US Ecology, Inc.

US ECOLOGY, INC.

FORM 10-K
(Annual Report)

Filed 02/27/17 for the Period Ending 12/31/16

Address

Telephone
CIK
Symbol
SIC Code
Industry
Sector
Fiscal Year

251 E. FRONT ST.,
SUITE 400
BOISE, ID 83702
2083318400
0000742126
ECOL
4953 - Refuse Systems
Environmental Services & Equipment
Industrials
12/31

http://www.edgar-online.com
© Copyright 2017, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

  
  
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these
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to
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review
the
document
TABLE
OF
CONTENTS
ITEM
8.
FINANCIAL
STATEMENTS
AND
SUPPLEMENTARY
DATA
Table
of
ContentsUNITED
STATES
SECURITIES
AND
EXCHANGE
COMMISSION
Washington,
D.C.
20549FORM
10-KCommission
file
number:
0000-11688US
ECOLOGY,
INC.
(Exact
name
of
registrant
as
specified
in
its
charter)Delaware
(State
or
other
jurisdiction
of
incorporation
or
organization)
95-3889638
(I.R.S.
Employer
Identification
No.)251
E.
Front
St.,
Suite
400
Boise,
Idaho
(Address
of
principal
executiveoffices)
83702
(Zip
Code)Registrant's
telephone
number,
including
area
code:
(208)
331-8400Securities
registered
pursuant
to
Section
12(b)
of
the
Act:


Common
Stock,
$0.01
par
value




(Title
of
class)

Securities
registered
pursuant
to
Section
12(g)
of
the
Act:
NoneIndicate
by
check
mark
if
the
registrant
is
a
well-known
seasoned
issuer,
as
defined
in
Rule
405
of
the
Securities
Act.
Yes

ý




No

oIndicate
by
check
mark
if
the
registrant
is
not
required
to
file
reports
pursuant
to
Section
13
or
Section
15(d)
of
the
Act.
Yes

o





No

ýIndicate
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
thepreceding
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
thepast
90
days.
Yes

ý




No

oIndicate
by
check
mark
whether
the
registrant
has
submitted
electronically
and
posted
on
its
corporate
Web
site,
if
any,
every
Interactive
Data
File
required
to
besubmitted
and
posted
pursuant
to
Rule
405
of
Regulation
S-T
(§
232.405
of
this
chapter)
during
the
preceding
12
months
(or
for
such
shorter
period
that
theregistrant
was
required
to
submit
and
post
such
files).
Yes

ý





No

oIndicate
by
check
mark
if
disclosure
of
delinquent
filers
pursuant
to
Item
405
of
Regulation
S-K
(§229.405
of
this
chapter)
is
not
contained
herein,
and
will
not
beý
ANNUAL
REPORT
PURSUANT
TO
SECTION
13
or
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934For
the
fiscal
year
ended
December
31,
2016ORo
TRANSITION
REPORT
PURSUANT
TO
Section
13
or
15(d)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934For
the
transition
period
from













to













.
contained,
to
the
best
of
registrant's
knowledge,
in
definitive
proxy
or
information
statements
incorporated
by
reference
in
Part
III
of
this
Form
10-K
or
anyamendment
to
this
Form
10-K.

ýIndicate
by
check
mark
whether
the
registrant
is
a
large
accelerated
filer,
an
accelerated
filer,
a
non-accelerated
filer,
or
a
smaller
reporting
company.
See
thedefinitions
of
"large
accelerated
filer,"
"accelerated
filer,"
and
"smaller
reporting
company"
in
Rule
12b-2
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

o




No

ýThe
aggregate
market
value
of
the
registrant's
voting
stock
held
by
non-affiliates
on
June
30,
2016
was
approximately
$992.0
million
based
on
the
closing
price
of$45.95
per
share
as
reported
on
the
NASDAQ
Global
Market
System.At
February
17,
2017,
there
were
21,798,917
shares
of
the
registrant's
Common
Stock
outstanding.Documents
Incorporated
by
ReferenceListed
hereunder
are
the
documents,
any
portions
of
which
are
incorporated
by
reference
and
the
Parts
of
this
Form
10-K
into
which
such
portions
areincorporated:


Large
accelerated
filer

ý
Accelerated
filer

o
Non-accelerated
filer

o
(Do
not
check
if
a
smaller
reporting
company)
Smaller
reporting
company

o1.
The
registrant's
definitive
proxy
statement
for
use
in
connection
with
the
Annual
Meeting
of
Stockholders
to
be
held
onor
about
May
23,
2017
to
be
filed
within
120
days
after
the
registrant's
fiscal
year
ended
December
31,
2016,
portions
ofwhich
are
incorporated
by
reference
into
Part
III
of
this
Form
10-K.
Table
of
ContentsUS
ECOLOGY,
INC.
FORM
10-K
TABLE
OF
CONTENTS
2Item



Page
PART
I




Cautionary
Statement

3
1.
Business

4
1A.
Risk
Factors

19
1B.
Unresolved
Staff
Comments

28
2.
Properties

29
3.
Legal
Proceedings

31
4.
Mine
Safety
Disclosures

31
PART
II



5.
Market
for
Registrant's
Common
Equity,
Related
Stockholder
Matters
and
Issuer
Purchases
of
Equity
Securities

32
6.
Selected
Financial
Data

35
7.
Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations

35
7A.
Quantitative
and
Qualitative
Disclosures
About
Market
Risk

61
8.
Financial
Statements
and
Supplementary
Data

63
9.
Changes
in
and
Disagreements
With
Accountants
on
Accounting
and
Financial
Disclosure

108
9A.
Controls
and
Procedures

108
9B.
Other
Information

109
PART
III



10.
Directors,
Executive
Officers
and
Corporate
Governance

110
11.
Executive
Compensation

110
12.
Security
Ownership
of
Certain
Beneficial
Owners
and
Management
and
Related
Stockholder
Matters

110
13.
Certain
Relationships
and
Related
Transactions,
and
Director
Independence

111
14.
Principal
Accounting
Fees
and
Services

111
PART
IV



15.
Exhibits,
Financial
Statement
Schedules

111
16.
Form
10-K
Summary

111
SIGNATURES

112
Table
of
ContentsPART
I
Cautionary
Statement
for
Purposes
of
Safe
Harbor
Provisions
of
the
Private
Securities
Litigation
Reform
Act
of
1995This annual report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts,including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by,followed by or that include the words "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend" andsimilar expressions. These statements include, among others, statements regarding our financial and operating results, strategic objectives and means to achievethose objectives, the amount and timing of capital expenditures, repurchases of its stock under approved stock repurchase plans, the amount and timing of interestexpense, the likelihood of our success in expanding our business, financing plans, budgets, working capital needs and sources of liquidity.Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on management's beliefs and assumptions,which in turn are based on currently available information. Important assumptions include, among others, those regarding demand for Company services,expansion of service offerings geographically or through new or expanded service lines, the timing and cost of planned capital expenditures, competitiveconditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve known and unknown risks anduncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond ourability to control or predict. Such factors include the replacement of non-recurring event cleanup projects, a loss of a major customer, our ability to permit andcontract for timely construction of new or expanded disposal cells, our ability to renew our operating permits or lease agreements with regulatory bodies, loss ofkey personnel, compliance with and changes to applicable laws, rules, or regulations, access to insurance, surety bonds and other financial assurances, adeterioration in our labor relations or labor disputes, our ability to perform under required contracts, failure to realize anticipated benefits and operationalperformance from acquired operations, adverse economic or market conditions, government funding or competitive pressures, incidents or adverse weatherconditions that could limit or suspend specific operations, access to cost effective transportation services, fluctuations in foreign currency markets, lawsuits, ourwillingness or ability to repurchase stock or pay dividends, implementation of new technologies, limitations on our available cash flow as a result of ourindebtedness and our ability to effectively execute our acquisition strategy and integrate future acquisitions.Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission(the "SEC"), we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events orotherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-lookingstatements are reasonable, we cannot guarantee future results or performance. Before
you
invest
in
our
common
stock,
you
should
be
aware
that
the
occurrenceof
the
events
described
in
the
"Risk
Factors"
section
in
this
report
could
harm
our
business,
prospects,
operating
results,
and
financial
condition.Investors should also be aware that while we do, from time to time, communicate with securities analysts, it is against our policy to disclose to them any materialnon-public information or other confidential commercial information. Accordingly, stockholders should not assume that we agree with any statement or reportissued by any analyst irrespective of the content of the statement or report. Furthermore, we have a policy against issuing or confirming financial forecasts orprojections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not theresponsibility of US Ecology, Inc.3Table
of
ContentsITEM
1.



BUSINESS
GeneralThe
table
below
contains
definitions
that
are
used
throughout
this
Annual
Report
on
Form
10-K.US
Ecology,
Inc.
is
a
leading
North
American
provider
of
environmental
services
to
commercial
and
government
entities.
The
Company
addresses
the
complexwaste
management
needs
of
its
customers,
offering
treatment,
disposal
and
recycling
of
hazardous,
non-hazardous
and
radioactive
waste,
as
well
as
a
wide
range
ofcomplementary
field
and
industrial
services.
US
Ecology's
comprehensive
knowledge
of
the
waste
business,
its
collection
of
waste
management
facilities
and
focuson
safety,
environmental
compliance,
and
customer
service
enables
us
to
effectively
meet
the
needs
of
our
customers
and
to
build
long-lasting
relationships.
USEcology
and
its
predecessor
companies
have
been
in
business
for
more
than
60
years.
As
of
December
31,
2016,
we
employed
approximately
1,450
people.US
Ecology
was
most
recently
incorporated
as
a
Delaware
corporation
in
May
1987
as
American
Ecology
Corporation.
On
February
22,
2010,
the
Companychanged
its
name
from
American
Ecology
Corporation
to
US
Ecology,
Inc.
Our
filings
with
the
SEC
are
posted
on
our
website
at
www.usecology.com.
Theinformation
found
on
our
website
is
not
part
of
this
or
any
other
report
we
file
with
or
furnish
to
the
SEC.4Term
MeaningUS
Ecology,
the
Company,
"we,"
"our,"
"us"
US
Ecology,
Inc.,
and
its
subsidiariesAEA
Atomic
Energy
Act
of
1954,
as
amendedCEPA
Canadian
Environmental
Protection
Act
(1999)CERCLA
or
"Superfund"
Comprehensive
Environmental
Response,
Compensation
andLiability
Act
of
1980CWA
Clean
Water
Act
of
1977LARM
Low-activity
radioactive
material
exempt
from
federal
AtomicEnergy
Act
regulation
for
disposalLLRW
Low-level
radioactive
waste
regulated
under
the
federalAtomic
Energy
Act
for
disposalNORM/NARM
Naturally
occurring
and
accelerator
produced
radioactivematerialNRC
U.S.
Nuclear
Regulatory
CommissionPCBs
Polychlorinated
biphenylsQEQA
Québec
Environmental
Quality
ActRCRA
Resource
Conservation
and
Recovery
Act
of
1976SEC
U.
S.
Securities
and
Exchange
CommissionTSCA
Toxic
Substances
Control
Act
of
1976TSDF
Treatment,
Storage
and
Disposal
FacilityUSACE
U.S.
Army
Corps
of
EngineersUSEPA
U.S.
Environmental
Protection
AgencyWUTC
Washington
Utilities
and
Transportation
CommissionTable
of
ContentsThe
public
can
also
obtain
copies
of
these
filings
by
visiting
the
SEC's
Public
Reference
Room
at
100
F
Street
NE,
Washington
DC
20549,
or
by
calling
the
SEC
at1-800-SEC-0330
or
by
accessing
the
SEC's
website
at
www.sec.gov.We
have
fixed
facilities
and
service
centers
operating
in
the
United
States,
Canada
and
Mexico.
Our
fixed
facilities
include
five
permitted
hazardous
waste
landfillsand
one
LLRW
landfill
located
near
Beatty,
Nevada;
Richland,
Washington;
Robstown,
Texas;
Grand
View,
Idaho;
Detroit,
Michigan
and
Blainville,
Québec,Canada.
These
facilities
generate
revenue
from
fees
charged
to
treat
and
dispose
of
waste
and
to
perform
various
field
and
industrial
services
for
our
customers.On
June
17,
2014,
the
Company
acquired
100%
of
the
outstanding
shares
of
EQ
Holdings,
Inc.
and
its
wholly-owned
subsidiaries
(collectively
"EQ").
EQ
is
a
fullyintegrated
environmental
services
company
providing
waste
treatment
and
disposal,
wastewater
treatment,
remediation,
recycling,
industrial
cleaning
andmaintenance,
transportation,
total
waste
management,
technical
services,
and
emergency
response
services
to
a
variety
of
industries
and
customers
in
NorthAmerica.On
November
1,
2015,
we
sold
our
Allstate
Power
Vac,
Inc.
("Allstate")
subsidiary
to
a
private
investor
group.
See
Note
5
to
the
Consolidated
FinancialStatements
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K
for
additional
information.Our
operations
are
managed
in
two
reportable
segments
reflecting
our
internal
management
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,
treatmentand
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
sitesand
through
our
10-day
transfer
facilities.
Services
include
on-site
management,
waste
characterization,
transportation
and
disposal
of
non-hazardous
andhazardous
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.Financial
information
with
respect
to
each
segment
is
further
discussed
in
Note
20
to
the
Consolidated
Financial
Statements
in
"Part
II,
Item
8.
FinancialStatements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K.Environmental
Services
SegmentOur
Environmental
Services
involve
the
transportation,
treatment,
recycling
and
disposal
of
hazardous
and
non-hazardous
wastes,
and
include
physical
treatment,recycling,
landfill
disposal
and
wastewater
treatment
services.Waste Treatment & DisposalWe
recycle,
treat
and
dispose
of
hazardous
and
non-hazardous
industrial
wastes.
The
wastes
handled
include
substances
which
are
classified
as
"hazardous"because
of
their
corrosive,
ignitable,
reactive
or
toxic
properties,
and
other
wastes
subject
to
federal,
state
and
provincial
environmental
regulation.
The
wastes
wehandle
come
in
solid,
liquid
and
sludge
form
and
can
be
received
in
a
variety
of
containerized
and
bulk
forms
and
transported
to
our
facilities
by
truck
and
rail.We
own
and
operate
five
permitted
hazardous
waste
treatment
and
disposal
landfills
in
the
United
States
and
Canada
used
primarily
for
the
disposal
of
wastestreated
at
Company-owned
onsite
and
offsite
treatment
facilities.
The
United
States
landfills
are
regulated
under
RCRA
by
the
respective
states
in
which
they
arelocated
and
the
USEPA
while
our
Canadian
landfill
is
regulated
by
the
Quebec
Ministry
of5Table
of
ContentsEnvironment.
We
also
operate
a
commercial
LLRW
landfill
in
Richland,
Washington
that
is
licensed
by
the
Washington
Department
of
Health
through
delegatedauthority
of
the
NRC.
The
WUTC
sets
disposal
rates
for
LLRW.
Rates
are
set
at
an
amount
sufficient
to
cover
operating
costs
and
provide
us
with
a
reasonableprofit.
The
current
rate
agreement
with
the
WUTC
was
extended
in
2013
and
is
effective
until
January
1,
2020.As
of
December
31,
2016,
the
capacity
used
in
the
calculation
of
the
useful
economic
lives
of
our
six
landfills
includes
approximately
39.5
million
cubic
yards
ofremaining
permitted
airspace
capacity
and
approximately
18.1
million
cubic
yards
of
additional
unpermitted
airspace
capacity
included
in
the
footprints
of
theselandfills.
We
believe
it
is
probable
that
this
unpermitted
airspace
capacity
will
be
permitted
in
the
future
based
on
our
analysis
of
site
conditions,
past
regulatoryapprovals
on
adjacent
property,
and
our
interactions
with
regulators
on
applicable
regulations,
although
there
can
be
no
assurance
that
any
additional
unpermittedairspace
capacity
will
be
permitted
in
the
future.Treatment
and
disposal
("T&D")
revenue
can
be
broken
down
into
two
categories,
based
on
the
underlying
nature
of
the
revenue
source:
"Base
Business"
and"Event
Business."
We
define
Event
Business
as
non-recurring
projects
that
are
expected
to
equal
or
exceed
1,000
tons,
with
Base
Business
defined
as
all
otherbusiness
not
meeting
the
definition
of
Event
Business.
The
duration
of
Event
Business
projects
can
last
from
a
several-week
cleanup
of
a
contaminated
site
to
amultiple
year
cleanup
project.A
significant
portion
of
our
T&D
revenue
is
attributable
to
discrete
Event
Business
projects
which
vary
widely
in
size,
duration
and
unit
pricing.
For
the
yearended
December
31,
2016,
approximately
18%
of
our
T&D
revenue
was
derived
from
Event
Business
projects.
The
one-time
nature
of
Event
Business,
diversespectrum
of
waste
types
received
and
widely
varying
unit
pricing
necessarily
creates
variability
in
revenue
and
earnings.
This
variability
may
be
influenced
bygeneral
and
industry-specific
economic
conditions,
funding
availability,
changes
in
laws
and
regulations,
government
enforcement
actions
or
court
orders,
publiccontroversy,
litigation,
weather,
commercial
real
estate,
closed
military
bases
and
other
project
timing,
government
appropriation
and
funding
cycles
and
otherfactors.
The
types
and
amounts
of
Base
Business
waste
received
also
vary
quarter
to
quarter,
sometimes
significantly,
but
are
generally
more
predictable
thanEvent
Business.The
types
of
waste
received,
also
referred
to
as
"service
mix,"
can
produce
significant
quarter-to-quarter
and
year-to-year
variations
in
revenue,
average
sellingprice,
gross
profit,
gross
margin,
operating
profit
and
net
income
for
both
Base
Business
and
Event
Business.
Base
Business
represented
approximately
82%
and75%
of
disposal
revenue
(excluding
transportation)
for
the
years
ended
December
31,
2016
and
2015,
respectively.
Event
Business
contributed
approximately
18%and
25%
of
disposal
revenue
(excluding
transportation)
for
the
years
ended
December
31,
2016
and
2015,
respectively.
Our
strategy
is
to
expand
our
BaseBusiness
while
securing
both
short-term
and
extended-duration
Event
Business.
When
Base
Business
covers
our
fixed
overhead
costs,
a
significant
portion
ofdisposal
revenue
generated
from
Event
Business
is
generally
realized
as
operating
income
and
net
income.
This
strategy
takes
advantage
of
the
operating
leverageinherent
to
the
largely
fixed-cost
nature
of
the
waste
disposal
business.
Contribution
margin
is
influenced
by
whether
the
waste
is
directly
disposed
("directdisposal")
or
requires
the
application
of
chemical
reagents,
absorbents
or
other
additives
(variable
costs)
to
treat
the
waste
prior
to
disposal.Wastewater TreatmentWe
operate
wastewater
treatment
facilities
that
offer
a
range
of
wastewater
treatment
technologies.
These
wastewater
treatment
operations
involve
processinghazardous
and
non-hazardous
wastes
through
the
use
of
physical
and
chemical
treatment
methods.
Our
wastewater
treatment
facilities
treat
a
broad
range
ofindustrial
liquid
and
semi-liquid
wastes
containing
heavy
metals,
organics
and
suspended
solids.6Table
of
ContentsThe
following
table
summarizes
the
locations
and
services
of
our
active
Environmental
Services
waste
treatment
and/or
disposal
facilities:7Location
Onsite
Landfill
ServicesBeatty,
Nevada
Yes
Hazardous
and
non-hazardous
industrial
waste
treatment,
storage
and
disposalfacility
permitted
under
Subtitle
C
of
RCRA
and
TSCA
to
treat
and
disposeRCRA,
TSCA
and
certain
NRC-exempt
(NORM)
radioactive
waste.Robstown,
Texas
Yes
Hazardous
and
non-hazardous
industrial
waste
treatment,
storage
and
disposalfacility
permitted
under
Subtitle
C
of
RCRA
to
treat
and
dispose
RCRA,
PCBremediation
and
certain
NRC-exempt
(LARM
and
NORM/NARM)
radioactivewaste.
PCB
waste
storage
for
off-site
shipment.
Features
a
thermal
desorptionsystem
permitted
as
a
Subpart
X
RCRA
treatment
unit
that
treats
and
recyclesorganic
materials
including
recoverable
oils
and
metal
catalysts
from
petroleumwastes.
Rail
transfer
station.Grand
View,
Idaho
Yes
Hazardous
and
non-hazardous
industrial
waste
treatment,
storage
and
disposalfacility
permitted
under
Subtitle
C
of
RCRA
and
TSCA
to
treat
RCRA
and
TSCAwastes
and
certain
NRC-exempt
(NORM/NARM,
Technologically
EnhancedNORM
(TENORM))
radioactive
waste.
Rail
transfer
station.Belleville,
Michigan
Yes
Hazardous
and
non-hazardous
industrial
waste
treatment,
storage
and
disposalfacility
permitted
under
Subtitle
C
of
RCRA
to
treat
and
dispose
RCRA
wastesand
certain
NRC-exempt
(NORM/NARM,
Technologically
Enhanced
NORM(TENORM))
radioactive
waste.
Permitted
under
TSCA
to
dispose
TSCA
wastes.Features
a
regenerative
thermal
oxidation
air
pollution
control
system
that
iscompliant
with
RCRA
Subpart
CC
air
emissions
standards.
Rail
transfer
station.Blainville,
Québec,
Canada
Yes
Permitted
by
the
Canadian
Ministry
of
Environment
and
authorized
under
theEnvironmental
Quality
Act
by
Order-in-Council
to
treat
and
stabilize
inorganichazardous
liquid
and
solid
waste
and
contaminated
soils
to
produce
a
non-leachable
concrete-like
material
for
disposal
in
the
onsite
landfill.
Specializes
inprocessing
hard-to-treat
materials,
such
as
cyanides,
mercury
compounds,
strongacids,
non-organic
oxidizers,
lab
packs,
contaminated
debris
and
batteries.
Directrail
access.Richland,
Washington
Yes
LLRW
disposal
facility
accepts
Class
A,
B,
and
C
commercial
LLRW
from
withinthe
Northwest
Interstate
and
Rocky
Mountain
Compacts,
NORM/NARM
andLARM
waste
including
radium
sources
produced
by
customers
nationwide.
Oneof
only
three
full-service
Class
A,
B,
and
C
disposal
facilities
in
the
nation.Table
of
Contents8Location
Onsite
Landfill
ServicesDetroit,
Michigan
No
RCRA
Part
B
and
Centralized
Wastewater
Treatment
("CWT")
permittedindustrial
hazardous
and
non-hazardous
treatment
of
liquid
wastes,
stabilization,solidification,
chemical
oxidation/reduction
and
deactivation
of
hazardous
andnon-hazardous
solid
and
liquid
wastes.
Direct
rail
access.Canton,
Ohio
No
RCRA
Part
B
and
CWT
permitted
wastewater
treatment
of
hazardous
and
non-hazardous
liquid
wastes
and
stabilization,
solidification,
chemicaloxidation/reduction,
deactivation
and
metals
recovery
of
hazardous
and
non-hazardous
liquid
and
solid
wastes.
Specializes
in
a
delisting
process
that
convertsindustrial
inorganic
wastes
into
non-hazardous
residuals.Harvey,
Illinois
No
RCRA
Part
B
and
CWT
permitted
wastewater
treatment
of
hazardous
and
non-hazardous
liquid
wastes
and
stabilization,
solidification,
chemicaloxidation/reduction,
deactivation,
metals
recovery
of
hazardous
and
non-hazardous
liquid
and
solid
wastes
and
industrial
cleaning.
Specializes
in
adelisting
process
that
converts
industrial
inorganic
wastes
into
non-hazardousresiduals.York,
Pennsylvania
No
RCRA
Part
B
and
CWT
permitted
wastewater
treatment
of
hazardous
and
non-hazardous
liquid
wastes
and
stabilization,
solidification,
chemicaloxidation/reduction,
deactivation
and
metals
recovery
of
hazardous
and
non-hazardous
liquid
and
solid
wastes.
Specializes
in
a
delisting
process
that
convertsindustrial
inorganic
wastes
into
non-hazardous
residuals.Tulsa,
Oklahoma
No
RCRA
Part
B
and
CWT
permitted
wastewater
treatment
of
hazardous
and
non-hazardous
liquid
wastes
and
stabilization,
solidification,
chemicaloxidation/reduction
and
deactivation
of
hazardous
and
non-hazardous
liquid
andsolid
wastes.Tilbury,
Ontario,
Canada
No
Hazardous
and
non-hazardous
industrial
waste
treatment,
storage,
and
disposalfacility
permitted
by
the
Ontario
Ministry
of
Environment.
Provides
bulking,blending
and
solidification
services.
Treatment
of
non-hazardous
hydrocarboncontaminated
solids
to
industrial
re-use
standards.
Full
licensed
and
permitted
fleetof
hazardous
and
non-hazardous
transportation
equipment.
Also
provides
heavyindustrial
cleaning
and
confined
space
entry
and
rescue
services
along
withemergency
response.Vernon,
California
No
RCRA
Part
B
and
CWT
permitted
wastewater
treatment
of
hazardous
and
non-hazardous
liquid
wastes.
Storage
and
consolidation
of
hazardous
and
non-hazardous
wastes.
California
State
certified
laboratory.
Direct
rail
access.Table
of
ContentsRecycling ServicesWe
operate
recycling
technologies
designed
to
reclaim
valuable
commodities
from
hazardous
waste,
including
oil-bearing
hazardous
waste,
certain
metal-bearingwaste,
batteries,
and
solvent-based
wastes
for
industrial
clients,
metal
finishing
and
other
manufacturing
processes.
Resource
recovery
involves
the
treatment
ofwastes
using
various
methods
to
effectively
remove
contaminants
from
the
original
material
to
restore
its
usefulness
and
to
reduce
the
volume
of
waste
requiringdisposal.We
offer
full-service
storm
water
management
and
propylene
glycol
recovery
at
major
airports.
We
currently
operate
deicing
fluid
collection
systems
at
theMinneapolis-St.
Paul
International,
Pittsburgh
and
Detroit
airports.
We
also
receive
deicing
fluids
from
the
Grand
Rapids
airport
in
the
Great
Lakes
Region.Recovered
fluids
are
transported
to
our
RCRA
Part
B
and
CWT
permitted
chemical
recycling
facility
in
Romulus,
Michigan
where
they
are
recycled
into
a
greaterthan
99%
pure
material
that
is
sold
to
industrial
users.We
also
operate
a
thermal
desorption
unit
at
our
Robstown,
Texas
facility
that
recovers
oil
and
metal
bearing
catalyst
from
refinery
waste.
The
recycled
oil
andrecycled
catalyst
are
sold
to
third
parties.We
operate
a
fleet
of
mobile
solvent
recycling
stills
that
provide
on-site
recycling
services
throughout
the
Eastern
United
States.
The
trailer-mounted
stills
are
self-contained
units
that
perform
solvent
distillation
at
the
point
of
generation.
Waste
solvents
are
processed
in
500
-
7,500
gallon
batches,
and
clean
solvent
is
returnedfor
reuse.
Our
Mobile
Recycling
services
are
based
in
Mt.
Airy,
North
Carolina.TransportationFor
waste
transported
by
rail
from
locations
distant
from
our
facilities,
transportation-related
revenue
can
vary
significantly
and
can
account
for
as
much
as
75%
oftotal
project
revenue.
While
bundling
transportation
and
disposal
services
may
reduce
overall
gross
profit
as
a
percentage
of
total
revenue
("gross
margin"),
thisvalue-added
service
has
allowed
us
to
win
multiple
projects
that
we
believe
we
could
not
have
otherwise
competed
for
successfully.
Our
Company-owned
fleet
ofgondola
railcars,
which
is
periodically
supplemented
with
railcars
obtained
under
operating
leases,
has
reduced
our
transportation
expenses
by
largely
eliminatingreliance
on
more
costly
short-term
rentals.
These
Company-owned
railcars
also
help
us
to
win
business
during
times
of
demand-driven
railcar
scarcity.
We
alsoutilize
a
variety
of
specially
designed
and
constructed
Company-owned
tanker
trucks
and
trailers
as
well
as
various
third-party
transporters
to
support
this
activity.Further,
to
maximize
utilization
of
our
railcar
fleet,
we
periodically
deploy
available
railcars
to
transport
waste
from
cleanup
sites
to
disposal
facilities
operated
byother
companies.
Such
transportation
services
may
also
be
bundled
with
logistics
and
field
services
support
work.Field
&
Industrial
Services
SegmentOur
Field
&
Industrial
Services
include
a
wide
range
of
industrial
maintenance
and
specialty
services
at
refineries,
chemical
plants,
steel
and
automotive
plants,and
other
government,
commercial
and
industrial
facilities.
Onsite
specialty
services
include
excavation,
high-pressure
cleaning,
tank
cleaning,
decontamination,remediation,
transportation,
spill
cleanup
and
emergency
response.
We
provide
these
services
through
a
network
of
facilities
located
throughout
the
Eastern
UnitedStates
that
are
organized
into
service
lines
including
Small
Quantity
Generation,
Remediation
Services,
Managed
Services,
Emergency
Response,
Transfer
andProcessing
and
Terminal
Services
and
Industrial
Services.Small Quantity GenerationOur
small
quantity
generation
service
offerings
consist
of
retail
services,
laboratory
packing
and
Household
Hazardous
Waste
("HHW")
collection.
Retail
services,laboratory
packing
and
HHW
are
full-service
waste
characterization,
packaging,
collection
and
transportation
programs.
Services
are
provided
to
small,
mediumand
large
industrial
and
commercial
customers.
These
programs
are
built
on
our
network
of9Table
of
Contentsservice
centers,
employ
highly
trained
staff
and
provide
a
high
level
of
service
to
the
customer.
As
an
integral
part
of
our
services,
we
operate
a
network
of
servicecenters
that
characterize,
package
and
collect
hazardous
and
non-hazardous
wastes
from
customers
and
transport
such
wastes
to
and
between
our
facilities
fortreatment
or
bulking
for
shipment
to
final
disposal
locations.
Customers
typically
accumulate
wastes
in
containers,
such
as
55
gallon
drums,
bulk
storage
tanks
or20
cubic
yard
roll-off
containers.
We
utilize
a
variety
of
specially
designed
and
constructed
tank
trucks
and
semi-trailers
as
well
as
third-party
transporters,including
railroads.
Depending
on
customer
needs
and
competitive
economics,
transportation
services
may
be
offered
at
or
near
our
cost
to
help
secure
newbusiness.Remediation ServicesOur
remediation
service
offerings
include
RCRA
and
TSCA
closures,
surgical
excavations,
wastewater
management,
building
decontamination
and
radiologicalsite
remediation.Managed ServicesOur
managed
service
offerings
consist
of
Total
Waste
Management
("TWM")
programs.
Through
our
TWM
program,
customers
outsource
the
management
oftheir
waste
compliance
program
to
us,
allowing
us
to
organize
and
coordinate
their
waste
management
disposal
activities
and
environmental
compliance.Emergency ResponseOur
primary
emergency
response
offerings
include
spill
response,
waste
analysis
and
treatment
and
disposal
planning.
We
also
offer
product
transfers,
spillcontingency
planning
and
yearly
service
agreements
with
first
responder
status.
Trained,
experienced
professionals
operate
the
Company's
Emergency
ResponseService
24
hours
per
day,
7
days
per
week.Transfer and ProcessingOur
transfer
and
processing
stations
stage
and
consolidate
non-bulk
loads
of
hazardous,
non-hazardous
and
universal
waste
into
full
loads
for
more
efficientshipment
to
Company-owned
or
third-party
treatment
and
disposal
facilities.
This
allows
us
to
offer
a
broader
geographic
presence
without
having
a
dedicated,Company-owned
treatment
or
disposal
facility
in
the
region.Terminal ServicesOur
terminal
services
include
petroleum
and
chemical
tank
cleaning
and
other
services,
including
emergency
response,
construction
and
industrial
maintenance.The
Company
services
several
major
petroleum
terminals
around
New
York
Harbor.Industrial ServicesOur
primary
industrial
service
offerings
include
emergency
response,
industrial
cleaning
and
maintenance
for
railroads,
refineries,
chemical
plants,
steel
andautomotive
plants,
as
well
as
tank
cleaning
and
temporary
storage.Waste
Services
IndustryDuring
the
1970s
and
1980s,
waste
services
industry
growth
in
the
United
States
was
driven
by
new
environmental
laws
and
actions
by
federal
and
state
agenciesto
regulate
existing
hazardous
waste
management
facilities
and
direct
the
cleanup
of
contaminated
sites
under
the
federal
Superfund
law.
By
the
early
1990s,excess
hazardous
waste
management
capacity
had
been
constructed
by
the
industry.
Over
this
same
period,
to
better
manage
risk
and
reduce
expenses,
many
wastegenerators
instituted
industrial10Table
of
Contentsprocess
changes
and
other
methods
to
reduce
waste
production.
These
factors
led
to
highly
competitive
market
conditions
that
still
apply
today.In
the
U.S.,
hazardous
waste
is
regulated
under
the
RCRA,
which
created
a
cradle-to-grave
system
governing
defined
hazardous
waste
from
the
point
of
generationto
ultimate
disposal.
RCRA
requires
waste
generators
to
distinguish
between
"hazardous"
and
"non-hazardous"
wastes,
and
to
treat,
store
and
dispose
of
hazardouswaste
in
accordance
with
specific
regulations.
Generally,
entities
that
treat,
store,
or
dispose
of
hazardous
waste
must
obtain
a
permit,
either
from
the
USEPA
orfrom
a
state
agency
to
which
the
USEPA
has
delegated
such
authority.
Similar
regulations
and
management
methods
apply
to
hazardous
waste
generation
inCanada,
which
is
regulated
by
the
Canada
Ministry
of
Environment
and
delegated
to
provincial
agencies.Disposal
facilities
are
typically
designed
to
permanently
contain
the
waste
and
prevent
the
release
of
harmful
pollutants
into
the
environment.
The
most
commonhazardous
waste
disposal
practice
is
placement
in
an
engineered
disposal
unit
such
as
a
landfill,
surface
impoundment
or
deep
injection
well.
RCRA's
hazardouswaste
permitting
program
establishes
specific
requirements
that
must
be
followed
when
managing
those
wastes.We
believe
that
a
baseline
demand
for
hazardous
waste
services
will
continue
into
the
future
with
fluctuations
driven
by
general
and
industry-specific
economicconditions,
identification
and
prioritization
of
new
cleanup
needs,
cleanup
project
schedules,
funding
availability,
regulatory
changes
and
other
public
policydecisions.
We
further
believe
that
the
ability
to
deliver
specialized
niche
services
while
aggressively
competing
for
large
volume
cleanup
projects
and
non-nichecommodity
business
opportunities
differentiates
successful
from
less
successful
companies.
We
seek
to
control
variable
costs,
expand
service
lines,
increase
wastethroughput
efficiency,
employ
innovative
treatment
techniques,
provide
complementary
transportation
and
logistics
services,
build
market
share
and
increaseprofitability.Our
Richland,
Washington
disposal
facility,
serving
the
Northwest
and
Rocky
Mountain
LLRW
Compacts,
is
one
of
three
operating
Compact
disposal
facilities
inthe
U.S.
While
our
Washington
disposal
facility
has
substantial
unused
capacity,
it
can
only
accept
LLRW
from
the
11
western
states
comprising
the
twoCompacts
served.
The
Barnwell,
South
Carolina
site,
operated
by
Energy
Solutions,
Inc.
("Energy
Solutions"),
exclusively
serves
the
three-state
Atlantic
Compact.A
third
LLRW
disposal
facility,
licensed
by
Waste
Control
Specialists,
LLC
and
located
near
Andrews,
Texas
serves
the
two-state
Texas
Compact
and
approvedout-of-compact
waste
generators.
Class
A
LLRW
from
states
outside
the
Northwest
Compact
region
may
also
be
disposed
at
a
non-compact,
commercial
disposalsite
in
Clive,
Utah,
also
operated
by
Energy
Solutions.Increases
in
pricing
at
AEA
licensed
LLRW
disposal
facilities
heightened
demand
for
more
cost-effective
disposal
options
for
soil,
debris,
consumer
products,industrial
wastes
and
other
materials
containing
LARM,
including
"mixed
wastes,"
exhibiting
both
hazardous
and
radioactive
properties.
In
addition
to
commercialdemand,
a
substantial
amount
of
LARM
is
generated
by
government
cleanup
projects.
The
NRC,
USEPA
and
USACE
have
authorized
the
use
of
hazardous
wastedisposal
facilities
to
dispose
of
certain
LARM,
encouraging
expansion
of
this
compliant,
cost-effective
alternative.
We
have
been
successful
at
expanding
ourpermits
at
four
of
our
RCRA
hazardous
waste
facilities
to
allow
acceptance
of
additional
LARM
wastes.Industrial
Services
IndustryThe
industrial
services
industry
is
highly
fragmented
with
thousands
of
small
companies
performing
a
variety
of
cleaning,
maintenance
and
other
services
toindustrial
based
companies
such
as
refineries,
chemical
plants
and
steel
and
automotive
plants.
We
believe
customers
increasingly
desire
to
shift
high
fixed
costs
tolower
variable
costs
by
outsourcing
waste
management
and
industrial
services.
Some
companies,
such
as
power
generation
plants,
petroleum
refineries
andchemical
processors,
are
required
to
perform
specialized
"turnaround"
maintenance
only
once
or
twice
per
year,
making
it
impractical
and11Table
of
Contentscost-prohibitive
to
purchase
expensive,
specialized
equipment,
comply
with
complex
permits
and
employ
full-time
specialized
technicians
required
to
performthose
services.
Similarly,
the
regulatory
requirements
of
characterizing,
manifesting,
transporting
and
properly
disposing
of
waste
has
led
many
companies
tooutsource
this
function
to
specialists.
Our
network
of
service
centers
and
treatment,
recycling
and
storage
facilities
provides
a
national
footprint
allowing
us
toserve
these
customers,
while
at
the
same
time
internalizing
the
waste
to
our
own
facilities.Industrial
services
generally
have
low
barriers
to
entry
and
customers
are
frequently
won
based
on
quality
of
service,
reputation,
health
and
safety
record,
logisticsand
price.
This
low
barrier
to
entry
has
fostered
a
fragmented
and
competitive
market
place.StrategyOur
strategy
is
to
capitalize
on
our
difficult-to-replicate
combination
of
treatment
and
disposal
assets
and
complementary
service
lines
to
provide
a
full
serviceoffering
to
customers
and
increase
market
share
in
the
diverse
markets
we
serve.
We
are
focused
on
safety,
environmental
compliance
and
a
commitment
tocustomer
service
excellence.
In
addition
to
organic
growth
initiatives,
we
actively
pursue
acquisition
opportunities
to
expand
our
geographic
reach,
service
linesand
customer
base.
The
principal
elements
of
our
business
strategy
are
to:Execute Best-in-Class Safety and Environmental Compliance Programs. 



