UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

or

☐ TRANSITION REPORT PURSUANT TO Section 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                        to                       .

Commission file number: 001-39120

US ECOLOGY, INC.

(Exact name of registrant as specified in its charter)

Delaware	84-2421185
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
organization)
101 S. Capitol Blvd., Suite 1000
Boise, Idaho	83702
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (208) 331-8400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ECOL	Nasdaq Global Select Market
Warrants to Purchase Common Stock	ECOLW	Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ⌧  No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ⌧  No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ⌧ Accelerated Filer ◻ Non-Accelerated Filer ◻ Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  ☐     No  ☒

At May 5, 2020, there were 31,503,073 shares of the registrant’s Common Stock outstanding.

US ECOLOGY, INC.

FORM 10-Q

TABLE OF CONTENTS

Item		Page
	PART I — FINANCIAL INFORMATION
1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019	3
	Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019	4
	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019	5
	Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019	6
	Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2020 and 2019	7
	Notes to Consolidated Financial Statements	8
	Report of Independent Registered Public Accounting Firm	32
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
3.	Quantitative and Qualitative Disclosures About Market Risk	47
4.	Controls and Procedures	48
	PART II — OTHER INFORMATION
	Cautionary Statement	49
1.	Legal Proceedings	50
1A.	Risk Factors	51
2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
3.	Defaults Upon Senior Securities	53
4.	Mine Safety Disclosures	53
5.	Other Information	53
6.	Exhibits	54
	SIGNATURE	55

2

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

US ECOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except par value amount)

	March 31, 2020		December 31, 2019
Assets
Current Assets:
Cash and cash equivalents	$	109,790	$	41,281
Receivables, net		240,378		255,310
Prepaid expenses and other current assets		27,080		25,136
Income taxes receivable		10,332		11,244
Total current assets		387,580		332,971
Property and equipment, net		485,325		478,768
Operating lease assets		55,843		57,396
Restricted cash and investments		5,168		5,069
Intangible assets, net		564,124		574,902
Goodwill		466,031		766,980
Other assets		14,568		15,158
Total assets	$	1,978,639	$	2,231,244
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	51,387	$	46,906
Deferred revenue		21,698		14,788
Accrued liabilities		50,245		65,869
Accrued salaries and benefits		22,069		29,653
Income taxes payable		1,324		726
Short-term borrowings		396		—
Current portion of long-term debt		3,358		3,359
Current portion of closure and post-closure obligations		2,704		2,152
Current portion of operating lease liabilities		17,813		17,317
Total current liabilities		170,994		180,770
Long-term debt		855,003		765,842
Long-term closure and post-closure obligations		84,392		84,231
Long-term operating lease liabilities		38,092		39,954
Other long-term liabilities		31,439		20,722
Deferred income taxes, net		122,396		128,345
Total liabilities		1,302,316		1,219,864
Commitments and contingencies (See Note 18)
Stockholders’ Equity:
Common stock $0.01 par value per share, 50,000 authorized; 31,503 and 31,461 shares issued and outstanding, respectively		315		315
Additional paid-in capital		817,730		816,345
Retained (deficit) earnings		(97,179)		206,574
Treasury stock, at cost, 415 and 0 shares, respectively		(18,332)		—
Accumulated other comprehensive loss		(26,211)		(11,854)
Total stockholders’ equity		676,323		1,011,380
Total liabilities and stockholders’ equity	$	1,978,639	$	2,231,244

The accompanying notes are an integral part of these consolidated financial statements.

3

US ECOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended March 31,
	2020		2019
Revenue	$	240,720	$	131,037
Direct operating costs		179,598		95,796
Gross profit		61,122		35,241
Selling, general and administrative expenses		51,058		20,305
Goodwill impairment charges		300,300		—
Operating (loss) income		(290,236)		14,936
Other income (expense):
Interest income		89		207
Interest expense		(9,310)		(4,030)
Foreign currency gain (loss)		937		(139)
Other		171		110
Total other expense		(8,113)		(3,852)
(Loss) income before income taxes		(298,349)		11,084
Income tax (benefit) expense		(263)		3,041
Net (loss) income	$	(298,086)	$	8,043
(Loss) earnings per share:
Basic	$	(9.52)	$	0.37
Diluted	$	(9.52)	$	0.36
Shares used in (loss) earnings per share calculation:
Basic		31,305		21,987
Diluted		31,305		22,197

The accompanying notes are an integral part of these consolidated financial statements.

