segment EBITDA 68,819 74,369 195,390 200,283 Central segment EBITDA 70,288 64,607 191,840 177,975 E&P segment EBITDA 35,099 27,881 95,009 63,518 Subtotal reportable segments 414,260 388,907 1,156,048 1,097,846 Unallocated corporate overhead (8,286) (5,751) (14,368) (32,535) Depreciation (148,232) (136,941) (423,866) (395,008) Amortization of intangibles (26,871) (26,613) (79,444) (76,886) Impairments and other operating items 1,998 (832) (6,106) (141,333) Interest expense (32,078) (32,471) (96,874) (92,763) Interest income 1,467 1,656 3,677 3,131 Other income, net 732 1,709 2,376 3,561 Foreign currency transaction loss (132) (1,864) (323) (3,502) Income before income tax provision $ 202,858 $ 187,800 $ 541,120 $ 362,511 |