We
pursue
best-in-class
safety
and
environmental
compliance
at
US
Ecology.
Not
onlyis
it
the
cornerstone
of
our
business,
but
our
customers
and
regulators
rely
on
our
expertise
when
they
select
us
as
a
vendor
or
grant
us
permits
and
licenses.
Wedeploy
significant
resources
in
terms
of
human
capital,
programs
and
facility
investment
to
achieve
safe
and
compliant
operations.
The
Company
has
dedicatedprofessionals
who
oversee
and
manage
safety
and
environmental
programs
including,
but
not
limited
to,
employee
training,
internal
and
independent
externalaudits,
safety
incentive
programs,
Voluntary
Protection
Programs
("VPP"),
the
Safety
&
Health
Achievement
Recognition
Program,
and
ISO
9001
and
ISO
14001programs.
Dedicated
senior
managers
regularly
review
and
discuss
environmental
and
safety
results
with
operational
staff,
management
and
the
Board
of
Directorsto
improve
our
safety
results
and
focus
on
regulatory
compliance.Leverage Regulatory Expertise to Expand Permit Capabilities and Broaden Cost-Effective Service Offerings. 



We
have
a
proven
track
record
of
leveraging
morethan
six
decades
of
regulatory
experience
to
broaden
our
service
offerings.
Working
with
customers,
we
assess
market
opportunities
in
relation
to
existing
laws,regulations
and
permit
conditions.
Our
engineering,
operational
and
regulatory
affairs
personnel
then
seek
authority
to
implement
innovative
processes
andtechnologies
and
accept
additional
types
of
waste
by
modifying
our
existing
permits
or
obtaining
new
permits.Continue to Build on Our Robust Waste Handling Infrastructure to Increase Revenue from Existing Assets. 



We
believe
we
have
a
difficult
to
replicate
set
oftreatment,
recycling
and
disposal
assets
in
the
highly
regulated
hazardous
and
radioactive
waste
industry.
We
aim
to
enhance
treatment
capabilities
at
our
existingfacilities
to
handle
additional
waste
streams
and
increase
throughput.
We
also
continue
to
invest
in
equipment
and
infrastructure
to
ensure
that
we
have
amplethroughput
capacity
to
expand
our
Event
Business
while
continuing
to
support
our
Base
Business
customers.Execute on Marketing Initiatives to Grow Organically. 



Our
sales
team
is
focused
on
high
margin,
niche
wastes
that
our
competitors
may
not
be
able
to
obtain
thenecessary
regulatory
authorizations
for
or
handle
cost-effectively.
We
seek
to
expand
into
new
markets
and
offer
new
services
allowing
us
to
cross-sell
or
bundleservices
and
ultimately
drive
incremental
volume
into
our
existing
disposal
facilities.
Our
strategy
is
to
have
our
Base
Business
cover
our
fixed
overhead
costs
anddeliver
a
reasonable
profit,
which
allows
the
majority
of
our
Event
Business
revenue
to
be
realized
as
operating
profit.
We
aim
to
continue
building
our
BaseBusiness
while
remaining
flexible
enough
to
handle
large
cleanup
events.12Table
of
ContentsDeliver Innovative Technological Solutions: 



We
challenge
ourselves
to
identify
innovative
and
technology-driven
solutions
to
solve
our
customers'
wastemanagement
challenges.
Past
examples
include
leveraging
our
expertise
in
developing
waste
treatment
recipes
for
organic
and
metals-bearing
wastes,
utilizingwaste
as
a
reagent
to
treat
other
wastes,
beneficial
reuse
of
select
wastes,
partnering
with
an
innovative
technology
provider
to
deploy
thermal
desorptiontechnology
to
recover
oil
and
metal
catalyst
from
refinery
waste,
and
stabilizing
mercury
laden
waste
and
other
wastes
using
patented
treatment
process.Pursue a Disciplined Acquisition Strategy to Add Complementary Capabilities. 



We
pursue
selective
acquisitions
to
expand
our
disposal
network,
customer
baseand
geographic
footprint.
We
have
had
success
achieving
this
in
recent
years
through
our
targeted
acquisition
strategy,
acquiring
Stablex
Canada
Inc.
("Stablex")in
2010,
Dynecol,
Inc.
in
2012,
EQ
in
2014
and
Environmental
Services
Inc.
("ESI")
and
the
Vernon,
California
based
RCRA
Part
B,
liquids
and
solids
wastetreatment
and
storage
facility
of
Evoqua
Water
Technologies
LLC
in
2016.
The
acquisition
of
EQ
also
provided
us
with
an
entirely
new
line
of
complementaryfield
and
industrial
service
offerings.
We
continue
to
seek
acquisition
opportunities
to
further
expand
our
service
offerings
across
the
hazardous
waste
value
chainwhile
maintaining
our
commitment
to
compliance,
safety
and
customer
service
excellence.Competitive
StrengthsDifficult-to-Replicate Infrastructure. 



We
consider
our
disposal
facilities
to
be
difficult
to
replicate
due
to
the
longstanding
regulatory
and
public
policyenvironment
for
hazardous
waste
processing
facilities,
which
includes
the
generally
high
cost
of
obtaining
permits,
multi-year
permitting
timeframes,
uncertaintyof
outcome,
high
initial
capital
expenditures
and
the
potential
for
both
broad-based
and
local
community
opposition
to
the
development
of
new
facilities.
As
aresult,
it
has
been
more
than
20
years
since
a
new
hazardous
waste
landfill
has
been
built
in
the
United
States.
We
operate
five
of
twenty
landfills
in
the
U.S.
andCanada
that
are
permitted
to
accept
RCRA
wastes.
Our
Richland,
Washington
LLRW
facility
is
one
of
only
three
full-service
Class
A,
B,
and
C
disposal
facilitiesin
the
U.
S.
Our
personnel
have
extensive
experience
safely
managing
certain
radioactive
waste
requiring
the
use
of
shielding
and
remote
handling
devices.Significant Regulatory and Operating Expertise. 



We
operate
in
a
highly
regulated
marketplace.
The
permitting
process
for
operating
disposal
assets
in
ourindustry
is
lengthy
and
complex,
requiring
a
deep
understanding
of
federal
and
state
hazardous
and
radioactive
waste
laws
and
regulations.
We
maintain
aregulatory
compliance
and
permitting
program
at
our
disposal
facilities
that
has
allowed
us
to
obtain
approvals
to
expand
our
service
offering
in
terms
of
the
types,amounts
and
concentrations
of
wastes
that
we
are
authorized
to
accept.
Our
track
record
of
successfully
navigating
government
regulatory
and
permitting
processeshas
been
a
consistent
competitive
advantage.A Market Leader in Hazardous & Non-Hazardous Waste Treatment and Disposal. 



We
are
a
leader
in
the
North
American
hazardous
waste
services
sector
withmore
than
six
decades
of
experience.
Our
collection
of
disposal
assets
combined
with
our
transportation
network
provides
us
with
coast-to-coast
treatment
anddisposal
capabilities,
allowing
us
to
serve
a
diverse
mix
of
customers
and
industries
across
the
United
States,
Canada
and
Mexico.Comprehensive Waste Services. 



Our
comprehensive
waste
service
offerings
allow
us
to
act
as
a
full-service
provider
to
our
customers.
Our
full-serviceorientation
creates
incremental
revenue
growth
as
customers
seek
to
minimize
the
number
of
outside
vendors
through
"one-stop"
service
providers.Diverse Markets and Customer Base. 



In
2016,
we
serviced
more
than
4,000
commercial
and
governmental
entities,
such
as
refineries,
chemical
productionfacilities,
heavy
manufacturers,
steel
mills,
waste
brokers
and
medical
and
academic
institutions.
Our
broad
range
of
end-markets
gives
us
exposure
to
a
variety
ofindustrial
cycles,
lessening
the
impact
of
market
volatility.13Table
of
ContentsSolid Safety and Compliance Record. 



Safety
and
environmental
compliance
is
a
cornerstone
of
US
Ecology's
business.
The
Company
has
dedicatedenvironmental
professionals
who
oversee
and
manage
safety
and
environmental
programs
including,
but
not
limited
to,
employee
training,
internal
andindependent
external
audits,
safety
incentive
programs,
VPP,
the
Safety
&
Health
Achievement
Recognition
Program,
and
ISO
9001
and
ISO
14001
programs.Dedicated
senior
managers
regularly
review
and
discuss
environmental
and
safety
results
with
operational
staff,
management
and
the
Board
of
Directors
toimprove
our
safety
results
and
focus
on
regulatory
compliance.
In
addition,
we
have
received
multiple
operating
site
safety
awards
including
the
VPP
StarWorksite
Award,
Thoroughbred
Safety
Award
and
the
CSX
Chemical
Safety
Award.CompetitionOur
Environmental
Services
segment
competes
with
large
and
small
companies
in
each
of
the
commercial
markets
we
serve.
While
niche
services
apply,
theradioactive,
hazardous
and
non-hazardous
industrial
waste
management
industry
is
generally
very
competitive.
We
believe
that
our
primary
hazardous
waste
andPCB
disposal
competitors
are
Clean
Harbors,
Inc.,
Heritage
Environmental
Services
and
Waste
Management,
Inc.
Other
hazardous
waste
disposal
competitorsinclude,
but
are
not
limited
to,
Peoria
Disposal
Company,
Envirosafe
Services
of
Ohio,
Tradebe,
Ross
Environmental,
Perma-Fix
Environmental
Services
andVeolia
Environmental
Services.
We
believe
that
our
primary
radioactive
material
disposal
competitors
are
Energy
Solutions,
Inc.
and
Waste
ControlSpecialists,
Inc.
We
believe
the
principal
competitive
factors
applicable
to
these
businesses
are:•price;
•specialized
permits
and
"niche"
service
offerings;
•customer
service;
•operational
efficiency
and
technical
expertise;
•regulatory
compliance
and
worker
safety;
•industry
reputation
and
brand
name
recognition;
•transportation
distance;
and
•State
or
Province
and
local
community
support.Competition
within
our
Field
&
Industrial
Services
segment
varies
by
locality
and
type
of
service
rendered,
with
competition
coming
from
large
national
andregional
service
providers
and
hundreds
of
privately-owned
firms
that
offer
field
or
industrial
services.
We
believe
that
our
primary
field
and
industrial
servicescompetitors
are
Clean
Harbors,
Inc.;
Stericycle,
Inc.,
Veolia
Environmental
Services
and
Waste
Management,
Inc.
Each
of
these
competitors
is
able
to
providemost
if
not
all
of
the
field
and
industrial
services
we
offer.We
believe
that
we
are
competitive
in
all
markets
we
serve
and
that
we
offer
a
unique
mix
of
services,
including
niche
technologies
and
services
that
favorablydistinguish
us
from
competitors.
We
also
believe
that
our
strong
brand
name
recognition
from
six
decades
of
experience,
compliance
and
safety
record,
customerservice
reputation
and
positive
relations
with
regulators
and
local
communities
enhance
our
competitive
position.
Advantages
exist
for
competitors
that
are
largerin
scale
or
have
technology,
permits
or
equipment
to
handle
a
broader
range
of
waste,
that
operate
in
jurisdictions
imposing
lower
disposal
fees
and/or
are
locatedcloser
to
where
wastes
are
generated.Permits,
Licenses
and
Regulatory
RequirementsObtaining
authorization
to
construct
and
operate
new
hazardous
or
radioactive
waste
facilities
is
a
lengthy
and
complex
process.
We
believe
we
have
demonstratedsignificant
expertise
in
this
area
over
multiple14Table
of
Contentsdecades.
We
also
believe
we
possess
all
permits,
licenses
and
regulatory
approvals
required
to
maintain
regulatory
compliance
and
operate
our
facilities
and
havethe
specialized
expertise
required
to
obtain
additional
approvals
to
continue
growing
our
business
in
the
future.We
incur
costs
and
make
capital
investments
to
comply
with
environmental
regulations.
These
regulations
require
that
we
operate
our
facilities
in
accordance
withpermit-specific
requirements.
Most
of
our
facilities
are
also
required
to
provide
financial
assurance
for
closure
and
post-closure
obligations
should
our
facilitiescease
operations.
Both
human
resource
and
capital
investments
are
required
to
maintain
compliance
with
these
requirements.United
States
Hazardous
Waste
RegulationOur
hazardous,
industrial,
non-hazardous
and
radioactive
waste
treatment,
disposal
and
handling
business
is
subject
to
extensive
federal
and
state
environmental,health,
safety,
and
transportation
laws,
regulations,
permits
and
licenses.
Local
government
controls
may
also
apply.
The
responsible
government
regulatoryagencies
regularly
inspect
our
operations
to
monitor
compliance.
They
have
authority
to
enforce
compliance
through
the
suspension
or
revocation
of
operatinglicenses
and
permits
and
the
imposition
of
civil
or
criminal
penalties
in
case
of
violations.
We
believe
that
these
laws
and
regulations,
as
well
as
the
specializedservices
we
provide,
contribute
to
demand
and
create
barriers
to
new
competitors
seeking
to
enter
the
markets
we
serve.RCRA
provides
a
comprehensive
framework
for
regulating
hazardous
waste
transportation,
treatment,
storage
and
disposal.
RCRA
regulation
is
the
responsibilityof
the
USEPA,
which
may
delegate
authority
to
state
agencies.
Chemical
compounds
and
residues
derived
from
USEPA-listed
industrial
processes
are
subject
toRCRA
standards
unless
they
are
delisted
through
rulemaking.
RCRA
liability
may
be
imposed
for
improper
waste
management
or
failure
to
take
corrective
actionfor
releases
of
hazardous
substances.
To
the
extent
wastes
are
recycled
or
beneficially
reused,
regulatory
controls
and
permitting
requirements
under
RCRAdiminish.
LARM
and
NORM/NARM
may
also
be
managed
to
varying
degrees
under
RCRA
permits,
as
is
authorized
for
our
facilities
in
Grand
View,
Idaho;Beatty,
Nevada;
Belleville,
Michigan
and
Robstown,
Texas.CWA
legislation
prohibits
discharge
of
pollutants
into
the
waters
of
the
United
States
without
governmental
authorization
and
regulates
the
discharge
of
pollutantsinto
surface
waters
and
sewers
from
a
variety
of
sources,
including
disposal
sites
and
treatment
facilities.
The
USEPA
has
promulgated
"pretreatment"
regulationsunder
the
CWA,
which
establish
pretreatment
standards
for
introduction
of
pollutants
into
publicly
owned
treatment
works.
In
the
course
of
the
treatment
process,our
wastewater
treatment
facilities
generate
wastewater,
which
we
discharge
to
publicly
owned
treatment
works
pursuant
to
permits
issued
by
the
appropriategovernmental
authority.
We
are
required
to
obtain
discharge
permits
and
conduct
sampling
and
monitoring
programs.CERCLA
and
its
amendments
impose
strict,
joint
and
several
liability
on
owners
or
operators
of
facilities
where
a
release
of
hazardous
substances
has
occurred,
onparties
who
generated
hazardous
substances
released
at
such
facilities
and
on
parties
who
arranged
for
the
transportation
of
hazardous
substances.
Liability
underCERCLA
may
be
imposed
if
releases
of
hazardous
substances
occur
at
treatment,
storage
or
disposal
sites.
Since
waste
generators,
transporters
and
those
whoarrange
transportation
are
subject
to
the
same
liabilities,
we
believe
they
are
motivated
to
minimize
the
number
of
disposal
sites
used.
In
addition,
hazardous
wastegenerated
during
the
remediation
of
CERCLA
cleanup
projects
and
transferred
offsite
must
be
managed
by
a
treatment
and
disposal
facility
authorized
by
EPA
tomanage
CERCLA
waste.TSCA
regulates
the
treatment,
storage
and
disposal
of
PCBs.
U.S.
regulation
and
licensing
of
PCB
wastes
is
the
responsibility
of
the
USEPA.
Our
Grand
View,Idaho
and
Beatty,
Nevada
facilities
have
TSCA
treatment,
storage
and
disposal
permits.
Our
Belleville,
Michigan
facility
has
a
TSCA
disposal
permit.
Our15Table
of
ContentsRobstown,
Texas
facility
has
a
TSCA
storage
permit
and
may
dispose
of
PCB-contaminated
waste
in
limited
concentrations
not
requiring
a
TSCA
disposal
permit.The
AEA
assigns
the
NRC
regulatory
authority
over
receipt,
possession,
use
and
transfer
of
certain
radioactive
materials,
including
disposal.
The
NRC
has
adoptedregulations
for
licensing
commercial
LLRW
disposal
and
has
delegated
regulatory
authority
to
certain
states
including
Washington,
where
our
Richland
facility
islocated.
The
NRC
and
U.S.
Department
of
Transportation
regulate
the
transport
of
radioactive
materials.
Shippers
must
comply
with
both
the
general
requirementsfor
hazardous
materials
transportation
and
specific
requirements
for
transporting
radioactive
materials.The
Energy
Policy
Act
of
2005
amended
the
AEA
to
classify
discrete
(i.e.
concentrated
versus
diffuse)
NORM/NARM
as
byproduct
material.
The
law
does
notapply
to
interstate
Compacts
ratified
by
Congress
pursuant
to
the
LLRW
Policy
Act.Canadian
Hazardous
Waste
RegulationThe
Canadian
federal
government
regulates
issues
of
national
scope
where
activities
cross
provincial
boundaries
and
affect
Canada's
relations
with
other
nations.The
Provinces
retain
control
over
environmental
matters
within
their
boundaries
including
primary
responsibility
for
regulation
and
management
of
hazardouswaste.The
main
federal
laws
governing
hazardous
waste
management
are
CEPA
and
the
Transportation
of
Dangerous
Goods
Act.
Environment
and
Climate
ChangeCanada
is
the
federal
agency
with
responsibility
for
environmental
matters.
CEPA
charges
Environment
Canada
and
Health
Canada
with
the
protection
of
humanhealth
and
the
environment
and
seeks
to
control
the
production,
importation
and
use
of
substances
in
Canada
and
their
impact
on
the
environment.
The
Export
andImport
of
Hazardous
Waste
Regulations
under
CEPA
govern
trans-border
movement
of
hazardous
waste
and
hazardous
recyclable
materials.
These
regulationsrequire
that
anyone
proposing
to
export
or
import
hazardous
waste
or
hazardous
recyclable
materials
or
transport
them
through
Canada
notify
the
Minister
of
theEnvironment
and
obtain
a
permit
to
do
so.Our
Stablex
facility
is
located
in
Blainville,
Québec,
Canada
and
is
subject
to
QEQA.
This
Act,
independently
developed
by
the
Province,
regulates
the
generation,characterization,
transport,
treatment
and
disposal
of
hazardous
wastes.
QEQA
also
provides
for
the
establishment
of
waste
management
facilities
which
arecontrolled
by
the
provincial
statutes
and
regulations
governing
releases
to
air,
groundwater
and
surface
water.Our
Tilbury,
Ontario,
Canada
facility
is
subject
to
Regulation
347
of
the
Ontario
Environmental
Protection
Act.
Regulation
347,
independently
developed
by
theProvince,
regulates
the
collection,
storage,
transportation,
treatment,
recovery
and
disposal
of
hazardous
wastes.Waste
transporters
require
a
permit
to
operate
under
the
Province's
regulations
and
are
also
subject
to
the
requirements
of
the
Federal
Transportation
of
DangerousGoods
law
which
requires
reporting
of
quantities
and
disposition
of
materials
shipped.A
major
difference
between
the
United
States
regulatory
regime
and
that
in
Canada
relates
to
ownership
and
liability.
Under
Canadian
federal
regulation,ownership
changes
when
waste
is
transferred
to
a
properly
permitted
third-party
carrier
and
subsequently
to
an
approved
treatment
and
disposal
facility.
As
aresult,
the
generator
is
no
longer
liable
for
proper
handling,
treatment
or
disposal.
In
the
United
States,
joint
and
several
liability
is
retained
by
the
waste
generatoras
well
as
the
transporter
and
the
treatment
and
disposal
facility.16Table
of
ContentsInsurance,
Financial
Assurance
and
Risk
ManagementWe
carry
a
broad
range
of
insurance
coverage,
including
general
liability,
automobile
liability,
real
and
personal
property,
workers
compensation,
directors
andofficers
liability,
environmental
impairment
liability
and
other
coverage
customary
to
the
industry.
We
do
not
expect
the
impact
of
any
known
casualty,
property,environmental
or
other
contingency
to
be
material
to
our
financial
condition,
results
of
operations
or
cash
flows.As
noted
above,
applicable
regulations
require
financial
assurance
to
cover
the
cost
of
final
closure
and
post-closure
obligations
at
certain
of
our
operating
andnon-operating
disposal
facilities.
Acceptable
forms
of
financial
assurance
include
third-party
standby
letters
of
credit,
surety
bonds
and
insurance.
Alternatively,we
may
be
required
to
collect
fees
from
waste
generators
to
fund
dedicated,
state-controlled
escrow
or
trust
accounts
during
the
operating
life
of
the
facility.Through
December
31,
2016,
we
have
met
our
financial
assurance
requirements
through
insurance,
surety
bonds,
standby
letters
of
credit
and
self-funded
restrictedtrusts.Insurance
policies
covering
our
U.S.
closure
and
post-closure
obligations
expire
in
December
2017.
While
we
expect
to
timely
renew
these
policies
as
we
have
inthe
past,
if
we
are
unable
to
obtain
adequate
closure,
post-closure
or
environmental
insurance,
any
partial
or
completely
uninsured
claim
against
us,
if
successful,could
have
a
material
adverse
effect
on
our
financial
condition,
results
of
operations
and
cash
flows.
Failure
to
maintain
adequate
financial
assurance
could
alsoresult
in
regulatory
action
including
early
closure
of
facilities.
As
of
December
31,
2016,
we
have
provided
collateral
of
$5.8
million
in
funded
trust
agreements,$12.0
million
in
surety
bonds,
issued
$2.7
million
in
letters
of
credit
for
financial
assurance
and
have
insurance
policies
of
approximately
$81.6
million
for
closureand
post-closure
obligations.
Financial
assurance,
premium
and
collateral
cost
requirement
increases
may
have
an
adverse
impact
on
our
results
of
operations.We
maintain
a
surety
bond
for
closure
costs
associated
with
the
Blainville
facility.
Our
lease
agreement
with
the
Province
of
Québec
requires
that
the
surety
bondbe
maintained
for
25
years
after
the
lease
expires.
At
December
31,
2016
we
had
$686,000
in
commercial
surety
bonds
dedicated
for
closure
obligations.Primary
casualty
insurance
programs
generally
do
not
cover
accidental
environmental
contamination
losses.
To
provide
insurance
protection
for
potential
claims,we
maintain
pollution
legal
liability
insurance
and
professional
environmental
consultant's
liability
insurance
for
non-nuclear
occurrences.
For
nuclear
liabilitycoverage,
we
maintain
Facility
Form
and
Workers'
Form
nuclear
liability
insurance
provided
under
the
federal
Price
Anderson
Act.
This
insurance
covers
theoperations
of
our
facilities,
suppliers
and
transporters.
We
purchase
primary
property,
casualty
and
excess
liability
policies
through
traditional
third-party
insurancecarriers.Significant
CustomersNo
customer
accounted
for
more
than
10%
of
total
revenue
for
the
years
ended
December
31,
2016
or
2015.
Revenue
from
a
single
customer
accounted
forapproximately
10%
of
total
revenue
for
the
year
ended
December
31,
2014.Geographical
InformationFor
the
year
ended
December
31,
2016,
we
derived
$428.8
million
or
90%
of
our
revenue
in
the
United
States
and
$48.9
million
or
10%
of
our
revenue
in
Canada.For
the
year
ended
December
31,
2015,
we
derived
$521.1
million
or
93%
of
our
revenue
in
the
United
States
and
$42.0
million
or
7%
of
our
revenue
in
Canada.For
the
year
ended
December
31,
2014,
we
derived
$388.1
million
or
87%
of
our
revenue
in
the
United
States
and
$59.3
million
or
13%
of
our
revenue
in
Canada.Additional
information
about
the
geographical
areas
in
which
our
revenues
are
derived
and
in
which
our
assets
are
located
is
presented
in17Table
of
ContentsNote
20
to
the
Consolidated
Financial
Statements
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K.Seasonal
EffectsSeasonal
fluctuations
due
to
weather
and
budgetary
cycles
can
influence
the
timing
of
customer
spending
for
our
services.
Typically,
in
the
first
quarter
of
eachcalendar
year
there
is
less
demand
for
our
services
due
to
reduced
construction
activities
related
to
weather.
While
large,
multi-year
cleanup
projects
may
continuein
winter
months,
the
pace
of
waste
shipments
may
be
slower,
or
stop
temporarily,
due
to
weather.
Market
conditions
and
federal
funding
decisions
generally
havea
greater
influence
on
the
business
than
seasonality.PersonnelOn
December
31,
2016,
we
had
approximately
1,450
employees,
of
which
approximately
200
in
the
United
States
and
100
in
Canada
were
represented
by
variouslabor
unions.Executive
Officers
of
RegistrantThe
following
table
sets
forth
the
names,
ages
and
titles,
as
well
as
a
brief
account
of
the
business
experience
of
each
person
who
is
currently
an
executive
officerof
US
Ecology:Jeffrey
R.
Feeler
was
appointed
President
and
Chief
Executive
Officer
in
May
2013.
Mr.
Feeler
was
previously
the
Company's
senior
executive
as
President
andChief
Operating
Officer
from
October
2012
to
May
2013
and
as
the
Company's
Vice
President
and
Chief
Financial
Officer
from
May
2007
to
October
2012.
Hejoined
US
Ecology
in
2006
as
Vice
President,
Controller,
Chief
Accounting
Officer,
Treasurer
and
Secretary.
He
previously
held
financial
and
accountingmanagement
positions
with
MWI
Veterinary
Supply,
Inc.,
Albertson's,
Inc.
and
Hewlett-Packard
Company.
From
1993
to
2002,
he
held
various
accounting
andauditing
positions
for
PricewaterhouseCoopers
LLP.
Mr.
Feeler
is
a
Certified
Public
Accountant
and
holds
a
BBA
of
Accounting
and
a
BBA
of
Finance
fromBoise
State
University.Simon
G.
Bell
was
appointed
Executive
Vice
President
and
Chief
Operating
Officer
in
November
2016.
Mr.
Bell
previously
served
as
the
Company's
ExecutiveVice
President
of
Operations,
Environmental
Services
from
June
2014
to
November
2016.
From
May
2013
to
June
2014,
he
was
Executive
Vice
President
ofOperations
and
Technology
Development.
From
August
2007
to
May
2013,
he
was
Vice
President
of
Operations.
From
2005
to
August
2007,
he
was
VicePresident
of
Hazardous
Waste
Operations.
From
2002
to
2005,
he
was
our
Idaho
facility
General
Manager
and
Environmental
Manager.
His
20
years
of
industryexperience
includes
service
as
general
manager
of
a
competitor
disposal
facility
and
mining
industry
experience
in
Idaho,
Nevada
and
South
Dakota.
He
holds
aBS
in
Geology
from
Colorado
State
University.Eric
L.
Gerratt
was
appointed
Executive
Vice
President,
Chief
Financial
Officer
and
Treasurer
in
May
2013.
Mr.
Gerratt
previously
served
as
the
Company's
VicePresident,
Chief
Financial
Officer,
Treasurer
and
Chief
Accounting
Officer
from
October
2012
to
May
2013.
He
joined
US
Ecology
in
August
2007
as
VicePresident
and
Controller.
He
previously
held
various
financial
and
accounting
management
positions
at
SUPERVALU,
Inc.
and
Albertson's,
Inc.
From
1997
to2003,
he
held
various
accounting
and
auditing
positions
for
PricewaterhouseCoopers
LLP.
Mr.
Gerratt
is
a
Certified
Public
Accountant
and
holds
a
BS
inAccounting
from
the
University
of
Idaho.18Name
Age
TitleJeffrey
R.
Feeler

47
President
and
Chief
Executive
OfficerSimon
G.
Bell

46
Executive
Vice
President
and
Chief
Operating
OfficerEric
L.
Gerratt

46
Executive
Vice
President,
Chief
Financial
Officer
and
TreasurerSteven
D.
Welling

58
Executive
Vice
President
of
Sales
and
MarketingTable
of
ContentsSteven
D.
Welling
was
appointed
Executive
Vice
President
of
Sales
and
Marketing
in
May
2013.
Mr.
Welling
previously
served
as
the
Company's
Senior
VicePresident,
Sales
and
Marketing
from
January
2010
to
May
2013.
He
joined
US
Ecology
in
2001
through
the
Envirosafe
Services
of
Idaho
acquisition.
Hepreviously
served
as
National
Accounts
Manager
for
Envirosource
Technologies
and
Western
Sales
Manager
for
Envirosafe
Services
of
Idaho
and
before
thatmanaged
new
market
development
and
sales
for
a
national
bulk
chemical
transportation
company.
Mr.
Welling
holds
a
BS
from
California
State
University-Stanislaus.ITEM
1A.