4

US ECOLOGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2020		2019
Net (loss) income	$	(298,086)	$	8,043
Other comprehensive income (loss):
Foreign currency translation (loss) gain		(8,259)		1,689
Net changes in interest rate hedge, net of taxes of $(1,621) and ($184), respectively		(6,098)		(691)
Comprehensive (loss) income, net of tax	$	(312,443)	$	9,041

The accompanying notes are an integral part of these consolidated financial statements.

5

US ECOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2020		2019
Cash flows from operating activities:
Net (loss) income	$	(298,086)	$	8,043
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		17,978		8,125
Amortization of intangible assets		9,441		2,811
Accretion of closure and post-closure obligations		1,266		1,125
Property and equipment impairment charges		—		25
Goodwill impairment charges		300,300		—
Unrealized foreign currency loss (gain)		2,703		(371)
Deferred income taxes		(3,320)		2,905
Share-based compensation expense		1,564		1,222
Share-based payments of business development and integration expenses		181		—
Unrecognized tax benefits		52		131
Net loss (gain) on disposition of assets		184		(272)
Gain on insurance proceeds from damaged property and equipment		—		(4,653)
Amortization and write-off of debt issuance costs		298		204
Amortization and write-off of debt discount		245		—
Change in fair value of contingent consideration		(1,127)		—
Changes in assets and liabilities (net of effects of business acquisitions):
Receivables		13,467		16,577
Income taxes receivable		893		(1,487)
Other assets		(2,957)		525
Accounts payable and accrued liabilities		(13,618)		(11,935)
Deferred revenue		7,083		(47)
Accrued salaries and benefits		(7,446)		(3,417)
Income taxes payable		662		(517)
Closure and post-closure obligations		(417)		(470)
Net cash provided by operating activities		29,346		18,524
Cash flows from investing activities:
Business acquisitions (net of cash acquired)		(3,309)		—
Purchases of property and equipment		(19,131)		(7,223)
Insurance proceeds from damaged property and equipment		—		5,000
Proceeds from sale of property and equipment		781		459
Purchases of restricted investments		(56)		(23)
Net cash used in investing activities		(21,715)		(1,787)
Cash flows from financing activities:
Proceeds from long-term debt		90,000		—
Payments on long-term debt		(1,125)		(30,000)
Payments on short-term borrowings		(49,871)		(4,331)
Proceeds from short-term borrowings		50,267		6,449
Repurchase of common stock		(18,332)		(915)
Dividends paid		(5,667)		(3,970)
Payment of equipment financing obligations		(1,525)		(199)
Net cash provided by (used in) financing activities		63,747		(32,966)
Effect of foreign exchange rate changes on cash		(2,825)		393
Increase (decrease) in Cash and cash equivalents and restricted cash		68,553		(15,836)
Cash and cash equivalents and restricted cash at beginning of period		42,140		32,753
Cash and cash equivalents and restricted cash at end of period	$	110,693	$	16,917
Reconciliation of Cash and cash equivalents and restricted cash
Cash and cash equivalents at beginning of period		41,281		31,969
Restricted cash at beginning of period		859		784
Cash and cash equivalents and restricted cash at beginning of period	$	42,140	$	32,753
Cash and cash equivalents at end of period		109,790		16,120
Restricted cash at end of period		903		797
Cash and cash equivalents and restricted cash at end of period	$	110,693	$	16,917
Supplemental Disclosures:
Income taxes paid, net of receipts	$	1,241	$	2,085
Interest paid	$	7,642	$	3,462
Non-cash investing and financing activities:
Capital expenditures in accounts payable	$	3,531	$	912

The accompanying notes are an integral part of these consolidated financial statements.

