SEGMENT REPORTING

12 Months Ended

Dec. 31, 2014

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 18. SEGMENT REPORTING

Financial Information by Segment

Subsequent to our acquisition of EQ on June 17, 2014, we made changes to the manner in which we manage our business, make operating decisions and assess our performance. Under our new structure our operations are managed in two reportable segments reflecting our internal reporting structure and nature of services offered as follows:

Environmental Services—This segment includes all of the legacy US Ecology operations and the legacy EQ treatment and disposal facilities. It provides a broad range of hazardous material management services including transportation, recycling, treatment and disposal of hazardous and non-hazardous waste at Company-owned landfill, wastewater and other treatment facilities.

Field & Industrial Services—This segment includes all of the field and industrial service business of the legacy EQ operation. It 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 services such as high-pressure and chemical cleaning, centrifuge and materials processing, tank cleaning, decontamination, remediation, transportation, spill cleanup and emergency response and other services to commercial and industrial facilities and to government entities.

Prior to the acquisition of EQ, our operations were managed in two reportable segments: Operating Disposal Facilities and Non-Operating Disposal Facilities. The Operating Disposal Facility segment represented disposal facilities accepting hazardous and radioactive waste while the Non-Operating Disposal Facility segment represented facilities not accepting hazardous and/or radioactive waste or formerly proposed new facilities. All operations of both the former Operating Disposal Facilities and the Non-Operating Disposal Facilities segment are now included in the Environmental Services segment. None of the Company's operations prior to the acquisition of EQ have been assigned to the Field & Industrial Services segment.

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 for the years ended December 31, 2014, 2013 and 2012 is as follows:

	2014
$s in thousands	Environmental Services			Field & Industrial Services			Corporate		Total
Revenue by Service Offering:
Treatment & Disposal	$	256,580		$	—		$	—	$	256,580
Services		63,987			137,279			—		201,266
Intersegment		(8,789	)		(1,646	)		—		(10,435	)
Total Revenue	$	311,778		$	135,633		$	—	$	447,411
Depreciation , amortization and accretion	$	28,211		$	6,762		$	303	$	35,276
Capital expenditures	$	20,128		$	7,398		$	908	$	28,434
Total assets	$	622,385		$	215,517		$	81,953	$	919,855

	2013
$s in thousands	Environmental Services		Field & Industrial Services		Corporate		Total
Revenue by Service Offering:
Treatment & Disposal	$	165,109	$	—	$	—	$	165,109
Services		36,017		—		—		36,017
Intersegment		—		—		—		—
Total Revenue	$	201,126	$	—	$	—	$	201,126
Depreciation , amortization and accretion	$	17,478	$	—	$	39	$	17,517
Capital expenditures	$	20,989	$	—	$	384	$	21,373
Total assets	$	222,128	$	—	$	78,428	$	300,556

	2012
$s in thousands	Environmental Services		Field & Industrial Services		Corporate		Total
Revenue by Service Offering:
Treatment & Disposal	$	145,707	$	—	$	—	$	145,707
Services		23,431		—		—		23,431
Intersegment		—		—		—		—
Total Revenue	$	169,138	$	—	$	—	$	169,138
Depreciation , amortization and accretion	$	16,710	$	—	$	42	$	16,752
Capital expenditures	$	15,724	$	—	$	42	$	15,766
Total assets	$	211,077	$	—	$	7,617	$	218,694

The primary financial measure used by management to assess segment performance is Adjusted EBITDA. Adjusted EBITDA is defined as net income before net interest expense, income tax expense, depreciation, amortization, stock based compensation, accretion of closure and post-closure liabilities, foreign currency gain/loss and other income/expense, which are not considered part of usual business operations. Adjusted EBITDA is a complement to results provided in accordance with accounting principles generally accepted in the United States ("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 Adjusted EBITDA to Net Income for the years ended December 31, 2014, 2013 and 2012 is as follows:

$s in thousands	2014			2013			2012
Adjusted EBITDA:
Environmental Services	$	115,214		$	84,547		$	71,556
Field & Industrial Services		16,572			—			—
Corporate		(22,810	)		(13,361	)		(13,204	)
Total		108,976			71,186			58,352
Reconciliation to Net income:
Income tax expense		(22,814	)		(17,996	)		(16,059	)
Interest expense		(10,677	)		(828	)		(878	)
Interest income		107			19			17
Foreign currency gain (loss)		(1,499	)		(2,327	)		1,213
Other income		669			352			728
Depreciation and amortization of plant and equipment		(24,413	)		(14,815	)		(13,916	)
Amortization of intangibles		(8,207	)		(1,461	)		(1,469	)
Stock-based compensation		(1,250	)		(865	)		(846	)
Accretion and non-cash adjustment of closure & post-closure liabilities		(2,656	)		(1,114	)		(1,483	)
Net income	$	38,236		$	32,151		$	25,659

Revenue and Long-Lived Assets Outside of the United States

We provide services in the United States and Canada. Revenues by geographic location where the underlying services were performed for the years ended December 31, 2014, 2013 and 2012 were as follows:

$s in thousands	2014		2013		2012
United States	$	388,084	$	147,128	$	130,889
Canada		59,327		53,998		38,249
	$	447,411	$	201,126	$	169,138

Long-lived assets, comprised of property and equipment and intangible assets net of accumulated depreciation and amortization, by geographic location as of December 31, 2014 and 2013 are as follows:

$s in thousands	2014		2013
United States	$	446,412	$	86,175
Canada		59,939		65,516
	$	506,351	$	151,691