RISK
FACTORSIn
addition
to
the
factors
discussed
elsewhere
in
this
Form
10-K,
the
following
are
important
factors
which
could
cause
actual
results
or
events
to
differ
materiallyfrom
those
contained
in
any
forward-looking
statements
made
by
or
on
behalf
of
us.Risks
Affecting
All
of
Our
BusinessesThe
completion
of,
loss
of
or
failure
to
renew
one
or
more
significant
contracts
could
adversely
affect
our
profitability.We
provide
disposal
and
transportation
services
to
customers
on
discrete
Event
Business
(non-recurring
project
based
work)
which
varies
widely
in
size,
durationand
unit
pricing.
Some
of
these
multi-year
projects
can
account
for
a
significant
portion
of
our
revenue
and
profit.
The
replacement
of
2016
Event
Businessrevenue
and
earnings
depends
on
multiple
factors,
many
of
which
are
outside
of
our
control
including,
but
not
limited
to,
general
and
industry-specific
economicconditions,
capital
in
the
commercial
credit
markets,
general
level
of
government
funding
on
environmental
matters,
real
estate
development
and
other
industrialinvestment
opportunities.
Our
inability
to
replace
the
contribution
from
2016
Event
Business
projects
with
new
business
could
result
in
a
material
adverse
effect
onour
financial
condition
and
results
of
operations.Our
market
is
highly
competitive.
Failure
to
compete
successfully
could
have
a
material
adverse
effect
on
our
business,
financial
condition
and
results
ofoperations.We
face
competition
from
companies
with
greater
resources
than
us,
companies
with
closer
geographic
proximity
to
waste
sites,
companies
with
service
offeringswe
do
not
provide
and
companies
that
can
provide
lower
pricing
than
we
can
in
certain
instances.
An
increase
in
the
number
or
location
of
commercial
treatment
ordisposal
facilities
for
hazardous
or
radioactive
waste,
significant
expansion
of
existing
competitor
permitted
capabilities,
acquisitions
by
competitors
or
a
decreasein
the
treatment
or
disposal
fees
charged
by
competitors
could
materially
and
adversely
affect
our
results
of
operations.
Our
business
is
also
heavily
affected
bywaste
disposal
fees
imposed
by
government
agencies.
These
fees,
which
vary
from
state
to
state
and
are
periodically
adjusted,
may
adversely
impact
thecompetitive
environment
in
which
we
operate.Adverse
economic
conditions,
government
funding
or
competitive
pressures
affecting
our
customers
could
harm
our
business.We
serve
oil
refineries,
chemical
production
plants,
steel
mills,
real
estate
developers,
waste
brokers/aggregators
serving
small
manufacturers
and
other
industrialcustomers
that
are,
or
may
be,
affected
by
changing
economic
conditions
and
competition.
These
customers
may
be
significantly
impacted
by
deterioration
in
thegeneral
economy
and
may
curtail
waste
production
and/or
delay
spending
on
plant
maintenance,
waste
cleanup
projects
and
other
discretionary
work.
Spending
bygovernment
customers
may
also
be
reduced
or
temporarily
suspended
due
to
declining
tax
revenues
that
may
result
from
a
general
deterioration
in
economicconditions
or
other
federal
or
state
fiscal
policy.
Factors
that
can
impact
general
economic
conditions
and
the
level
of
spending
by
customers
include
the
generallevel
of
consumer
and
industrial
spending,
increases
in
fuel
and
energy
costs,
residential
and
commercial
real
estate
and
mortgage19Table
of
Contentsmarket
conditions,
labor
and
healthcare
costs,
access
to
credit,
consumer
confidence
and
other
macroeconomic
factors
affecting
spending
behavior.
Market
forcesmay
also
compel
customers
to
cease
or
reduce
operations,
declare
bankruptcy,
liquidate
or
relocate
to
other
countries,
any
of
which
could
adversely
affect
ourbusiness.Our
operations
are
significantly
affected
by
the
commencement
and
completion
of
large
and
small
cleanup
projects;
potential
seasonal
fluctuations
due
to
weather;budgetary
decisions
and
cash
flow
limitations
influencing
the
timing
of
customer
spending
for
remedial
activities;
the
timing
of
regulatory
agency
decisions
andjudicial
proceedings;
changes
in
government
regulations
and
enforcement
policies
and
other
factors
that
may
delay
or
cause
the
cancellation
of
cleanup
projects.We
do
not
control
such
factors,
which
can
cause
our
revenue
and
income
to
vary
significantly
from
quarter
to
quarter
and
year
to
year.If
we
fail
to
comply
with
applicable
laws
and
regulations
our
business
could
be
adversely
affected.The
changing
regulatory
framework
governing
our
business
creates
significant
risks.
We
could
be
held
liable
if
our
operations
cause
contamination
of
air,groundwater
or
soil
or
expose
our
employees
or
the
public
to
contamination.
Under
current
law,
we
may
be
held
liable
for
damage
caused
by
conditions
thatexisted
before
we
acquired
the
assets
or
operations
involved.
Also,
we
may
be
liable
if
we
arrange
for
the
transportation,
disposal
or
treatment
of
hazardoussubstances
that
cause
environmental
contamination
at
facilities
operated
by
others,
or
if
a
predecessor
made
such
arrangements
and
we
are
a
successor.
Liability
forenvironmental
damage
could
have
a
material
adverse
effect
on
our
financial
condition,
results
of
operations
and
cash
flows.Stringent
regulations
of
federal,
state
or
provincial
governments
have
a
substantial
impact
on
our
business.
Local
government
controls
may
also
apply.
Manycomplex
laws,
rules,
orders
and
regulatory
interpretations
govern
environmental
protection,
health,
safety,
noise,
visual
impact,
odor,
land
use,
zoning,transportation
and
related
matters.
Failure
to
obtain
on
a
timely
basis
or
comply
with
applicable
federal,
state,
provincial
and
local
governmental
regulations,licenses,
permits
or
approvals
for
our
waste
treatment
and
disposal
facilities
could
prevent
or
restrict
our
ability
to
provide
certain
services,
resulting
in
apotentially
significant
loss
of
revenue
and
earnings.
Changes
in
environmental
regulations
may
require
us
to
make
significant
capital
or
other
expenditures,
or
limitoperations.
Changes
in
laws
or
regulations
or
changes
in
the
enforcement
or
interpretation
of
existing
laws,
regulations
or
permitted
activities
may
require
us
tomodify
existing
operating
licenses
or
permits,
or
obtain
additional
approvals
or
limit
operations.
New
governmental
requirements
that
raise
compliance
standardsor
require
changes
in
operating
practices
or
technology
may
impose
significant
costs
and/or
limit
operations.Our
revenue
is
primarily
generated
as
a
result
of
requirements
imposed
on
our
customers
under
federal,
state,
and
provincial
laws
and
regulations
to
protect
publichealth
and
the
environment.
If
requirements
to
comply
with
laws
and
regulations
governing
management
of
PCB,
hazardous
or
radioactive
waste
were
relaxed
orless
vigorously
enforced,
demand
for
our
services
could
materially
decrease
and
our
revenues
and
earnings
could
be
significantly
reduced.Failure
to
realize
the
anticipated
benefits
and
operational
performance
from
previously
acquired
operations
could
lead
to
an
impairment
of
goodwill
or
otherintangible
assets.As
a
result
of
acquisitions
in
2016,
2014,
2012
and
2010,
we
have
goodwill
of
$193.6
million
and
indefinite-lived
intangible
assets
of
$51.8
million
atDecember
31,
2016.
We
are
required
to
test
goodwill
and
intangible
assets
with
indefinite
useful
lives
at
least
annually
to
determine
if
impairment
has
occurred.The
testing
of
goodwill
and
other
intangible
assets
for
impairment
requires
us
to
make
significant
estimates
about
future
performance
and
cash
flows,
as
well
asother
assumptions.
These
estimates
can
be
affected
by
numerous
factors,
including
potential
changes
in
economic,
industry
or
market
conditions,
changes
in
lawsor
regulations,
changes
in
business
operations,
changes
in
competition
or
changes
in
our
stock
price
and
market
capitalization.
Changes
in
these
factors,
or
changesin
actual
performance
compared
with
estimates20Table
of
Contentsof
our
future
performance,
may
affect
the
fair
value
of
goodwill
or
other
intangible
assets,
which
may
result
in
an
impairment
charge.Estimates
of
the
future
performance
of
our
reporting
units
assume
a
certain
level
of
revenue
and
earnings
growth
over
the
projection
period.
The
projected
revenueand
earnings
growth
is
based
on
various
factors
and
assumptions
that
we
consider
to
be
reasonable,
including,
but
not
limited
to,
growth
in
the
industries
served
bythe
Field
Services
and
Resource
Recovery
reporting
units,
successful
implementation
of
our
business
and
marketing
strategies
for
these
reporting
units
andcontinuing
favorable
market
conditions
for
the
customers
we
serve.
Should
any
of
these
assumptions
turn
out
not
to
be
true
and
the
projected
growth
not
occur
forthese
or
other
reasons,
or
the
reporting
units
otherwise
fail
to
meet
their
current
financial
plans,
or
there
are
changes
to
any
other
key
assumptions
used
in
theestimates,
the
financial
performance
of
these
reporting
units
could
result
in
a
future
goodwill
impairment.We
cannot
accurately
predict
the
amount
and
timing
of
any
impairment
of
assets.
Should
the
value
of
goodwill
or
other
intangible
assets
become
impaired
as
aresult
of
a
failure
to
realize
the
anticipated
benefits
and
operational
performance
of
acquired
operations,
our
financial
condition
and
results
of
operations
could
beadversely
impacted.Our
indebtedness
may
limit
the
amount
of
cash
flow
available
to
invest
in
the
ongoing
needs
of
our
business,
and
our
Credit
Agreement
restricts
our
ability
toengage
in
certain
corporate
and
financial
transactions.On
June
17,
2014
we
entered
into
a
new
$540.0
million
senior
secured
credit
agreement
(the
"Credit
Agreement")
with
a
syndicate
of
banks,
which
substantiallyincreased
our
outstanding
indebtedness.
As
of
December
31,
2016,
we
had
total
indebtedness
of
$285.2
million,
comprised
entirely
of
outstanding
borrowingsunder
the
Credit
Agreement.
Our
Credit
Agreement
requires
us
to
dedicate
a
portion
of
our
cash
flow
from
operations
to
payments
on
our
indebtedness,
potentiallyreducing
the
availability
of
our
cash
flow
to
fund
working
capital,
capital
expenditures,
development
activity,
acquisitions,
and
other
general
corporate
purposes;increases
our
vulnerability
to
adverse
general
economic
or
industry
conditions;
makes
us
more
vulnerable
to
increases
in
interest
rates,
as
borrowings
under
oursenior
secured
credit
facilities
are
at
variable
rates;
and
limits
our
ability
to
obtain
additional
financing
in
the
future
for
working
capital
or
other
purposes.In
addition,
the
Credit
Agreement
and
related
ancillary
agreements
with
our
lenders
contain
certain
covenants
that,
among
other
things,
restrict
our
ability
to
incuradditional
indebtedness,
pay
dividends
and
make
other
restricted
payments,
repurchase
shares
of
outstanding
stock,
create
certain
liens
and
engage
in
certain
typesof
transactions.
Our
ability
to
borrow
under
the
Credit
Agreement
depends
upon
our
compliance
with
the
restrictions
contained
in
the
Credit
Agreement
and
eventsbeyond
our
control
could
affect
our
ability
to
comply
with
these
covenants.Failure
to
perform
under
our
contracts
may
adversely
harm
our
business.Certain
contracts
require
us
to
meet
specified
performance
criteria.
Our
ability
to
meet
these
criteria
requires
that
we
expend
significant
resources.
If
we
or
oursubcontractors
are
unable
to
perform
as
required,
we
could
be
subject
to
substantial
monetary
penalties
and/or
loss
of
the
affected
contracts
which
may
adverselyaffect
our
business.Loss
of
key
management
or
sales
personnel
could
harm
our
business.We
have
an
experienced
management
team
including
general
managers
at
our
operating
facilities
and
rely
on
the
continued
service
of
these
senior
managers
toachieve
our
objectives.
Our
objective
is
to
retain
our
present
management
and
sales
teams
and
identify,
hire,
train,
motivate
and
retain
other
highly
skilledpersonnel.
The
loss
of
any
key
management
employee
or
sales
personnel
could
adversely
affect
our
business
and
results
of
operations.21Table
of
ContentsA
change
or
deterioration
in
labor
relations
could
disrupt
our
business
or
increase
costs,
which
could
have
a
material
adverse
effect
on
our
business,
financialcondition
and
results
of
operations.The
Company
is
a
party
to
collective
bargaining
agreements
covering
approximately
300,
or
approximately
21%,
of
our
employees.
The
agreements
expire
onApril
30,
2017,
May
31,
2018
and
November
30,
2020,
respectively.
While
we
believe
the
Company
will
maintain
good
working
relations
with
its
employees
onacceptable
terms,
there
can
be
no
assurance
that
we
will
be
able
to
negotiate
the
terms
of
future
agreements
in
a
manner
acceptable
to
the
Company.
Potential
workdisruptions
from
labor
disputes
may
disrupt
our
businesses
and
adversely
affect
our
financial
condition
and
results
of
operations.Our
participation
in
multi-employer
pension
plans
may
subject
us
to
liabilities
that
could
materially
adversely
affect
our
liquidity,
cash
flows
and
results
ofoperations.Certain
of
the
Company's
wholly-owned
subsidiaries
participate
in
multi-employer
defined
benefit
pension
plans
under
the
terms
of
collective
bargainingagreements
covering
most
of
the
subsidiaries'
union
employees.
To
the
extent
that
those
plans
are
underfunded,
the
Employee
Retirement
Income
Security
Act
of1974,
as
amended
by
the
Multi-Employer
Pension
Plan
Amendments
Act
of
1980
("ERISA"),
may
subject
us
to
substantial
liabilities
if
we
withdraw
from
suchmulti-employer
plans
or
if
they
are
terminated.
Under
current
law
regarding
multi-employer
defined
benefit
plans,
a
plan's
termination,
an
employer's
voluntarypartial
or
complete
withdrawal
from,
or
the
mass
withdrawal
of
all
contributing
employers
from,
an
underfunded
multi-employer
defined
benefit
plan
requiresparticipating
employers
to
make
payments
to
the
plan
for
their
proportionate
share
of
the
multi-employer
plan's
unfunded
vested
liabilities.
Furthermore,
thePension
Protection
Act
of
2006
added
new
funding
rules
generally
applicable
to
plan
years
beginning
after
2007
for
multi-employer
plans
that
are
classified
as"endangered,"
"seriously
endangered,"
or
"critical"
status.
If
plans
in
which
we
participate
are
in
critical
status,
benefit
reductions
may
apply
and/or
we
could
berequired
to
make
additional
contributions.
Contributions
to
these
funds
could
also
increase
as
a
result
of
future
collective
bargaining
with
the
unions,
a
shrinkingcontribution
base
as
a
result
of
the
insolvency
of
other
companies
who
currently
contribute
to
these
funds,
failure
of
the
Plan
to
meet
ERISA's
minimum
fundingrequirements,
lower
than
expected
returns
on
pension
fund
assets,
or
other
funding
deficiencies.
Any
of
the
foregoing
events
could
materially
adversely
affect
ourliquidity,
cash
flows
and
results
of
operations.Based
upon
the
information
available
to
us
from
plan
administrators
as
of
April
30,
2016,
certain
of
the
multi-employer
pension
plans
in
which
we
participate
areunderfunded.
The
Pension
Protection
Act
requires
that
underfunded
pension
plans
improve
their
funding
ratios
within
prescribed
intervals
based
on
the
level
oftheir
underfunding.
In
addition,
if
a
multi-employer
defined
benefit
plan
fails
to
satisfy
certain
minimum
funding
requirements,
the
Internal
Revenue
Service
mayimpose
a
nondeductible
excise
tax
of
5%
on
the
amount
of
the
accumulated
funding
deficiency
for
those
employers
contributing
to
the
fund.
We
have
been
notifiedthat
certain
plans
to
which
our
subsidiaries
contribute
are
in
"critical"
status
and
these
plans
may
require
additional
contributions
in
the
form
of
a
surcharge
onfuture
benefit
contributions
required
for
future
work
performed
by
union
employees
covered
by
these
plans.
As
a
result,
we
expect
our
required
contributions
tothese
plans
to
increase
in
the
future.
The
amount
of
additional
funds
we
may
be
obligated
to
contribute
in
the
future
cannot
be
estimated,
as
such
amounts
will
bebased
on
future
levels
of
work
that
require
the
specific
use
of
the
union
employees
covered
by
these
plans,
investment
returns
and
the
level
of
underfunding
of
suchplans.We
may
not
be
able
or
willing
to
pay
future
dividends.Our
ability
to
pay
dividends
is
subject
to
our
future
financial
condition
and
certain
conditions
such
as
continued
compliance
with
covenants
contained
in
our
CreditAgreement.
Our
Board
of
Directors
must
also
approve
any
dividends
at
their
sole
discretion.
Pursuant
to
our
Credit
Agreement,
we
may
only
declare
quarterly
orannual
dividends
if
on
the
date
of
declaration,
no
event
of
default
has
occurred
and
no
other
event
or
condition
has
occurred
that
would
constitute
an
event
ofdefault
due
to
the
payment
of
the22Table
of
Contentsdividend.
Unforeseen
events
or
situations
could
cause
non-compliance
with
these
covenants,
or
cause
the
Board
of
Directors
to
discontinue
or
reduce
the
amount
ofany
future
dividend
payment.Future
stock
issuances
could
adversely
affect
common
stock
ownership
interest
and
rights
in
comparison
with
those
of
other
security
holders.Our
board
of
directors
has
the
authority
to
issue
additional
shares
of
common
stock
or
preferred
stock
without
stockholder
approval.
If
additional
funds
are
raisedthrough
the
issuance
of
equity
or
securities
convertible
into
common
stock,
or
we
use
shares
of
our
common
stock
to
pay
a
portion
of
the
purchase
price
in
anyfuture
acquisition,
the
percentage
of
ownership
of
our
existing
stockholders
would
be
reduced,
and
these
newly
issued
securities
may
have
rights,
preferences
orprivileges
senior
to
those
of
existing
stockholders.
If
we
issue
additional
common
stock
or
securities
convertible
into
common
stock,
such
issuance
would
reducethe
proportionate
ownership
and
voting
power
of
each
other
stockholder.
In
addition,
such
stock
issuances
might
result
in
a
reduction
of
the
book
value
of
ourcommon
stock.Anti-takeover
provisions
in
our
organizational
documents
and
under
Delaware
law
may
impede
or
discourage
a
takeover,
which
could
cause
the
market
priceof
our
common
stock
to
decline.We
are
a
Delaware
corporation,
and
the
anti-takeover
provisions
of
Delaware
law
impose
various
impediments
to
the
ability
of
a
third
party
to
acquire
control
ofus,
even
if
a
change
in
control
would
be
beneficial
to
our
existing
stockholders,
which,
under
certain
circumstances,
could
reduce
the
market
price
of
our
commonstock.
In
addition,
protective
provisions
in
our
Restated
Certificate
of
Incorporation
and
Amended
and
Restated
Bylaws
or
the
implementation
by
our
Board
ofDirectors
of
a
stockholder
rights
plan
could
prevent
a
takeover,
which
could
harm
our
stockholders.The
price
of
our
common
stock
has
fluctuated
in
the
past
and
this
may
make
it
difficult
for
stockholders
to
resell
shares
of
common
stock
at
times
or
may
makeit
difficult
for
stockholders
to
sell
shares
of
common
stock
at
prices
they
find
attractive.The
trading
price
of
our
common
stock
may
fluctuate
widely
as
a
result
of
a
number
of
factors,
many
of
which
are
outside
our
control.
In
addition,
the
stock
marketis
subject
to
fluctuations
in
share
prices
and
trading
volumes
that
affect
the
market
prices
of
the
shares
of
many
companies.
These
broad
market
fluctuations
haveadversely
affected,
and
may
in
the
future
adversely
affect,
the
market
price
of
our
common
stock.
Among
the
factors
that
could
affect
our
stock
price
are:•changes
in
financial
estimates
and
buy/sell
recommendations
by
securities
analysts
or
our
failure
to
meet
analysts'
revenue
or
earnings
estimates;
•actual
or
anticipated
variations
in
our
operating
results;
•our
earnings
releases
and
financial
performance;
•market
conditions
in
our
industry
and
the
general
state
of
the
securities
markets;
•fluctuations
in
the
stock
price
and
operating
results
of
our
competitors;
•actions
by
institutional
stockholders;
•investor
perception
of
us
and
the
industry
and
markets
in
which
we
operate;
•general
economic
conditions
in
the
United
States
and
Canada;
•international
disorder
and
instability
in
foreign
financial
markets,
including
but
not
limited
to
potential
sovereign
defaults;
and
•other
factors
described
in
"Risk
Factors."23Table
of
ContentsA
cybersecurity
incident
could
negatively
impact
our
business
and
our
relationships
with
customers.We
use
computers
in
substantially
all
aspects
of
our
business
operations.
We
also
use
mobile
devices
and
other
online
activities
to
connect
with
our
employees
andour
customers.
Such
uses
of
technology
give
rise
to
cybersecurity
risks,
including
security
breach,
espionage,
system
disruption,
theft
and
inadvertent
release
ofinformation.
Our
business
involves
the
storage
and
transmission
of
numerous
classes
of
sensitive
and/or
confidential
information
and
intellectual
property,including
customers'
personal
information,
private
information
about
employees,
and
financial
and
strategic
information
about
the
Company
and
its
businesspartners.
Further,
if
the
Company
in
the
future
pursues
acquisitions
or
new
initiatives
that
require
expanding
or
improving
our
information
technologies,
this
mayresult
in
a
larger
technological
presence
and
corresponding
exposure
to
cybersecurity
risk.
If
we
fail
to
assess
and
identify
cybersecurity
risks
associated
withacquisitions
and
new
initiatives,
we
may
become
increasingly
vulnerable
to
such
risks.
Further,
despite
these
security
measures,
the
Company's
computer
systemsand
infrastructure
may
be
vulnerable
to
attacks
by
hackers
or
breached
due
to
employee
error,
malfeasance,
or
other
disruptions.
Additionally,
while
we
haveimplemented
measures
to
prevent
security
breaches
and
cyber
incidents,
our
preventative
measures
and
incident
response
efforts
may
not
be
entirely
effective.
Thetheft,
destruction,
loss,
misappropriation,
or
release
of
sensitive
and/or
confidential
information
or
intellectual
property,
or
interference
with
our
informationtechnology
systems
or
the
technology
systems
of
third
parties
on
which
we
rely,
could
result
in
business
disruption,
negative
publicity,
brand
damage,
violation
ofprivacy
laws,
loss
of
customers,
potential
liability
and
competitive
disadvantage.Additional
Risks
of
Our
Environmental
Services
BusinessA
significant
portion
of
our
business
depends
upon
non-recurring
event
cleanup
projects
over
which
we
have
no
control.A
significant
portion
of
our
disposal
revenue
is
attributable
to
discrete
Event
Business
which
varies
widely
in
size,
duration
and
unit
pricing.
For
the
year
endedDecember
31,
2016,
approximately
18%
of
our
T&D
revenue
was
derived
from
Event
Business
projects.
The
one-time
nature
of
Event
Business,
diverse
spectrumof
waste
types
received
and
widely
varying
unit
pricing
necessarily
creates
variability
in
revenue
and
earnings.
This
variability
may
be
influenced
by
general
andindustry-specific
economic
conditions,
funding
availability,
changes
in
laws
and
regulations,
government
enforcement
actions
or
court
orders,
public
controversy,litigation,
weather,
commercial
real
estate,
closed
military
bases
and
other
project
timing,
government
appropriation
and
funding
cycles
and
other
factors.
Thisvariability
can
cause
significant
quarter-to-quarter
and
year-to-year
differences
in
revenue,
gross
profit,
gross
margin,
operating
income
and
net
income.
Also,while
we
pursue
many
large
projects
months
or
years
in
advance
of
work
performance,
both
large
and
small
cleanup
project
opportunities
routinely
arise
with
littleor
no
prior
notice.
These
market
dynamics
are
inherent
to
the
waste
disposal
business
and
are
factored
into
our
projections
and
externally
communicated
businessoutlook
statements.
Our
projections
combine
historical
experience
with
identified
sales
pipeline
opportunities,
new
or
expanded
service
line
projections
andprevailing
market
conditions.
A
reduction
in
the
number
and
size
of
new
cleanup
projects
won
to
replace
completed
work
could
have
a
material
adverse
effect
onour
financial
condition
and
results
of
operations.If
we
are
unable
to
obtain
regulatory
approvals
and
contracts
for
construction
of
additional
disposal
space
by
the
time
our
current
disposal
capacity
isexhausted,
our
business
would
be
adversely
affected.Construction
of
new
disposal
capacity
at
our
operating
disposal
facilities
beyond
currently
permitted
capacity
requires
state
and
provincial
regulatory
agencyapprovals.
Administrative
processes
for
such
approval
reviews
vary.
The
State
of
Texas,
which
regulates
our
Robstown
facility,
provides
for
an
adjudicatoryhearing
process
administered
by
a
hearing
officer
appointed
by
the
State.
There
can
be
no
assurance
that
we
will
be
successful
in
obtaining
future
expansionapprovals
in
a
timely
manner
or
at
all.
If
we
are
not
successful
in
receiving
these
approvals,
our
disposal
capacity
could
eventually
be
exhausted,24Table
of
Contentspreventing
us
from
accepting
additional
waste
at
an
affected
facility.
This
would
have
a
material
adverse
effect
on
our
business.If
we
are
unable
to
renew
our
operating
permits
or
lease
agreements
with
regulatory
bodies,
our
business
would
be
adversely
affected.Our
facilities
operate
using
permits
and
licenses
issued
by
various
regulatory
bodies
at
various
state,
provincial
and
federal
government
levels.
In
addition,
three
ofour
facilities
operate
on
land
leased
from
government
agencies.
Failure
to
renew
our
permits
and
licenses
necessary
to
operate
our
facilities
or
failure
to
renew
ormaintain
compliance
with
our
site
lease
agreements
would
have
a
material
adverse
effect
on
our
business.
There
can
be
no
assurance
we
will
continue
to
besuccessful
in
obtaining
timely
permit
applications
approval,
maintaining
compliance
with
our
lease
agreements
and
obtaining
timely
lease
renewals.Our
business
requires
the
handling
of
dangerous
substances.
Improper
handling
of
such
substances
could
result
in
an
adverse
impact
on
our
financialcondition
and
results
of
operations.We
are
subject
to
unexpected
occurrences
related,
or
unrelated,
to
the
routine
handling
of
dangerous
substances.
A
fire
or
other
incident
could
impair
the
ability
ofone
or
more
facilities
to
continue
to
perform
normal
operations,
which
could
have
a
material
adverse
impact
on
our
financial
condition
and
results
of
operations.Improper
handling
of
these
substances
could
also
violate
laws
and
regulations
resulting
in
fines
and/or
suspension
of
operations.If
we
are
unable
to
obtain
at
a
reasonable
cost
or
under
reasonable
terms
and
conditions
the
necessary
levels
of
insurance
and
financial
assurances
requiredfor
operations,
our
business
and
results
of
operations
would
be
adversely
affected.We
are
required
by
law,
license,
permit
and
prudence
to
maintain
various
insurance
instruments
and
financial
assurances.
We
carry
a
broad
range
of
insurancecoverages
that
we
believe
are
customary
for
a
company
of
our
size
in
our
business.
We
obtain
these
coverages
to
mitigate
risk
of
loss,
allowing
us
to
manage
ourself-insured
exposure
from
potential
claims.
We
are
self-insured
for
employee
health-care
coverage.
Stop-loss
insurance
is
carried
covering
liability
on
claims
inexcess
of
$150,000
per
individual
or
on
an
aggregate
basis
for
the
monthly
population.
Accrued
costs
related
to
the
self-insured
health
care
coverage
were$1.0
million
and
$1.1
million
at
December
31,
2016
and
2015,
respectively.
We
also
maintain
a
Pollution
and
Remediation
Legal
Liability
Policy
pursuant
toRCRA
regulations
subject
to
a
$250,000
self-insured
retention.
In
addition,
we
are
insured
for
consultant's
environmental
liability
subject
to
a
$100,000
self-insured
retention.
We
are
also
insured
for
losses
or
damage
to
third
party
property
or
people
subject
to
a
$100,000
self-insured
retention.
If
our
insurers
wereunable
to
meet
their
obligations,
or
our
own
obligations
for
claims
were
more
than
expected,
there
could
be
a
material
adverse
effect
to
our
financial
condition
andresults
of
operation.Through
December
31,
2016,
we
have
met
our
financial
assurance
requirements
through
a
combination
of
insurance
policies,
commercial
surety
bonds
and
trustfunds.
Our
insurance
policies
covering
closure
and
post-closure
activities
expire
in
December
2017
for
covered
U.S.
operating
facilities
(dedicated
state-controlledclosure
and
post-closure
funds
provide
financial
assurance
for
our
Washington
and
Nevada
facilities).
We
continue
to
use
self-funded
trust
accounts
for
our
post-closure
obligations
at
our
U.S.
non-operating
sites.
We
use
commercial
surety
bonds
for
our
Canadian
operations
that
expire
in
November
and
December
2017,respectively.
We
currently
have
in
place
all
financial
assurance
instruments
necessary
for
our
operations.
While
we
expect
to
continue
renewing
these
policies
andsurety
bonds,
if
we
were
unable
to
obtain
adequate
closure,
post-closure
or
environmental
insurance,
bonds
or
other
instruments
in
the
future,
any
partially
orcompletely
uninsured
claim
against
us,
if
successful
and
of
sufficient
magnitude,
could
have
a
material
adverse
effect
on
our
results
of
operations
and
cash
flows.Additionally,
continued
access
to
casualty
and
pollution
legal
liability
insurance
with
sufficient
limits,
at25Table
of
Contentsacceptable
terms,
is
important
to
obtaining
new
business.
Failure
to
maintain
adequate
financial
assurance
could
also
result
in
regulatory
action
including
earlyclosure
of
facilities.
As
of
December
31,
2016,
we
have
provided
collateral
of
$5.8
million
in
funded
trust
agreements,
$12.0
million
in
surety
bonds,
issued$2.7
million
in
letters
of
credit
for
financial
assurance
and
have
insurance
policies
of
approximately
$81.6
million
for
closure
and
post-closure
obligations
atcovered
U.S.
operating
facilities.
We
have
$686,000
in
commercial
surety
bonds
dedicated
for
closure
obligations
at
our
Canadian
operating
facility.
While
webelieve
we
will
be
able
to
maintain
the
requisite
financial
assurance
policies
at
a
reasonable
cost,
premium
and
collateral
requirements
may
materially
increase.Such
increases
could
have
a
material
adverse
effect
on
our
financial
condition
and
results
of
operations.The
hazardous
and
radioactive
waste
industries
in
which
we
operate
are
subject
to
litigation
risk.The
handling
of
radioactive,
PCBs
and
hazardous
material
subjects
us
to
potential
liability
claims
by
employees,
contractors,
property
owners,
neighbors
andothers.
There
can
be
no
assurance
that
our
existing
liability
insurance
is
adequate
to
cover
claims
asserted
against
us
or
that
we
will
be
able
to
maintain
adequateinsurance
in
the
future.
Adverse
rulings
in
judicial
or
administrative
proceedings
could
also
have
a
material
adverse
effect
on
our
financial
condition
and
results
ofoperations.We
may
not
be
able
to
obtain
timely
or
cost
effective
transportation
services
which
could
adversely
affect
our
profitability.Revenue
at
each
of
our
facilities
is
subject
to
potential
risks
from
disruptions
in
rail
or
truck
transportation
services
relied
upon
to
deliver
waste
to
our
facilities.Increases
in
fuel
costs
and
unforeseen
events
such
as
labor
disputes,
public
health
pandemics,
severe
weather,
natural
disasters
and
other
acts
of
God,
war
or
terrorcould
prevent
or
delay
shipments
and
reduce
both
volumes
and
revenue.
Our
rail
transportation
service
agreements
with
our
customers
generally
allow
us
to
passon
fuel
surcharges
assessed
by
the
railroads.
This
may
decrease
or
eliminate
our
exposure
to
fuel
cost
increases.
Transportation
services
may
be
limited
byeconomic
conditions,
including
increased
demand
for
rail
or
trucking
services,
resulting
in
periods
of
slower
service
to
the
point
that
individual
customer
needscannot
be
met.
No
assurance
can
be
given
that
we
can
procure
transportation
services
in
a
timely
manner
at
competitive
rates
or
pass
through
fuel
cost
increases
inall
cases.
Such
factors
could
also
limit
our
ability
to
achieve
revenue
and
earnings
objectives.We
may
not
be
able
to
effectively
adopt
or
adapt
to
new
or
improved
technologies.We
expect
to
continue
implementing
new
or
improved
technologies
at
our
facilities
to
meet
customer
service
demands
and
expand
our
business.
If
we
are
unable
toidentify
and
implement
new
technologies
in
response
to
market
conditions
and
customer
requirements
in
a
timely,
cost
effective
manner,
our
financial
conditionand
results
of
operations
could
be
adversely
impacted.Our
financial
results
could
be
adversely
affected
by
foreign
exchange
fluctuations.We
operate
in
the
United
States
and
Canada
but
report
revenue,
costs
and
earnings
in
U.S.
dollars.
Exchange
rates
between
the
U.S.
dollar
and
the
Canadian
dollarare
likely
to
fluctuate
from
period
to
period.
Because
our
financial
results
are
reported
in
U.S.
dollars,
we
are
subject
to
the
risk
of
non-cash
translation
losses
forreporting
purposes.
If
we
continue
to
expand
our
international
operations,
we
will
conduct
more
transactions
in
currencies
other
than
the
U.S.
dollar.
To
the
extentthat
foreign
revenue
and
expense
transactions
are
not
denominated
in
the
local
currency,
we
are
further
subject
to
the
risk
of
transaction
losses.
We
have
notentered
into
derivative
instruments
to
offset
the
impact
of
foreign
exchange
fluctuations.
Fluctuations
in
foreign
currency
exchange
rates
could
have
a
materialadverse
effect
on
our
financial
condition
and
results
of
operations.26Table
of
ContentsWe
are
subject
to
risks
associated
with
operating
in
a
foreign
country.Our
Canadian
subsidiaries'
facilities
are
located
in
Blainville,
Québec
and
Tilbury,
Ontario,
Canada
and
use
the
Canadian
dollar
as
their
functional
currency.International
operations
are
subject
to
risks
that
may
have
material
adverse
effects
on
our
financial
condition
and
results
of
operations.
The
risks
that
ourinternational
operations
are
subject
to
include,
among
other
things:•difficulties
and
costs
relating
to
staffing
and
managing
foreign
operations;
•foreign
labor
union
relations;
•fluctuations
in
the
value
of
the
Canadian
dollar;
•repatriation
of
cash
from
Canadian
subsidiaries
to
the
United
States;
•imposition
of
additional
taxes
on
our
foreign
income;
and
•regulatory,
economic
and
public
policy
changes.Additional
Risks
of
Our
Field
&
Industrial
Services
BusinessA
significant
portion
of
our
Field
&
Industrial
Services
segment
depends
upon
the
demand
for
cleanup
of
major
spills
and
other
remedial
projects
andregulatory
developments
over
which
we
have
no
control.A
significant
portion
of
our
Field
&
Industrial
Services
segment
consists
of
remediation,
recycling,
industrial
cleaning
and
maintenance,
transportation,
total
wastemanagement,
technical
services,
and
emergency
response
services.
Demand
for
these
services
can
be
affected
by
the
commencement
and
completion
of
cleanup
ofmajor
spills
and
other
events,
customers'
decisions
to
undertake
remedial
projects,
seasonal
fluctuations
due
to
weather
and
budgetary
cycles
influencing
the
timingof
customers'
spending
for
remedial
activities,
the
timing
of
regulatory
decisions
relating
to
hazardous
waste
management
projects,
changes
in
regulationsgoverning
the
management
of
hazardous
waste,
changes
in
the
waste
processing
industry
towards
waste
minimization
and
the
propensity
for
delays
in
the
demandfor
remedial
services,
and
changes
in
governmental
regulations
relevant
to
our
diverse
operations.
We
do
not
control
such
factors
and,
as
a
result,
our
revenue
andincome
can
vary
from
quarter
to
quarter
or
year
to
year,
and
past
financial
performance
may
not
be
a
reliable
indicator
of
future
performance.Additional
Risks
of
Completed
and
Potential
AcquisitionsAcquisitions
that
we
undertake
could
be
difficult
to
integrate,
disrupt
our
business,
dilute
stockholder
value
and
adversely
affect
our
results
of
operations.Acquisitions
involve
multiple
risks.
Our
inability
to
successfully
integrate
an
acquired
business
could
have
a
material
adverse
effect
on
our
financial
condition
andresults
of
operations.
These
risks
include
but
are
not
limited
to:•failure
of
the
acquired
company
to
achieve
anticipated
revenues,
earnings
or
cash
flows;
•assumption
of
liabilities,
including
those
related
to
environmental
matters,
that
were
not
disclosed
to
us
or
that
exceed
our
estimates;
•problems
integrating
the
purchased
operations
with
our
own,
which
could
result
in
substantial
costs
and
delays
or
other
operational,
technical
or
financialproblems;
•potential
compliance
issues
relating
to
the
protection
of
health
and
the
environment,
compliance
with
securities
laws
and
regulations,
adequacy
of
internalcontrols
and
other
matters;
•diversion
of
management's
attention
or
other
resources
from
our
existing
business;27Table
of
Contents•risks
associated
with
entering
markets
or
product/service
areas
in
which
we
have
limited
prior
experience;
•increases
in
working
capital
investment
to
fund
the
growth
of
acquired
operations;
•unexpected
capital
expenditures
to
upgrade
waste
handling
or
other
infrastructure
or
replace
equipment
to
operate
safely
and
efficiently;
•potential
loss
of
key
employees
and
customers
of
the
acquired
company;
and
•future
write-offs
of
intangible
and
other
assets,
including
goodwill,
if
the
acquired
operations
fail
to
generate
sufficient
cash
flows.If
we
are
not
able
to
achieve
these
objectives,
the
anticipated
benefits
of
the
acquisition
may
not
be
realized
fully,
if
at
all,
or
may
take
longer
to
realize
thanexpected.
It
is
possible
that
the
integration
process
could
result
in
the
loss
of
key
employees,
the
disruption
of
our
ongoing
business,
failure
to
implement
thebusiness
plan
for
the
combined
businesses,
unanticipated
issues
in
integrating
service
offerings,
logistics
information,
communications
and
other
systems
or
otherunanticipated
issues,
expenses
and
liabilities,
any
or
all
of
which
could
adversely
affect
our
ability
to
maintain
relationships
with
customers
and
employees
or
toachieve
the
anticipated
benefits
of
the
acquisition.In
the
event
that
we
undertake
future
acquisitions,
we
may
not
be
able
to
successfully
execute
our
acquisition
strategy.We
may
experience
delays
in
making
acquisitions
or
be
unable
to
make
acquisitions
we
desire
for
a
number
of
reasons.
Suitable
acquisition
candidates
may
not
beavailable
at
purchase
prices
that
are
attractive
to
us
or
on
terms
that
are
acceptable
to
us.
In
pursuing
acquisition
opportunities,
we
typically
compete
with
othercompanies,
some
of
which
have
greater
financial
and
other
resources
than
we
do.
We
may
not
have
available
funds
or
common
stock
with
a
sufficient
market
priceto
complete
an
acquisition.
If
we
are
unable
to
secure
sufficient
funding
for
potential
acquisitions,
we
may
not
be
able
to
complete
acquisitions
that
we
otherwisefind
advantageous.The
timing
and
number
of
acquisitions
we
pursue
may
cause
volatility
in
our
financial
results.We
are
unable
to
predict
the
size,
timing
and
number
of
acquisitions
we
may
complete,
if
any.
In
addition,
we
may
incur
expenses
associated
with
sourcing,evaluating
and
negotiating
acquisitions
(including
those
that
are
not
completed),
and
we
also
may
pay
fees
and
expenses
associated
with
financing
acquisitions
toinvestment
banks
and
others.
Any
of
these
amounts
may
be
substantial,
and
together
with
the
size,
timing
and
number
of
acquisitions
we
pursue,
may
negativelyimpact
and
cause
significant
volatility
in
our
financial
results
and
the
price
of
our
common
stock.ITEM
1B.



UNRESOLVED
STAFF
COMMENTSNone.28Table
of
ContentsITEM
2.