6

US ECOLOGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2020		2019
Total stockholders' equity, beginning balances	$	1,011,380	$	359,217
Common stock:
Beginning balances	$	315	$	220
Stock option exercises and issuance of common stock and restricted common stock		—		1
Ending balances	$	315	$	221
Additional paid-in capital:
Beginning balances	$	816,345	$	183,834
Share-based compensation		1,564		1,222
Share-based payments of business development and integration expenses		181		—
Stock option exercises and issuance of common stock and restricted common stock		(360)		(1,103)
Ending balances	$	817,730	$	183,953
Retained (deficit) earnings:
Beginning balances	$	206,574	$	189,324
Net (loss) income		(298,086)		8,043
Dividends paid		(5,667)		(3,970)
Ending balances	$	(97,179)	$	193,397
Treasury stock:
Beginning balances	$	—	$	(370)
Repurchase of common stock		(18,332)		(916)
Ending balances	$	(18,332)	$	(1,286)
Accumulated other comprehensive income (loss):
Beginning balances	$	(11,854)	$	(13,791)
Other comprehensive (loss) income		(14,357)		998
Ending balances	$	(26,211)	$	(12,793)
Total stockholders' equity, ending balances	$	676,323	$	363,492

The accompanying notes are an integral part of these consolidated financial statements.

7

US ECOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.     GENERAL

Basis of Presentation

The accompanying unaudited consolidated financial statements include the results of operations, financial position and cash flows of US Ecology, Inc. and its wholly-owned subsidiaries. All inter-company balances have been eliminated. Throughout these consolidated financial statements words such as “we,” “us,” “our,” “US Ecology” and “the Company” refer to US Ecology, Inc. and its subsidiaries.

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary to present fairly, in all material respects, the results of the Company for the periods presented. These consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted pursuant to the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the entire year ending December 31, 2020.

The Company’s consolidated balance sheet as of December 31, 2019 has been derived from the Company’s audited consolidated balance sheet as of that date.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our consolidated financial statements. As it relates to estimates and assumptions in amortization rates and environmental obligations, significant engineering, operations and accounting judgments are required. We review these estimates and assumptions no less than annually. In many circumstances, the ultimate outcome of these estimates and assumptions will not be known for decades into the future. Actual results could differ materially from these estimates and assumptions due to changes in applicable regulations, changes in future operational plans and inherent imprecision associated with estimating environmental impacts far into the future.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes” (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses” (Topic 326), which became effective for reporting periods beginning after December 15, 2019. The standard replaced the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The standard requires a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning

8

of the first reporting period in which the guidance is effective. The Company adopted the new credit loss standard effective January 1, 2020 and the impact of the adoption was not material to the Company's consolidated financial statements as credit losses are not expected to be significant based on historical collection trends, the financial condition of payment partners, and external market factors. The Company will continue to actively monitor the impact of the recent coronavirus (‘COVID-19”) pandemic on expected credit losses.

NOTE 2.     REVENUES

Our operations are managed in two reportable segments, Environmental Services and Field & Industrial Services, reflecting our internal reporting structure and nature of services offered. See Note 17 for additional information on our operating segments.

The following table presents our revenue disaggregated by our reportable segments and service lines:

	Three Months Ended March 31, 2020
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Total
Treatment & Disposal Revenue (1)	$	100,049	$	9,984	$	110,033
Services Revenue:
Transportation and Logistics (2)		26,696		6,154		32,850
Industrial Services (3)		—		28,478		28,478
Small Quantity Generation (4)		—		11,084		11,084
Total Waste Management (5)		—		8,482		8,482
Remediation (6)		—		10,441		10,441
Emergency Response (7)		—		24,922		24,922
Domestic Standby Services (8)		—		9,467		9,467
Other (9)		—		4,963		4,963
Revenue	$	126,745	$	113,975	$	240,720

	Three Months Ended March 31, 2019
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Total
Treatment & Disposal Revenue (1)	$	77,713	$	2,796	$	80,509
Services Revenue:
Transportation and Logistics (2)		14,619		7,093		21,712
Industrial Services (3)		—		6,016		6,016
Small Quantity Generation (4)		—		8,189		8,189
Total Waste Management (5)		—		8,714		8,714
Remediation (6)		—		1,726		1,726
Emergency Response (7)		—		3,046		3,046
Other (9)		—		1,125		1,125
Revenue	$	92,332	$	38,705	$	131,037

