OPERATING SEGMENTS

6 Months Ended

Jun. 30, 2019

OPERATING SEGMENTS

OPERATING SEGMENTS

NOTE 17.   OPERATING SEGMENTS

Financial Information by Segment

Our operations are managed in two reportable segments reflecting our internal reporting structure and nature of services offered as follows:

Environmental Services - This segment provides a broad range of hazardous material management services including transportation, recycling, treatment and disposal of hazardous, non-hazardous and radioactive waste at Company-owned landfill, wastewater, deep-well injection and other treatment facilities.

Field & Industrial Services - This segment provides packaging and collection of hazardous waste and total waste management solutions at customer sites and through our 10-day transfer facilities. Services include on-site management, waste characterization, transportation and disposal of non-hazardous and hazardous waste. This segment also provides specialty field services such as industrial cleaning and maintenance, remediation, lab packs, retail services, transportation, emergency response and other services to commercial and industrial facilities and to government entities.

The operations not managed through our two reportable segments are recorded as “Corporate.” Corporate selling, general and administrative expenses include typical corporate items such as legal, accounting and other items of a general corporate nature. Income taxes are assigned to Corporate, but all other items are included in the segment where they originated. Inter-company transactions have been eliminated from the segment information and are not significant between segments.

Summarized financial information of our reportable segments is as follows:

	Three Months Ended June 30, 2019
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Revenue	$	112,844	$	42,958	$	—	$	155,802
Depreciation, amortization and accretion	$	10,377	$	2,151	$	597	$	13,125
Capital expenditures	$	14,455	$	2,059	$	920	$	17,434
Total assets	$	725,311	$	167,985	$	68,120	$	961,416

	Three Months Ended June 30, 2018
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Revenue	$	98,960	$	37,952	$	—	$	136,912
Depreciation, amortization and accretion	$	8,676	$	1,415	$	330	$	10,421
Capital expenditures	$	4,935	$	1,849	$	618	$	7,402
Total assets	$	599,706	$	126,797	$	98,160	$	824,663

	Six Months Ended June 30, 2019
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Revenue	$	205,177	$	81,662	$	—	$	286,839
Depreciation, amortization and accretion	$	20,003	$	4,282	$	901	$	25,186
Capital expenditures	$	21,296	$	2,108	$	1,253	$	24,657
Total assets	$	725,311	$	167,985	$	68,120	$	961,416

	Six Months Ended June 30, 2018
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Revenue	$	185,431	$	71,540	$	—	$	256,971
Depreciation, amortization and accretion	$	17,186	$	2,770	$	446	$	20,402
Capital expenditures	$	10,939	$	2,887	$	1,134	$	14,960
Total assets	$	599,706	$	126,797	$	98,160	$	824,663

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)

Management uses Adjusted EBITDA as a financial measure to assess segment performance. Adjusted EBITDA is defined as net income before interest expense, interest income, income tax expense, depreciation, amortization, share-based compensation, accretion of closure and post-closure liabilities, foreign currency gain/loss, non-cash property and equipment impairment charges, property insurance recoveries and other income/expense. Adjusted EBITDA is a complement to results provided in accordance with GAAP and we believe that such information provides additional useful information to analysts, stockholders and other users to understand the Company’s operating performance. Since Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies. Items excluded from Adjusted EBITDA are significant components in understanding and assessing our financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or a substitute for analyzing our results as reported under GAAP. Some of the limitations are:

● Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

● Adjusted EBITDA does not reflect our interest expense, or the requirements necessary to service interest or principal payments on our debt;

● Adjusted EBITDA does not reflect our income tax expenses or the cash requirements to pay our taxes;

● Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; and

● Although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

A reconciliation of Net income to Adjusted EBITDA is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
$s in thousands	2019		2018		2019		2018
Net income	$	15,491	$	13,220	$	23,534	$	22,463
Income tax expense		6,395		4,258		9,436		7,778
Interest expense		3,588		2,907		7,618		5,716
Interest income		(202)		(39)		(409)		(63)
Foreign currency loss		384		139		523		153
Other income		(122)		(193)		(232)		(2,316)
Property and equipment impairment charges		—		—		25		—
Depreciation and amortization of plant and equipment		9,129		7,044		17,254		13,649
Amortization of intangible assets		2,863		2,296		5,674		4,598
Share-based compensation		1,245		1,011		2,467		2,079
Accretion and non-cash adjustment of closure & post-closure liabilities		1,133		1,081		2,258		2,155
Property insurance recoveries		(4,500)		—		(9,153)		—
Adjusted EBITDA	$	35,404	$	31,724	$	58,995	$	56,212

Adjusted EBITDA, by operating segment, is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
$s in thousands	2019		2018		2019		2018
Adjusted EBITDA:
Environmental Services	$	47,056	$	39,860	$	82,316	$	74,532
Field & Industrial Services		5,022		4,562		7,576		6,907
Corporate		(16,674)		(12,698)		(30,897)		(25,227)
Total	$	35,404	$	31,724	$	58,995	$	56,212

Property and Equipment and Intangible Assets Outside of the United States

We provide services in the United States and Canada. Long-lived assets, comprised of property and equipment and intangible assets net of accumulated depreciation and amortization, by geographic location are as follows:

	June 30,		December 31,
$s in thousands	2019		2018
United States	$	481,301	$	480,322
Canada		59,185		57,787
Total long-lived assets	$	540,486	$	538,109