PROPERTIESThe
following
table
describes
our
principal
physical
properties
and
facilities
at
December
31,
2016
owned
or
leased
by
us.
We
believe
that
our
existing
propertiesare
in
good
condition
and
suitable
for
conducting
our
business.In
addition
to
the
principal
physical
properties
detailed
in
the
table
above,
the
Company
owns
or
leases
a
number
of
smaller
(less
than
20,000
sq.
ft.)
propertiessupporting
our
Field
&
Industrial
Services
segment.The
following
table
provides
additional
information
for
our
treatment
facilities
with
onsite
landfills
including
total
acreage
owned
or
controlled
by
us
at
eachfacility,
estimated
amount
of
permitted
airspace
available
at
each
facility,
the
estimated
amount
of
non-permitted
airspace
and
the
estimated
life
at
each
facility.
Allestimates
are
as
of
December
31,
2016.29Location
Segment
Function
Own/LeaseBeatty,
Nevada
Environmental
Svcs.
Waste
treatment
and
landfill
disposal
LeaseRobstown,
Texas
Environmental
Svcs.
Waste
treatment
and
landfill
disposal
OwnGrand
View,
Idaho
Environmental
Svcs.
Waste
treatment
and
landfill
disposal
OwnBelleville,
Michigan
Environmental
Svcs.
Waste
treatment
and
landfill
disposal
OwnBlainville,
Québec,
Canada
Environmental
Svcs.
Waste
treatment
and
landfill
disposal
Own/LeaseRichland,
Washington
Environmental
Svcs.
Landfill
disposal
SubleaseDetroit,
Michigan
Environmental
Svcs.
Waste
treatment
OwnCanton,
Ohio
Environmental
Svcs.
Waste
treatment
OwnHarvey,
Illinois
Environmental
Svcs.
Waste
treatment
OwnYork,
Pennsylvania
Environmental
Svcs.
Waste
treatment
OwnTulsa,
Oklahoma
Environmental
Svcs.
Waste
treatment
OwnRomulus,
Michigan
Environmental
Svcs.
Waste
treatment
OwnMt.
Airy,
North
Carolina
Environmental
Svcs.
Waste
treatment
OwnTilbury,
Ontario,
Canada
Environmental
Svcs.
Waste
treatment
OwnVernon,
California
Environmental
Svcs.
Waste
treatment
OwnSulligent,
Alabama
Field
&
Industrial
Svcs.
Field
and
industrial
waste
management
OwnTampa,
Florida
Field
&
Industrial
Svcs.
Field
and
industrial
waste
management
OwnTaylor,
Michigan
Field
&
Industrial
Svcs.
Field
and
industrial
waste
management
OwnBayonne,
New
Jersey
Field
&
Industrial
Svcs.
Field
and
industrial
waste
management
LeaseAtlanta,
Georgia
Field
&
Industrial
Svcs.
Field
and
industrial
waste
management
LeaseWrentham,
Massachusetts
Field
&
Industrial
Svcs.
Field
and
industrial
waste
management
OwnBoise,
Idaho
Corporate
Corporate
Office
LeaseLivonia,
Michigan
Corporate
Regional
Office
LeaseLocation
Total
Acreage
Permitted
Airspace
(Cubic
Yards)
Non-Permitted
Airspace
(Cubic
Yards)
Estimated
Life
(Years)Beatty,
Nevada(1)
480

8,826,464

—
51Robstown,
Texas(2)
873

1,003,649

—
6Grand
View,
Idaho(3)
1,411

10,476,524

18,100,000
160Belleville,
Michigan(4)
455

12,230,638

—
39Blainville,
Québec,
Canada(5)
350

6,342,357

—
28Richland,
Washington(6)
100

646,768

—
39​​Total



39,526,400

18,100,000

​​​​​​(1)Our
Beatty,
Nevada
facility,
which
began
receiving
hazardous
waste
in
1970,
is
located
in
the
Amargosa
Desert
approximately
120
milesnorthwest
of
Las
Vegas,
Nevada
and
approximately
30
miles
east
of
Death
Valley,
California.
The
facility
operates
through
an
operatingagreement
with
the
State
of
Nevada
on
480
acres
owned
by
the
State.
In
2016,
the
facility
secured
permit
modifications
from
the
NevadaDivision
of
Environmental
Protection
and
the
USEPA
authorizing
the
construction
of
a
new
landfill
unit
at
the
facility.
The
first
phase
ofthis
new
landfill
is
anticipated
to
beTable
of
Contents30completed
in
early
2017.
In
April
2007,
we
renewed
our
lease
with
the
State
of
Nevada
as
a
year-to-year
periodic
tenancy
until
(i)
that
areareaches
full
capacity
and
can
no
longer
accept
waste
(an
estimated
life
of
51
years
using
2016
volume);
(ii)
the
lease
is
terminated
by
us
atour
option;
or
(iii)
the
State
terminates
the
lease
due
to
our
breach
of
the
lease
terms.
The
State
of
Nevada
assesses
disposal
fees
to
fund
adedicated
trust
account
to
pay
for
future
closure
and
post-closure
costs.(2)Our
Robstown,
Texas
facility
began
operations
in
1973.
It
is
located
on
240
acres
owned
by
the
Company
approximately
10
miles
west
ofCorpus
Christi,
Texas.
We
own
an
additional
633
acres
of
adjacent
land
for
future
expansion.
We
also
own
174
acres
of
land
five
mileswest
of
the
facility
adjacent
to
a
rail
line
where
we
have
operated
a
rail
transfer
station
since
2006.
We
are
currently
working
with
theTexas
Commission
of
Environmental
Quality
to
permit
180
acres
of
adjacent
land
that
we
anticipate
will
add
approximately
10
millioncubic
yards,
or
30
years,
of
future
airspace.
We
expect
our
permit
to
be
approved
in
2017.
(3)Our
Grand
View,
Idaho
facility,
purchased
in
2001,
is
located
on
1,252
acres
of
Company-owned
land
approximately
60
miles
southeast
ofBoise,
Idaho
in
the
Owyhee
Desert.
We
own
an
additional
159
acres
approximately
two
miles
east
of
the
facility
that
provides
a
clay
sourcefor
site
operations
(liner
construction
and
waste
treatment).
We
also
own
189
acres
where
our
rail
transfer
station
is
located
approximately30
miles
northeast
of
the
disposal
facility.
This
site
has
two
enclosed
rail-to-truck
waste
transfer
facilities
located
adjacent
to
the
main
lineof
the
Union
Pacific
Railroad.
(4)Our
Belleville,
Michigan
facility
began
operations
in
1957
and
began
disposing
of
waste
in
the
onsite
landfill
in
1969.
The
facility
islocated
on
455
acres
owned
by
the
Company
approximately
30
miles
from
Detroit,
Michigan.
We
also
own
12
acres
of
land
nine
milesfrom
the
facility
adjacent
to
a
rail
line
where
we
have
operated
a
rail
transfer
station
since
1998.
(5)Our
Blainville,
Québec,
Canada
facility
has
been
in
operation
since
1983
and
is
located
approximately
30
miles
northwest
of
Montreal,Québec,
Canada.
The
facility
includes
an
indoor
hazardous
and
industrial
waste
treatment
and
storage
facility
and
a
rail
transfer
stationlocated
on
25
acres
adjacent
to
a
325
acre
disposal
site.
The
treatment
processing
facility
is
on
land
owned
by
the
Company.
The
disposalsite
which
is
adjacent
to
the
owned
treatment
processing
facility
is
leased
from
the
Province
of
Québec
with
a
term
through
2018
and
onefive-year
renewal
option.
The
site
is
permitted
to
accept
up
to
875,000
metric
tons
(962,500
U.S.
tons)
over
the
five-year
permit
period.
Ofthis
amount,
up
to
350,000
metric
tons
(385,000
U.S.
tons)
can
be
accepted
as
soil.
While
there
are
no
specific
restrictions
on
waste
soilsreceived
from
the
U.S.,
non-soil
waste
received
from
the
U.S.
is
limited
to
350,000
metric
tons
(385,000
U.S.
tons)
over
the
five-yearpermit
period.
The
Province
assesses
fees
to
fund
a
dedicated
government
trust
account
to
pay
for
post-closure
costs
at
the
disposal
site.
(6)Our
Richland,
Washington
LLRW
facility
has
been
in
operation
since
1965
and
is
located
on
100
acres
of
land
leased
by
the
State
ofWashington
from
the
federal
government
on
the
U.S.
Department
of
Energy
Hanford
Reservation
approximately
35
miles
west
ofRichland,
Washington.
We
sublease
this
property
from
the
State
of
Washington.
The
lease
between
the
State
of
Washington
and
the
federalgovernment
expires
in
2063.
We
renewed
our
sublease
with
the
State
in
2005
for
ten
years
with
four
ten-year
renewal
options,
giving
uscontrol
of
the
property
until
the
year
2055
provided
that
we
meet
our
obligations
and
operate
in
a
compliant
manner.
The
facility's
intendedoperating
life
is
equal
to
the
period
of
the
sublease.
The
State
assesses
user
fees
for
local
economic
development,
state
regulatory
agencyexpenses
and
a
dedicated
trust
account
to
pay
for
long-term
care
after
the
facility
closes.
The
State
maintains
separate,
dedicated
trust
fundsfor
future
closure
and
post-closure
costs.Table
of
ContentsITEM
3.



LEGAL
PROCEEDINGSIn
the
ordinary
course
of
business,
we
are
involved
in
judicial
and
administrative
proceedings
involving
federal,
state,
provincial
or
local
governmental
authorities,including
regulatory
agencies
that
oversee
and
enforce
compliance
with
permits.
Fines
or
penalties
may
be
assessed
by
our
regulators
for
non-compliance.
Actionsmay
also
be
brought
by
individuals
or
groups
in
connection
with
permitting
of
planned
facilities,
modification
or
alleged
violations
of
existing
permits,
or
allegeddamages
suffered
from
exposure
to
hazardous
substances
purportedly
released
from
our
operated
sites,
as
well
as
other
litigation.
We
maintain
insurance
intendedto
cover
property
and
damage
claims
asserted
as
a
result
of
our
operations.
Periodically,
management
reviews
and
may
establish
reserves
for
legal
andadministrative
matters,
or
other
fees
expected
to
be
incurred
in
relation
to
these
matters.We
are
not
currently
a
party
to
any
material
pending
legal
proceedings
and
are
not
aware
of
any
other
claims
that
could,
individually
or
in
the
aggregate,
have
amaterially
adverse
effect
on
our
financial
position,
results
of
operations
or
cash
flows.ITEM
4.



MINE
SAFETY
DISCLOSURESNot
applicable.31Table
of
ContentsPART
II
ITEM
5.



MARKET
FOR
REGISTRANT'S
COMMON
EQUITY,
RELATED
STOCKHOLDER
MATTERS
AND
ISSUER
PURCHASES
OF
EQUITYSECURITIESCommon
Stock
PriceOur
common
stock
is
listed
on
the
NASDAQ
Global
Select
Market
under
the
symbol
ECOL.
As
of
January
4,
2017
there
were
approximately
13,923
beneficialowners
of
our
common
stock.
High
and
low
sales
prices
for
the
common
stock
for
each
quarter
in
the
last
two
years
are
shown
below:Dividend
HistoryWe
have
paid
the
following
dividends
on
our
common
stock
($s
in
thousands
except
per
share
amounts):On
January
3,
2017,
the
Company
declared
a
dividend
of
$0.18
per
common
share
for
stockholders
of
record
on
January
20,
2017.
The
dividend
was
paid
fromcash
on
hand
on
January
27,
2016
in
an
aggregate
amount
of
$3.9
million.Pursuant
to
the
Credit
Agreement,
we
may
only
declare
quarterly
or
annual
dividends
if
on
the
date
of
declaration,
no
event
of
default
has
occurred
and
no
otherevent
or
condition
has
occurred
that
would
constitute
an
event
of
default
due
to
the
payment
of
the
dividend.
No
events
of
default
under
the
Credit
Agreement
haveoccurred
to
date.Stock
Performance
GraphThe
following
graph
compares
the
five-year
cumulative
total
return
on
our
common
stock
with
the
comparable
five-year
cumulative
total
returns
of
the
NASDAQComposite
Index
and
Dow
Jones
Waste
&
Disposal
Services
Index
for
the
period
from
the
end
of
fiscal
2011
to
the
end
of
fiscal
2016.
The
stock
priceperformance
shown
below
is
not
necessarily
indicative
of
future
performance.32


2016
2015



High
Low
High
Low
First
Quarter
$44.68
$29.89
$52.42
$38.58
Second
Quarter
$49.39
$40.62
$51.93
$45.30
Third
Quarter
$48.84
$42.13
$52.99
$43.28
Fourth
Quarter
$50.25
$38.00
$48.01
$32.76



2016
2015



Per
share
Dollars
Per
share
Dollars
First
Quarter
$0.18
$3,918
$0.18
$3,894
Second
Quarter

0.18

3,917

0.18

3,899
Third
Quarter

0.18

3,919

0.18

3,907
Fourth
Quarter

0.18

3,919

0.18

3,912
Total
$0.72
$15,673
$0.72
$15,612
Table
of
ContentsComparison
of
Cumulative
Total
Stockholder
Return(1)
Among
US
Ecology,
Inc.,
NASDAQ
Composite
Index
and
Dow
Jones
Waste
&
Disposal
Services
Index
The
performance
graph
above
is
being
furnished
solely
to
accompany
this
Annual
Report
on
Form
10-K
pursuant
to
Item
201(e)
of
Regulation
S-K,
is
not
beingfiled
for
purposes
of
Section
18
of
the
Exchange
Act,
and
is
not
to
be
incorporated
by
reference
into
any
filing
of
the
Company,
whether
made
before
or
after
thedate
hereof,
regardless
of
any
general
incorporation
language
in
such
filing.Securities
Authorized
for
Issuance
Under
Equity
Compensation
PlansInformation
with
respect
to
compensation
plans
under
which
our
equity
securities
are
authorized
for
issuance
is
discussed
in
Item
12
of
Part
III
of
this
AnnualReport
on
Form
10-K.Issuer
Purchases
of
Equity
SecuritiesOn
June
1,
2016,
the
Company's
Board
of
Directors
authorized
the
repurchase
of
$25.0
million
of
the
Company's
outstanding
common
stock.
Repurchases
may
bemade
from
time
to
time
in
the
open
market
or
through
privately
negotiated
transactions.
The
timing
of
any
repurchases
will
be
based
upon
prevailing33Date
US
Ecology,
Inc.
Nasdaq
Composite
Dow
Jones
US
Waste
&
Disposal
Services
Index
December
31,
2011
$100.00
$100.00
$100.00
December
31,
2012
$131.01
$116.41
$108.50
December
31,
2013
$210.40
$165.47
$135.56
December
31,
2014
$231.36
$188.69
$154.20
December
31,
2015
$213.49
$200.32
$160.66
December
31,
2016
$293.07
$216.54
$194.63
(1)Total
return
assuming
$100
invested
on
December
31,
2011
and
reinvestment
of
dividends
on
the
day
they
were
paid.Table
of
Contentsmarket
conditions
and
other
factors.
The
Company
did
not
repurchase
any
shares
of
common
stock
under
the
repurchase
program
during
the
year
endedDecember
31,
2016.
The
repurchase
program
will
remain
in
effect
until
June
2,
2018,
unless
extended
by
our
Board
of
Directors.The
following
table
summarizes
the
purchases
of
shares
of
our
common
stock
during
the
year
ended
December
31,
2016:34Period
Total
Number
of
Shares
Purchased(1)
Average
Price
Paid
per
Share
Total
Number
of
Shares
Purchased
as
Part
of
Publicly
Announced
Plan
or
Program
Approximate
Dollar
Value
of
Shares
that
May
Yet
be
Purchased
Under
the
Plans
or
Programs
January
1
to
31,
2016

—
$—

—
$—
February
1
to
29,
2016

—

—

—

—
March
1
to
31,
2016

5,564

40.49

—

—
April
1
to
30,
2016

—

—

—

—
May
1
to
31,
2016

—

—

—

—
June
1
to
30,
2016

103

45.95

—

25,000,000
July
1
to
31,
2016

—

—

—

25,000,000
August
1
to
31,
2016

922

43.20

—

25,000,000
September
1
to
30,
2016

—

—

—

25,000,000
October
1
to
31,
2016

—

—

—

25,000,000
November
1
to
30,
2016

—

—

—

25,000,000
December
1
to
31,
2016

—

—

—

25,000,000
Total

6,589
$40.95

—
$25,000,000
(1)Represents
shares
surrendered
or
forfeited
in
connection
with
certain
employees'
tax
withholding
obligations
related
to
the
vesting
ofshares
of
restricted
stock.Table
of
ContentsITEM
6.



SELECTED
FINANCIAL
DATA
This
summary
should
be
read
in
conjunction
with
the
consolidated
financial
statements
and
related
notes.ITEM
7.



MANAGEMENT'S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATIONSGeneralUS
Ecology,
Inc.
is
a
leading
North
American
provider
of
environmental
services
to
commercial
and
government
entities.
The
Company
addresses
the
complexwaste
management
needs
of
its
customers,
offering
treatment,
disposal
and
recycling
of
hazardous,
non-hazardous
and
radioactive
waste,
as
well
as
a
wide
range
ofcomplementary
field
and
industrial
services.
US
Ecology's
comprehensive
knowledge
of
the
waste
business,
its
collection
of
waste
management
facilities
and
focuson
safety,
environmental35$s
in
thousands,
except
per
share
amounts
2016(2)
2015(2)
2014(1)
2013
2012
Revenue
$477,665
$563,070
$447,411
$201,126
$169,138
Impairment
charges

—

6,700

—

—

—
Operating
income

70,029

71,631

72,450

52,931

40,638
Foreign
currency
gain
(loss)

(138)
(2,196)
(1,499)
(2,327)
1,213
Income
tax
expense

21,049

21,244

22,814

17,996

16,059
Net
income
$34,252
$25,611
$38,236
$32,151
$25,659
Earnings
per
share—basic:
$1.58
$1.18
$1.78
$1.73
$1.41
Earnings
per
share—diluted:
$1.57
$1.18
$1.77
$1.72
$1.40
Shares
used
in
earnings
per
share
calculation:















Basic

21,704

21,637

21,537

18,592

18,238
Diluted

21,789

21,733

21,655

18,676

18,281
Dividends
paid
per
share
$0.72
$0.72
$0.72
$0.54
$0.90
Total
assets
$776,400
$771,987
$910,047
$300,556
$218,694
Working
capital(3)
$52,774
$54,516
$76,869
$85,356
$13,021
Long-term
debt
$277,362
$293,740
$384,381
$—
$44,797
Stockholders'
equity
$280,024
$256,135
$251,337
$231,538
$112,022
Return
on
invested
capital(4)

6.1%
6.2%
6.0%
17.3%
14.6%Adjusted
EBITDA(5)
$112,786
$125,450
$108,976
$71,186
$58,352
(1)2014
financial
data
reflects
the
acquisition
of
EQ
on
June
17,
2014.
(2)2015
and
2016
financial
data
reflects
the
divestiture
of
Allstate
on
November
1,
2015.
(3)Calculated
as
current
assets
minus
current
liabilities.
(4)Calculated
as
operating
income
less
applicable
taxes
divided
by
the
sum
of
stockholders'
equity,
long-term
debt,
closure
and
post-closureobligations
and
monetized
operating
leases,
less
cash
and
short-term
investments.
(5)We
define
Adjusted
EBITDA
as
net
income
before
interest
expense,
interest
income,
income
tax
expense,
depreciation,
amortization,
stockbased
compensation,
accretion
of
closure
and
post-closure
liabilities,
foreign
currency
gain/loss,
non-cash
impairment
charges,
loss
ondivestiture
and
other
income/expense.
See
"Adjusted
EBITDA"
under
Item
7.
Management's
Discussion
and
Analysis
of
FinancialCondition
and
Results
of
Operations
of
this
report
for
further
discussion
of
Adjusted
EBITDA
and
a
reconciliation
to
the
most
directlycomparable
GAAP
measure,
net
income.Table
of
Contentscompliance,
and
customer
service
enables
us
to
effectively
meet
the
needs
of
our
customers
and
to
build
long-lasting
relationships.We
have
fixed
facilities
and
service
centers
operating
in
the
United
States,
Canada
and
Mexico.
Our
fixed
facilities
include
five
RCRA
subtitle
C
hazardous
wastelandfills
and
one
LLRW
landfill
located
near
Beatty,
Nevada;
Richland,
Washington;
Robstown,
Texas;
Grand
View,
Idaho;
Detroit,
Michigan
and
Blainville,Québec,
Canada.
These
facilities
generate
revenue
from
fees
charged
to
treat
and
dispose
of
waste
and
from
fees
charged
to
perform
various
field
and
industrialservices
for
our
customers.On
June
17,
2014,
the
Company
acquired
100%
of
the
outstanding
shares
of
EQ
Holdings,
Inc.
and
its
wholly-owned
subsidiaries
(collectively
"EQ").
EQ
is
a
fullyintegrated
environmental
services
company
providing
waste
treatment
and
disposal,
wastewater
treatment,
remediation,
recycling,
industrial
cleaning
andmaintenance,
transportation,
total
waste
management,
technical
services,
and
emergency
response
services
to
a
variety
of
industries
and
customers
in
NorthAmerica.On
November
1,
2015,
we
sold
our
Allstate
Power
Vac,
Inc.
("Allstate")
subsidiary
to
a
private
investor
group.
See
Note
5
to
the
Consolidated
FinancialStatements
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K
for
additional
information.Our
operations
are
managed
in
two
reportable
segments
reflecting
our
internal
management
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,
treatmentand
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
sitesand
through
our
10-day
transfer
facilities.
Services
include
on-site
management,
waste
characterization,
transportation
and
disposal
of
non-hazardous
andhazardous
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.Effective
January
1,
2016,
we
changed
our
internal
reporting
structure
by
moving
the
financial
results
of
our
Sulligent,
Alabama
and
Tampa,
Florida
facilities
fromour
Environmental
Services
segment
to
our
Field
&
Industrial
Services
segment.
The
purpose
of
this
change
is
to
align
our
internal
reporting
structure
with
how
wemanage
our
business
based
on
the
primary
service
offering
of
each
facility.
Throughout
this
Annual
Report
on
Form
10-K,
our
segment
results
for
all
periodspresented
have
been
recast
to
reflect
this
change.In
order
to
provide
insight
into
the
underlying
drivers
of
our
waste
volumes
and
related
treatment
and
disposal
("T&D")
revenues,
we
evaluate
period-to-periodchanges
in
our
T&D
revenue
for
our
Environmental
Services
segment
based
on
the
industry
of
the
waste
generator ,
based
on
North
American
IndustryClassification
System
("NAICS")
codes.36Table
of
ContentsThe
composition
of
the
Environmental
Services
segment
T&D
revenues
by
waste
generator
industry
for
the
years
ended
December
31,
2016
and
2015
were
asfollows:We
also
categorize
our
Environmental
Services
T&D
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
meetingthe
definition
of
Event
Business.A
significant
portion
of
our
disposal
revenue
is
attributable
to
discrete
Event
Business
projects
which
vary
widely
in
size,
duration
and
unit
pricing.
For
the
yearended
December
31,
2016,
approximately
18%
of
our
T&D
revenue
was
derived
from
Event
Business
projects.
The
one-time
nature
of
Event
Business,
diversespectrum
of
waste
types
received
and
widely
varying
unit
pricing
necessarily
creates
variability
in
revenue
and
earnings.
This
variability
may
be
influenced
bygeneral
and
industry-specific
economic
conditions,
funding
availability,
changes
in
laws
and
regulations,
government
enforcement
actions
or
court
orders,
publiccontroversy,
litigation,
weather,
commercial
real
estate,
closed
military
bases
and
other
project
timing,
government
appropriation
and
funding
cycles
and
otherfactors.
The
types
and
amounts
of
waste
received
from
Base
Business
also
vary
from
quarter
to
quarter.
This
variability
can
also
cause
significant
quarter-to-quarter
and
year-to-year
differences
in
revenue,
gross
profit,
gross
margin,
operating
income
and
net
income.
While
we
pursue
many
projects
months
or
years
inadvance
of
work
performance,
cleanup
project
opportunities
routinely
arise
with
little
or
no
prior
notice.
These
market
dynamics
are
inherent
to
the
waste
disposalbusiness
and
are
factored
into
our
projections
and
externally
communicated
business
outlook
statements.
Our
projections
combine
historical
experience
withidentified
sales
pipeline
opportunities,
new
or
expanded
service
line
projections
and
prevailing
market
conditions.During
2016,
Base
Business
revenue
growth
was
up
2%
compared
to
2015.
Base
Business
revenue
was
approximately
82%
of
total
2016
T&D
revenue,
up
from75%
in
2015.
Our
business
is
highly
competitive
and
no
assurance
can
be
given
that
we
will
maintain
these
revenue
levels
or
increase
our
market
share.Depending
on
project-specific
customer
needs
and
competitive
economics,
transportation
services
may
be
offered
at
or
near
our
cost
to
help
secure
new
business.For
waste
transported
by
rail
from
the
eastern
United
States
and
other
locations
distant
from
our
Grand
View,
Idaho
and
Robstown,
Texas
facilities,
transportation-related
revenue
can
account
for
as
much
as
75%
of
total
project
revenue.
While
bundling37


%
of
Treatment
and
Disposal
Revenue(1)
for
the
Years
Ended
December
31,
Generator
Industry
2016
2015
Metal
Manufacturing

16%
16%Broker
/
TSDF

15%
14%General
Manufacturing

14%
12%Chemical
Manufacturing

13%
19%Refining

11%
10%Government

6%
7%Utilities

4%
4%Mining,
Exploration
and
Production

3%
3%Transportation

3%
3%Waste
Management
&
Remediation

2%
2%Other(2)

13%
10%(1)Excludes
all
transportation
service
revenue
(2)Includes
retail
and
wholesale
trade,
rate
regulated,
construction
and
other
industriesTable
of
Contentstransportation
and
disposal
services
reduces
overall
gross
profit
as
a
percentage
of
total
revenue
("gross
margin"),
this
value-added
service
has
allowed
us
to
winmultiple
projects
that
management
believes
we
could
not
have
otherwise
competed
for
successfully.
Our
Company-owned
fleet
of
gondola
railcars,
which
isperiodically
supplemented
with
railcars
obtained
under
operating
leases,
has
reduced
our
transportation
expenses
by
largely
eliminating
reliance
on
more
costlyshort-term
rentals.
These
Company-owned
railcars
also
help
us
to
win
business
during
times
of
demand-driven
railcar
scarcity.The
increased
waste
volumes
resulting
from
projects
won
through
this
bundled
service
strategy
further
drive
operating
leverage
benefits
inherent
to
the
disposalbusiness,
increasing
profitability.
While
waste
treatment
and
other
variable
costs
are
project-specific,
the
incremental
earnings
contribution
from
large
and
smallprojects
generally
increases
as
overall
disposal
volumes
increase.
Based
on
past
experience,
management
believes
that
maximizing
operating
income,
net
incomeand
earnings
per
share
is
a
higher
priority
than
maintaining
or
increasing
gross
margin.
We
intend
to
continue
aggressively
bidding
bundled
transportation
anddisposal
services
based
on
this
proven
strategy.We
serve
oil
refineries,
chemical
production
plants,
steel
mills,
waste
brokers/aggregators
serving
small
manufacturers
and
other
industrial
customers
that
aregenerally
affected
by
the
prevailing
economic
conditions
and
credit
environment.
Adverse
conditions
may
cause
our
customers
as
well
as
those
they
serve
to
curtailoperations,
resulting
in
lower
waste
production
and/or
delayed
spending
on
off-site
waste
shipments,
maintenance,
waste
cleanup
projects
and
other
work.
Factorsthat
can
impact
general
economic
conditions
and
the
level
of
spending
by
customers
include,
but
are
not
limited
to,
consumer
and
industrial
spending,
increases
infuel
and
energy
costs,
conditions
in
the
real
estate
and
mortgage
markets,
labor
and
healthcare
costs,
access
to
credit,
consumer
confidence
and
other
globaleconomic
factors
affecting
spending
behavior.
Market
forces
may
also
induce
customers
to
reduce
or
cease
operations,
declare
bankruptcy,
liquidate
or
relocate
toother
countries,
any
of
which
could
adversely
affect
our
business.
To
the
extent
business
is
either
government
funded
or
driven
by
government
regulations
orenforcement
actions,
we
believe
it
is
less
susceptible
to
general
economic
conditions.
Spending
by
government
agencies
may
be
reduced
due
to
declining
taxrevenues
resulting
from
a
weak
economy
or
changes
in
policy.
Disbursement
of
funds
appropriated
by
Congress
may
also
be
delayed
for
various
reasons.Our
results
of
operations
have
been
affected
by
certain
significant
events
during
the
past
three
fiscal
years
including,
but
not
limited
to:2016
EventsDivestiture of Augusta, Georgia Facility: 



On
April
5,
2016,
we
completed
the
divestiture
of
our
Augusta,
Georgia
facility
for
cash
proceeds
of
$1.9
million.
TheAugusta,
Georgia
facility
was
reported
as
part
of
our
Environmental
Services
segment.
Sales,
net
income
and
total
assets
of
the
Augusta,
Georgia
facility
are
notmaterial
to
our
consolidated
financial
position
or
results
of
operations
in
any
period
presented.
We
recognized
a
$1.9
million
pre-tax
gain
on
the
divestiture
of
theAugusta,
Georgia
facility,
which
is
included
in
Other
income
(expense)
in
our
consolidated
statements
of
operations
for
the
year
ended
December
31,
2016.Acquisition of Environmental Services Inc.: 



On
May
2,
2016,
the
Company
acquired
100%
of
the
outstanding
shares
of
Environmental
Services
Inc.,
("ESI"),
anenvironmental
services
company
based
in
Tilbury,
Ontario,
Canada.
The
total
purchase
price
was
$4.9
million,
net
of
cash
acquired,
and
was
funded
with
cash
onhand.
Revenues
and
total
assets
of
ESI
are
not
material
to
our
consolidated
financial
position
or
results
of
operations.
We
recorded
$1.5
million
of
intangible
assetsand
$1.0
million
of
goodwill
on
the
consolidated
balance
sheets
as
a
result
of
the
acquisition.
Definite-lived
intangibles
will
be
amortized
over
a
weighted
averagelife
of
approximately
14
years.
Goodwill
and
indefinite-lived
intangibles
are
tested
for
impairment
at
least
annually.Acquisition of Vernon, California Facility: 



On
October
1,
2016,
the
Company
acquired
the
Vernon,
California
based
RCRA
Part
B,
liquids
and
solids
wastetreatment
and
storage
facility
of
Evoqua
Water38Table
of
ContentsTechnologies
LLC.
The
total
purchase
price
was
$5.0
million
and
was
funded
with
cash
on
hand.
Revenues
and
total
assets
of
the
Vernon,
California
facility
arenot
material
to
our
consolidated
financial
position
or
results
of
operations.
We
recorded
$3.2
million
of
intangible
assets
and
$354,000
of
goodwill
on
theconsolidated
balance
sheets
as
a
result
of
the
acquisition.
Definite-lived
intangibles
will
be
amortized
over
a
weighted
average
life
of
approximately
20
years.Goodwill
and
indefinite-lived
intangibles
are
tested
for
impairment
at
least
annually.2015
EventsFull Year of EQ Operations: 



2015
includes
a
full
year
of
operating
results
for
EQ,
which
was
acquired
on
June
17,
2014.Sale of Allstate Power Vac, Inc. ("Allstate") and Goodwill Impairment: 



On
November
1,
2015,
we
sold
our
Allstate
subsidiary
to
a
private
investor
group
forcash
proceeds
of
$58.8
million.
Allstate
represented
the
majority
of
the
industrial
services
business
we
acquired
with
the
acquisition
of
EQ.
As
a
result
of
thisdivestiture
and
management's
strategic
review,
we
evaluated
the
recoverability
of
the
assets
associated
with
our
industrial
services
business.
Based
on
this
analysis,we
recorded
a
non-cash
goodwill
impairment
charge
of
$6.7
million,
or
$0.31
per
diluted
share,
in
the
second
quarter
of
2015.
We
recognized
a
pre-tax
loss
on
thedivestiture
of
Allstate,
including
transaction-related
costs,
of
$542,000
in
the
fourth
quarter
of
2015.
In
the
second
quarter
of
2016,
we
received
additional
cashproceeds
of
$827,000
in
settlement
of
final
post-closing
adjustments
and
recognized
an
additional
$178,000
pre-tax
gain.
Gains
and
losses
related
to
the
sale
ofAllstate
are
included
in
Other
income
(expense)
in
our
consolidated
statements
of
operations.
Cash
proceeds
from
the
transaction
were
used
to
repay
debt.
SeeNote
5
to
the
Consolidated
Financial
Statements
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K
foradditional
information
on
the
sale
of
Allstate.2014
EventsAcquisition of EQ Holdings, Inc.: 



On
June
17,
2014,
the
Company
acquired
100%
of
the
outstanding
shares
of
EQ.
EQ
is
a
fully
integrated
environmentalservices
company
providing
waste
treatment
and
disposal,
wastewater
treatment,
remediation,
recycling,
industrial
cleaning
and
maintenance,
transportation,
totalwaste
management,
technical
services,
and
emergency
response
services
to
a
variety
of
industries
and
customers
in
North
America.
The
total
purchase
price
was$460.9
million,
net
of
cash
acquired,
and
was
funded
through
a
combination
of
cash
on
hand
and
borrowings
under
a
new
$415.0
million
term
loan.
Theacquisition
of
EQ
affects
the
comparability
of
2014
with
other
years,
including
as
follows:•Revenue
and
operating
income
from
the
legacy
EQ
business
for
the
period
from
June
17,
2014
to
December
31,
2014
included
in
the
Company'sconsolidated
statements
of
operations
for
the
year
ended
December
31,
2014
were
$228.2
million
and
$18.5
million,
respectively.
•We
incurred
$6.4
million
of
business
development
expenses
during
the
year
ended
December
31,
2014
in
connection
with
the
EQ
acquisition
primarily
fordue
diligence
and
business
integration
purposes.
•We
recorded
$252.9
million
of
intangible
assets
and
$197.6
million
of
goodwill
on
our
Consolidated
Balance
Sheet
as
a
result
of
the
acquisition.
Acquiredfinite-lived
intangibles
will
be
amortized
over
their
estimated
useful
life
ranging
from
one
to
45
years.
Goodwill
and
indefinite-lived
intangibles
are
testedfor
impairment
at
least
annually.39Table
of
ContentsResults
of
OperationsOur
operating
results
and
percentage
of
revenues
for
the
years
ended
December
31,
2016,
2015
and
2014
were
as
follows:The
primary
financial
measure
used
by
management
to
assess
segment
performance
is
Adjusted
EBITDA.
Adjusted
EBITDA
is
defined
as
net
income
beforeinterest
expense,
interest
income,
income
tax
expense,
depreciation,
amortization,
stock
based
compensation,
accretion
of
closure
and
post-closure
liabilities,foreign
currency
gain/loss,
non-cash
impairment
charges,
loss
on
divestiture
and
other
income/expense.40


Year
Ended
December
31,
2016
vs.
2015
2015
vs.
2014
$s
in
thousands
2016
%
2015
%
2014
%
$
Change
%
Change
$
Change
%
Change
Revenue






























Environmental
Services
$337,771

71%$359,040

64%$311,486

70%$(21,269)
–6%$47,554

15%Field
&
IndustrialServices

139,894

29%
204,030

36%
135,925

30%
(64,136)
–31%
68,105

50%Total

477,665

100%
563,070

100%
447,411

100%
(85,405)
–15%
115,659

26%Gross
Profit






























Environmental
Services

126,818

38%
137,633

38%
123,769

40%
(10,815)
–8%
13,864

11%Field
&
IndustrialServices

20,777

15%
33,777

17%
22,017

16%
(13,000)
–38%
11,760

53%Total

147,595

31%
171,410

30%
145,786

33%
(23,815)
–14%
25,624

18%Selling,
General
&AdministrativeExpenses






























Environmental
Services

21,418

6%
22,752

6%
18,591

6%
(1,334)
–6%
4,161

22%Field
&
IndustrialServices

10,115

7%
21,961

11%
14,499

11%
(11,846)
–54%
7,462

51%Corporate

46,033

n/m

48,366

n/m

40,246

n/m

(2,333)
–5%
8,120

20%Total

77,566

16%
93,079

17%
73,336

16%
(15,513)
–17%
19,743

27%Adjusted
EBITDA






























Environmental
Services

139,698

41%
150,067

42%
123,086

40%
(10,369)
–7%
26,981

22%Field
&
IndustrialServices

16,342

12%
21,388

10%
8,638

6%
(5,046)
–24%
12,750

148%Corporate

(43,254)
n/m

(46,005)
n/m

(22,748)
n/m

2,751

–6%
(23,257)
102%Total
$112,786

24%$125,450

22%$108,976

24%$(12,664)
–10%$16,474

15%Table
of
ContentsThe
reconciliation
of
Net
Income
to
Adjusted
EBITDA
for
the
years
ended
December
31,
2016,
2015
and
2014
is
as
follows:Adjusted
EBITDA
is
a
complement
to
results
provided
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
("GAAP")
and
we
believethat
such
information
provides
additional
useful
information
to
analysts,
stockholders
and
other
users
to
understand
the
Company's
operating
performance.
SinceAdjusted
EBITDA
is
not
a
measurement
determined
in
accordance
with
GAAP
and
is
thus
susceptible
to
varying
calculations,
Adjusted
EBITDA
as
presented
maynot
be
comparable
to
other
similarly
titled
measures
of
other
companies.
Items
excluded
from
Adjusted
EBITDA
are
significant
components
in
understanding
andassessing
our
financial
performance.
Adjusted
EBITDA
should
not
be
considered
in
isolation
or
as
an
alternative
to,
or
substitute
for,
net
income,
cash
flowsgenerated
by
operations,
investing
or
financing
activities,
or
other
financial
statement
data
presented
in
the
consolidated
financial
statements
as
indicators
offinancial
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
thefuture,
and
Adjusted
EBITDA
does
not
reflect
any
cash
requirements
for
such
replacements.41


Year
Ended
December
31,
2016
vs.
2015
2015
vs.
2014
$s
in
thousands
2016
2015
2014
$
Change
%
Change
$
Change
%
Change
Net
Income
$34,252
$25,611
$38,236
$8,641

34%$(12,625)
–33%Income
tax
expense

21,049

21,244

22,814

(195)
–1%
(1,570)
–7%Interest
expense

17,317

23,370

10,677

(6,053)
–26%
12,693

119%Interest
income

(96)
(65)
(107)
(31)
48%
42

–39%Foreign
currency
loss

138

2,196

1,499

(2,058)
–94%
697

46%Loss
(gain)
on
divestiture

(2,034)
542

—

(2,576)
–475%
542

n/m
Other
income

(597)
(1,267)
(669)
670

–53%
(598)
89%Impairment
charges

—

6,700

—

(6,700)
–100%
6,700

n/m
Depreciation
and
amortization
ofplant
and
equipment

25,304

27,931

24,413

(2,627)
–9%
3,518

14%Amortization
of
intangibles

10,575

12,307

8,207

(1,732)
–14%
4,100

50%Stock-based
compensation

2,925

2,297

1,250

628

27%
1,047

84%Accretion
and
non-cashadjustment
of
closure
and
post-closure
liabilities

3,953

4,584

2,656

(631)
–14%
1,928

73%Adjusted
EBITDA
$112,786
$125,450
$108,976
$(12,664)
–10%$16,474

15%Table
of
Contents2016
Compared
to
2015RevenueTotal
revenue
decreased
15%
to
$477.7
million
in
2016,
compared
with
$563.1
million
in
2015.Environmental ServicesEnvironmental
Services
segment
revenue
decreased
6%
to
$337.8
million
in
2016,
compared
to
$359.0
million
in
2015.
T&D
revenue
decreased
5%
in
2016,primarily
as
a
result
of
a
30%
decrease
in
project-based
Event
Business.
Transportation
and
logistics
service
revenue
decreased
8%
in
2016
compared
to
2015,reflecting
fewer
Event
Business
projects
utilizing
the
Company's
transportation
and
logistics
services.
Tons
of
waste
disposed
of
or
processed
decreased
14%
in2016
compared
to
2015.T&D
revenue
from
recurring
Base
Business
waste
generators
increased
2%
in
2016
compared
to
2015
and
comprised
82%
of
total
T&D
revenue.
During
2016,increases
in
Base
Business
T&D
revenue
from
the
refining,
"Other",
utilities
and
general
manufacturing
industry
groups
were
partially
offset
by
decreases
in
T&Drevenue
from
Base
Business
in
the
chemical
manufacturing
and
broker/TSDF
industry
groups.T&D
revenue
from
Event
Business
waste
generators
decreased
30%
in
2016
compared
to
2015
and
comprised
18%
of
total
T&D
revenue.
The
decrease
in
EventBusiness
T&D
revenue
compared
to
the
prior
year
primarily
reflects
lower
T&D
revenue
from
the
chemical
manufacturing,
refining
and
government
industrygroups,
partially
offset
by
higher
T&D
revenue
from
the
general
manufacturing
and
"Other"
industry
groups.
The
decrease
in
revenue
from
the
chemicalmanufacturing
industry
group
is
primarily
attributable
to
the
completion
of
a
large
East
Coast
remedial
cleanup
project
in
the
third
quarter
of
2015
and
thecompletion
of
a
nuclear
fuels
fabrication
plant
decommissioning
in
the
first
quarter
of
2016.
The
decrease
in
revenue
from
the
refining
and
government
industrygroups
is
primarily
attributable
to
lower
Event
Business
volumes.The
following
table
summarizes
combined
Base
Business
and
Event
Business
T&D
revenue
growth,
within
the
Environmental
Services
segment,
by
wastegenerator
industry
for
2016
compared
to
2015:Field & Industrial ServicesField
&
Industrial
Services
segment
revenue
decreased
31%
to
$139.9
million
in
2016
compared
with
$204.0
million
in
2015.
The
decrease
is
primarilyattributable
to
the
divested
Allstate
business
which
contributed
segment
revenue
of
$59.1
million
for
our
period
of
ownership
in
2015.42