(1) We categorize our treatment and disposal revenue as either “Base Business” or “Event Business” based on the underlying nature of the revenue source. We define Event Business as non-recurring projects that are expected to equal or exceed 1,000 tons, with Base Business defined as all other business not meeting the definition of Event Business. For the three months ended March 31, 2020 and 2019, 25% and 15%, respectively, of our treatment and disposal revenue was derived from Event Business projects. Base Business revenue accounted for 75% and 85% of our treatment and disposal revenue for the three months ended March 31, 2020 and 2019, respectively.

(2) Includes collection and transportation of non-hazardous and hazardous waste.

(3) Includes industrial cleaning and maintenance for refineries, chemical plants, steel and automotive plants, marine terminals and refinery services such as tank cleaning and temporary storage.

9

(4) Includes retail services, laboratory packing, less-than-truck-load service and household hazardous waste collection. Contracts for Small Quantity Generation may extend beyond one year and a portion of the transaction price can be fixed.

(5) Through our total waste management (“TWM”) program, customers outsource the management of their waste compliance program to us, allowing us to organize and coordinate their waste management disposal activities and environmental compliance. TWM contracts may extend beyond one year and a portion of the transaction price can be fixed.

(6) Includes site assessment, onsite treatment, project management and remedial action planning and execution. Contracts for Remediation may extend beyond one year and a portion of the transaction price can be fixed.

(7) Includes spill response, waste analysis and treatment and disposal planning.

(8) We provide government-mandated, commercial standby oil spill compliance solutions to companies that store, transport, produce or handle petroleum and certain nonpetroleum oils on or near U.S. waters. Our standby services customers pay annual retainer fees under long-term or evergreen contracts for access to our regulatory certifications, specialized assets and highly trained personnel. When a customer with a retainer contract experiences a spill incident, we coordinate and manage the spill response, which results in incremental revenue for the services provided, in addition to the retainer fees.

(9) Includes equipment rental and other miscellaneous services.

We provide services primarily in the United States, Canada and the Europe, Middle East, and Africa (“EMEA”) region. The following table presents our revenue disaggregated by our reportable segments and geographic location where the underlying services were performed:

	Three Months Ended March 31, 2020						Three Months Ended March 31, 2019
			Field &						Field &
	Environmental		Industrial				Environmental		Industrial
$s in thousands	Services		Services		Total		Services		Services		Total
United States	$	107,928	$	105,546	$	213,474	$	77,359	$	38,705	$	116,064
Canada		18,817		1,077		19,894		14,973		—		14,973
EMEA		—		5,239		5,239		—		—		—
Other (1)		—		2,113		2,113		—		—		—
Total revenue	$	126,745	$	113,975	$	240,720	$	92,332	$	38,705	$	131,037

(1) Includes Mexico, Asia Pacific, and Latin America and Caribbean geographical regions.

Deferred Revenue

We record deferred revenue when cash payments are received, or advance billings are charged, prior to performance of services, such as waste that has been received but not yet treated or disposed, and is recognized when these services are performed. During the three months ended March 31, 2020 and 2019, we recognized $8.4 million and $7.5 million of revenue that was included in the deferred revenue balance at the beginning of each year, respectively.

Receivables

Our receivables include invoiced and unbilled amounts where the Company has an unconditional right to payment.

Principal versus Agent Considerations

The Company commonly contracts with third-parties to perform certain waste-related services that we have promised in our customer contracts. We consider ourselves the principal in these arrangements as we direct the timing, nature and pricing of the services ultimately provided by the third-party to the customer.

10

Costs to obtain a contract

The Company pays sales commissions to employees, which qualify as costs to obtain a contract. Sales commissions are expensed as incurred as the commissions are earned by the employee and paid by the Company over time as the related revenue is recognized. Other commissions and incremental costs to obtain a contract are not material.

Practical Expedients and Optional Exemptions

Our payment terms may vary based on type of service or customer; however, we do not adjust the promised amount of consideration in our contracts for the time value of money as payment terms extended to our customers do not exceed one year and are not considered a significant financing component in our contracts.

