NOTE 2. REVENUES

Adoption of ASC Topic 606, “Revenue from Contracts with Customers”

As of January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Revenue Recognition (Topic 605).

Adoption of the guidance did not materially affect the timing or amount of revenue recognized, and no cumulative effect adjustment was recognized as a result of initially applying Topic 606.

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

We recognize revenue from three primary sources: 1) waste treatment, recycling and disposal services, 2) field and industrial waste management services, and 3) waste transportation services.

Our waste treatment and disposal customers are legally obligated to properly treat and dispose of their waste in accordance with local, state, and federal laws and regulations. As our customers do not possess the resources to properly treat and dispose of their waste independently, they contract with the Company to perform the services. Waste treatment, recycling, and disposal revenue results primarily from fixed fees charged to customers for treatment and/or disposal or recycling of specified wastes. Waste treatment, recycling, and disposal revenue is generally charged on a per-ton or per-yard basis based on contracted prices and is recognized over time as the services are performed. Our treatment and disposal services are generally performed as the waste is received and considered complete upon final disposal.

Field and industrial waste management services revenue results primarily from specialty onsite services such as high-pressure cleaning, tank cleaning, decontamination, remediation, transportation, spill cleanup and emergency response at refineries, chemical plants, steel and automotive plants, and other government, commercial and industrial facilities. We also provide hazardous waste packaging and collection services and total waste management solutions at customer sites and through our 10-day transfer facilities. These services are provided based on purchase orders or agreements with the customer and include prices based upon daily, hourly or job rates for equipment, materials and personnel. Generally, the pricing in these types of contracts is fixed, but the quantity of services to be provided during the contract term is variable and revenues are recognized over the term of the agreements or as services are performed. As we have a right to consideration from our customers in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date, we have applied the practical expedient to recognize revenue in the amount to which we have the right to invoice. Revenue is recognized on contracts with retainage when services have been performed and it is probable that a significant reversal in the amount of cumulative revenue recognized on the contracts will not occur.

Transportation and logistics revenue results from delivering customer waste to a disposal facility for treatment and/or disposal or recycling. Transportation services are generally not provided on a stand-alone basis and instead are bundled with other Company services. However, in some instances we provide transportation and logistics services for shipment of waste from cleanup sites to disposal facilities operated by other companies. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customer or using expected cost plus margin. Transportation revenue is recognized over time as the waste is transported.

Taxes and fees collected from customers concurrent with revenue-producing transactions to be remitted to governmental authorities are excluded from revenue.

Our operations are managed in two reportable segments, Environmental Services and Field & Industrial Services, reflecting our internal reporting structure and nature of services offered. The operations not managed through our two reportable segments are recorded as Corporate. See Note 15 for additional information.

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


	Three Months Ended March 31, 2018
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Total
Treatment & Disposal Revenue (1)	$	72,301	$	2,737	$	75,038
Services Revenue:
Transportation and Logistics (2)		14,170		5,697		19,867
Industrial Cleaning (3)		—		3,505		3,505
Technical Services (4)		—		20,405		20,405
Remediation (5)		—		353		353
Other (6)		—		891		891
Revenue	$	86,471	$	33,588	$	120,059


	Three Months Ended March 31, 2017
			Field &
	Environmental		Industrial
$s in thousands	Services		Services		Total
Treatment & Disposal Revenue (1)	$	68,703	$	2,637	$	71,340
Services Revenue:
Transportation and Logistics (2)		12,600		5,320		17,920
Industrial Cleaning (3)		—		4,219		4,219
Technical Services (4)		—		15,662		15,662
Remediation (5)		—		606		606
Other (6)		—		487		487
Revenue	$	81,303	$	28,931	$	110,234

(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, 2018 and 2017, approximately 17% and 16%, respectively, of our treatment and disposal revenue was derived from Event Business projects. Base Business revenue was approximately 83% and 84% of our treatment and disposal revenue for the three months ended March 31, 2018 and 2017, respectively.

(2)

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

(3)

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.

(4)

Includes such services as total waste management programs, retail services, laboratory packing, less-than-truck-load service and household hazardous waste collection. Contracts for Technical Services may extend beyond one year and a portion of the transactions price can be fixed.

(5)

Includes such services as 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.

(6)

Includes such services as emergency response and marine.

We provide services in the United States and Canada. 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, 2018						Three Months Ended March 31, 2017
			Field &						Field &
	Environmental		Industrial				Environmental		Industrial
$s in thousands	Services		Services		Total		Services		Services		Total
United States	$	74,986	$	33,588	$	108,574	$	67,261	$	28,931	$	96,192
Canada		11,485		—		11,485		14,042		—		14,042
Total revenue	$	86,471	$	33,588	$	120,059	$	81,303	$	28,931	$	110,234

Deferred Revenue

We record deferred revenues when cash payments are received, or advance billings are charged, prior to performance of services. Deferred revenues include waste that has been received but not yet treated or disposed, which are recognized when services are performed. During the three months ended March 31, 2018, we recognized $6.3 million in revenues that were included in the deferred revenue balance at the beginning of the period.

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.

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.

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.