T&D
Revenue
Growth
2016
vs.
2015Other
15%General
Manufacturing
14%Waste
Management
&
Remediation
10%Utilities
9%Refining
0%Metal
Manufacturing
–3%Broker
/
TSDF
–3%Mining
and
E&P
–4%Transportation
–5%Government
–28%Chemical
Manufacturing
–35%Table
of
ContentsGross
ProfitTotal
gross
profit
decreased
14%
to
$147.6
million
in
2016,
down
from
$171.4
million
in
2015.
Total
gross
margin
was
31%
for
2016
compared
with
30%
for2015.Environmental ServicesEnvironmental
Services
segment
gross
profit
decreased
8%
to
$126.8
million
in
2016,
down
from
$137.6
million
in
2015.
This
decrease
primarily
reflects
lowerT&D
volumes
in
2016
compared
to
2015.
Total
segment
gross
margin
was
38%
for
both
2016
and
2015.
T&D
gross
margin
was
42%
for
2016
compared
with
43%for
2015.Field & Industrial ServicesField
&
Industrial
Services
segment
gross
profit
decreased
38%
to
$20.8
million
in
2016,
down
from
$33.8
million
in
2015.
Total
segment
gross
margin
was
15%for
2016
compared
with
17%
for
2015.
The
divested
Allstate
business
contributed
segment
gross
profit
of
$12.4
million
for
our
period
of
ownership
in
2015.Selling,
General
and
Administrative
Expenses
("SG&A")Total
SG&A
decreased
to
$77.6
million,
or
16%
of
total
revenue,
in
2016
compared
with
$93.1
million,
or
17%
of
total
revenue,
in
2015.Environmental ServicesEnvironmental
Services
segment
SG&A
decreased
6%
to
$21.4
million,
or
6%
of
segment
revenue,
in
2016
compared
with
$22.8
million,
or
6%
of
segmentrevenue,
in
2015,
primarily
reflecting
higher
gains
on
sales
of
assets
in
2016
compared
to
2015.Field & Industrial ServicesField
&
Industrial
Services
segment
SG&A
decreased
54%
to
$10.1
million,
or
7%
of
segment
revenue,
in
2016
compared
with
$22.0
million,
or
11%
of
segmentrevenue,
in
2015.
The
divested
Allstate
business
contributed
segment
SG&A
of
$10.9
million
for
our
period
of
ownership
in
2015.
The
remaining
decrease
insegment
SG&A
primarily
reflects
lower
employee
labor
costs
in
2016
compared
to
2015.CorporateCorporate
SG&A
was
$46.0
million,
or
10%
of
total
revenue,
in
2016
compared
with
$48.4
million,
or
9%
of
total
revenue,
in
2015,
primarily
reflecting
lowerbusiness
development
expenses
and
lower
professional
services
expenses
in
2016
compared
to
2015.Components
of
Adjusted
EBITDAIncome tax expenseOur
effective
income
tax
rate
for
2016
was
38.1%
compared
with
45.3%
in
2015.
The
decrease
reflects
nonrecurring
non-deductible
goodwill
impairment
chargesincurred
in
2015,
a
nondeductible
loss
on
the
sale
of
the
Allstate
business
recorded
during
2015
and
a
decrease
in
our
U.S.
effective
tax
rate,
driven
by
a
loweroverall
effective
state
tax
rate.
The
lower
effective
state
tax
rate
was
driven
by
changes
in
apportionment
of
income
and
deferred
taxes
between
the
various
states
inwhich
we
operate.
The
decrease
in
the
effective
tax
rate
was
partially
offset
by
a
lower
proportion
of
earnings
from
our
Canadian
operations
in
2016,
which
aretaxed
at
a
lower
corporate
tax
rate.
As
of
December
31,
2016,
we
had
approximately
$12.7
million
in
state
and
local
net
operating
loss
carry
forwards
("NOLs")
forwhich
we43Table
of
Contentsmaintain
a
valuation
allowance
on
the
majority
of
the
balance.
We
maintain
a
valuation
allowance
on
state
and
local
NOLs
when
we
no
longer
do
business
within
astate
or
locality
or
determine
it
is
unlikely
that
we
will
utilize
these
NOLs
in
the
future.
We
consider
it
more
likely
than
not
that
we
will
not
utilize
the
majority
ofthese
NOLs
in
the
future.Interest expenseInterest
expense
was
$17.3
million
in
2016
compared
with
$23.4
million
in
2015.
The
decrease
is
primarily
due
to
$291,000
of
incremental
non-cash
amortizationof
deferred
financing
fees
associated
with
debt
principal
payments
in
2016
compared
with
$2.4
million
of
incremental
amortization
in
2015.
The
remainingdecrease
is
attributable
to
lower
debt
levels
in
2016
compared
with
2015.Foreign currency gain (loss)We
recognized
a
$138,000
non-cash
foreign
currency
loss
in
2016
compared
with
a
$2.2
million
non-cash
foreign
currency
loss
in
2015.
Foreign
currency
gainsand
losses
reflect
changes
in
business
activity
conducted
in
a
currency
other
than
the
USD,
our
functional
currency.
Our
Canadian
subsidiaries'
facilities
are
locatedin
Blainville,
Québec
and
Tilbury,
Ontario,
Canada
and
use
the
Canadian
dollar
("CAD")
as
their
functional
currency.
Additionally,
we
established
intercompanyloans
between
our
Canadian
subsidiaries,
whose
functional
currency
is
the
CAD,
and
our
parent
company,
US
Ecology,
as
part
of
a
tax
and
treasury
managementstrategy
allowing
for
repayment
of
third-party
bank
debt.
These
intercompany
loans
are
payable
by
our
Canadian
subsidiaries
to
US
Ecology
in
CAD
requiring
usto
revalue
the
outstanding
loan
balance
through
our
statements
of
operations
based
on
USD/CAD
currency
movements
from
period
to
period.
At
December
31,2016,
we
had
$20.8
million
of
intercompany
loans
subject
to
currency
revaluation.Gain on divestitureOther
income
in
2016
includes
approximately
$2.0
million
related
to
the
gain
on
sale
of
the
Augusta,
Georgia
facility
in
April
2016
and
final
closing
adjustmentson
the
Allstate
divestiture.Depreciation and amortization of plant and equipmentDepreciation
and
amortization
expense
was
$25.3
million
in
2016
compared
with
$27.9
million
in
2015.
The
divested
Allstate
business
contributed
depreciationand
amortization
expense
of
$2.2
million
for
our
period
of
ownership
in
2015.Amortization of intangiblesIntangible
assets
amortization
expense
was
$10.6
million
in
2016
compared
with
$12.3
million
in
2015.
The
divested
Allstate
business
contributed
intangible
assetsamortization
expense
of
$1.4
million
for
our
period
of
ownership
in
2015.Stock-based compensationStock-based
compensation
expense
increased
27%
to
$2.9
million
in
2016,
compared
with
$2.3
million
2015
as
a
result
of
an
increase
in
equity-based
awardsgranted
to
employees.Accretion and non-cash adjustment of closure and post-closure liabilitiesAccretion
and
non-cash
adjustment
of
closure
and
post-closure
liabilities
was
$4.0
million
in
2016
compared
with
$4.6
million
in
2015.44Table
of
ContentsImpairment chargesOn
August
4,
2015,
we
entered
into
a
definitive
agreement
to
sell
Allstate
to
a
private
investor
group.
Allstate
represented
the
majority
of
the
industrial
servicesbusiness
we
acquired
with
the
acquisition
of
EQ.
As
a
result
of
this
agreement
and
management's
strategic
review,
we
evaluated
the
recoverability
of
the
assetsassociated
with
our
industrial
services
business.
Based
on
this
analysis,
we
recorded
a
non-cash
goodwill
impairment
charge
of
$6.7
million
in
the
second
quarterof
2015.
See
Note
5
to
the
Consolidated
Financial
Statements
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K
for
additional
information
on
the
sale
of
Allstate.2015
Compared
to
2014RevenueTotal
revenue
increased
26%
to
$563.1
million
in
2015,
compared
with
$447.4
million
in
2014.
The
acquired
EQ
operations
contributed
$359.0
million
of
revenuein
2015,
compared
with
$228.2
million
for
our
period
of
ownership
in
2014.
Excluding
EQ
operations,
total
revenue
decreased
7%
to
$204.1
million
in
2015,compared
with
$219.2
million
in
2014.
Revenue
from
EQ
is
excluded
from
percentages
of
Base
and
Event
Business
and
waste
generator
industry
information
inthe
following
paragraphs.Environmental ServicesEnvironmental
Services
segment
revenue
increased
15%
to
$359.0
million
in
2015,
compared
to
$311.5
million
in
2014.
The
acquired
EQ
operations
contributed$154.9
million
of
segment
revenue
in
2015
compared
with
$92.3
million
of
segment
revenue
for
our
period
of
ownership
in
2014.
Excluding
EQ
operations,segment
revenue
decreased
7%
to
$204.1
million
in
2015,
compared
with
$219.2
million
in
2014.
T&D
revenue
(excluding
EQ)
decreased
8%
in
2015
comparedto
2014,
primarily
as
a
result
of
a
23%
decrease
in
project-based
Event
Business.
Transportation
service
revenue
(excluding
EQ)
increased
2%
compared
to
2014,reflecting
more
Event
Business
projects
utilizing
our
transportation
and
logistics
services.
Tons
of
waste
disposed
of
or
processed
increased
5%
in
2015
comparedto
2014.
Excluding
EQ,
tons
of
waste
disposed
of
or
processed
decreased
20%
in
2015
compared
to
2014.Growth
in
T&D
revenue
from
recurring
Base
Business
waste
generators
was
flat
compared
to
2014
and
comprised
74%
of
total
T&D
revenue
in
2015.
During2015,
increases
in
Base
Business
T&D
revenue
from
the
refining
and
broker/TSDF
industries
were
offset
by
decreases
in
T&D
revenue
from
Base
Business
in
thechemical
manufacturing,
utilities,
and
mining,
exploration
and
production
industries.T&D
revenue
from
Event
Business
waste
generators
decreased
23%
in
2015
compared
to
2014
and
comprised
26%
of
total
T&D
revenue
in
2015.
The
decrease
inEvent
Business
T&D
revenue
compared
to
the
prior
year
primarily
reflects
lower
T&D
revenue
from
the
chemical
and
metal
manufacturing,
transportation,broker/TSDF,
and
mining,
exploration
and
production
industries,
partially
offset
by
higher
T&D
revenue
from
the
utilities,
government
and
refining
industries.
Thedecrease
in
T&D
revenue
from
the
chemical
manufacturing
industry
is
primarily
attributable
to
reductions
in
volume
from
a
large
East
Coast
remedial
cleanupproject
and
lower
overall
industry
activity
in
2015.
The
decrease
in
T&D
revenue
from
the
metal
manufacturing
industry
is
primarily
attributable
to
lower
domesticproduction
of
metal
related
products
and
services.
The
decrease
in
T&D
revenue
from
the
mining,
exploration
and
production
industry
primarily
reflects
lowerindustry
activity
due
to
lower
commodity
prices.45Table
of
ContentsThe
following
table
summarizes
combined
Base
Business
and
Event
Business
T&D
revenue
growth
by
waste
generator
industry
for
2015
compared
to
2014:Field & Industrial ServicesOur
Field
&
Industrial
Services
segment
was
added
subsequent
to,
and
as
a
result
of,
our
acquisition
of
EQ
on
June
17,
2014.
This
segment
includes
all
of
the
fieldand
industrial
service
business
of
the
legacy
EQ
operations
and
none
of
the
legacy
US
Ecology
operations.
Field
&
Industrial
Services
segment
revenue
was$204.0
million
in
2015
compared
with
$135.9
million
for
our
period
of
ownership
in
2014.
The
divested
Allstate
business
contributed
segment
revenue
of$59.1
million
for
our
period
of
ownership
in
2015
compared
with
$37.0
million
for
our
period
of
ownership
in
2014.Gross
ProfitTotal
gross
profit
increased
18%
to
$171.4
million
in
2015,
up
from
$145.8
million
in
2014.
The
acquired
EQ
operations
contributed
$91.7
million
of
gross
profitin
2015,
compared
with
$57.4
million
for
our
period
of
ownership
in
2014.
Excluding
EQ
operations,
total
gross
profit
decreased
10%
to
$79.7
million
in
2015,compared
with
$88.4
million
in
2014.
Total
gross
margin
in
2015
was
30%.
Excluding
EQ
operations,
total
gross
margin
was
39%.Environmental ServicesEnvironmental
Services
segment
gross
profit
increased
11%
to
$137.6
million
in
2015,
up
from
$123.8
million
in
2014.
The
acquired
EQ
operations
contributed$57.9
million
of
segment
gross
profit
in
2015
compared
with
$35.4
million
of
segment
gross
profit
for
our
period
of
ownership
in
2014.
Excluding
EQ
operations,segment
gross
profit
decreased
10%
to
$79.7
million
in
2015,
compared
with
$88.4
million
in
2014.
This
decrease
primarily
reflects
lower
T&D
volumes
in
2015compared
to
2014.
Total
segment
gross
margin
in
2015
was
38%.
Excluding
EQ
operations,
total
segment
margin
was
39%.
Excluding
EQ
operations,
T&D
grossmargin
was
48%
in
2015
compared
to
49%
in
2014.Field & Industrial ServicesOur
Field
&
Industrial
Services
segment
was
added
in
2014
as
a
result
of
our
acquisition
of
EQ
on
June
17,
2014.
This
segment
includes
all
of
the
field
andindustrial
service
business
of
the
legacy
EQ
operations
and
none
of
the
legacy
US
Ecology
operations.
Field
&
Industrial
Services
segment
gross
profit
and
grossmargin
were
$33.8
million
and
17%,
respectively,
in
2015
compared
with
$22.0
million
and
16%,
respectively,
for
our
period
of
ownership
in
2014.
The
divestedAllstate
business
contributed
segment
gross46


T&D
Revenue
Growth(1)
2015
vs.
2014Utilities
25%Refining
20%Government
15%Other
5%Waste
Management
&
Remediation
4%General
Manufacturing
2%Broker
/
TSDF
1%Metal
Manufacturing
–12%Mining
and
E&P
–31%Chemical
Manufacturing
–35%Transportation
–44%(1)Excludes
EQ
Holdings,
Inc.
which
was
acquired
on
June
17,
2014Table
of
Contentsprofit
of
$12.4
million
for
our
period
of
ownership
in
2015
compared
with
$8.2
million
for
our
period
of
ownership
in
2014.Selling,
General
and
Administrative
Expenses
("SG&A")Total
SG&A
increased
27%
to
$93.1
million
in
2015,
up
from
$73.3
million
in
2014.
The
acquired
EQ
operations
contributed
$56.6
million
of
SG&A
in
2015,compared
with
$38.9
million
for
our
period
of
ownership
in
2014.
Excluding
EQ
operations,
total
SG&A
was
$36.5
million,
or
18%
of
total
revenue
in
2015,compared
with
$34.4
million,
or
16%
of
total
revenue,
in
2014.Environmental ServicesEnvironmental
Services
segment
SG&A
increased
22%
to
$22.8
million,
or
6%
of
segment
revenue,
in
2015,
up
from
$18.6
million,
or
6%
of
segment
revenue,
in2014.
The
acquired
EQ
operations
contributed
$11.6
million
of
segment
SG&A
in
2015
compared
with
$6.8
million
of
segment
SG&A
for
our
period
of
ownershipin
2014.
Excluding
EQ
operations,
total
segment
SG&A
was
$11.1
million,
or
5%
of
segment
revenue,
in
2015
compared
with
$11.8
million,
or
5%
of
segmentrevenue,
in
2014.Field & Industrial ServicesOur
Field
&
Industrial
Services
segment
was
added
in
2014
as
a
result
of
our
acquisition
of
EQ
on
June
17,
2014.
This
segment
includes
all
of
the
field
andindustrial
service
business
of
the
legacy
EQ
operations
and
none
of
the
legacy
US
Ecology
operations.
Field
&
Industrial
Services
segment
SG&A
was$22.0
million
in
2015
compared
with
$14.5
million
for
our
period
of
ownership
in
2014.
The
divested
Allstate
business
contributed
segment
SG&A
of$10.9
million
for
our
period
of
ownership
in
2015
compared
with
$6.6
million
for
our
period
of
ownership
in
2014.CorporateCorporate
SG&A
increased
20%
to
$48.4
million
in
2015,
up
from
$40.2
million
in
2014.
The
acquired
EQ
operations
contributed
$23.0
million
of
corporateSG&A
in
2015
compared
with
$17.6
million
of
corporate
SG&A
for
our
period
of
ownership
in
2014.
Excluding
EQ
operations,
total
corporate
SG&A
was$25.4
million,
or
12%
of
total
revenue
in
2015,
compared
with
$22.6
million,
or
10%
of
total
revenue
in
2014,
primarily
reflecting
higher
labor
costs
andprofessional
fees
and
expenses,
partially
offset
by
lower
business
development
expenses
in
2015
compared
to
2014.Components
of
Adjusted
EBITDAIncome tax expenseOur
effective
income
tax
rate
for
2015
was
45.3%
compared
to
37.4%
in
2014.
The
increase
reflects
non-deductible
goodwill
impairment
charges,
a
non-deductibleloss
on
the
sale
of
the
Allstate
business
recorded
during
2015
and
an
increase
in
our
U.S.
effective
tax
rate,
primarily
driven
by
a
higher
overall
effective
state
taxrate.
The
higher
effective
state
tax
rate
was
driven
by
changes
in
apportionment
of
income
and
deferred
taxes
between
the
various
states
in
which
we
operate.
Theincrease
in
the
effective
tax
rate
was
also
partially
attributable
to
a
lower
proportion
of
earnings
from
our
Canadian
operations
in
2015,
which
are
taxed
at
a
lowercorporate
tax
rate.
As
of
December
31,
2015,
we
had
approximately
$161,000
in
federal
NOLs
acquired
from
EQ.
As
of
December
31,
2015,
we
hadapproximately
$34.2
million
in
state
and
local
NOLs
for
which
we
maintain
a
substantial
valuation
allowance.
We
maintain
a
valuation
allowance
on
state
andlocal
NOLs
when
we
no
longer
do
business
within
a
state
or
locality
or
determine
it
is
unlikely
that
we
will
utilize
these
NOLs
in
the
future.
We
consider
itunlikely
that
we
will
utilize
the
majority
of
these
NOLs
in
the
future.47Table
of
ContentsInterest expenseInterest
expense
was
$23.4
million
in
2015
compared
with
$10.7
million
in
2014.
The
increase
is
a
result
of
higher
outstanding
debt
levels
and
the
related
interestexpense
on
borrowings
under
our
Revolving
Credit
Facility
used
to
finance
the
acquisition
of
EQ
in
June
2014.
Additionally,
we
recorded
$2.4
million
ofincremental
non-cash
amortization
of
deferred
financing
fees
in
2015
primarily
as
a
result
of
significant
debt
principal
payments
during
the
year.Foreign currency gain (loss)We
recognized
a
$2.2
million
non-cash
foreign
currency
loss
in
2015
compared
with
a
$1.5
million
non-cash
foreign
currency
loss
in
2014.
Foreign
currency
gainsand
losses
reflect
changes
in
business
activity
conducted
in
a
currency
other
than
the
USD,
our
functional
currency.
Our
Stablex
facility
is
located
in
Blainville,Québec,
Canada
and
uses
the
CAD
as
its
functional
currency.
Also,
as
part
of
our
treasury
management
strategy
we
established
intercompany
loans
between
ourparent
company,
US
Ecology
and
Stablex.
These
intercompany
loans
are
payable
by
Stablex
to
US
Ecology
in
CAD
requiring
us
to
revalue
the
outstanding
loanbalance
through
our
statements
of
operations
based
on
USD/CAD
currency
movements
from
period
to
period.
At
December
31,
2015,
we
had
$15.0
million
ofintercompany
loans
subject
to
currency
revaluation.Loss on divestitureOn
November
1,
2015,
we
completed
the
divestiture
of
Allstate
for
cash
proceeds
of
$58.8
million,
subject
to
post-closing
adjustments.
We
recognized
a
pre-taxloss
on
the
divestiture
of
Allstate,
including
transaction-related
costs,
of
$542,000
during
the
fourth
quarter
of
2015.Impairment chargesOn
August
4,
2015,
we
entered
into
a
definitive
agreement
to
sell
Allstate
to
a
private
investor
group.
Allstate
represented
the
majority
of
the
industrial
servicesbusiness
we
acquired
with
the
acquisition
of
EQ.
As
a
result
of
this
agreement
and
management's
strategic
review,
we
evaluated
the
recoverability
of
the
assetsassociated
with
our
industrial
services
business.
Based
on
this
analysis,
we
recorded
a
non-cash
goodwill
impairment
charge
of
$6.7
million
in
the
second
quarterof
2015.
See
Note
5
to
the
Consolidated
Financial
Statements
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K
for
additional
information
on
the
sale
of
Allstate.Depreciation and amortization of plant and equipmentDepreciation
and
amortization
expense
was
$27.9
million
in
2015,
an
increase
of
14%
compared
to
2014.
The
acquired
EQ
operations
contributed
$13.9
million
ofdepreciation
and
amortization
expense
in
2015
compared
with
$9.0
million
of
depreciation
and
amortization
expense
for
our
period
of
ownership
in
2014.Excluding
EQ
operations,
depreciation
and
amortization
expense
was
$14.0
million
in
2015,
compared
with
$15.4
million
in
2014.Amortization of intangiblesIntangible
assets
amortization
expense
was
$12.3
million
in
2015,
an
increase
of
50%
compared
to
2014.
Excluding
intangible
assets
amortization
expense
of$11.1
million
and
$6.8
million
recorded
in
2015
and
2014,
respectively,
on
new
intangible
assets
recorded
as
a
result
of
the
acquisition
of
EQ,
intangible
assetsamortization
expense
was
$1.2
million
in
2015,
compared
with
$1.4
million
in
2014.48Table
of
ContentsStock-based compensationStock-based
compensation
expense
increased
84%
to
$2.3
million
in
2015,
compared
with
$1.3
million
2014
as
a
result
of
an
increase
in
equity-based
awardsgranted
to
employees.Accretion and non-cash adjustment of closure and post-closure liabilitiesAccretion
and
non-cash
adjustment
of
closure
and
post-closure
liabilities
increased
73%
to
$4.6
million
in
2015,
compared
with
$2.7
million
in
2014.
The
acquiredEQ
operations
contributed
$2.5
million
of
accretion
and
non-cash
adjustment
of
closure
and
post-closure
liabilities
in
2015
compared
with
$1.2
million
of
accretionand
non-cash
adjustment
of
closure
and
post-closure
liabilities
for
our
period
of
ownership
in
2014.
Excluding
EQ
operations,
accretion
and
non-cash
adjustmentof
closure
and
post-closure
liabilities
was
$2.1
million
in
2015,
compared
with
$1.5
million
in
2014.Liquidity
and
Capital
ResourcesOur
primary
sources
of
liquidity
are
cash
and
cash
equivalents,
cash
generated
from
operations
and
borrowings
under
the
Credit
Agreement.
At
December
31,2016,
we
had
$7.0
million
in
cash
and
cash
equivalents
immediately
available
and
$116.8
million
of
borrowing
capacity
available
under
our
Revolving
CreditFacility.
We
assess
our
liquidity
in
terms
of
our
ability
to
generate
cash
to
fund
our
operating,
investing
and
financing
activities.
Our
primary
ongoing
cashrequirements
are
funding
operations,
capital
expenditures,
paying
interest
and
required
principal
payments
of
our
long-term
debt,
and
paying
declared
dividendspursuant
to
our
dividend
policy.
We
believe
future
operating
cash
flows
will
be
sufficient
to
meet
our
future
operating,
investing
and
dividend
cash
needs
for
theforeseeable
future.
Furthermore,
existing
cash
balances
and
availability
of
additional
borrowings
under
our
Credit
Agreement
provide
additional
sources
ofliquidity
should
they
be
required.Operating
Activities.




In
2016,
net
cash
provided
by
operating
activities
was
$74.6
million.
This
primarily
reflects
net
income
of
$34.3
million,
non-cashdepreciation,
amortization
and
accretion
of
$39.8
million,
a
decrease
in
accounts
receivable
of
$10.9
million,
share-based
compensation
expense
of
$2.9
million,non-cash
amortization
of
debt
issuance
costs
of
$2.0
million,
and
a
decrease
in
other
assets
of
$1.2
million,
partially
offset
by
a
decrease
in
accounts
payable
andaccrued
liabilities
of
$7.7
million,
a
decrease
in
deferred
income
taxes
of
$2.7
million,
the
gain
recognized
on
the
divestiture
of
the
Augusta,
Georgia
facility
inApril
2016,
final
closing
adjustments
on
the
Allstate
divestiture
of
$2.0
million,
and
a
decrease
in
income
taxes
receivable
of
$2.0
million.
Impacts
on
net
incomeare
due
to
the
factors
discussed
above
under
"Results
of
Operations."
The
decrease
in
receivables
is
primarily
attributable
to
the
timing
of
customer
payments.Changes
in
income
taxes
receivable
and
payable
are
primarily
attributable
to
the
timing
of
income
tax
payments.Days
sales
outstanding
were
73
days
as
of
December
31,
2016,
compared
to
68
days
as
of
December
31,
2015.
The
increase
in
days
sales
outstanding
compared
toDecember
31,
2015
is
primarily
attributable
to
a
decrease
in
revenue
in
2016,
compared
to
2015,
which
resulted
in
a
higher
proportion
of
accounts
receivable
as
apercentage
of
revenues.In
2015,
net
cash
provided
by
operating
activities
was
$71.5
million.
This
primarily
reflects
net
income
of
$25.6
million,
non-cash
depreciation,
amortization
andaccretion
of
$44.8
million,
non-cash
impairment
charges
of
$6.7
million,
a
decrease
in
income
taxes
receivable
of
$4.8
million,
non-cash
amortization
of
debtissuance
costs
of
$4.4
million,
unrealized
foreign
currency
losses
of
$3.3
million,
share-based
compensation
expense
of
$2.3
million
and
a
decrease
in
accountsreceivable
of
$1.6
million,
partially
offset
by
a
decrease
in
accounts
payable
and
accrued
liabilities
of
$6.5
million,
a
decrease
in
closure
and
post-closureobligations
of
$5.7
million,
a
decrease
in
deferred
revenue
of
$4.4
million,
a
decrease
in
income
taxes
payable
of
$3.9
million
and
a
decrease
in
deferred
incometaxes
of
$2.7
million.
Impacts
on
net
income
are
due
to
the
factors
discussed
above
under
Results
of
Operations.
The
decrease
in
receivables
and
deferred
revenueis
primarily
attributable
to
the
timing
of
the
treatment
and
disposal
of49Table
of
Contentswaste
associated
with
a
significant
East
Coast
remedial
cleanup
project.
The
changes
in
income
taxes
receivable
and
payable
are
primarily
attributable
to
the
timingof
income
tax
payments.
The
decrease
in
closure
and
post-closure
obligations
is
primarily
attributable
to
payments
made
for
closure
and
post-closure
activitiesprimarily
at
our
closed
landfills.In
2014,
net
cash
provided
by
operating
activities
was
$71.4
million.
This
primarily
reflects
net
income
of
$38.2
million,
non-cash
depreciation,
amortization
andaccretion
of
$35.3
million,
unrealized
foreign
currency
losses
of
$2.4
million,
an
increase
in
deferred
revenue
of
$1.9
million
and
an
increase
in
deferred
incometaxes
of
$2.0
million,
partially
offset
by
an
increase
in
receivables
of
$4.4
million,
a
decrease
in
accounts
payable
and
accrued
liabilities
of
$2.9
million
and
anincrease
in
income
taxes
receivable
of
$1.8
million.
Impacts
on
net
income
are
due
to
the
factors
discussed
above
under
Results
of
Operations.
Non-cash
foreigncurrency
losses
reflect
a
weaker
CAD
relative
to
the
USD
in
2014.
The
increase
in
deferred
revenue
and
receivables
is
primarily
attributable
to
the
timing
of
thetreatment
and
disposal
of
waste
associated
with
a
significant
East
Coast
remedial
cleanup
project.
The
changes
in
income
taxes
receivable
are
primarily
attributableto
the
timing
of
income
tax
payments.Investing
Activities.




In
2016,
net
cash
used
in
investing
activities
was
$42.0
million,
primarily
related
to
capital
expenditures
of
$35.7
million,
the
purchase
ofthe
Vernon,
California
based
RCRA
Part
B,
liquids
and
solids
waste
treatment
and
storage
facility
of
Evoqua
Water
Technologies
LLC
for
$5.0
million
and
thepurchase
of
Environmental
Services
Inc.,
("ESI"),
for
$4.9
million,
net
of
cash
acquired,
partially
offset
by
proceeds
from
the
divestiture
of
our
Augusta,
Georgiafacility
for
$2.7
million,
net
of
cash
divested.
Significant
capital
projects
included
construction
of
additional
disposal
capacity
at
our
Blainville,
Québec,
Canada,Beatty,
Nevada
and
Robstown,
Texas
facilities
and
equipment
purchases
and
infrastructure
upgrades
at
our
corporate
and
operating
facilities.In
2015,
net
cash
provided
by
investing
activities
was
$20.3
million,
primarily
related
to
the
divestiture
of
Allstate
for
$58.7
million,
net
of
cash
divested,
partiallyoffset
by
capital
expenditures
of
$39.4
million.
Significant
capital
projects
included
construction
of
additional
disposal
capacity
at
our
Blainville,
Québec,
Canadaand
Robstown,
Texas
locations
and
equipment
purchases
and
infrastructure
upgrades
at
all
of
our
corporate
and
operating
facilities.In
2014,
net
cash
used
in
investing
activities
was
$488.5
million,
primarily
related
to
the
purchase
of
EQ
for
$460.9
million,
net
of
cash
acquired,
and
capitalexpenditures
of
$28.4
million.
Significant
capital
projects
included
construction
of
additional
disposal
capacity
at
our
Blainville,
Québec,
Canada
location
andequipment
purchases
and
infrastructure
upgrades
at
all
of
our
corporate
and
operating
facilities.Financing
Activities.




During
2016,
net
cash
used
in
financing
activities
was
$31.6
million,
consisting
primarily
of
$18.0
million
of
payments
on
our
Term
Loanand
$15.7
million
of
dividend
payments
to
our
stockholders,
partially
offset
by
$2.2
million
of
net
proceeds
on
our
Revolving
Credit
Facility
to
fund
workingcapital
requirements.During
2015,
net
cash
used
in
financing
activities
was
$108.4
million,
consisting
primarily
of
$94.6
million
of
payments
on
our
Term
Loan
and
$15.6
million
ofdividend
payments
to
our
stockholders.During
2014,
net
cash
provided
by
financing
activities
was
$366.8
million,
consisting
primarily
of
$414.0
million
of
net
proceeds
from
our
new
Term
Loan
used
topartially
finance
the
acquisition
of
EQ,
offset
in
part
by
$19.4
million
of
term
loan
repayments,
$15.5
million
of
dividend
payments
to
our
stockholders
and$14.0
million
of
deferred
financing
costs
associated
with
our
Credit
Agreement.Credit
FacilityOn
June
17,
2014,
in
connection
with
the
acquisition
of
EQ,
the
Company
entered
into
a
new
$540.0
million
senior
secured
credit
agreement
(the
"CreditAgreement")
with
a
syndicate
of
banks
comprised
of
a
$415.0
million
term
loan
(the
"Term
Loan")
with
a
maturity
date
of
June
17,
2021
and
a
$125.0
millionrevolving
line
of
credit
(the
"Revolving
Credit
Facility")
with
a
maturity
date
of
June
17,50Table
of
Contents2019.
Upon
entering
into
the
Credit
Agreement,
the
Company
terminated
its
existing
credit
agreement
with
Wells
Fargo,
dated
October,
29,
2010,
as
amended
(the"Former
Agreement").
Immediately
prior
to
the
termination
of
the
Former
Agreement,
there
were
no
outstanding
borrowings
under
the
Former
Agreement.
Noearly
termination
penalties
were
incurred
as
a
result
of
the
termination
of
the
Former
Agreement.Term LoanThe
Term
Loan
provides
an
initial
commitment
amount
of
$415.0
million,
the
proceeds
of
which
were
used
to
acquire
100%
of
the
outstanding
shares
of
EQ
andpay
related
transaction
fees
and
expenses.
The
Term
Loan
bears
interest
at
a
base
rate
(as
defined
in
the
Credit
Agreement)
plus
2.00%
or
LIBOR
plus
3.00%,
atthe
Company's
option.
The
Term
Loan
is
subject
to
amortization
in
equal
quarterly
installments
in
an
aggregate
annual
amount
equal
to
1.00%
of
the
originalprincipal
amount
of
the
Term
Loan.
At
December
31,
2016,
the
effective
interest
rate
on
the
Term
Loan,
including
the
impact
of
our
interest
rate
swap,
was
4.76%.Interest
only
payments
are
due
either
monthly
or
on
the
last
day
of
any
interest
period,
as
applicable.
As
set
forth
in
the
Credit
Agreement,
the
Company
is
requiredto
enter
into
one
or
more
interest
rate
hedge
agreements
in
amounts
sufficient
to
fix
the
interest
rate
on
at
least
50%
of
the
principal
amount
of
the
$415.0
millionTerm
Loan.
In
October
2014,
the
Company
entered
into
an
interest
rate
swap
agreement
with
Wells
Fargo,
effectively
fixing
the
interest
rate
on
$210.0
million,
or74%,
of
the
Term
Loan
principal
outstanding
as
of
December
31,
2016.Revolving Credit FacilityThe
Revolving
Credit
Facility
provides
up
to
$125.0
million
of
revolving
credit
loans
or
letters
of
credit
with
the
use
of
proceeds
restricted
solely
for
workingcapital
and
other
general
corporate
purposes.
Under
the
Revolving
Credit
Facility,
revolving
loans
are
available
based
on
a
base
rate
(as
defined
in
the
CreditAgreement)
or
LIBOR,
at
the
Company's
option,
plus
an
applicable
margin
which
is
determined
according
to
a
pricing
grid
under
which
the
interest
rate
decreasesor
increases
based
on
our
ratio
of
funded
debt
to
consolidated
earnings
before
interest,
taxes,
depreciation
and
amortization
(as
defined
in
the
Credit
Agreement).The
Company
is
required
to
pay
a
commitment
fee
of
0.50%
per
annum
on
the
unused
portion
of
the
Revolving
Credit
Facility,
with
such
commitment
fee
to
bereduced
based
upon
the
Company's
total
leverage
ratio
(as
defined
in
the
Credit
Agreement).
The
maximum
letter
of
credit
capacity
under
the
Revolving
CreditFacility
is
$50.0
million
and
the
Credit
Agreement
provides
for
a
letter
of
credit
fee
equal
to
the
applicable
margin
for
LIBOR
loans
under
the
Revolving
CreditFacility.
Interest
payments
are
due
either
monthly
or
on
the
last
day
of
any
interest
period,
as
applicable.
At
December
31,
2016,
there
were
$2.2
million
ofworking
capital
borrowings
outstanding
on
the
Revolving
Credit
Facility.
These
borrowings
are
due
"on
demand"
and
presented
as
short-term
debt
in
theconsolidated
balance
sheets.
The
availability
under
the
Revolving
Credit
Facility
was
$116.8
million
with
$6.0
million
of
the
Revolving
Credit
Facility
issued
inthe
form
of
standby
letters
of
credit
utilized
as
collateral
for
closure
and
post-closure
financial
assurance
and
other
assurance
obligations.See
Note
15
to
the
Consolidated
Financial
Statements
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K
foradditional
information
on
the
Company's
debt.51Table
of
ContentsContractual
Obligations
and
GuaranteesContractual
ObligationsUS
Ecology's
contractual
obligations
at
December
31,
2016
become
due
as
follows:GuaranteesWe
enter
into
a
wide
range
of
indemnification
arrangements,
guarantees
and
assurances
in
the
ordinary
course
of
business
and
have
evaluated
agreements
thatcontain
guarantees
and
indemnification
clauses.
These
include
tort
indemnities,
tax
indemnities,
indemnities
against
third-party
claims
arising
out
of
arrangementsto
provide
services
to
us
and
indemnities
related
to
the
sale
of
our
securities.
We
also
indemnify
individuals
made
party
to
any
suit
or
proceeding
if
that
individualwas
acting
as
an
officer
or
director
of
US
Ecology
or
was
serving
at
the
request
of
US
Ecology
or
any
of
its
subsidiaries
during
their
tenure
as
a
director
or
officer.We
also
provide
guarantees
and
indemnifications
for
the
benefit
of
our
wholly-owned
subsidiaries
to
satisfy
performance
obligations,
including
closure
and
post-closure
financial
assurances.
It
is
difficult
to
quantify
the
maximum
potential
liability
under
these
indemnification
arrangements;
however,
we
are
not
currentlyaware
of
any
material
liabilities
to
the
Company
or
any
of
its
subsidiaries
arising
from
these
arrangements.Environmental
MattersWe
maintain
funded
trusts
agreements,
surety
bonds
and
insurance
policies
for
future
closure
and
post-closure
obligations
at
both
current
and
formerly
operateddisposal
facilities.
These
funded
trust
agreements,
surety
bonds
and
insurance
policies
are
based
on
management
estimates
of
future
closure
and
post-closuremonitoring
using
engineering
evaluations
and
interpretations
of
regulatory
requirements
which
are
periodically
updated.
Accounting
for
closure
and
post-closurecosts
includes
final
disposal
cell
capping
and
revegetation,
soil
and
groundwater
monitoring
and
routine
maintenance
and
surveillance
required
after
a
site
isclosed.52