We do not disclose the value of unsatisfied performance obligations as contracts with an original expected length of more than one year and contracts for which we do not recognize revenue at the amount to which we have the right to invoice for services performed is insignificant and the aggregate amount of fixed consideration allocated to unsatisfied performance obligations is not material.

NOTE 3.     BUSINESS COMBINATIONS

Acquisition of Impact Environmental Services, Inc.

On January 28, 2020, we acquired Impact Environmental Services, Inc., an industrial cleaning and environmental services company based in Romulus, Michigan for $3.3 million. The acquired operations are reported as part of our Field & Industrial Services segment, however, revenues, net income, earnings per share and total assets are not material to our consolidated financial position or results of operations.

We allocated the purchase price to the assets acquired and liabilities assumed based on estimates of the fair value at the date of the acquisition, resulting in $300,000 allocated to goodwill and $900,000 allocated to amortizing intangible assets (primarily customer relationships) to be amortized over a weighted average life of approximately 12 years. All of the goodwill recognized was assigned to our Field & Industrial Services segment and is expected to be deductible for income tax purposes over a 15-year amortization period.

NRC Group Holdings Corp.

On November 1, 2019, the Company completed its acquisition (the “NRC Merger”) of NRC Group Holdings Corp. (“NRC”), a provider of comprehensive environmental, compliance and waste management services to the marine and rail transportation, general industrial and energy industries. The addition of NRC’s substantial service network strengthened and expanded US Ecology’s suite of environmental services, including new energy waste disposal and service capabilities, and provided expanded opportunities to establish US Ecology as a leader in standby and emergency response services.

The total merger consideration was $1,024.8 million, comprised of the following:

	November 1,
$s in thousands	2019
Fair value of US Ecology common stock issued (1)	$	581,101
Fair value of replacement warrants issued (2)		44,858
Fair value of replacement restricted stock units issued (3)		141
Fair value of replacement stock options (4)		360
Repayment of NRC’s term loan and revolving credit facility		398,373
Total merger consideration	$	1,024,833

(1) The fair value of US Ecology common stock issued was calculated based on 9,337,949 shares of US Ecology common stock multiplied by the closing price of US Ecology common stock of $62.23 per share on October 31, 2019, the day

11

immediately preceding the closing of the NRC Merger.

(2) The fair value of replacement warrants issued was calculated based on 3,772,753 replacement warrants multiplied by the fair value per warrant of $11.89. The fair value per warrant was based on the closing price of the replaced NRC warrants (NYSE: NRCG.WS) of $2.33 on October 31, 2019, the day immediately preceding the closing of the NRC Merger, divided by the exchange ratio of 0.196 pursuant to the Merger Agreement.

(3) The fair value of replacement restricted stock units issued was calculated based on 118,239 replacement restricted stock units multiplied by the closing price of US Ecology common stock of $62.23 per share on October 31, 2019, the day immediately preceding the closing of the NRC Merger, further multiplied by the ratio of the precombination service period to the remaining vesting period, or approximately 1.9%.

(4) The fair value of replacement stock options issued was calculated based on 29,400 replacement stock options multiplied by the fair value per option of $12.26. The fair value per option was calculated using the Black-Scholes option pricing model, with the following weighted-average assumptions: strike price of $52.30 per option, dividend yield of 1.2%; expected volatility of 28.9%; average risk-free interest rate of 1.5%; and an expected term of 1 year. The replacement stock options became fully vested at the merger date therefore the entire fair value is considered merger consideration.

The payment of transaction fees and expenses and repayment of $398.4 million of NRC’s debt were funded using proceeds from a new $450.0 million seven-year term loan. See Note 11 for more information.

