Segment Reporting | 16. 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 solid waste 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 solid waste 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. In the first quarter of 2019, the Company moved two districts from the Eastern segment to the Central segment because their locations in Iowa were closer in proximity to operations in the Company’s Central segment. The segment information presented herein reflects the realignment of these districts. Under the current orientation, the Company’s Eastern segment services customers located in northern Illinois, Kentucky, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, eastern Tennessee, Vermont, Virginia and Wisconsin; the Company’s Southern segment services customers located in Alabama, Arkansas, Florida, Georgia, 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 Central segment services customers located in Arizona, Colorado, southern Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, New Mexico, Oklahoma, South Dakota, western Texas, Utah and eastern Wyoming; and 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. The E&P segment services E&P customers located in 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, and other income (expense). Segment EBITDA is not a measure of operating income, operating performance or liquidity under generally accepted accounting principles 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 16. Summarized financial information concerning the Company’s reportable segments for the years ended December 31, 2019, 2018 and 2017, is shown in the following tables: Year Ended Intercompany Reported Segment Depreciation and Capital December 31, 2019 Revenue Revenue (b) Revenue EBITDA (c) Amortization Expenditures Total Assets (e) Eastern $ 1,524,648 $ (255,684) $ 1,268,964 $ 330,578 $ 204,221 $ 154,218 $ 3,099,283 Southern 1,355,753 (162,831) 1,192,922 305,999 160,038 141,157 2,990,247 Western 1,234,669 (135,820) 1,098,849 338,563 102,067 147,893 1,718,015 Central 958,139 (119,555) 838,584 292,111 106,391 116,831 1,885,468 Canada 835,603 (102,321) 733,282 256,405 113,944 61,119 2,490,291 E&P 267,861 (11,783) 256,078 135,426 48,929 36,970 962,202 Corporate (a), (d) — — — (15,438) 8,328 7,901 592,189 $ 6,176,673 $ (787,994) $ 5,388,679 $ 1,643,644 $ 743,918 $ 666,089 $ 13,737,695 Year Ended Intercompany Reported Segment Depreciation and Capital December 31, 2018 Revenue Revenue (b) Revenue EBITDA (c) Amortization Expenditures Total Assets (e) Eastern $ 1,296,823 $ (224,833) $ 1,071,990 $ 295,016 $ 166,715 $ 136,214 $ 2,673,316 Southern 1,273,033 (150,485) 1,122,548 276,791 153,923 97,442 2,892,994 Western 1,170,382 (126,454) 1,043,928 318,401 95,400 125,112 1,596,129 Central 815,520 (103,966) 711,554 259,794 89,001 91,646 1,506,326 Canada 823,989 (96,776) 727,213 261,233 124,155 66,319 2,412,971 E&P 253,083 (7,375) 245,708 129,825 44,175 25,937 969,808 Corporate (a), (d) — — — (8,211) 7,118 3,475 575,785 $ 5,632,830 $ (709,889) $ 4,922,941 $ 1,532,849 $ 680,487 $ 546,145 $ 12,627,329 Year Ended Intercompany Reported Segment Depreciation and Capital December 31, 2017 Revenue Revenue (b) Revenue EBITDA (c) Amortization Expenditures Total Assets (e) Eastern $ 1,120,221 $ (178,394) $ 941,827 $ 269,106 $ 135,737 $ 100,025 $ 2,009,328 Southern 1,262,147 (146,283) 1,115,864 258,560 151,417 117,441 2,718,296 Western 1,127,146 (119,916) 1,007,230 323,648 95,724 100,000 1,573,955 Central 734,042 (88,488) 645,554 241,972 79,460 79,544 1,312,317 Canada 828,755 (99,978) 728,777 264,693 121,174 62,690 2,677,557 E&P 199,063 (7,827) 191,236 90,597 42,500 12,274 981,980 Corporate (a), (d) — — — (32,501) 6,472 7,313 741,248 $ 5,271,374 $ (640,886) $ 4,630,488 $ 1,416,075 $ 632,484 $ 479,287 $ 12,014,681 (a) Corporate functions include accounting, legal, tax, treasury, information technology, risk management, human resources, training, direct acquisition expenses, other administrative functions and share-based compensation expenses associated with Progressive Waste share-based grants existing at June 1, 2016. Amounts reflected are net of allocations to the six operating segments. For the years ended December 31, 2018 and 2017, amounts also include Progressive Waste integration-related expenses. (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 Note 3. (d) Corporate assets include cash, debt issuance costs, equity investments, operating lease right-of-use assets and corporate facility leasehold improvements and equipment. (e) Goodwill is included within total assets for each of the Company’s six operating segments. The following table shows changes in goodwill during the years ended December 31, 2018 and 2019, by reportable segment: Eastern Southern Western Central Canada E&P Total Balance as of December 31, 2017 $ 804,133 $ 1,436,320 $ 397,508 $ 468,275 $ 1,575,538 $ — $ 4,681,774 Goodwill transferred (16,869) — — 16,869 — — — Goodwill acquired 339,222 71,109 666 55,291 153 — 466,441 Goodwill adjustment for assets sold — 10,181 — — — — 10,181 Impact of changes in foreign currency — — — — (126,711) — (126,711) Balance as of December 31, 2018 1,126,486 1,517,610 398,174 540,435 1,448,980 — 5,031,685 Goodwill acquired 204,694 11,460 1,863 189,035 16 — 407,068 Goodwill divested — (845) — — — — (845) Impact of changes in foreign currency — — — — 72,943 — 72,943 Balance as of December 31, 2019 $ 1,331,180 $ 1,528,225 $ 400,037 $ 729,470 $ 1,521,939 $ — $ 5,510,851 Property and equipment, net relating to operations in the United States and Canada are as follows: December 31, 2019 2018 United States $ 4,862,557 $ 4,516,966 Canada 653,790 652,030 Total $ 5,516,347 $ 5,168,996 A reconciliation of the Company’s primary measure of segment profitability (segment EBITDA) to Income before income tax provision in the Consolidated Statements of Net Income is as follows: Years ended December 31, 2019 2018 2017 Eastern segment EBITDA $ 330,578 $ 295,016 $ 269,106 Southern segment EBITDA 305,999 276,791 258,560 Western segment EBITDA 338,563 318,401 323,648 Central segment EBITDA 292,111 259,794 241,972 Canada segment EBITDA 256,405 261,233 264,693 E&P segment EBITDA 135,426 129,825 90,597 Subtotal reportable segments 1,659,082 1,541,060 1,448,576 Unallocated corporate overhead (15,438) (8,211) (32,501) Depreciation (618,396) (572,708) (530,187) Amortization of intangibles (125,522) (107,779) (102,297) Impairments and other operating items (61,948) (20,118) (156,493) Interest expense (147,368) (132,104) (125,297) Interest income 9,777 7,170 5,173 Other income (expense), net 5,704 (170) 1,536 Income before income tax provision $ 705,891 $ 707,140 $ 508,510 |