Payments
Due
by
Period
$s
in
thousands
Total
2017
2018
-
2019
2020
-
2021
Thereafter
Closure
and
post-closure
obligations(1)
$310,553
$2,735
$5,239
$18,977
$283,602
Operating
lease
commitments

13,194

6,189

6,246

430

329
Credit
agreement
obligations(2)

283,040

2,903

5,806

274,331

—
Interest
expense(3)

56,575

13,350

25,523

17,702

—
Total
contractual
obligations
$663,362
$25,177
$42,814
$311,440
$283,931
(1)For
the
purposes
of
the
table
above,
closure
and
post-closure
obligations
are
shown
on
an
undiscounted
basis
and
inflated
using
anestimated
annual
inflation
rate
of
2.6%.
Cash
payments
for
closure
and
post-closure
obligation
extend
to
the
year
2105.
(2)The
Term
Loan
portion
of
the
Credit
Agreement
with
Wells
Fargo
matures
on
June
17,
2021
and
is
subject
to
amortization
in
equalquarterly
installments
in
an
aggregate
annual
amount
of
$2.9
million
beginning
March
31,
2017,
with
a
final
payment
for
the
remainingprincipal
balance
due
upon
maturity.
(3)Interest
expense
has
been
calculated
using
the
effective
interest
rate
of
3.75%
in
effect
at
December
31,
2016
on
the
unhedged
variable
rateportion
of
the
outstanding
principal
and
5.17%
on
the
fixed
rate
hedged
portion
of
the
outstanding
principal
beginning
December
31,
2014,the
effective
date
of
the
Company's
interest
rate
swap
agreement
with
Wells
Fargo.
The
interest
expense
calculation
reflects
assumedprincipal
reductions
consistent
with
the
disclosures
in
footnote
(2)
above.Table
of
ContentsWe
estimate
that
our
undiscounted
future
closure
and
post-closure
costs
for
all
facilities
was
approximately
$310.6
million
at
December
31,
2016,
with
a
medianpayment
year
of
2061.
Our
future
closure
and
post-closure
estimates
are
our
best
estimate
of
current
costs
and
are
updated
periodically
to
reflect
currenttechnology,
cost
of
materials
and
services,
applicable
laws,
regulations,
permit
conditions
or
orders
and
other
factors.
These
current
costs
are
adjusted
foranticipated
annual
inflation,
which
we
assumed
to
be
2.6%
as
of
December
31,
2016.
These
future
closure
and
post-closure
estimates
are
discounted
to
theirpresent
value
for
financial
reporting
purposes
using
our
credit-adjusted
risk-free
interest
rate,
which
approximates
our
incremental
long-term
borrowing
rate
ineffect
at
the
time
the
obligation
is
established
or
when
there
are
upward
revisions
to
our
estimated
closure
and
post-closure
costs.
At
December
31,
2016,
ourweighted-average
credit-adjusted
risk-free
interest
rate
was
5.9%.
For
financial
reporting
purposes,
our
recorded
closure
and
post-closure
obligations
were$75.1
million
and
$71.2
million
as
of
December
31,
2016
and
2015,
respectively.Through
December
31,
2016,
we
have
met
our
financial
assurance
requirements
through
insurance,
surety
bonds,
standby
letters
of
credit
and
self-funded
restrictedtrusts.US
Operating
and
Non-Operating
FacilitiesWe
cover
our
closure
and
post-closure
obligations
for
our
U.S.
operating
facilities
through
the
use
of
third-party
insurance
policies,
surety
bonds
and
standbyletters
of
credit.
Insurance
policies
covering
our
closure
and
post-closure
obligations
expire
in
December
2017.
Our
total
policy
limits
are
approximately$81.6
million.
At
December
31,
2016
our
trust
accounts
had
$5.8
million
for
our
closure
and
post-closure
obligations
and
are
identified
as
Restricted
cash
andinvestments
on
our
consolidated
balance
sheets.All
closure
and
post-closure
funding
obligations
for
our
Beatty,
Nevada
and
Richland,
Washington
facilities
revert
to
the
respective
State.
Volume
based
fees
arecollected
from
our
customers
and
remitted
to
state
controlled
trust
funds
to
cover
the
estimated
cost
of
closure
and
post-closure
obligations.StablexWe
use
commercial
surety
bonds
to
cover
our
closure
obligations
for
our
Stablex
facility
located
in
Blainville,
Québec,
Canada.
Our
lease
agreement
with
theProvince
of
Québec
requires
that
the
surety
bond
be
maintained
for
25
years
after
the
lease
expires
in
2023.
At
December
31,
2016
we
had
$686,000
in
commercialsurety
bonds
dedicated
for
closure
obligations.
These
bonds
were
renewed
in
November
and
December
2016
and
expire
in
November
and
December
2017.
Post-closure
funding
obligations
for
the
Stablex
landfill
revert
back
to
the
Province
of
Québec
through
a
dedicated
trust
account
that
is
funded
based
on
a
per-metric-tondisposed
fee
by
Stablex.We
expect
to
renew
insurance
policies
and
commercial
surety
bonds
in
the
future.
If
we
are
unable
to
obtain
adequate
closure,
post-closure
or
environmentalliability
insurance
and/or
commercial
surety
bonds
in
future
years,
any
partial
or
completely
uninsured
claim
against
us,
if
successful
and
of
sufficient
magnitude,could
have
a
material
adverse
effect
on
our
financial
condition,
results
of
operations
or
cash
flows.
Additionally,
continued
access
to
casualty
and
pollution
legalliability
insurance
with
sufficient
limits,
at
acceptable
terms,
is
important
to
obtaining
new
business.
Failure
to
maintain
adequate
financial
assurance
could
alsoresult
in
regulatory
action
including
early
closure
of
facilities.
While
we
believe
we
will
be
able
to
maintain
the
requisite
financial
assurance
policies
at
areasonable
cost,
premium
and
collateral
requirements
may
materially
increase.Operation
of
disposal
facilities
creates
operational,
closure
and
post-closure
obligations
that
could
result
in
unplanned
monitoring
and
corrective
action
costs.
Wecannot
predict
the
likelihood
or
effect
of
all
such
costs,
new
laws
or
regulations,
litigation
or
other
future
events
affecting
our
facilities.
We
do
not
believe
thatcontinuing
to
satisfy
our
environmental
obligations
will
have
a
material
adverse
effect
on
our
financial
condition
or
results
of
operations.53Table
of
ContentsSeasonal
EffectsSeasonal
fluctuations
due
to
weather
and
budgetary
cycles
can
influence
the
timing
of
customer
spending
for
our
services.
Typically,
in
the
first
quarter
of
eachcalendar
year
there
is
less
demand
for
our
services
due
to
reduced
construction
and
business
activities
related
to
weather
while
we
experience
improvement
in
oursecond
and
third
quarters
of
each
calendar
year
as
weather
conditions
and
other
business
activity
improves.Critical
Accounting
PoliciesOur
discussion
and
analysis
of
our
financial
condition
and
results
of
operations
are
based
upon
our
consolidated
financial
statements,
which
have
been
prepared
inaccordance
with
GAAP.
The
preparation
of
these
financial
statements
require
us
to
make
estimates
and
judgments
that
affect
the
reported
amounts
of
assets,liabilities,
revenues
and
expenses
and
related
disclosure
of
contingent
assets
and
liabilities.
On
an
ongoing
basis,
we
evaluate
our
estimates
included
in
our
criticalaccounting
policies
discussed
below
and
those
accounting
policies
and
use
of
estimates
discussed
in
Notes
2
and
3
to
the
Consolidated
Financial
Statementslocated
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K.
We
base
our
estimates
on
historical
experience
andon
various
assumptions
and
other
factors
we
believe
to
be
reasonable,
the
results
of
which
form
the
basis
for
making
judgments
about
the
carrying
values
of
assetsand
liabilities
that
are
not
readily
apparent
from
other
sources.
We
make
adjustments
to
judgments
and
estimates
based
on
current
facts
and
circumstances
on
anongoing
basis.
Historically,
actual
results
have
not
deviated
significantly
from
those
determined
using
the
estimates
described
below
or
in
Notes
2
and
3
to
theConsolidated
Financial
Statements
located
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
to
this
Annual
Report
on
Form
10-K.
However,actual
amounts
could
differ
materially
from
those
estimated
at
the
time
the
consolidated
financial
statements
are
prepared.We
believe
the
following
critical
accounting
policies
are
important
to
understand
our
financial
condition
and
results
of
operations
and
require
management's
mostdifficult,
subjective
or
complex
judgments,
often
as
a
result
of
the
need
to
estimate
the
effect
of
matters
that
are
inherently
uncertain.Revenue
RecognitionWe
recognize
revenue
when
persuasive
evidence
of
an
arrangement
exists,
delivery
and
disposal
have
occurred
or
services
have
been
rendered,
the
price
is
fixed
ordeterminable
and
collection
is
reasonably
assured.
We
recognize
revenue
from
three
primary
sources:
1)
waste
treatment,
recycling
and
disposal,
2)
field
andindustrial
waste
management
services
and
3)
waste
transportation
services.Waste
treatment
and
disposal
revenue
results
primarily
from
fees
charged
to
customers
for
treatment
and/or
disposal
or
recycling
of
specified
wastes.
Wastetreatment
and
disposal
revenue
is
generally
charged
on
a
per-ton
or
per-yard
basis
based
on
contracted
prices
and
is
recognized
when
services
are
complete.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
othergovernment,
commercial
and
industrial
facilities.
These
services
are
provided
based
on
purchase
orders
or
agreements
with
the
customer
and
include
prices
basedupon
daily,
hourly
or
job
rates
for
equipment,
materials
and
personnel.
Revenues
are
recognized
over
the
term
of
the
agreements
or
as
services
are
performed.Revenue
is
recognized
on
contracts
with
retainage
when
services
have
been
rendered
and
collectability
is
reasonably
assured.Transportation
revenue
results
from
delivering
customer
waste
to
a
disposal
facility
for
treatment
and/or
disposal
or
recycling.
Transportation
services
aregenerally
not
provided
on
a
stand-alone
basis
and
instead
are
bundled
with
other
Company
services.
However,
in
some
instances
we
provide
transportation
and54Table
of
Contentslogistics
services
for
shipment
of
waste
from
cleanup
sites
to
disposal
facilities
operated
by
other
companies.
We
account
for
our
bundled
arrangements
as
multipledeliverable
arrangements
and
determine
the
amount
of
revenue
recognized
for
each
deliverable
(unit
of
accounting)
using
the
relative
fair
value
method.Transportation
revenue
is
recognized
when
the
transported
waste
is
received
at
the
disposal
facility.
Waste
treatment
and
disposal
revenue
under
bundledarrangements
is
recognized
when
services
are
complete
and
the
waste
is
disposed
in
the
landfill.Burial
fees
collected
from
customers
for
each
ton
or
cubic
yard
of
waste
disposed
in
our
landfills
are
paid
to
the
respective
local
and/or
state
government
entity
andare
not
included
in
revenue.
Revenue
and
associated
costs
from
waste
that
has
been
received
but
not
yet
treated
and
disposed
of
in
our
landfills
are
deferred
untildisposal
occurs.Our
Richland,
Washington
disposal
facility
is
regulated
by
the
WUTC,
which
approves
our
rates
for
disposal
of
LLRW.
Annual
revenue
levels
are
establishedbased
on
a
six-year
rate
agreement
with
the
WUTC
at
amounts
sufficient
to
cover
the
costs
of
operation
and
provide
us
with
a
reasonable
profit.
Per-unit
ratescharged
to
LLRW
customers
during
the
year
are
based
on
our
evaluation
of
disposal
volume
and
radioactivity
projections
submitted
to
us
by
waste
generators.
Ourproposed
rates
are
then
reviewed
and
approved
by
the
WUTC.
If
annual
revenue
exceeds
the
approved
levels
set
by
the
WUTC,
we
are
required
to
refund
excesscollections
to
facility
users
on
a
pro-rata
basis.
The
current
rate
agreement
with
the
WUTC
was
extended
in
2013
and
is
effective
until
January
1,
2020.Disposal
Facility
AccountingWe
amortize
landfill
and
disposal
assets
and
certain
related
permits
over
their
estimated
useful
lives.
The
units-of-consumption
method
is
used
to
amortize
landfillcell
construction
and
development
costs
and
asset
retirement
costs.
Under
the
units-of-consumption
method,
we
include
costs
incurred
to
date
as
well
as
futureestimated
construction
costs
in
the
amortization
base
of
the
landfill
assets.
Additionally,
where
appropriate,
as
discussed
below,
we
also
include
probableexpansion
airspace
that
has
yet
to
be
permitted
in
the
calculation
of
the
total
remaining
useful
life
of
the
landfill
asset.
If
we
determine
that
expansion
capacityshould
no
longer
be
considered
in
calculating
the
total
remaining
useful
life
of
a
landfill
asset,
we
may
be
required
to
recognize
an
asset
impairment
or
incursignificantly
higher
amortization
expense
over
the
remaining
estimated
useful
life
of
the
landfill
asset.
If
at
any
time
we
make
the
decision
to
abandon
theexpansion
effort,
the
capitalized
costs
related
to
the
expansion
effort
would
be
expensed
in
the
period
of
abandonment.Our
landfill
assets
and
liabilities
fall
into
the
following
two
categories,
each
of
which
require
accounting
judgments
and
estimates:•Landfill
assets
comprised
of
capitalized
landfill
development
costs.
•Disposal
facility
retirement
obligations
relating
to
our
capping,
closure
and
post-closure
liabilities
that
result
in
corresponding
retirement
assets.Landfill AssetsLandfill
assets
include
the
costs
of
landfill
site
acquisition,
permits
and
cell
design
and
construction
incurred
to
date.
Landfill
cells
represent
individual
disposalareas
within
the
overall
treatment
and
disposal
site
and
may
be
subject
to
specific
permit
requirements
in
addition
to
the
general
permit
requirements
associatedwith
the
overall
site.To
develop,
construct
and
operate
a
landfill
cell,
we
must
obtain
permits
from
various
regulatory
agencies
at
the
local,
state
and
federal
levels.
The
permittingprocess
requires
an
initial
site
study
to
determine
whether
the
location
is
feasible
for
landfill
operations.
The
initial
studies
are
reviewed
by
our
environmentalmanagement
group
and
then
submitted
to
the
regulatory
agencies
for
approval.
During
the55Table
of
Contentsdevelopment
stage
we
capitalize
certain
costs
that
we
incur
after
site
selection
but
before
the
receipt
of
all
required
permits
if
we
believe
that
it
is
probable
that
thelandfill
cell
will
be
permitted.Upon
receipt
of
regulatory
approval,
technical
landfill
cell
designs
are
prepared.
The
technical
designs,
which
include
the
detailed
specifications
to
develop
andconstruct
all
components
of
the
landfill
cell
including
the
types
and
quantities
of
materials
that
will
be
required,
are
reviewed
by
our
environmental
managementgroup.
The
technical
designs
are
submitted
to
the
regulatory
agencies
for
approval.
Upon
approval
of
the
technical
designs,
the
regulatory
agencies
issue
permits
todevelop
and
operate
the
landfill
cell.The
types
of
costs
that
are
detailed
in
the
technical
design
specifications
generally
include
excavation,
natural
and
synthetic
liners,
construction
of
leachatecollection
systems,
installation
of
groundwater
monitoring
wells,
construction
of
leachate
management
facilities
and
other
costs
associated
with
the
development
ofthe
site.
We
review
the
adequacy
of
our
cost
estimates
at
least
annually.
These
development
costs,
together
with
any
costs
incurred
to
acquire,
design
and
permitthe
landfill
cell,
including
personnel
costs
of
employees
directly
associated
with
the
landfill
cell
design,
are
recorded
to
the
landfill
asset
on
the
balance
sheet
asincurred.To
match
the
expense
related
to
the
landfill
asset
with
the
revenue
generated
by
the
landfill
operations,
we
amortize
the
landfill
asset
on
a
units-of-consumptionbasis
over
its
operating
life,
typically
on
a
cubic
yard
or
cubic
meter
of
disposal
space
consumed.
The
landfill
asset
is
fully
amortized
at
the
end
of
a
landfill
cell'soperating
life.
The
per-unit
amortization
rate
is
calculated
by
dividing
the
sum
of
the
landfill
asset
net
book
value
plus
estimated
future
development
costs
(asdescribed
above)
for
the
landfill
cell,
by
the
landfill
cell's
estimated
remaining
disposal
capacity.
Amortization
rates
are
influenced
by
the
original
cost
basis
of
thelandfill
cell,
including
acquisition
costs,
which
in
turn
is
determined
by
geographic
location
and
market
values.
We
have
secured
significant
landfill
assets
throughbusiness
acquisitions
and
valued
them
at
the
time
of
acquisition
based
on
fair
value.Included
in
the
technical
designs
are
factors
that
determine
the
ultimate
disposal
capacity
of
the
landfill
cell.
These
factors
include
the
area
over
which
the
landfillcell
will
be
developed,
such
as
the
depth
of
excavation,
the
height
of
the
landfill
cell
elevation
and
the
angle
of
the
side-slope
construction.
Landfill
cell
capacityused
in
the
determination
of
amortization
rates
of
our
landfill
assets
includes
both
permitted
and
unpermitted
disposal
capacity.
Unpermitted
disposal
capacity
isincluded
when
management
believes
achieving
final
regulatory
approval
is
probable
based
on
our
analysis
of
site
conditions
and
interactions
with
applicableregulatory
agencies.We
review
the
estimates
of
future
development
costs
and
remaining
disposal
capacity
for
each
landfill
cell
at
least
annually.
These
costs
and
disposal
capacityestimates
are
developed
using
input
from
independent
engineers
and
internal
technical
and
accounting
managers
and
are
reviewed
and
approved
by
ourenvironmental
management
group.
Any
changes
in
future
estimated
costs
or
estimated
disposal
capacity
are
reflected
prospectively
in
the
landfill
cell
amortizationrates.We
assess
our
long-lived
landfill
assets
for
impairment
when
an
event
occurs
or
circumstances
change
that
indicate
the
carrying
amount
may
not
be
recoverable.Examples
of
events
or
circumstances
that
may
indicate
impairment
of
any
of
our
landfill
assets
include,
but
are
not
limited
to,
the
following:•Changes
in
legislative
or
regulatory
requirements
impacting
the
landfill
site
permitting
process
making
it
more
difficult
and
costly
to
obtain
and/or
maintaina
landfill
permit;
•Actions
by
neighboring
parties,
private
citizen
groups
or
others
to
oppose
our
efforts
to
obtain,
maintain
or
expand
permits,
which
could
result
in
denial,revocation
or
suspension
of
a
permit
and
adversely
impact
the
economic
viability
of
the
landfill.
As
a
result
of
opposition
to
our
obtaining
a
permit,improved
technical
information
as
a
project
progresses,
or
changes
in
the
anticipated
economics
associated
with
a
project,
we
may
decide
to
reduce
thescope
of,
or
abandon,
a
project,
which
could
result
in
an
asset
impairment;
and56Table
of
Contents•Unexpected
significant
increases
in
estimated
costs,
significant
reductions
in
prices
we
are
able
to
charge
our
customers
or
reductions
in
disposal
capacitythat
affect
the
ongoing
economic
viability
of
the
landfill.Disposal Facility Retirement ObligationsDisposal
facility
retirement
obligations
include
the
cost
to
close,
maintain
and
monitor
landfill
cells
and
support
facilities.
As
individual
landfill
cells
reachcapacity,
we
must
cap
and
close
the
cells
in
accordance
with
the
landfill
cell
permits.
These
capping
and
closure
requirements
are
detailed
in
the
technical
design
ofeach
landfill
cell
and
included
as
part
of
our
approved
regulatory
permit.
After
the
entire
landfill
cell
has
reached
capacity
and
is
certified
closed,
we
must
continueto
maintain
and
monitor
the
landfill
cell
for
a
post-closure
period,
which
generally
extends
for
30
years.
Costs
associated
with
closure
and
post-closurerequirements
generally
include
maintenance
of
the
landfill
cell
and
groundwater
systems,
and
other
activities
that
occur
after
the
landfill
cell
has
ceased
acceptingwaste.
Costs
associated
with
post-closure
monitoring
generally
include
groundwater
sampling,
analysis
and
statistical
reports,
transportation
and
disposal
oflandfill
leachate,
and
erosion
control
costs
related
to
the
final
cap.We
have
a
legally
enforceable
obligation
to
operate
our
landfill
cells
in
accordance
with
the
specific
requirements,
regulations
and
criteria
set
forth
in
our
permits.This
includes
executing
the
approved
closure/post-closure
plan
and
closing/capping
the
entire
landfill
cell
in
accordance
with
the
established
requirements,
designand
criteria
contained
in
the
permit.
As
a
result,
we
record
the
fair
value
of
our
disposal
facility
retirement
obligations
as
a
liability
in
the
period
in
which
theregulatory
obligation
to
retire
a
specific
asset
is
triggered.
For
our
individual
landfill
cells,
the
required
closure
and
post-closure
obligations
under
the
terms
of
ourpermits
and
our
intended
operation
of
the
landfill
cell
are
triggered
and
recorded
when
the
cell
is
placed
into
service
and
waste
is
initially
disposed
in
the
landfillcell.
The
fair
value
is
based
on
the
total
estimated
costs
to
close
the
landfill
cell
and
perform
post-closure
activities
once
the
landfill
cell
has
reached
capacity
and
isno
longer
accepting
waste,
discounted
using
a
credit-adjusted
risk-free
rate.
Retirement
obligations
are
increased
each
year
to
reflect
the
passage
of
time
byaccreting
the
balance
at
the
weighted
average
credit-adjusted
risk-free
rate
that
is
used
to
calculate
the
recorded
liability,
with
accretion
charged
to
direct
operatingcosts.
Actual
cash
expenditures
to
perform
closure
and
post-closure
activities
reduce
the
retirement
obligation
liabilities
as
incurred.
After
initial
measurement,asset
retirement
obligations
are
adjusted
at
the
end
of
each
period
to
reflect
changes,
if
any,
in
the
estimated
future
cash
flows
underlying
the
obligation.
Disposalfacility
retirement
assets
are
capitalized
as
the
related
disposal
facility
retirement
obligations
are
incurred.
Disposal
facility
retirement
assets
are
amortized
on
aunits-of-consumption
basis
as
the
disposal
capacity
is
consumed.Our
disposal
facility
retirement
obligations
represent
the
present
value
of
current
cost
estimates
to
close,
maintain
and
monitor
landfills
and
support
facilities
asdescribed
above.
Cost
estimates
are
developed
using
input
from
independent
engineers,
internal
technical
and
accounting
managers,
as
well
as
our
environmentalmanagement
group's
interpretation
of
current
legal
and
regulatory
requirements,
and
are
intended
to
approximate
fair
value.
We
estimate
the
timing
of
futurepayments
based
on
expected
annual
disposal
airspace
consumption
and
then
inflate
the
current
cost
estimate
by
an
inflation
rate,
estimated
at
December
31,
2016
tobe
2.6%.
Inflated
current
costs
are
then
discounted
using
our
credit-adjusted
risk-free
interest
rate,
which
approximates
our
incremental
borrowing
rate
in
effect
atthe
time
the
obligation
is
established
or
when
there
are
upward
revisions
to
our
estimated
closure
and
post-closure
costs.
Our
weighted-average
credit-adjustedrisk-free
interest
rate
at
December
31,
2016
was
approximately
5.9%.
Final
closure
and
post-closure
obligations
are
currently
estimated
as
being
paid
through
theyear
2105.
During
2016
we
updated
several
assumptions,
including
estimated
costs
and
timing
of
closing
our
disposal
cells.
These
updates
resulted
in
a
netincrease
to
our
post-closure
obligations
of
$1.7
million.We
update
our
estimates
of
future
capping,
closure
and
post-closure
costs
and
of
future
disposal
capacity
for
each
landfill
cell
on
an
annual
basis.
Changes
ininflation
rates
or
the
estimated
costs,
timing
or
extent
of
the
required
future
activities
to
close,
maintain
and
monitor
landfills
and
facilities
result
in
both:
(i)
a57Table
of
Contentscurrent
adjustment
to
the
recorded
liability
and
related
asset
and
(ii)
a
change
in
accretion
and
amortization
rates
which
are
applied
prospectively
over
theremaining
life
of
the
asset.
A
hypothetical
1%
increase
in
the
inflation
rate
would
increase
our
closure/post-closure
obligation
by
$18.0
million.
A
hypothetical10%
increase
in
our
cost
estimates
would
increase
our
closure/post-closure
obligation
by
$8.1
million.Goodwill
and
Intangible
AssetsAs
of
December
31,
2016,
the
Company's
goodwill
balance
was
$193.6
million.
We
assess
goodwill
for
impairment
during
the
fourth
quarter
as
of
October
1
ofeach
year,
and
also
if
an
event
occurs
or
circumstances
change
that
would
more
likely
than
not
reduce
the
fair
value
of
a
reporting
unit
below
its
carrying
amount.The
assessment
consists
of
comparing
the
fair
value
of
the
reporting
unit
to
the
carrying
value
of
the
net
assets
assigned
to
the
reporting
unit,
including
goodwill.Some
of
the
factors
that
could
indicate
impairment
include
a
significant
adverse
change
in
legal
factors
or
in
the
business
climate,
an
adverse
action
or
assessmentby
a
regulator,
or
failure
to
generate
sufficient
cash
flows
at
the
reporting
unit.
For
example,
field
and
industrial
services
represents
an
emerging
business
for
theCompany
and
has
been
the
focus
of
a
shift
in
strategy
since
the
acquisition
of
EQ.
Failure
to
execute
on
planned
growth
initiatives
within
this
business
could
leadto
the
impairment
of
goodwill
and
intangible
assets
in
future
periods.We
determine
our
reporting
units
by
identifying
the
components
of
each
operating
segment,
and
then
aggregate
components
having
similar
economiccharacteristics
based
on
quantitative
and/or
qualitative
factors.
At
December
31,
2016,
we
had
15
reporting
units,
10
of
which
had
allocated
goodwill.Fair
values
are
generally
determined
by
using
both
the
market
approach,
applying
a
multiple
of
earnings
based
on
guideline
for
publicly
traded
companies,
and
theincome
approach,
discounting
projected
future
cash
flows
based
on
our
expectations
of
the
current
and
future
operating
environment.
Estimating
future
cash
flowsrequires
significant
judgment
about
factors
such
as
general
economic
conditions
and
projected
growth
rates,
and
our
estimates
often
vary
from
the
cash
flowseventually
realized.
The
rates
used
to
discount
projected
future
cash
flows
reflect
a
weighted
average
cost
of
capital
based
on
our
industry,
capital
structure
and
riskpremiums
including
those
reflected
in
the
current
market
capitalization.
In
the
event
the
fair
value
of
a
reporting
unit
exceeds
its
carrying
amount,
goodwill
of
thereporting
unit
is
considered
not
impaired.
If
the
carrying
amount
of
a
reporting
unit
exceeds
its
fair
value,
the
second
step
of
the
goodwill
test
would
be
performedto
measure
the
amount
of
impairment
loss.
In
the
event
that
we
determine
that
the
value
of
goodwill
has
become
impaired,
we
will
incur
an
accounting
charge
forthe
amount
of
impairment
during
the
period
in
which
the
determination
has
been
made.The
result
of
the
annual
assessment
of
goodwill
undertaken
in
the
fourth
quarter
of
2016
indicated
that
the
fair
value
of
each
of
our
reporting
units
wassubstantially
in
excess
of
its
respective
carrying
value.We
review
intangible
assets
with
indefinite
useful
lives
for
impairment
during
the
fourth
quarter
as
of
October
1
of
each
year.
Fair
value
is
generally
determined
byconsidering
an
internally
developed
discounted
projected
cash
flow
analysis.
Estimating
future
cash
flows
requires
significant
judgment
about
factors
such
asgeneral
economic
conditions
and
projected
growth
rates,
and
our
estimates
often
vary
from
the
cash
flows
eventually
realized.
If
the
fair
value
of
an
asset
isdetermined
to
be
less
than
the
carrying
amount
of
the
intangible
asset,
an
impairment
in
the
amount
of
the
difference
is
recorded
in
the
period
in
which
the
annualassessment
occurs.The
result
of
the
annual
assessment
of
intangible
assets
with
indefinite
useful
lives
undertaken
in
the
fourth
quarter
of
2016
indicated
no
impairment
charges
wererequired.We
also
review
finite-lived
intangible
assets
for
impairment
whenever
events
or
changes
in
circumstances
indicate
that
the
carrying
value
of
an
intangible
assetmay
not
be
recoverable.
In
order
to
assess
whether
a
potential
impairment
exists,
the
assets'
carrying
values
are
compared
with
their
undiscounted
expected58Table
of
Contentsfuture
cash
flows.
Estimating
future
cash
flows
requires
significant
judgment
about
factors
such
as
general
economic
conditions
and
projected
growth
rates,
andour
estimates
often
vary
from
the
cash
flows
eventually
realized.
Impairments
are
measured
by
comparing
the
fair
value
of
the
asset
to
its
carrying
value.
Fairvalue
is
generally
determined
by
considering:
(i)
the
internally
developed
discounted
projected
cash
flow
analysis;
(ii)
a
third-party
valuation;
and/or(iii)
information
available
regarding
the
current
market
environment
for
similar
assets.
If
the
fair
value
of
an
intangible
asset
is
determined
to
be
less
than
thecarrying
amount
of
the
intangible
asset,
an
impairment
in
the
amount
of
the
difference
is
recorded
in
the
period
in
which
the
events
or
changes
in
circumstancesthat
indicated
the
carrying
value
of
the
intangible
assets
may
not
be
recoverable
occurred.The
result
of
the
assessment
of
finite-lived
intangible
assets
undertaken
in
2016
indicated
no
impairment
charges
were
required.On
August
4,
2015,
we
entered
into
a
definitive
agreement
to
sell
Allstate
to
a
private
investor
group.
Allstate
represents
the
majority
of
the
industrial
servicesbusiness
we
acquired
with
the
acquisition
of
EQ.
As
a
result
of
this
agreement
and
management's
strategic
review,
we
evaluated
the
recoverability
of
the
assetsassociated
with
our
industrial
services
business.
Our
interim
goodwill
impairment
test
which
included
both
Step
I
and
Step
II
analysis
was
performed
and
resultedin
a
non-cash
goodwill
impairment
charge
of
$6.7
million
being
recognized
in
the
second
quarter
of
2015.
See
Note
5
to
the
Consolidated
Financial
Statements
in"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-K
for
additional
information
on
the
sale
of
Allstate.No
events
or
circumstances
occurred
during
2016
that
would
indicate
that
our
intangible
assets
may
be
impaired,
therefore
no
other
impairment
tests
wereperformed
during
2016
other
than
the
annual
assessment
of
goodwill
and
intangible
assets
with
indefinite
useful
lives
conducted
in
the
fourth
quarter
of
every
year.Our
acquired
permits
and
licenses
generally
have
renewal
terms
of
approximately
5-10
years.
We
have
a
history
of
renewing
these
permits
and
licenses
asdemonstrated
by
the
fact
that
each
of
the
sites'
treatment
permits
and
licenses
have
been
renewed
regularly
since
the
facility
began
operations.
We
intend
tocontinue
to
renew
our
permits
and
licenses
as
they
come
up
for
renewal
for
the
foreseeable
future.
Costs
incurred
to
renew
or
extend
the
term
of
our
permits
andlicenses
are
recorded
in
Selling,
general
and
administrative
expenses
in
our
consolidated
statements
of
operations.Share
Based
PaymentsOn
May
27,
2015,
our
stockholders
approved
the
Omnibus
Incentive
Plan
("Omnibus
Plan"),
which
was
approved
by
our
Board
of
Directors
on
April
7,
2015.
TheOmnibus
Plan
was
developed
to
provide
additional
incentives
through
equity
ownership
in
US
Ecology
and,
as
a
result,
encourage
employees
and
directors
tocontribute
to
our
success.
The
Omnibus
Plan
provides,
among
other
things,
the
ability
for
the
Company
to
grant
restricted
stock,
performance
stock,
options,
stockappreciation
rights,
restricted
stock
units,
performance
stock
units
("PSUs")
and
other
stock-based
awards
or
cash
awards
to
officers,
employees,
consultants
andnon-employee
directors.
Subsequent
to
the
approval
of
the
Omnibus
Plan
in
May
2015,
we
stopped
granting
equity
awards
under
our
2008
Stock
Option
IncentivePlan
and
our
2006
Restricted
Stock
Plan
("Previous
Plans"),
and
the
Previous
Plans
will
remain
in
effect
solely
for
the
settlement
of
awards
granted
under
thePrevious
Plans.
No
shares
that
are
reserved
but
unissued
under
the
Previous
Plans
or
that
are
outstanding
under
the
Previous
Plans
and
reacquired
by
the
Companyfor
any
reason
will
be
available
for
issuance
under
the
Omnibus
Plan.
The
Omnibus
Plan
expires
on
April
7,
2025
and
authorizes
1,500,000
shares
of
commonstock
for
grant
over
the
life
of
the
Omnibus
Plan.As
of
December
31,
2016,
we
have
PSUs
outstanding
under
the
Omnibus
Plan.
Each
PSU
represents
the
right
to
receive,
on
the
settlement
date,
one
share
of
theCompany's
common
stock.
The
total
number
of
PSUs
each
participant
is
eligible
to
earn
ranges
from
0%
to
200%
of
the
target
number
of
PSUs
granted.
The
actualnumber
of
PSUs
that
will
vest
and
be
settled
in
shares
is
determined
at
the
end
of
a
three-year59Table
of
Contentsperformance
period,
based
on
total
stockholder
return
relative
to
a
set
of
peer
companies
and
the
S&P
600.
The
fair
value
of
the
PSUs
is
determined
using
a
MonteCarlo
simulation.
Refer
to
Note
18
to
the
Consolidated
Financial
Statements
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
AnnualReport
on
Form
10-K
for
a
summary
of
the
assumptions
utilized
in
the
Monte
Carlo
valuation
of
awards
granted
during
2016
and
2015.As
of
December
31,
2016,
we
have
stock
option
awards
outstanding
under
the
1992
Stock
Option
Plan
for
Employees
("1992
Employee
Plan")
and
the
2008
StockOption
Incentive
Plan
("2008
Stock
Option
Plan").
Subsequent
to
the
approval
of
the
Omnibus
Plan
in
May
2015,
we
stopped
granting
equity
awards
under
the2008
Stock
Option
Plan.
The
2008
Stock
Option
Plan
will
remain
in
effect
solely
for
the
settlement
of
awards
previously
granted.
In
April
2013,
the
1992Employee
Plan
expired
and
was
cancelled
except
for
options
then
outstanding.The
determination
of
fair
value
of
stock
option
awards
on
the
date
of
grant
using
the
Black-Scholes
model
is
affected
by
our
stock
price
and
subjectiveassumptions.
These
assumptions
include,
but
are
not
limited
to,
the
expected
term
of
stock
options
and
expected
stock
price
volatility
over
the
term
of
the
awards.Refer
to
Note
18
to
the
Consolidated
Financial
Statements
in
"Part
II,
Item
8.
Financial
Statements
and
Supplementary
Data"
of
this
Annual
Report
on
Form
10-Kfor
a
summary
of
the
assumptions
utilized
in
2016,
2015
and
2014.
Our
stock
options
have
characteristics
significantly
different
from
those
of
traded
options,
andchanges
in
the
assumptions
can
materially
affect
the
fair
value
estimates.Forfeitures
are
estimated
at
the
time
of
grant
and
revised,
if
necessary,
in
subsequent
periods
if
actual
forfeitures
differ
from
those
estimates.
When
actualforfeitures
vary
from
our
estimates,
we
recognize
the
difference
in
compensation
expense
in
the
period
the
actual
forfeitures
occur
or
when
options
vest.Income
TaxesIncome
taxes
are
accounted
for
using
an
asset
and
liability
approach
whereby
we
recognize
deferred
tax
assets
and
liabilities
for
the
expected
future
taxconsequences
of
temporary
differences
between
the
financial
statement
and
tax
basis
of
assets
and
liabilities
at
the
applicable
tax
rates.
The
effect
of
a
change
intax
rates
on
deferred
tax
assets
and
liabilities
is
recognized
in
the
period
that
includes
the
enactment
date.
Deferred
tax
assets
are
evaluated
for
the
likelihood
of
usein
future
periods.
A
valuation
allowance
is
recorded
against
deferred
tax
assets
if,
based
on
the
weight
of
the
available
evidence,
it
is
more
likely
than
not
that
someor
all
of
the
deferred
tax
assets
will
not
be
realized.
The
determination
of
the
need
for
a
valuation
allowance,
if
any,
requires
our
judgment
and
the
use
of
estimates.If
we
determine
that
we
would
be
able
to
realize
our
deferred
tax
assets
in
the
future
in
excess
of
their
net
recorded
amount,
we
would
make
an
adjustment
to
thedeferred
tax
asset
valuation
allowance,
which
would
reduce
the
provision
for
income
taxes.
As
of
December
31,
2016,
we
have
deferred
tax
assets
totalingapproximately
$24.3
million,
a
valuation
allowance
of
$3.1
million
and
deferred
tax
liabilities
totaling
approximately
$102.6
million.The
application
of
income
tax
law
is
inherently
complex.
Tax
laws
and
regulations
are
voluminous
and
at
times
ambiguous
and
interpretations
of
guidanceregarding
such
tax
laws
and
regulations
change
over
time.
This
requires
us
to
make
many
subjective
assumptions
and
judgments
regarding
the
timing
and
amountsof
deductible
and
taxable
items
and
the
probability
of
sustaining
uncertain
tax
positions.
A
liability
for
uncertain
tax
positions
is
recorded
in
our
financialstatements
on
the
basis
of
a
two-step
process
whereby
(1)
we
determine
whether
it
is
more
likely
than
not
that
the
tax
position
taken
will
be
sustained
based
on
thetechnical
merits
of
the
position
and
(2)
for
those
tax
positions
that
meet
the
more
likely
than
not
recognition
threshold,
we
recognize
the
largest
amount
of
taxbenefit
that
is
greater
than
50%
likely
to
be
realized
upon
ultimate
settlement
with
the
related
tax
authority.
As
facts
and
circumstances
change,
we
reassess
theseprobabilities
and
record
any
changes
in
the
financial
statements
as
appropriate.
Changes
in
our
assumptions
and
judgments
can
materially
affect
our
financialposition,
results
of
operations
and
cash
flows.
We
recognize
interest
assessed
by
taxing
authorities
or
interest
associated
with
uncertain
tax
positions
as
acomponent
of
interest
expense.
We
recognize
any
penalties
assessed
by
taxing
authorities
or60Table
of
Contentspenalties
associated
with
uncertain
tax
positions
as
a
component
of
selling,
general
and
administrative
expenses.LitigationWe
have,
in
the
past,
been
involved
in
litigation
requiring
estimates
of
timing
and
loss
potential
whose
timing
and
ultimate
disposition
is
controlled
by
the
judicialprocess.
As
of
December
31,
2016,
we
did
not
have
any
ongoing,
pending
or
threatened
legal
action
that
management
believes,
either
individually
or
in
theaggregate,
would
have
a
material
adverse
effect
on
our
financial
position,
results
of
operations
or
cash
flows.
The
decision
to
accrue
costs
or
write
off
assets
isbased
on
the
pertinent
facts
and
our
evaluation
of
present
circumstances.Off
Balance
Sheet
ArrangementsWe
do
not
have
any
off
balance
sheet
arrangements
or
interests
in
variable
interest
entities
that
would
require
consolidation.
US
Ecology
operates
through
wholly-owned
subsidiaries.ITEM
7A.