We have recognized the assets and liabilities of NRC based on our preliminary estimates of their acquisition date fair values. The purchase price allocations are preliminary and subject to change. We continue to gather information relevant to our determination of the fair value of acquired assets and liabilities primarily related to, but not limited to, property and equipment, identifiable intangible assets and deferred income taxes. Any adjustments to the purchase price allocations are made as soon as practicable but no later than one year from the merger date. The following table summarizes the merger consideration and the preliminary fair value estimates of assets acquired and liabilities assumed, recognized at the merger date, with purchase price allocation adjustments since the preliminary purchase price allocation as previously disclosed as of December 31, 2019:

	December 31,				March 31,
$s in thousands	2019		Adjustments		2020
Current assets	$	131,653	$	—	$	131,653
Property and equipment		197,045		—		197,045
Identifiable intangible assets		303,600		—		303,600
Other assets		41,687		—		41,687
Current liabilities		(83,460)		(1,215)		(84,675)
Deferred income tax liabilities		(56,596)		194		(56,402)
Other liabilities		(57,581)		—		(57,581)
Total identifiable net assets		476,348		(1,021)		475,327
Goodwill		548,485		1,021		549,506
Total purchase price	$	1,024,833	$	—	$	1,024,833

Purchase price allocation adjustments related primarily to the receipt of additional information regarding the fair values of accrued liabilities, deferred income taxes and residual goodwill.

Goodwill of $549.5 million arising from the acquisition is primarily attributable to the assembled workforce of NRC and expected synergies from combining operations. $309.4 million of the goodwill recognized was allocated to our Environmental Services segment and $240.1 million of the goodwill recognized was allocated to Field & Industrial Services segment. We expect $33.3 million of the acquired goodwill to be deductible for income tax purposes.

During the first quarter of 2020, management determined that the projected future cash flows of certain reporting units identified as part of the NRC Merger indicated that the fair value of the reporting units may be below their respective

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carrying amounts. Accordingly, we performed an interim assessment of each reporting unit’s goodwill as of March 31, 2020. Based on the results of this assessment, we recognized goodwill impairment charges of $283.6 million related to our Environmental Services segment and $16.7 million related to our Field & Industrial Services segment in the first quarter of 2020. Refer to Note 10 for additional information.

The preliminary fair value of identifiable intangible assets related to the acquisition of NRC by major intangible asset class and corresponding weighted average amortization period are as follows:

			Average
			Amortization
$s in thousands	Fair Value		Period (Years)
Amortizing intangible assets:
Customer relationships - noncontractual	$	193,700	14
Customer relationships - contractual		34,400	7
Permits and licenses		8,700	16
Tradenames		6,100	2
Non-compete agreements		3,300	2
Total identified amortizing intangible assets		246,200
Non-amortizing intangible assets:
Permits and licenses		57,400	n/a
Total identified intangible assets	$	303,600

The following unaudited pro forma financial information presents the combined results of operations as if NRC had been combined with US Ecology as of January 1, 2019. The pro forma financial information includes the accounting effects of the business combination, including the amortization of intangible assets, depreciation of property, plant and equipment, and interest expense. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented, nor should it be taken as indication of our future consolidated results of operations.

	(unaudited)
	Three Months Ended
$s in thousands	March 31, 2019
Pro forma combined:
Revenue		231,195
Net loss		(2,857)

The amounts of revenue and operating loss from NRC included in the Company’s consolidated statements of operations for the three months ended March 31, 2020 were $86.6 million and $304.0 million, respectively. NRC Merger-related business development and integration expenses of $2.9 million are included in Selling, general and administrative expenses in the Company’s consolidated statements of operations for the three months ended March 31, 2020.

W.I.S.E. Environmental Solutions Inc.

On August 1, 2019, we acquired 100% of the outstanding shares of W.I.S.E. Environmental Solutions Inc. (“US Ecology Sarnia”), an equipment rental and waste services company based in Sarnia, Ontario, Canada for 23.5 million Canadian dollars, which translated to $17.9 million at the time of transaction and was funded with borrowings under the Credit Agreement. US Ecology Sarnia is reported as part of our Field & Industrial Services segment. The Company assessed the revenues, net income, earnings per share and total assets of US Ecology Sarnia and concluded they are not material to our consolidated financial position or results of operations. As such, pro forma financial information has not been provided.

We allocated the purchase price to the assets acquired and liabilities assumed based on estimates of the fair value at the date of the acquisition, resulting in $7.7 million allocated to goodwill and $6.2 million allocated to intangible assets (primarily customer relationships) to be amortized over a weighted average life of approximately 14 years. The purchase price allocation is preliminary, as estimates and assumptions are subject to change as more information becomes available.

