NOTE 14. 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 and non-hazardous waste at Company-owned landfill, wastewater 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 services such as high-pressure cleaning, tank cleaning, decontamination, remediation, transportation, spill cleanup and 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, 2017
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Treatment & Disposal Revenue	$	71,238	$	2,901	$	—	$	74,139
Services Revenue:
Transportation and Logistics (1)		18,353		4,943		—		23,296
Industrial Cleaning (2)		—		4,705		—		4,705
Technical Services (3)		—		19,802		—		19,802
Remediation (4)		—		3,217		—		3,217
Other (5)		—		898		—		898
Total Revenue	$	89,591	$	36,466	$	—	$	126,057
Depreciation, amortization and accretion	$	9,105	$	1,451	$	128	$	10,684
Capital expenditures	$	7,771	$	1,839	$	723	$	10,333
Total assets	$	608,207	$	124,466	$	56,773	$	789,446


	Three Months Ended June 30, 2016
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Treatment & Disposal Revenue	$	66,908	$	2,897	$	—	$	69,805
Services Revenue:
Transportation and Logistics (1)		15,889		4,955		—		20,844
Industrial Cleaning (2)		—		7,201		—		7,201
Technical Services (3)		—		19,167		—		19,167
Remediation (4)		—		4,653		—		4,653
Other (5)		—		681		—		681
Total Revenue	$	82,797	$	39,554	$	—	$	122,351
Depreciation, amortization and accretion	$	8,371	$	1,377	$	125	$	9,873
Capital expenditures	$	5,575	$	1,021	$	673	$	7,269
Total assets	$	591,511	$	127,836	$	58,905	$	778,252


	Six Months Ended June 30, 2017
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Treatment & Disposal Revenue	$	139,941	$	5,538	$	—	$	145,479
Services Revenue:
Transportation and Logistics (1)		30,953		10,263		—		41,216
Industrial Cleaning (2)		—		8,924		—		8,924
Technical Services (3)		—		35,464		—		35,464
Remediation (4)		—		3,823		—		3,823
Other (5)		—		1,385		—		1,385
Total Revenue	$	170,894	$	65,397	$	—	$	236,291
Depreciation, amortization and accretion	$	17,895	$	2,909	$	258	$	21,062
Capital expenditures	$	13,610	$	2,339	$	1,603	$	17,552
Total assets	$	608,207	$	124,466	$	56,773	$	789,446


	Six Months Ended June 30, 2016
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Treatment & Disposal Revenue	$	133,633	$	5,649	$	—	$	139,282
Services Revenue:
Transportation and Logistics (1)		30,688		10,343		—		41,031
Industrial Cleaning (2)		—		11,472		—		11,472
Technical Services (3)		—		36,772		—		36,772
Remediation (4)		—		5,490		—		5,490
Other (5)		—		1,622		—		1,622
Total Revenue	$	164,321	$	71,348	$	—	$	235,669
Depreciation, amortization and accretion	$	16,451	$	2,713	$	247	$	19,411
Capital expenditures	$	11,414	$	1,521	$	1,553	$	14,488
Total assets	$	591,511	$	127,836	$	58,905	$	778,252

(1)

Includes such services as collection, transportation and disposal of non-hazardous and hazardous waste.

(2)

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

(3)

Includes such services as Total Waste Management ("TWM") programs, retail services, laboratory packing, less-than-truck-load (“LTL”) service and Household Hazardous Waste ("HHW") collection.

(4)

Includes such services as site assessment, onsite treatment, project management and remedial action planning and execution.

(5)

Includes such services as emergency response and marine.

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

The primary financial measure used by management to assess segment performance is Adjusted EBITDA. Adjusted EBITDA is defined as net income before interest expense, interest income, income tax expense, depreciation, amortization, stock based compensation, accretion of closure and post-closure liabilities, foreign currency gain/loss 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	2017		2016		2017		2016
Net income	$	5,049	$	8,938	$	10,234	$	16,455
Income tax expense		2,718		5,866		5,797		10,550
Interest expense		8,474		4,303		12,604		8,862
Interest income		(21)		(33)		(31)		(82)
Foreign currency (gain) loss		(158)		343		(246)		(416)
Other income		(166)		(2,330)		(303)		(2,499)
Depreciation and amortization of plant and equipment		6,987		6,202		13,621		12,106
Amortization of intangibles		2,615		2,646		5,286		5,256
Stock-based compensation		1,043		783		1,959		1,578
Accretion and non-cash adjustment of closure & post-closure liabilities		1,082		1,025		2,155		2,049
Adjusted EBITDA	$	27,623	$	27,743	$	51,076	$	53,859

Adjusted EBITDA, by operating segment, is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
$s in thousands	2017		2016		2017		2016
Adjusted EBITDA:
Environmental Services	$	34,642	$	33,551	$	66,498	$	66,604
Field & Industrial Services		4,119		5,123		6,183		8,801
Corporate		(11,138)		(10,931)		(21,605)		(21,546)
Total	$	27,623	$	27,743	$	51,076	$	53,859

Revenue, Property and Equipment and Intangible 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 were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
$s in thousands	2017		2016		2017		2016
United States	$	110,763	$	111,183	$	206,955	$	214,374
Canada		15,294		11,168		29,336		21,295
Total revenue	$	126,057	$	122,351	$	236,291	$	235,669

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	2017		2016
United States	$	403,448	$	405,767
Canada		56,636		54,826
Total long-lived assets	$	460,084	$	460,593