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 September 30, 2017
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Treatment & Disposal Revenue	$	77,071	$	2,595	$	—	$	79,666
Services Revenue:
Transportation and Logistics (1)		20,590		4,955		—		25,545
Industrial Cleaning (2)		—		4,328		—		4,328
Technical Services (3)		—		20,314		—		20,314
Remediation (4)		—		2,672		—		2,672
Other (5)		—		1,529		—		1,529
Total Revenue	$	97,661	$	36,393	$	—	$	134,054
Depreciation, amortization and accretion	$	9,342	$	1,316	$	118	$	10,776
Capital expenditures	$	7,594	$	561	$	647	$	8,802
Total assets	$	619,156	$	124,053	$	59,442	$	802,651


	Three Months Ended September 30, 2016
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Treatment & Disposal Revenue	$	70,719	$	3,737	$	—	$	74,456
Services Revenue:
Transportation and Logistics (1)		17,066		4,073		—		21,139
Industrial Cleaning (2)		—		5,025		—		5,025
Technical Services (3)		—		20,364		—		20,364
Remediation (4)		—		3,326		—		3,326
Other (5)		—		514		—		514
Total Revenue	$	87,785	$	37,039	$	—	$	124,824
Depreciation, amortization and accretion	$	8,665	$	1,356	$	115	$	10,136
Capital expenditures	$	1,960	$	450	$	546	$	2,956
Total assets	$	589,841	$	124,351	$	59,118	$	773,310


	Nine Months Ended September 30, 2017
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Treatment & Disposal Revenue	$	217,012	$	8,133	$	—	$	225,145
Services Revenue:
Transportation and Logistics (1)		51,543		15,218		—		66,761
Industrial Cleaning (2)		—		13,252		—		13,252
Technical Services (3)		—		55,778		—		55,778
Remediation (4)		—		6,495		—		6,495
Other (5)		—		2,914		—		2,914
Total Revenue	$	268,555	$	101,790	$	—	$	370,345
Depreciation, amortization and accretion	$	27,238	$	4,225	$	375	$	31,838
Capital expenditures	$	21,204	$	2,900	$	2,250	$	26,354
Total assets	$	619,156	$	124,053	$	59,442	$	802,651


	Nine Months Ended September 30, 2016
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Corporate		Total
Treatment & Disposal Revenue	$	204,352	$	9,386	$	—	$	213,738
Services Revenue:
Transportation and Logistics (1)		47,754		14,416		—		62,170
Industrial Cleaning (2)		—		16,497		—		16,497
Technical Services (3)		—		57,136		—		57,136
Remediation (4)		—		8,816		—		8,816
Other (5)		—		2,136		—		2,136
Total Revenue	$	252,106	$	108,387	$	—	$	360,493
Depreciation, amortization and accretion	$	25,117	$	4,070	$	362	$	29,549
Capital expenditures	$	18,309	$	1,883	$	2,358	$	22,550
Total assets	$	589,841	$	124,351	$	59,118	$	773,310

(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 September 30,				Nine Months Ended September 30,
$s in thousands	2017		2016		2017		2016
Net income	$	8,365	$	10,114	$	18,599	$	26,569
Income tax expense		4,668		6,278		10,465		16,828
Interest expense		2,783		4,288		15,387		13,150
Interest income		(18)		(8)		(49)		(90)
Foreign currency (gain) loss		(275)		224		(521)		(192)
Other (income) expense		(234)		19		(537)		(2,480)
Depreciation and amortization of plant and equipment		7,386		6,454		21,007		18,561
Amortization of intangibles		2,300		2,651		7,586		7,907
Stock-based compensation		995		605		2,954		2,182
Accretion and non-cash adjustment of closure & post-closure liabilities		1,090		1,031		3,245		3,081
Adjusted EBITDA	$	27,060	$	31,656	$	78,136	$	85,516

Adjusted EBITDA, by operating segment, is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
$s in thousands	2017		2016		2017		2016
Adjusted EBITDA:
Environmental Services	$	35,524	$	37,747	$	102,022	$	104,352
Field & Industrial Services		3,646		4,466		9,829		13,267
Corporate		(12,110)		(10,557)		(33,715)		(32,103)
Total	$	27,060	$	31,656	$	78,136	$	85,516

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 September 30,				Nine Months Ended September 30,
$s in thousands	2017		2016		2017		2016
United States	$	112,821	$	111,005	$	319,776	$	325,379
Canada		21,233		13,819		50,569		35,114
Total revenue	$	134,054	$	124,824	$	370,345	$	360,493

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


	September 30,		December 31,
$s in thousands	2017		2016
United States	$	400,269	$	405,767
Canada		59,341		54,826
Total long-lived assets	$	459,610	$	460,593