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Goodwill of $7.7 million arising from the acquisition is attributable to the assembled workforce and the future economic benefits of synergies with our other regional facilities and expansion into new markets. All of the goodwill recognized was assigned to our Field & Industrial Services segment and is not expected to be deductible for income tax purposes.

NOTE 4.     ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in accumulated other comprehensive income (loss) (“AOCI”) consisted of the following:

	Foreign		Unrealized Gain
	Currency		(Loss) on Interest
$s in thousands	Translation		Rate Hedge		Total
Balance at December 31, 2019	$	(10,925)	$	(929)	$	(11,854)
Other comprehensive loss before reclassifications, net of tax		(8,259)		(6,310)		(14,569)
Amounts reclassified out of AOCI, net of tax (1)		—		212		212
Other comprehensive loss, net		(8,259)		(6,098)		(14,357)
Balance at March 31, 2020	$	(19,184)	$	(7,027)	$	(26,211)

(1) Before-tax reclassifications of $268,000 ($212,000 after-tax) for the three months ended March 31, 2020, were included in Interest expense in the Company’s consolidated statements of operations. Amounts relate to the Company’s interest rate swap which is designated as a cash flow hedge. Changes in fair value of the swap recognized in AOCI are reclassified to interest expense when hedged interest payments on the underlying long-term debt are made or, for terminated swap agreements, amortized to interest expense over the period from termination to original maturity. Amounts in AOCI expected to be reclassified to interest expense over the next 12 months total approximately $516,000 ($407,000 after-tax).

	Foreign		Unrealized Gain
	Currency		(Loss) on Interest
$s in thousands	Translation		Rate Hedge		Total
Balance at December 31, 2018	$	(14,697)	$	906	$	(13,791)
Other comprehensive income (loss) before reclassifications, net of tax		1,689		(581)		1,108
Amounts reclassified out of AOCI, net of tax (2)		—		(110)		(110)
Other comprehensive income (loss), net		1,689		(691)		998
Balance at March 31, 2019	$	(13,008)	$	215	$	(12,793)

(2) Before-tax reclassifications of $139,000 ($110,000 after-tax) for the three months ended March 31, 2019, were included as a reduction of Interest expense in the Company’s consolidated statements of operations. Amounts relate to the Company’s interest rate swap which is designated as a cash flow hedge. Changes in fair value of the swap recognized in AOCI are reclassified to interest expense when hedged interest payments on the underlying long-term debt are made.

NOTE 5.     CONCENTRATIONS AND CREDIT RISK

Major Customers

No customer accounted for more than 10% of total revenue for the three months ended March 31, 2020 or 2019, respectively. No customer accounted for more than 10% of total trade receivables as of March 31, 2020 or December 31, 2019.

Credit Risk Concentration

We maintain most of our cash and cash equivalents with nationally recognized financial institutions. Substantially all balances are uninsured and are not used as collateral for other obligations. Concentrations of credit risk on accounts receivable are believed to be limited due to the number, diversification and character of the obligors and our credit

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evaluation process. Credit risk associated with a portion of the Company’s trade receivables is reduced by our ability to submit claims to the Oil Spill Liability Trust Fund (“OSLTF”) for reimbursement of unpaid customer receivables related to services regulated under the provisions of the Oil Pollution Act of 1990 (“OPA 90”). As of March 31, 2020, the Company did not have any trade receivables that are eligible for submission to the OSLTF for reimbursement.

NOTE 6.     RECEIVABLES

Receivables consisted of the following:

	March 31,		December 31,
$s in thousands	2020		2019
Trade	$	187,619	$	196,593
Unbilled revenue		49,854		54,727
Other		5,959		7,000
Total receivables		243,432		258,320
Allowance for doubtful accounts		(3,054)		(3,010)
Receivables, net	$	240,378	$	255,310

NOTE 7.     FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair value measurements, as follows:

● Level 1 - Quoted prices in active markets for identical assets or liabilities;

● Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable;

● Level 3 - Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions that market participants would use to value the asset or liability.