QUANTITATIVE
AND
QUALITATIVE
DISCLOSURES
ABOUT
MARKET
RISK
Interest
Rate
RiskWe
do
not
maintain
equities,
commodities,
derivatives,
or
any
other
similar
instruments
for
trading
purposes.
We
have
minimal
interest
rate
risk
on
investments
orother
assets
due
to
our
preservation
of
capital
approach
to
investments.
At
December
31,
2016,
$5.8
million
of
restricted
cash
was
invested
in
fixed-income
U.S.Treasury
and
U.S.
government
agency
securities
and
money
market
accounts.We
are
exposed
to
changes
in
interest
rates
as
a
result
of
our
borrowings
under
the
Credit
Agreement.
Under
the
Credit
Agreement,
Term
Loan
borrowings
incurinterest
at
a
base
rate
(as
defined
in
the
Credit
Agreement)
or
LIBOR,
at
the
Company's
option,
plus
an
applicable
margin.
Revolving
loans
under
the
RevolvingCredit
Facility
are
available
based
on
a
base
rate
(as
defined
in
the
Credit
Agreement)
or
LIBOR,
at
the
Company's
option,
plus
an
applicable
margin
which
isdetermined
according
to
a
pricing
grid
under
which
the
interest
rate
decreases
or
increases
based
on
our
ratio
of
funded
debt
to
consolidated
earnings
beforeinterest,
taxes,
depreciation
and
amortization
(as
defined
in
the
Credit
Agreement).
On
October
29,
2014,
the
Company
entered
into
an
interest
rate
swap
agreementwith
Wells
Fargo
with
the
intention
of
hedging
the
Company's
interest
rate
exposure
on
a
portion
of
the
Company's
outstanding
LIBOR-based
variable
rate
debt.Under
the
terms
of
the
swap,
effective
December
31,
2014,
the
Company
will
pay
to
Wells
Fargo
interest
at
the
fixed
effective
rate
of
5.17%
and
will
receive
fromWells
Fargo
interest
at
the
variable
one-month
LIBOR
rate
on
an
initial
notional
amount
of
$250.0
million.As
of
December
31,
2016,
there
were
$283.0
million
of
borrowings
outstanding
under
the
Term
Loan
and
$2.2
million
of
working
capital
borrowings
outstandingunder
the
Revolving
Credit
Facility.
If
interest
rates
were
to
rise
and
outstanding
balances
remain
unchanged,
we
would
be
subject
to
higher
interest
payments
onour
outstanding
debt.
Subsequent
to
the
effective
date
of
the
interest
rate
swap
on
December
31,
2014,
we
would
be
subject
to
higher
interest
payments
on
only
theunhedged
borrowings
under
the
Credit
Agreement.Based
on
the
outstanding
indebtedness
of
$285.2
million
under
our
Credit
Agreement
at
December
31,
2016
and
the
impact
of
our
interest
rate
hedge,
if
marketrates
used
to
calculate
interest
expense
were
to
average
1%
higher
in
the
next
twelve
months,
our
interest
expense
would
increase
by
approximately
$665,000
forthe
corresponding
period.Foreign
Currency
RiskWe
are
subject
to
currency
exposures
and
volatility
because
of
currency
fluctuations.
The
majority
of
our
transactions
are
in
USD;
however,
our
Canadiansubsidiaries
conduct
business
in
both
Canada
and
the61Table
of
ContentsUnited
States.
In
addition,
contracts
for
services
that
our
Canadian
subsidiaries
provide
to
U.S.
customers
are
generally
denominated
in
USD.
During
2016,
ourCanadian
subsidiaries
transacted
approximately
54%
of
their
revenue
in
USD
and
at
any
time
have
cash
on
deposit
in
USD
and
outstanding
USD
trade
receivablesand
payables
related
to
these
transactions.
These
USD
cash,
receivable
and
payable
accounts
are
subject
to
non-cash
foreign
currency
translation
gains
or
losses.Exchange
rate
movements
also
affect
the
translation
of
Canadian
generated
profits
and
losses
into
USD.We
established
intercompany
loans
between
our
Canadian
subsidiaries
and
our
parent
company,
US
Ecology,
as
part
of
a
tax
and
treasury
management
strategyallowing
for
repayment
of
third-party
bank
debt.
These
intercompany
loans
are
payable
using
CAD
and
are
subject
to
mark-to-market
adjustments
with
movementsin
the
CAD.
At
December
31,
2016,
we
had
$20.8
million
of
intercompany
loans
outstanding
between
our
Canadian
subsidiaries
and
US
Ecology.
During
2016,the
CAD
weakened
as
compared
to
the
USD
resulting
in
a
$107,000
non-cash
foreign
currency
translation
loss
being
recognized
in
the
Company's
consolidatedstatements
of
operations
related
to
the
intercompany
loans.
Based
on
intercompany
balances
as
of
December
31,
2016,
a
$0.01
CAD
increase
or
decrease
incurrency
rate
compared
to
the
USD
at
December
31,
2016
would
have
generated
a
gain
or
loss
of
approximately
$208,000
for
the
year
ended
December
31,
2016.We
had
a
total
pre-tax
foreign
currency
loss
of
$138,000
for
the
year
ended
December
31,
2016.
We
currently
have
no
foreign
exchange
contracts,
option
contractsor
other
foreign
currency
hedging
arrangements.
Management
evaluates
our
risk
position
on
an
ongoing
basis
to
determine
whether
foreign
exchange
hedgingstrategies
should
be
employed.62Table
of
ContentsITEM
8.



FINANCIAL
STATEMENTS
AND
SUPPLEMENTARY
DATA63


Page
NumberReport
of
Independent
Registered
Public
Accounting
Firm
64Consolidated
Balance
Sheets
as
of
December
31,
2016
and
2015
66Consolidated
Statements
of
Operations
for
the
years
ended
December
31,
2016,
2015
and
2014
67Consolidated
Statements
of
Comprehensive
Income
for
the
years
ended
December
31,
2016,
2015
and
2014
68Consolidated
Statements
of
Cash
Flows
for
the
years
ended
December
31,
2016,
2015
and
2014
69Consolidated
Statements
of
Stockholders'
Equity
for
the
years
ended
December
31,
2016,
2015
and
2014
70Notes
to
Consolidated
Financial
Statements
71Table
of
ContentsREPORT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRMTo
the
Board
of
Directors
and
Stockholders
of
US
Ecology,
Inc.
Boise,
IdahoWe
have
audited
the
accompanying
consolidated
balance
sheets
of
US
Ecology,
Inc.
and
subsidiaries
(the
"Company")
as
of
December
31,
2016
and
2015,
and
therelated
consolidated
statements
of
operations,
comprehensive
income,
stockholders'
equity,
and
cash
flows
for
each
of
the
three
years
in
the
period
endedDecember
31,
2016.
We
also
have
audited
the
Company's
internal
control
over
financial
reporting
as
of
December
31,
2016,
based
on
criteria
established
inInternal Control—Integrated Framework (2013) issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission.
The
Company'smanagement
is
responsible
for
these
financial
statements,
for
maintaining
effective
internal
control
over
financial
reporting,
and
for
its
assessment
of
theeffectiveness
of
internal
control
over
financial
reporting,
included
in
the
accompanying
Management's
Annual
Report
on
Internal
Controls
over
FinancialReporting.
Our
responsibility
is
to
express
an
opinion
on
these
financial
statements
and
an
opinion
on
the
Company's
internal
control
over
financial
reporting
basedon
our
audits.As
described
in
Management's
Annual
Report
on
Internal
Controls
over
Financial
Reporting,
management
excluded
from
its
assessment
the
internal
control
overfinancial
reporting
at
Environmental
Services
Inc.
("ESI")
and
the
Vernon,
California
based
RCRA
Part
B,
liquids
and
solids
waste
treatment
and
storage
facility
ofEvoqua
Water
Technologies
LLC
("Vernon"),
which
were
acquired
May
2,
2016
and
October
1,
2016
and
whose
financial
statements
constitute
1%
and
1%
oftotal
assets,
respectively,
and
1%
and
less
than
1%
of
revenues,
respectively,
of
the
consolidated
financial
statement
amounts
as
of
and
for
the
year
endedDecember
31,
2016.
Accordingly,
our
audits
did
not
include
the
internal
control
over
financial
reporting
at
ESI
and
Vernon.We
conducted
our
audits
in
accordance
with
the
standards
of
the
Public
Company
Accounting
Oversight
Board
(United
States).
Those
standards
require
that
weplan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement
and
whether
effective
internalcontrol
over
financial
reporting
was
maintained
in
all
material
respects.
Our
audits
of
the
financial
statements
included
examining,
on
a
test
basis,
evidencesupporting
the
amounts
and
disclosures
in
the
financial
statements,
assessing
the
accounting
principles
used
and
significant
estimates
made
by
management,
andevaluating
the
overall
financial
statement
presentation.
Our
audit
of
internal
control
over
financial
reporting
included
obtaining
an
understanding
of
internal
controlover
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,
and
testing
and
evaluating
the
design
and
operating
effectiveness
of
internal
controlbased
on
the
assessed
risk.
Our
audits
also
included
performing
such
other
procedures
as
we
considered
necessary
in
the
circumstances.
We
believe
that
our
auditsprovide
a
reasonable
basis
for
our
opinions.A
company's
internal
control
over
financial
reporting
is
a
process
designed
by,
or
under
the
supervision
of,
the
company's
principal
executive
and
principalfinancial
officers,
or
persons
performing
similar
functions,
and
effected
by
the
company's
board
of
directors,
management,
and
other
personnel
to
providereasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generallyaccepted
accounting
principles.
A
company's
internal
control
over
financial
reporting
includes
those
policies
and
procedures
that
(1)
pertain
to
the
maintenance
ofrecords
that,
in
reasonable
detail,
accurately
and
fairly
reflect
the
transactions
and
dispositions
of
the
assets
of
the
company;
(2)
provide
reasonable
assurance
thattransactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
generally
accepted
accounting
principles,
and
that
receiptsand
expenditures
of
the
company
are
being
made
only
in
accordance
with
authorizations
of
management
and
directors
of
the
company;
and
(3)
provide
reasonableassurance
regarding
prevention
or
timely
detection
of
unauthorized
acquisition,
use,
or
disposition
of
the
company's
assets
that
could
have
a
material
effect
on
thefinancial
statements.64Table
of
ContentsBecause
of
the
inherent
limitations
of
internal
control
over
financial
reporting,
including
the
possibility
of
collusion
or
improper
management
override
of
controls,material
misstatements
due
to
error
or
fraud
may
not
be
prevented
or
detected
on
a
timely
basis.
Also,
projections
of
any
evaluation
of
the
effectiveness
of
theinternal
control
over
financial
reporting
to
future
periods
are
subject
to
the
risk
that
the
controls
may
become
inadequate
because
of
changes
in
conditions,
or
thatthe
degree
of
compliance
with
the
policies
or
procedures
may
deteriorate.In
our
opinion,
the
consolidated
financial
statements
referred
to
above
present
fairly,
in
all
material
respects,
the
financial
position
of
US
Ecology,
Inc.
andsubsidiaries
as
of
December
31,
2016
and
2015,
and
the
results
of
their
operations
and
their
cash
flows
for
each
of
the
three
years
in
the
period
ended
December
31,2016,
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Also,
in
our
opinion,
the
Company
maintained,
in
all
materialrespects,
effective
internal
control
over
financial
reporting
as
of
December
31,
2016,
based
on
the
criteria
established
in
Internal Control—Integrated Framework(2013) issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission./s/ DELOITTE & TOUCHE LLPBoise,
Idaho
February
27,
201765Table
of
ContentsUS
ECOLOGY,
INC.
CONSOLIDATED
BALANCE
SHEETS
(In
thousands,
except
per
share
amounts)



The
accompanying
notes
are
an
integral
part
of
these
financial
statements.66


As
of
December
31,



2016
2015
Assets






Current
Assets:






Cash
and
cash
equivalents
$7,015
$5,989
Receivables,
net

96,819

106,380
Prepaid
expenses
and
other
current
assets

7,458

8,484
Income
taxes
receivable

4,076

2,017
Total
current
assets

115,368

122,870
Property
and
equipment,
net

226,237

210,334
Restricted
cash
and
investments

5,787

5,748
Intangible
assets,
net

234,356

239,571
Goodwill

193,621

191,823
Other
assets

1,031

1,641
Total
assets
$776,400
$771,987
Liabilities
And
Stockholders'
Equity






Current
Liabilities:






Accounts
payable
$13,948
$17,169
Deferred
revenue

7,820

8,078
Accrued
liabilities

22,605

25,634
Accrued
salaries
and
benefits

10,720

11,513
Income
taxes
payable

165

117
Current
portion
of
closure
and
post-closure
obligations

2,256

2,787
Revolving
credit
facility

2,177

—
Current
portion
of
long-term
debt

2,903

3,056
Total
current
liabilities

62,594

68,354
Long-term
closure
and
post-closure
obligations

72,826

68,367
Long-term
debt

274,459

290,684
Other
long-term
liabilities

5,164

5,825
Deferred
income
taxes

81,333

82,622
Total
liabilities

496,376

515,852
Commitments
and
contingencies






Stockholders'
Equity:






Common
stock
$0.01
par
value,
50,000
authorized;
21,780
and
21,744
shares
issued,
respectively

218

217
Additional
paid-in
capital

172,704

169,873
Retained
earnings

121,879

103,300
Treasury
stock,
at
cost,
7
and
5
shares,
respectively

(52)
(189)Accumulated
other
comprehensive
loss

(14,725)
(17,066)Total
stockholders'
equity

280,024

256,135
Total
liabilities
and
stockholders'
equity
$776,400
$771,987
Table
of
ContentsUS
ECOLOGY,
INC.
CONSOLIDATED
STATEMENTS
OF
OPERATIONS
(In
thousands,
except
per
share
amounts)



The
accompanying
notes
are
an
integral
part
of
these
financial
statements.67


For
the
Year
Ended
December
31,



2016
2015
2014
Revenue
$477,665
$563,070
$447,411
Direct
operating
costs

330,070

391,660

301,625
Gross
profit

147,595

171,410

145,786
Selling,
general
and
administrative
expenses

77,566

93,079

73,336
Impairment
charges

—

6,700

—
Operating
income

70,029

71,631

72,450
Other
income
(expense),
net:









Interest
income

96

65

107
Interest
expense

(17,317)
(23,370)
(10,677)Foreign
currency
loss

(138)
(2,196)
(1,499)Gain
(loss)
on
divestiture

2,034

(542)
—
Other

597

1,267

669
Total
other
income
(expense),
net

(14,728)
(24,776)
(11,400)Income
before
income
taxes

55,301

46,855

61,050
Income
tax
expense

21,049

21,244

22,814
Net
income
$34,252
$25,611
$38,236
Earnings
per
share:









Basic
$1.58
$1.18
$1.78
Diluted
$1.57
$1.18
$1.77
Shares
used
in
earnings
per
share
calculation:









Basic

21,704

21,637

21,537
Diluted

21,789

21,733

21,655
Table
of
ContentsUS
ECOLOGY,
INC.
CONSOLIDATED
STATEMENTS
OF
COMPREHENSIVE
INCOME
(In
thousands)



The
accompanying
notes
are
an
integral
part
of
these
financial
statements.68


For
the
Year
Ended
December
31,



2016
2015
2014
Net
income
$34,252
$25,611
$38,236
Other
comprehensive
income
(loss):









Foreign
currency
translation
gain
(loss)

1,379

(8,380)
(3,863)Net
changes
in
interest
rate
hedge,
net
of
taxes
of
$517,
($539)
and
($1,098),respectively

962

(1,000)
(2,038)Comprehensive
income,
net
of
tax
$36,593
$16,231
$32,335
Table
of
ContentsUS
ECOLOGY,
INC.
CONSOLIDATED
STATEMENTS
OF
CASH
FLOWS
(In
thousands)



The
accompanying
notes
are
an
integral
part
of
these
financial
statements.69


For
the
Year
Ended
December
31,



2016
2015
2014
Cash
flows
from
operating
activities:









Net
income
$34,252
$25,611
$38,236
Adjustments
to
reconcile
net
income
to
net
cash
provided
by
operating
activities:









Impairment
charges

—

6,700

—
Depreciation
and
amortization
of
property
and
equipment

25,304

27,931

24,413
Amortization
of
intangible
assets

10,575

12,307

8,207
Accretion
of
closure
and
post-closure
obligations

3,953

4,584

2,656
Unrealized
foreign
currency
loss

65

3,271

2,427
Deferred
income
taxes

(2,704)
(2,714)
2,035
Share-based
compensation
expense

2,925

2,297

1,250
Unrecognized
tax
benefits

—

—

(480)Loss
(gain)
on
disposition
of
business

(2,034)
542

—
Net
loss
(gain)
on
disposition
of
assets

(569)
741

421
Amortization
of
debt
issuance
costs

2,006

4,428

1,037
Amortization
of
debt
discount

148

148

74
Changes
in
assets
and
liabilities
(net
of
effects
of
business
acquisitions
anddivestitures):









Receivables

10,912

1,565

(4,400)Income
taxes
receivable

(2,043)
4,830

(1,798)Other
assets

1,149

734

(921)Accounts
payable
and
accrued
liabilities

(7,735)
(6,481)
(2,878)Deferred
revenue

(281)
(4,449)
1,890
Accrued
salaries
and
benefits

(864)
(901)
771
Income
taxes
payable

49

(3,918)
(389)Closure
and
post-closure
obligations

(481)
(5,679)
(1,182)Net
cash
provided
by
operating
activities

74,627

71,547

71,369
Cash
flows
from
investing
activities:









Proceeds
from
divestitures
(net
of
cash
divested)

2,723

58,728

—
Purchases
of
property
and
equipment

(35,696)
(39,370)
(28,434)Purchases
of
restricted
cash
and
investments

(2,317)
(2,075)
(1,060)Proceeds
from
sale
of
restricted
cash
and
investments

2,278

2,057

1,023
Proceeds
from
sale
of
short
term
investments

—

—

654
Proceeds
from
sale
of
property
and
equipment

991

948

201
Business
acquisitions
(net
of
cash
acquired)

(9,983)
—

(460,874)Net
cash
provided
by
(used
in)
investing
activities

(42,004)
20,288

(488,490)Cash
flows
from
financing
activities:









Payments
on
long-term
debt

(17,954)
(94,623)
(19,384)Dividends
paid

(15,673)
(15,612)
(15,532)Proceeds
from
revolving
credit
facility

49,405

10,316

—
Payments
on
revolving
credit
facility

(47,228)
(10,316)
—
Proceeds
from
exercise
of
stock
options

229

1,823

1,542
Proceeds
from
issuance
of
long-term
debt

—

—

413,962
Deferred
financing
costs
paid

—

—

(14,001)Payment
of
equipment
financing
obligations

(179)
—

—
Other

(189)
54

206
Net
cash
(used
in)
provided
by
financing
activities

(31,589)
(108,358)
366,793
Effect
of
foreign
exchange
rate
changes
on
cash

(8)
(459)
(641)Increase
(decrease)
in
cash
and
cash
equivalents

1,026

(16,982)
(50,969)Cash
and
cash
equivalents
at
beginning
of
year

5,989

22,971

73,940
Cash
and
cash
equivalents
at
end
of
year
$7,015
$5,989
$22,971
Table
of
ContentsUS
ECOLOGY,
INC.
CONSOLIDATED
STATEMENTS
OF
STOCKHOLDERS'
EQUITY
(In
thousands,
except
share
amounts)



The
accompanying
notes
are
an
integral
part
of
these
financial
statements.70


Common
Shares
Issued
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Income
(Loss)
Total
Balance
at
December
31,
2013

21,537,576
$215
$162,830
$70,597
$(319)$(1,785)$231,538
Net
income

—

—

—

38,236

—

—

38,236
Other
comprehensive
loss

—

—

—

—

—

(5,901)
(5,901)Dividend
paid

—

—

—

(15,532)
—

—

(15,532)Tax
benefit
of
equity
based
awards

—

—

667

—

—

—

667
Share-based
compensation

—

—

1,250

—

—

—

1,250
Stock
option
exercises

93,621

1

1,264

—

—

—

1,265
Repurchase
of
common
stock:4,860
shares

—

—

—

—

(186)
—

(186)Issuance
of
restricted
commonstock

1,246

—

—

—

—

—

—
Issuance
of
restricted
commonstock
from
treasury
shares

—

—

(487)
—

487

—

—
Balance
at
December
31,
2014

21,632,443

216

165,524

93,301

(18)
(7,686)
251,337
Net
income

—

—

—

25,611

—

—

25,611
Other
comprehensive
loss

—

—

—

—

—

(9,380)
(9,380)Dividend
paid

—

—

—

(15,612)
—

—

(15,612)Tax
benefit
of
equity
based
awards

—

—

376

—

—

—

376
Share-based
compensation

—

—

2,297

—

—

—

2,297
Stock
option
exercises

80,112

1

1,822

—

—

—

1,823
Repurchase
of
common
stock:6,150
shares

—

—

—

—

(317)
—

(317)Issuance
of
restricted
commonstock

31,417

—

—

—

—

—

—
Issuance
of
restricted
commonstock
from
treasury
shares

—

—

(146)
—

146

—

—
Balance
at
December
31,
2015

21,743,972

217

169,873

103,300

(189)
(17,066)
256,135
Net
income

—

—

—

34,252

—

—

34,252
Other
comprehensive
gain

—

—

—

—

—

2,341

2,341
Dividend
paid

—

—

—

(15,673)
—

—

(15,673)Tax
benefit
of
equity
based
awards

—

—

85

—

—

—

85
Share-based
compensation

—

—

2,925

—

—

—

2,925
Stock
option
exercises

11,856

—

229

—

—

—

229
Repurchase
of
common
stock:6,589
shares

—

—

—

—

(271)
—

(271)Issuance
of
restricted
commonstock

23,888

1

—

—

—

—

1
Issuance
of
restricted
commonstock
from
treasury
shares

—

—

(408)
—

408

—

—
Balance
at
December
31,
2016

21,779,716
$218
$172,704
$121,879
$(52)$(14,725)$280,024
Table
of
ContentsUS
ECOLOGY,
INC.
NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
NOTE
1.
DESCRIPTION
OF
BUSINESSUS
Ecology,
Inc.
was
most
recently
incorporated
as
a
Delaware
corporation
in
May
1987
as
American
Ecology
Corporation.
On
February
22,
2010
the
Companychanged
its
name
from
American
Ecology
Corporation
to
US
Ecology,
Inc.
US
Ecology,
Inc.,
through
its
subsidiaries,
is
a
leading
North
American
provider
ofenvironmental
services
to
commercial
and
government
entities.
The
Company
addresses
the
complex
waste
management
needs
of
its
customers,
offering
treatment,disposal
and
recycling
of
hazardous
and
radioactive
waste,
as
well
as
a
wide
range
of
complementary
field
and
industrial
services.
Headquartered
in
Boise,
Idaho,with
operations
in
the
United
States,
Canada
and
Mexico,
US
Ecology,
Inc.
has
been
protecting
the
environment
since
1952.
Throughout
these
financial
statementswords
such
as
"we,"
"us,"
"our,"
"US
Ecology"
and
the
"Company"
refer
to
US
Ecology,
Inc.
and
its
subsidiaries.On
June
17,
2014,
the
Company
acquired
100%
of
the
outstanding
shares
of
EQ
Holdings,
Inc.
and
its
wholly-owned
subsidiaries
(collectively
"EQ").
Theacquisition
of
EQ
significantly
expanded
the
Company's
service
offerings,
specifically
in
the
areas
of
field
and
industrial
services.
As
such,
we
have
made
changesto
the
manner
in
which
we
manage
our
business,
make
operating
decisions
and
assess
our
performance.
Under
our
new
structure,
our
operations
are
managed
intwo
reportable
segments
reflecting
our
internal
reporting
structure
and
nature
of
services
offered:
Environmental
Services
and
Field
&
Industrial
Services.Our
Environmental
Services
segment
provides
a
broad
range
of
hazardous
material
management
services
including
the
transportation,
recycling,
treatment
anddisposal
of
hazardous
and
non-hazardous
waste
at
Company-owned
landfill,
wastewater
and
other
treatment
facilities.Our
Field
&
Industrial
Services
segment
provides
packaging
and
collection
of
hazardous
waste
and
total
waste
management
solutions
at
customer
sites
and
throughour
10-day
storage
facilities.
Services
include
on-site
management,
waste
characterization,
transportation
and
disposal
of
non-hazardous
and
hazardous
waste.
Thissegment
also
provides
specialty
services
such
as
high-pressure
cleaning,
tank
cleaning,
decontamination,
remediation,
transportation,
spill
cleanup
and
emergencyresponse
and
other
services
to
commercial
and
industrial
facilities
and
to
government
entities.
On
November
1,
2015,
we
sold
our
Allstate
Power
Vac,
Inc.("Allstate")
subsidiary,
which
was
previously
reported
as
part
of
our
Field
&
Industrial
Services
segment,
to
a
private
investor
group.
See
Note
5
for
additionalinformation.NOTE
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIESPrinciples of ConsolidationThe
accompanying
financial
statements
are
prepared
on
a
consolidated
basis.
All
inter-company
balances
and
transactions
have
been
eliminated
in
consolidation.Our
year-end
is
December
31.Cash and Cash EquivalentsCash
and
cash
equivalents
consist
primarily
of
cash
on
deposit,
money
market
accounts
or
short-term
investments
with
remaining
maturities
of
90
days
or
less
atthe
date
of
acquisition.
Cash
and
cash
equivalents
totaled
$7.0
million
and
$6.0
million
at
December
31,
2016
and
2015,
respectively.
At
December
31,
2016
and2015,
we
had
$4.8
million
and
$2.1
million,
respectively,
of
cash
at
our
operations
outside
the
United
States.71Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)ReceivablesReceivables
are
stated
at
an
amount
management
expects
to
collect.
Based
on
management's
assessment
of
the
credit
history
of
the
customers
having
outstandingbalances
and
factoring
in
current
economic
conditions,
management
has
concluded
that
potential
unidentified
losses
on
balances
outstanding
at
year-end
will
not
bematerial.Unbilled
receivables
are
recorded
for
work
performed
under
contracts
that
have
not
yet
been
invoiced
to
customers
and
arise
due
to
the
timing
of
billings.Substantially
all
unbilled
receivables
at
December
31,
2016,
were
billed
in
the
following
month.Restricted Cash and InvestmentsRestricted
cash
and
investments
of
$5.8
million
and
$5.7
million
at
December
31,
2016
and
2015,
represent
funds
held
in
third-party
managed
trust
accounts
ascollateral
for
our
financial
assurance
obligations
for
post-closure
activities
at
our
non-operating
facilities.
These
funds
are
invested
in
fixed-income
U.S.
Treasuryand
government
agency
securities
and
money
market
accounts.
The
balances
are
adjusted
monthly
to
fair
market
value
based
on
quoted
prices
in
active
markets
foridentical
or
similar
assets.Revenue RecognitionWe
recognize
revenue
when
persuasive
evidence
of
an
arrangement
exists,
delivery
and
disposal
have
occurred
or
services
have
been
rendered,
the
price
is
fixed
ordeterminable
and
collection
is
reasonably
assured.
We
recognize
revenue
from
three
primary
sources:
1)
waste
treatment,
recycling
and
disposal,
2)
field
andindustrial
waste
management
services
and
3)
waste
transportation
services.Waste
treatment
and
disposal
revenue
results
primarily
from
fees
charged
to
customers
for
treatment
and/or
disposal
or
recycling
of
specified
wastes.
Wastetreatment
and
disposal
revenue
is
generally
charged
on
a
per-ton
or
per-yard
basis
based
on
contracted
prices
and
is
recognized
when
services
are
complete.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
othergovernment,
commercial
and
industrial
facilities.
These
services
are
provided
based
on
purchase
orders
or
agreements
with
the
customer
and
include
prices
basedupon
daily,
hourly
or
job
rates
for
equipment,
materials
and
personnel.
Revenues
are
recognized
over
the
term
of
the
agreements
or
as
services
are
performed.Revenue
is
recognized
on
contracts
with
retainage
when
services
have
been
rendered
and
collectability
is
reasonably
assured.Transportation
revenue
results
from
delivering
customer
waste
to
a
disposal
facility
for
treatment
and/or
disposal
or
recycling.
Transportation
services
aregenerally
not
provided
on
a
stand-alone
basis
and
instead
are
bundled
with
other
Company
services.
However,
in
some
instances
we
provide
transportation
andlogistics
services
for
shipment
of
waste
from
cleanup
sites
to
disposal
facilities
operated
by
other
companies.
We
account
for
our
bundled
arrangements
as
multipledeliverable
arrangements
and
determine
the
amount
of
revenue
recognized
for
each
deliverable
(unit
of
accounting)
using
the
relative
fair
value
method.Transportation
revenue
is
recognized
when
the
transported
waste
is
received
at
the
disposal
facility.
Waste
treatment
and
disposal
revenue
under
bundledarrangements
is
recognized
when
services
are
complete
and
the
waste
is
disposed
in
the
landfill.72Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)Burial
fees
collected
from
customers
for
each
ton
or
cubic
yard
of
waste
disposed
in
our
landfills
are
paid
to
the
respective
local
and/or
state
government
entity
andare
not
included
in
revenue.
Revenue
and
associated
cost
from
waste
that
has
been
received
but
not
yet
treated
and
disposed
of
in
our
landfills
are
deferred
untildisposal
occurs.Our
Richland,
Washington
disposal
facility
is
regulated
by
the
Washington
Utilities
and
Transportation
Commission
("WUTC"),
which
approves
our
rates
fordisposal
of
low-level
radioactive
waste
("LLRW").
Annual
revenue
levels
are
established
based
on
a
rate
agreement
with
the
WUTC
at
amounts
sufficient
to
coverthe
costs
of
operation,
including
facility
maintenance,
equipment
replacement
and
related
costs,
and
provide
us
with
a
reasonable
profit.
Per-unit
rates
charged
toLLRW
customers
during
the
year
are
based
on
our
evaluation
of
disposal
volume
and
radioactivity
projections
submitted
to
us
by
waste
generators.
Our
proposedrates
are
then
reviewed
and
approved
by
the
WUTC.
If
annual
revenue
exceeds
the
approved
levels
set
by
the
WUTC,
we
are
required
to
refund
excess
collectionsto
facility
users
on
a
pro-rata
basis.
Refundable
excess
collections,
if
any,
are
recorded
in
Accrued
liabilities
in
the
consolidated
balance
sheets.
The
current
rateagreement
with
the
WUTC
was
extended
in
2013
and
is
effective
until
January
1,
2020.Deferred RevenueRevenue
from
waste
that
has
been
received
but
not
yet
treated
or
disposed
or
advance
billings
prior
to
treatment
and
disposal
services
are
deferred
until
suchservices
are
completed.Property and EquipmentProperty
and
equipment
are
recorded
at
cost
and
depreciated
on
the
straight-line
method
over
estimated
useful
lives.
Replacements
and
major
repairs
of
propertyand
equipment
are
capitalized
and
retirements
are
made
when
assets
are
disposed
of
or
when
the
useful
life
has
been
exhausted.
Minor
components
and
parts
areexpensed
as
incurred.
Repair
and
maintenance
expenses
were
$11.8
million,
$13.9
million
and
$12.2
million
for
the
years
ended
December
31,
2016,
2015
and2014,
respectively.We
assume
no
salvage
value
for
our
depreciable
fixed
assets.
The
estimated
useful
lives
for
significant
property
and
equipment
categories
are
as
follows:Disposal Cell AccountingQualified
disposal
cell
development
costs
such
as
personnel
and
equipment
costs
incurred
to
construct
new
disposal
cells
are
recorded
and
capitalized
at
cost.Capitalized
cell
development
costs,
net
of
recorded
amortization,
are
added
to
estimated
future
costs
of
the
permitted
disposal
cell
to
be
incurred
over
theremaining
construction
of
the
cell,
to
determine
the
amount
to
be
amortized
over
the
remaining
estimated
cell
life.
Estimates
of
future
costs
are
developed
usinginput
from
independent
engineers
and
internal
technical
and
accounting
managers.
We
review
these
estimates
at
least
annually.
Amortization
is
recorded73


Useful
LivesVehicles
and
other
equipment
3
to
10
yearsDisposal
facility
and
equipment
3
to
20
yearsBuildings
and
improvements
5
to
40
yearsRailcars
40
yearsTable
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)on
a
unit
of
consumption
basis,
typically
applying
cost
as
a
rate
per
cubic
yard
disposed.
Disposal
facility
costs
are
expected
to
be
fully
amortized
upon
finalclosure
of
the
facility,
as
no
salvage
value
applies.
Costs
associated
with
ongoing
disposal
operations
are
charged
to
expense
as
incurred.We
have
material
financial
commitments
for
closure
and
post-closure
obligations
for
certain
facilities
we
own
or
operate.
We
estimate
future
cost
requirements
forclosure
and
post-closure
monitoring
based
on
RCRA
and
conforming
state
requirements
and
facility
permits.
RCRA
requires
that
companies
provide
theresponsible
regulatory
agency
acceptable
financial
assurance
for
closure
work
and
subsequent
post-closure
monitoring
of
each
facility
for
30
years
followingclosure.
Estimates
for
final
closure
and
post-closure
costs
are
developed
using
input
from
our
technical
and
accounting
managers
as
well
as
independent
engineersand
are
reviewed
by
management
at
least
annually.
These
estimates
involve
projections
of
costs
that
will
be
incurred
after
the
disposal
facility
ceases
operations,through
the
required
post-closure
care
period.
The
present
value
of
the
estimated
closure
and
post-closure
costs
are
accreted
using
the
interest
method
of
allocationto
direct
costs
in
our
consolidated
statements
of
operations
so
that
100%
of
the
future
cost
has
been
incurred
at
the
time
of
payment.Business CombinationsWe
account
for
business
combinations
under
the
acquisition
method
of
accounting.
The
cost
of
an
acquired
company
is
assigned
to
the
tangible
and
identifiableintangible
assets
purchased
and
the
liabilities
assumed
on
the
basis
of
their
fair
values
at
the
date
of
acquisition.
Any
excess
of
purchase
price
over
the
fair
value
ofnet
tangible
and
intangible
assets
acquired
is
assigned
to
goodwill.
The
transaction
costs
associated
with
business
combinations
are
expensed
as
they
are
incurred.GoodwillGoodwill
represents
the
excess
of
the
fair
value
of
the
consideration
transferred
over
the
fair
value
of
the
underlying
identifiable
assets
and
liabilities
acquired.Goodwill
is
not
amortized,
but
instead
is
assessed
for
impairment
annually
in
the
fourth
quarter
as
of
October
1
and
also
if
an
event
occurs
or
circumstances
changethat
may
indicate
a
possible
impairment.
In
the
event
that
we
determine
that
the
value
of
goodwill
has
become
impaired,
we
will
incur
an
accounting
charge
for
theamount
of
impairment
during
the
period
in
which
the
determination
has
been
made.
See
Note
3
for
additional
information
related
to
the
Company's
goodwillimpairment
tests.
Goodwill
was
recognized
in
connection
with
our
acquisitions
of
Environmental
Services
Inc.
("ESI")
and
the
Vernon,
California
based
RCRAPart
B,
liquids
and
solids
waste
treatment
and
storage
facility
of
Evoqua
Water
Technologies
LLC
in
2016,
EQ
in
2014,
Dynecol
in
2012
and
Stablex
in
2010.Intangible AssetsIntangible
assets
are
stated
at
the
fair
value
assigned
in
a
business
combination
net
of
amortization.
We
amortize
our
finite-lived
intangible
assets
using
thestraight-line
method
over
their
estimated
economic
lives
ranging
from
1
to
45
years.
We
review
intangible
assets
with
indefinite
useful
lives
for
impairment
duringthe
fourth
quarter
as
of
October
1
of
each
year.
We
also
review
both
indefinite-lived
and
finite-lived
intangible
assets
for
impairment
whenever
events
or
changesin
circumstances
indicate
that
the
carrying
value
of
an
intangible
asset
may
not
be
recoverable.Our
acquired
permits
and
licenses
generally
have
renewal
terms
of
approximately
5-10
years.
We
have
a
history
of
renewing
these
permits
and
licenses
asdemonstrated
by
the
fact
that
each
of
the
sites'
treatment74Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)permits
and
licenses
have
been
renewed
regularly
since
the
facility
began
operations.
We
intend
to
continue
to
renew
our
permits
and
licenses
as
they
come
up
forrenewal
for
the
foreseeable
future.
Costs
incurred
to
renew
or
extend
the
term
of
our
permits
and
licenses
are
recorded
in
Selling,
general
and
administrativeexpenses
in
our
consolidated
statements
of
operations.Impairment of Long-Lived AssetsLong-lived
assets
consist
primarily
of
property
and
equipment
facility
development
costs
and
finite-lived
intangible
assets.
The
recoverability
of
long-lived
assetsis
evaluated
periodically
through
analysis
of
operating
results
and
consideration
of
other
significant
events
or
changes
in
the
business
environment.
If
an
operatingunit
had
indications
of
possible
impairment,
we
would
evaluate
whether
impairment
exists
on
the
basis
of
undiscounted
expected
future
cash
flows
from
operationsover
the
remaining
amortization
period.
If
an
impairment
loss
were
to
exist,
the
carrying
amount
of
the
related
long-lived
assets
would
be
reduced
to
theirestimated
fair
value.Deferred Financing CostsDeferred
financing
costs
are
amortized
over
the
life
of
our
Credit
Agreement.
Amortization
of
deferred
financing
costs
is
included
as
a
component
of
interestexpense
in
the
consolidated
statements
of
operations.
In
April
2015,
the
FASB
issued
ASU
No.
2015-03,
Interest—Imputation of Interest (Subtopic 835-30),Simplifying the Presentation of Debt Issuance Costs .
We
elected
to
adopt
this
guidance
in
the
fourth
quarter
of
2015.
Deferred
financing
costs
associated
with
ourTerm
Loan
were
$5.0
million
and
$6.4
million,
net
of
accumulated
amortization
and
have
been
recorded
to
Long-term
debt
in
the
consolidated
balance
sheets
as
ofDecember
31,
2016
and
2015,
respectively.Deferred
financing
costs
associated
with
our
Revolving
Credit
Facility
were
$1.4
million
and
$2.0
million,
net
of
accumulated
amortization
and
continue
to
berecorded
in
Prepaid
expenses
and
other
current
assets
and
Other
assets
in
the
consolidated
balance
sheets
as
of
December
31,
2016
and
2015,
respectively.Derivative InstrumentsIn
order
to
manage
interest
rate
exposure,
we
entered
into
an
interest
rate
swap
agreement
in
October
2014
that
effectively
converts
a
portion
of
our
variable-ratedebt
to
a
fixed
interest
rate.
Changes
in
the
fair
value
of
the
interest
rate
swap
are
recorded
as
a
component
of
accumulated
other
comprehensive
income
withinstockholders'
equity,
and
are
recognized
in
interest
expense
in
the
period
in
which
the
payment
is
settled.
The
interest
rate
swap
has
an
effective
date
ofDecember
31,
2014
in
an
initial
notional
amount
of
$250.0
million.
The
Company
does
not
hold
or
issue
derivative
financial
instruments
for
trading
or
speculativepurposes.Foreign CurrencyWe
have
operations
in
Canada.
The
functional
currency
of
our
Canadian
operations
is
the
Canadian
dollar
("CAD").
Assets
and
liabilities
are
translated
to
U.S.dollars
("USD")
at
the
exchange
rate
in
effect
at
the
balance
sheet
date
and
revenue
and
expenses
at
the
average
exchange
rate
for
the
period.
Gains
and
losses
fromthe
translation
of
the
consolidated
financial
statements
of
our
Canadian
subsidiaries
into
USD
are
included
in
stockholders'
equity
as
a
component
of
Accumulatedother
comprehensive
income.
Gains
and
losses
resulting
from
foreign
currency
transactions
are
recognized
in
the
consolidated
statements
of
operations.
Recordedbalances
that
are
denominated
in
a
currency
other
than
the
functional
currency
are75Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)re-measured
to
the
functional
currency
using
the
exchange
rate
at
the
balance
sheet
date
and
gains
or
losses
are
recorded
in
the
statements
of
operations.Income TaxesIncome
taxes
are
accounted
for
using
an
asset
and
liability
approach.
This
requires
the
recognition
of
deferred
tax
assets
and
liabilities
for
the
expected
future
taxconsequences
of
temporary
differences
between
the
financial
statement
and
tax
basis
of
assets
and
liabilities
at
the
applicable
tax
rates.
The
effect
of
a
change
intax
rates
on
deferred
tax
assets
and
liabilities
is
recognized
in
the
period
that
includes
the
enactment
date.We
recognize
net
deferred
tax
assets
to
the
extent
that
we
believe
these
assets
are
more
likely
than
not
to
be
realized.
In
making
such
a
determination,
we
considerall
available
positive
and
negative
evidence,
including
future
reversals
of
existing
taxable
temporary
differences,
projected
future
taxable
income,
tax-planningstrategies,
and
results
of
recent
operations.
If
we
determine
that
we
would
be
able
to
realize
our
deferred
tax
assets
in
the
future
in
excess
of
their
net
recordedamount,
we
would
make
an
adjustment
to
the
deferred
tax
asset
valuation
allowance,
which
would
reduce
the
provision
for
income
taxes.The
application
of
income
tax
law
is
inherently
complex.
Tax
laws
and
regulations
are
voluminous
and
at
times
ambiguous
and
interpretations
of
guidanceregarding
such
tax
laws
and
regulations
change
over
time.
This
requires
us
to
make
many
subjective
assumptions
and
judgments
regarding
the
timing
and
amountsof
deductible
and
taxable
items
and
the
probability
of
sustaining
uncertain
tax
positions.
A
liability
for
uncertain
tax
positions
is
recorded
in
our
consolidatedfinancial
statements
on
the
basis
of
a
two-step
process
whereby
(1)
we
determine
whether
it
is
more
likely
than
not
that
the
tax
position
taken
will
be
sustainedbased
on
the
technical
merits
of
the
position
and
(2)
for
those
tax
positions
that
meet
the
more
likely
than
not
recognition
threshold,
we
recognize
the
largestamount
of
tax
benefit
that
is
greater
than
50%
likely
to
be
realized
upon
ultimate
settlement
with
the
related
tax
authority.
As
facts
and
circumstances
change,
wereassess
these
probabilities
and
record
any
changes
in
the
financial
statements
as
appropriate.
Our
tax
returns
are
subject
to
audit
by
the
Internal
Revenue
Service("IRS"),
various
states
in
the
U.S.
and
the
Canadian
Revenue
Agency.InsuranceAccrued
costs
for
our
self-insured
health
care
coverage
were
$1.0
million
and
$1.1
million
at
December
31,
2016
and
2015,
respectively.Earnings Per ShareBasic
earnings
per
share
is
calculated
based
on
the
weighted-average
number
of
outstanding
common
shares
during
the
applicable
period.
Diluted
earnings
pershare
is
based
on
the
weighted-average
number
of
outstanding
common
shares
plus
the
weighted-average
number
of
potential
outstanding
common
shares.Potential
common
shares
that
would
increase
earnings
per
share
or
decrease
loss
per
share
are
anti-dilutive
and
are
excluded
from
earnings
per
share
computations.Earnings
per
share
is
computed
separately
for
each
period
presented.76Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)Treasury StockShares
of
common
stock
repurchased
by
us
are
recorded
at
cost
as
treasury
stock
and
result
in
a
reduction
of
stockholders'
equity
in
our
consolidated
balancesheets.
Treasury
shares
are
reissued
using
the
weighted
average
cost
method
for
determining
the
cost
of
the
shares
reissued.
The
difference
between
the
cost
of
theshares
reissued
and
the
issuance
price
is
added
or
deducted
from
additional
paid-in
capital.Recently Issued Accounting PronouncementsIn
January
2017,
the
Financial
Accounting
Standards
Board
("FASB")
issued
Accounting
Standards
Update
("ASU")
No.
2017-04,
Simplifying the Test forGoodwill Impairment (Topic 350). This
ASU
removes
the
requirement
to
compare
the
implied
fair
value
of
goodwill
with
its
carrying
amount
as
part
of
step
2
ofthe
goodwill
impairment
test.
As
a
result,
under
the
ASU,
"an
entity
should
perform
its
annual,
or
interim,
goodwill
impairment
test
by
comparing
the
fair
value
ofa
reporting
unit
with
its
carrying
amount
and
should
recognize
an
impairment
charge
for
the
amount
by
which
the
carrying
amount
exceeds
the
reporting
unit's
fairvalue;
however,
the
loss
recognized
should
not
exceed
the
total
amount
of
goodwill
allocated
to
that
reporting
unit."
The
guidance
is
effective
prospectively
forannual
and
interim
periods
beginning
after
December
15,
2019.
Early
adoption
is
permitted.
We
are
assessing
the
impact
the
adoption
of
ASU
2017-04
may
haveon
our
consolidated
financial
position,
results
of
operations
and
cash
flows.In
November
2016,
the
FASB
issued
ASU
No.
2016-18,
Restricted Cash (Topic 230). This
ASU
amends
the
guidance
in
Accounting
Standards
Codification("ASC")
230
to
add
or
clarify
guidance
on
the
classification
and
presentation
of
restricted
cash
in
the
statement
of
cash
flows.
The
classification
of
restricted
cashin
the
statement
of
cash
flows,
along
with
eight
other
cash
flow-related
issues,
was
initially
addressed
by
the
Emerging
Issues
Task
Force
("EITF")
in
Issue
15-F.However,
after
deliberation
of
those
issues,
the
EITF
decided
to
address
the
diversity
in
practice
related
to
the
cash
flow
classification
of
restricted
cash
separately,in
Issue
16-A.
ASU
2016-18
is
based
on
the
EITF's
consensuses
reached
on
that
Issue.
The
guidance
is
effective
for
annual
and
interim
periods
beginning
afterDecember
15,
2017.
The
guidance
must
be
applied
retrospectively
to
all
periods
presented.
Early
adoption
is
permitted.
We
are
assessing
the
impact
the
adoptionof
ASU
2016-18
may
have
on
our
consolidated
financial
position
and
consolidated
cash
flows.In
August
2016,
the
FASB
issued
ASU
No.
2016-15,
Statements of Cash Flows (Topic 230). This
ASU
amends
the
guidance
in
ASC
230
on
the
classification
ofcertain
cash
receipts
and
payments
in
the
statement
of
cash
flows.
The
primary
purpose
of
the
ASU
is
to
reduce
the
diversity
in
practice
that
has
resulted
from
thelack
of
consistent
principles
on
this
topic.
The
guidance
is
effective
for
annual
and
interim
periods
beginning
after
December
15,
2017.
The
guidance
must
beapplied
retrospectively
to
all
periods
presented.
Early
adoption
is
permitted.
We
are
assessing
the
impact
the
adoption
of
ASU
2016-15
may
have
on
ourconsolidated
cash
flows.In
March
2016,
the
FASB
issued
ASU
No.
2016-09,
Compensation—Stock Compensation (Topic 718) .
This
ASU
simplifies
several
aspects
of
the
accounting
foremployee
share-based
transactions,
including
the
accounting
for
income
taxes,
forfeitures
and
statutory
tax
withholding
requirements,
as
well
as
classification
inthe
statement
of
cash
flows.
The
guidance
is
effective
for
annual
and
interim
periods
beginning
after
December
15,
2016.
Early
adoption
is
permitted
in
any
interimor
annual
period,
with
any
adjustments
reflected
as
of
the
beginning
of
the
fiscal
year
of
adoption.
We
are
assessing
the
impact
the
adoption
of
ASU
2016-09
mayhave
on
our
consolidated
financial
position,
results
of
operations
and
cash
flows.77Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
2.
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)In
February
2016,
the
FASB
issued
ASU
No.
2016-02,
Leases (Topic 842) .
The
ASU
significantly
changes
the
accounting
model
used
by
lessees
to
account
forleases,
requiring
that
all
material
leases
be
presented
on
the
balance
sheet.
Lessees
will
recognize
substantially
all
leases
on
the
balance
sheet
as
a
right-of-use
assetand
a
corresponding
lease
liability.
The
liability
will
be
equal
to
the
present
value
of
lease
payments.
The
asset
will
be
based
on
the
liability,
subject
to
adjustment,such
as
for
initial
direct
costs.
The
guidance
is
effective
for
annual
and
interim
periods
beginning
after
December
15,
2018.
The
guidance
must
be
applied
using
themodified
retrospective
approach.
Early
adoption
is
permitted.
We
are
assessing
the
impact
the
adoption
of
ASU
2016-02
may
have
on
our
consolidated
financialposition,
results
of
operations
and
cash
flows.In
May
2014,
the
FASB
issued
ASU
No.
2014-09,
Revenue from Contracts with Customers (Topic 606) ,
which
provides
guidance
for
revenue
recognition.
TheASU's
core
principle
is
that
a
company
will
recognize
revenue
when
it
transfers
promised
goods
or
services
to
customers
in
an
amount
that
reflects
theconsideration
to
which
the
company
expects
to
be
entitled
in
exchange
for
those
goods
or
services.
The
guidance
permits
the
use
of
either
the
retrospective
orcumulative
effect
transition
method.
The
ASU
also
requires
enhanced
disclosures
regarding
the
nature,
amount,
timing,
and
uncertainty
of
revenues
and
cash
flowsfrom
contracts
with
customers.
In
August
2015,
the
FASB
issued
ASU
2015-14:
Revenue
from
Contracts
with
Customers
(Topic
606):
Deferral
of
the
EffectiveDate,
which
deferred
the
effective
date
established
in
ASU
2014-09.
The
amendments
in
ASU
2014-09
are
now
effective
for
annual
reporting
periods
beginningafter
December
15,
2017,
including
interim
periods
within
that
reporting
period.
Early
adoption
is
permitted
but
not
before
annual
periods
beginning
afterDecember
15,
2016.
The
Company
is
in
the
process
of
evaluating
the
impact
of
adopting
ASU
2014-19
on
its
consolidated
financial
statements.
The
Company
iscurrently
reviewing
customer
contracts
in
each
of
its
operating
segments
for
all
services
provided,
assessing
the
impact
of
applying
ASU
2014-19,
and
comparingthis
to
the
Company's
historical
revenue
recognition
criteria.
Based
upon
the
preliminary
review
of
customer
contracts,
the
Company
believes
that
the
Company'srevenue
recognition
policies
are
consistent
with
the
requirements
of
ASU
2014-19.
While
the
Company
continues
to
assess
all
potential
impacts
of
adopting
ASU2014-19,
based
upon
information
available
to
date,
the
Company
does
not
expect
the
adoption
of
ASU
2014-19
to
have
a
significant
impact
either
on
the
timing
orrecognition
of
revenues.NOTE
3.
USE
OF
ESTIMATESThe
preparation
of
financial
statements
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
requires
management
to
make
estimatesand
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
and
the
disclosure
of
contingent
assets
and
liabilities
at
the
date
of
the
financialstatements,
as
well
as
the
reported
amounts
of
revenue
and
expenses
during
the
reporting
period.
Listed
below
are
the
estimates
and
assumptions
that
we
considerto
be
significant
in
the
preparation
of
our
consolidated
financial
statements.•Allowance for Doubtful Accounts —We
estimate
losses
for
uncollectible
accounts
based
on
the
aging
of
the
accounts
receivable
and
an
evaluation
of
thelikelihood
of
success
in
collecting
the
receivable.
•Recovery of Long-Lived Assets —We
evaluate
the
recovery
of
our
long-lived
assets
periodically
by
analyzing
our
operating
results
and
consideringsignificant
events
or
changes
in
the
business
environment.
•Income Taxes —We
assume
the
deductibility
of
certain
costs
in
our
income
tax
filings,
estimate
our
income
tax
rate
and
estimate
the
future
recovery
ofdeferred
tax
assets.78Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
3.
USE
OF
ESTIMATES
(Continued)•Legal and Environmental Accruals— We
estimate
the
amount
of
potential
exposure
we
may
have
with
respect
to
litigation
and
environmental
claims
andassessments.
•Disposal Cell Development and Final Closure/Post-Closure Amortization— We
expense
amounts
for
disposal
cell
usage
and
closure
and
post-closure
costsfor
each
cubic
yard
of
waste
disposed
of
at
our
operating
facilities.
In
determining
the
amount
to
expense
for
each
cubic
yard
of
waste
disposed,
weestimate
the
cost
to
develop
each
disposal
cell
and
the
closure
and
post-closure
costs
for
each
disposal
cell
and
facility.
The
expense
for
each
cubic
yard
isthen
calculated
based
on
the
remaining
permitted
capacity
and
total
permitted
capacity.
Estimates
for
closure
and
post-closure
costs
are
developed
usinginput
from
third-party
engineering
consultants,
and
our
internal
technical
and
accounting
personnel.
Management
reviews
estimates
at
least
annually.Estimates
for
final
disposal
cell
closure
and
post-closure
costs
consider
when
the
costs
would
actually
be
paid
and,
where
appropriate,
inflation
anddiscount
rates.
•Business Acquisitions —The
Company
records
assets
and
liabilities
of
the
acquired
business
at
their
fair
values.
Acquisition-related
transaction
andrestructuring
costs
are
expensed
rather
than
treated
as
part
of
the
cost
of
the
acquisition.
Goodwill
represents
the
excess
of
the
cost
of
an
acquired
businessover
the
fair
value
of
the
identifiable
tangible
and
intangible
assets
acquired
and
liabilities
assumed
in
a
business
acquisition.
•Goodwill— We
assess
goodwill
for
impairment
during
the
fourth
quarter
as
of
October
1
of
each
year
or
sooner
if
an
event
occurs
or
circumstances
changethat
would
more
likely
than
not
reduce
the
fair
value
of
a
reporting
unit
below
its
carrying
amount.
The
assessment
consists
of
comparing
the
estimated
fairvalue
of
the
reporting
unit
to
the
carrying
value
of
the
net
assets
assigned
to
the
reporting
unit,
including
goodwill.
Fair
values
are
generally
determined
byusing
both
the
market
approach,
applying
a
multiple
of
earnings
based
on
guideline
for
publicly
traded
companies,
and
the
income
approach,
discountingprojected
future
cash
flows
based
on
our
expectations
of
the
current
and
future
operating
environment.
The
rates
used
to
discount
projected
future
cashflows
reflect
a
weighted
average
cost
of
capital
based
on
our
industry,
capital
structure
and
risk
premiums
including
those
reflected
in
the
current
marketcapitalization.
Estimating
future
cash
flows
requires
significant
judgment
about
factors
such
as
general
economic
conditions
and
projected
growth
rates,and
our
estimates
often
vary
from
the
cash
flows
eventually
realized.
Failure
to
execute
on
planned
growth
initiatives
within
the
related
reporting
units,coupled
with
the
other
factors
mentioned
above,
could
lead
to
the
impairment
of
goodwill
and
other
long-lived
assets
in
future
periods.
•Intangible Assets— We
review
intangible
assets
with
indefinite
useful
lives
for
impairment
during
the
fourth
quarter
as
of
October
1
of
each
year.
Fairvalue
is
generally
determined
by
considering
an
internally-developed
discounted
projected
cash
flow
analysis.
If
the
fair
value
of
an
asset
is
determined
tobe
less
than
the
carrying
amount
of
the
intangible
asset,
an
impairment
in
the
amount
of
the
difference
is
recorded
in
the
period
in
which
the
annualassessment
occurs.
We
also
review
finite-lived
intangible
assets
for
impairment
whenever
events
or
changes
in
circumstances
indicate
that
the
carrying
value
of
an
intangibleasset
may
not
be
recoverable.
In
order
to
assess
whether
a
potential
impairment
exists,
the
assets'
carrying
values
are
compared
with
their
undiscountedexpected
future
cash
flows.
Estimating
future
cash
flows
requires
significant
judgment
about
factors
such
as
general
economic
conditions
and
projectedgrowth
rates,
and
our
estimates
often
vary
from
the
cash
flows
eventually
realized.
Impairments
are
measured
by
comparing
the
fair
value
of
the
asset
to
itscarrying
value.
Fair
value
is
generally
determined
by
considering:
(i)
the
internally-developed
discounted79Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
3.
USE
OF
ESTIMATES
(Continued)projected
cash
flow
analysis;
(ii)
a
third-party
valuation;
and/or
(iii)
information
available
regarding
the
current
market
environment
for
similar
assets.
Ifthe
fair
value
is
determined
to
be
less
than
the
carrying
amount
of
the
intangible
assets,
an
impairment
in
the
amount
of
the
difference
is
recorded
in
theperiod
in
which
the
events
or
changes
in
circumstances
that
indicated
the
carrying
value
of
the
intangible
assets
may
not
be
recoverable
occurred.Actual
results
could
differ
materially
from
the
estimates
and
assumptions
that
we
use
in
the
preparation
of
our
consolidated
financial
statements.
As
it
relates
toestimates
and
assumptions
in
amortization
rates
and
environmental
obligations,
significant
engineering,
operations
and
accounting
judgments
are
required.
Wereview
these
estimates
and
assumptions
no
less
than
annually.
In
many
circumstances,
the
ultimate
outcome
of
these
estimates
and
assumptions
will
not
be
knownfor
decades
into
the
future.
Actual
results
could
differ
materially
from
these
estimates
and
assumptions
due
to
changes
in
applicable
regulations,
changes
in
futureoperational
plans
and
inherent
imprecision
associated
with
estimating
environmental
impacts
far
into
the
future.NOTE
4.
BUSINESS
COMBINATIONSEnvironmental Services Inc.On
May
2,
2016,
the
Company
acquired
100%
of
the
outstanding
shares
of
Environmental
Services
Inc.,
("ESI"),
an
environmental
services
company
based
inTilbury,
Ontario,
Canada.
ESI
is
focused
primarily
on
hazardous
and
non-hazardous
transportation
and
disposal,
hazardous
and
non-hazardous
waste
treatment,industrial
services,
confined
space
rescue
and
emergency
response
work
throughout
Ontario.
The
total
purchase
price
was
$4.9
million,
net
of
cash
acquired,
andwas
funded
with
cash
on
hand.
ESI
is
reported
as
part
of
our
Environmental
Services
segment,
however,
revenues,
net
income,
earnings
per
share
and
total
assetsof
ESI
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$1.0
million
allocated
to
goodwill
(which
is
not
deductible
for
tax
purposes),
$813,000
allocated
to
intangible
assets
(primarily
customer
relationships)
to
beamortized
over
a
weighted
average
life
of
approximately
14
years,
and
$686,000
allocated
to
indefinite-lived
environmental
permits.Acquisition of Vernon, California FacilityOn
October
1,
2016,
we
acquired
the
Vernon,
California
based
RCRA
Part
B,
liquids
and
solids
waste
treatment
and
storage
facility
of
Evoqua
WaterTechnologies
LLC
for
$5.0
million.
The
Vernon,
California
facility
is
reported
as
part
of
our
Environmental
Services
segment,
however,
revenues,
net
income,earnings
per
share
and
total
assets
of
the
Vernon,
California
facility
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$354,000
allocated
to
goodwill,
$1.9
million
allocated
to
intangible
assets
(primarily
customer
relationships)
to
be
amortized
over
a
weighted
average
life
ofapproximately
20
years,
and
$1.3
million
allocated
to
indefinite-lived
environmental
permits.80Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
4.
BUSINESS
COMBINATIONS
(Continued)EQ Holdings, Inc.On
June
17,
2014,
the
Company
acquired
100%
of
the
outstanding
shares
of
EQ.
EQ
is
a
fully
integrated
environmental
services
company
providing
wastetreatment
and
disposal,
wastewater
treatment,
remediation,
recycling,
industrial
cleaning
and
maintenance,
transportation,
total
waste
management,
technicalservices,
and
emergency
response
services
to
a
variety
of
industries
and
customers
in
North
America.
The
total
purchase
price
was
$460.9
million,
net
of
cashacquired,
and
was
funded
through
a
combination
of
cash
on
hand
and
borrowings
under
a
new
$415.0
million
term
loan.As
of
June
30,
2015,
the
Company
finalized
the
purchase
accounting
for
the
acquisition
of
EQ.
The
following
table
summarizes
the
final
EQ
purchase
priceallocation:Goodwill
of
$197.6
million
arising
from
the
acquisition
is
the
result
of
several
factors.
EQ
has
an
assembled
workforce
that
serves
the
U.S.
industrial
marketutilizing
state-of-the-art
technology
to
treat
a
wide
range
of
industrial
and
hazardous
waste.
The
acquisition
of
EQ
increases
our
geographic
base
providing
a
coast-to-coast
presence
and
an
expanded
service
platform
to
better
serve
key
North
American
hazardous
waste
markets.
In
addition,
the
acquisition
of
EQ
provides
uswith
an
opportunity
to
compete
for
additional
waste
cleanup
project
work;
expand
penetration
with
national
accounts;
improve
and
enhance
transportation,logistics,
and
service
offerings
with
existing
customers
and
attract
new
customers.
$132.4
million
of
the
goodwill
recognized
was
allocated
to
reporting
units
in
ourEnvironmental
Services
segment
and
$65.2
million
of
the
goodwill
recognized
was
allocated
to
reporting
units
in
our
Field
&
Industrial
Services
segment.
None
ofthe
goodwill
recognized
is
expected
to
be
deductible
for
income
tax
purposes.81$s
in
thousands
Purchase
Price
Allocation
Current
assets
$112,009
Property
and
equipment

101,543
Identifiable
intangible
assets

252,874
Current
liabilities

(58,312)Other
liabilities

(139,068)Total
identifiable
net
assets

269,046
Goodwill

197,600
Total
purchase
price
$466,646
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
4.
BUSINESS
COMBINATIONS
(Continued)The
fair
value
estimate
of
identifiable
intangible
assets
by
major
intangible
asset
class
and
related
weighted
average
amortization
period
are
as
follows:The
following
unaudited
pro
forma
financial
information
presents
the
combined
results
of
operations
as
if
EQ
had
been
combined
with
us
at
the
beginning
of
2014.The
pro
forma
financial
information
includes
the
accounting
effects
of
the
business
combination,
including
the
amortization
of
intangible
assets,
depreciation
ofproperty,
plant
and
equipment,
and
interest
expense.
The
unaudited
pro
forma
financial
information
is
presented
for
informational
purposes
only
and
is
notindicative
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
betaken
as
indication
of
our
future
consolidated
results
of
operations.Revenue
from
EQ
included
in
the
Company's
consolidated
statements
of
operations
was
$228.2
million
for
the
year
ended
December
31,
2014.
Operating
incomefrom
EQ
included
in
the
Company's
consolidated
statements
of
operations
was
$18.5
million
for
the
year
ended
December
31,
2014.
Acquisition-related
costs
of$1.2
million
and
$6.4
million
were
included
in
Selling,
general
and
administrative
expenses
in
the
Company's
consolidated
statements
of
operations
for
the
yearsended
December
31,
2015
and
2014,
respectively.NOTE
5.
DIVESTITURESDivestiture of Augusta, Georgia FacilityOn
April
5,
2016,
we
completed
the
divestiture
of
our
Augusta,
Georgia
facility
for
cash
proceeds
of
$1.9
million.
The
Augusta,
Georgia
facility
was
reported
aspart
of
our
Environmental
Services
segment.82$s
in
thousands
Fair
Value
Weighted
Average
Amortization
Period
(Years)
Customer
relationships
$98,400

15
Permits
and
licenses

89,600

45
Permits
and
licenses,
nonamortizing

49,000

—
Tradename

5,481

3
Customer
backlog

4,600

10
Developed
software

3,443

9
Non-compete
agreements

900

1
Internet
domain
and
website

869

19
Database

581

15
Total
identifiable
intangible
assets
$252,874






(unaudited)
$s
in
thousands,
except
per
share
amounts
2014
Pro
forma
combined:



Revenue
$615,264
Net
income
$37,347
Earnings
per
share



Basic
$1.73
Diluted
$1.72
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
5.
DIVESTITURES
(Continued)Sales,
net
income
and
total
assets
of
the
Augusta,
Georgia
facility
are
not
material
to
our
consolidated
financial
position
or
results
of
operations
in
any
periodpresented.
We
recognized
a
$1.9
million
pre-tax
gain
on
the
divestiture
of
the
Augusta,
Georgia
facility,
which
is
included
in
Other
income
(expense)
in
ourconsolidated
statements
of
operations
for
the
year
ended
December
31,
2016.Divestiture of AllstateOn
November
1,
2015,
we
completed
the
divestiture
of
Allstate
for
cash
proceeds
at
closing
of
$58.8
million.
For
the
year
ended
December
31,
2015,
werecognized
a
pre-tax
loss
on
the
divestiture
of
Allstate,
including
transaction-related
costs,
of
$542,000,
which
was
included
in
Other
income
(expense)
in
ourconsolidated
statements
of
operations.
On
April
25,
2016,
we
received
additional
cash
proceeds
of
$827,000
in
settlement
of
final
post-closing
adjustments.
Werecognized
a
$178,000
pre-tax
gain
on
the
divestiture
of
Allstate,
which
is
included
in
Other
income
(expense)
in
our
consolidated
statements
of
operations
for
theyear
ended
December
31,
2016.Prior
to
the
divesture,
Allstate
represented
the
majority
of
the
industrial
services
business
included
in
our
Field
&
Industrial
Services
segment.
As
a
result
of
thisdivestiture
and
management's
strategic
review,
we
evaluated
the
recoverability
of
the
assets
associated
with
our
industrial
services
business.
Based
on
this
analysis,we
recorded
a
non-cash
goodwill
impairment
charge
of
$6.7
million
in
the
second
quarter
of
2015.
The
sale
of
Allstate
did
not
meet
the
requirements
to
be
reportedas
a
discontinued
operation
as
defined
in
ASU
No.
2014-08,
Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360),Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity .Loss
before
income
taxes
from
Allstate
of
$4.9
million
and
income
before
income
taxes
from
Allstate
of
$1.6
million
were
included
in
the
Company's
consolidatedstatements
of
operations
for
the
years
ended
December
31,
2015
and
2014,
respectively.
Loss
before
income
taxes
for
the
year
ended
December
31,
2015,
includesa
non-cash
goodwill
impairment
charge
of
$6.4
million.The
following
table
presents
the
carrying
amounts
of
major
classes
of
assets
and
liabilities
of
Allstate
classified
as
held
for
sale
immediately
preceding
thedisposition
on
November
1,
2015,
which
are
excluded
from
the
Company's
consolidated
balance
sheet
at
December
31,
2015:83$s
in
thousands
November
1,
2015
Cash
and
cash
equivalents
$46
Receivables,
net

25,407
Prepaid
expenses
and
other
current
assets

1,469
Property
and
equipment,
net

19,760
Intangible
assets,
net

21,825
Goodwill

13,572
Total
assets
held
for
sale
$82,079
Accounts
payable

7,253
Accrued
liabilities

1,784
Accrued
salaries
and
benefits

594
Deferred
income
taxes

13,601
Total
liabilities
held
for
sale
$23,232
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
6.
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME
(LOSS)Changes
in
accumulated
other
comprehensive
income
(loss)
("AOCI")
consisted
of
the
following:NOTE
7.
DISCLOSURE
OF
SUPPLEMENTAL
CASH
FLOW
INFORMATION84$s
in
thousands
Foreign
Currency
Translation
Adjustments
Unrealized
Loss
on
Interest
Rate
Hedge
Total
Balance
at
December
31,
2014
$(5,648)$(2,038)$(7,686)Other
comprehensive
loss
before
reclassifications,
net
of
tax

(8,380)
(3,269)
(11,649)Amounts
reclassified
out
of
AOCI,
net
of
tax(1)

—

2,269

2,269
Other
comprehensive
loss,
net

(8,380)
(1,000)
(9,380)Balance
at
December
31,
2015
$(14,028)$(3,038)$(17,066)Other
comprehensive
loss
before
reclassifications,
net
of
tax

1,379

(1,121)
258
Amounts
reclassified
out
of
AOCI,
net
of
tax(2)

—

2,083

2,083
Other
comprehensive
income,
net

1,379

962

2,341
Balance
at
December
31,
2016
$(12,649)$(2,076)$(14,725)(1)Before-tax
reclassifications
of
$3.5
million
($2.3
million
after-tax)
for
the
year
ended
December
31,
2015
were
included
in
Interest
expensein
the
Company's
consolidated
statements
of
operations.
Amount
relates
to
the
Company's
interest
rate
swap
which
is
designated
as
a
cashflow
hedge.
Changes
in
fair
value
of
the
swap
recognized
in
AOCI
are
reclassified
to
interest
expense
when
hedged
interest
payments
onthe
underlying
long-term
debt
are
made.
Amounts
in
AOCI
expected
to
be
recognized
in
interest
expense
over
the
next
12
months
totalapproximately
$3.5
million
($2.3
million
after
tax).
(2)Before-tax
reclassifications
of
$3.2
million
($2.1
million
after-tax)
for
the
year
ended
December
31,
2016
were
included
in
Interest
expensein
the
Company's
consolidated
statements
of
operations.
Amount
relates
to
the
Company's
interest
rate
swap
which
is
designated
as
a
cashflow
hedge.
Changes
in
fair
value
of
the
swap
recognized
in
AOCI
are
reclassified
to
interest
expense
when
hedged
interest
payments
onthe
underlying
long-term
debt
are
made.
Amounts
in
AOCI
expected
to
be
recognized
in
interest
expense
over
the
next
12
months
totalapproximately
$3.2
million
($2.1
million
after
tax).


For
the
Year
Ended
December
31,
$s
in
thousands
2016
2015
2014
Income
taxes
and
interest
paid:









Income
taxes
paid,
net
of
receipts
$25,729
$27,252
$22,754
Interest
paid

14,304

18,587

9,298
Non-cash
investing
and
financing
activities:









Closure/Post-closure
retirement
asset

426

(349)
7,157
Capital
expenditures
in
accounts
payable

2,906

3,805

6,101
Acquisition
of
equipment
with
financing
arrangements

1,156

—

—
Restricted
stock
issuances
from
treasury
shares

408

127

487
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
8.
FAIR
VALUE
MEASUREMENTSFair
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
themeasurement
date.
Assets
and
liabilities
recorded
at
fair
value
are
categorized
using
defined
hierarchical
levels
directly
related
to
the
amount
of
subjectivityassociated
with
the
inputs
to
fair
value
measurements,
as
follows:The
Company's
financial
instruments
consist
of
cash
and
cash
equivalents,
accounts
receivable,
restricted
cash
and
investments,
accounts
payable
and
accruedliabilities,
debt
and
interest
rate
swap
agreements.
The
estimated
fair
value
of
cash
and
cash
equivalents,
accounts
receivable,
accounts
payable
and
accruedliabilities
approximate
their
carrying
value
due
to
the
short-term
nature
of
these
instruments.The
Company
estimates
the
fair
value
of
its
variable-rate
debt
using
Level
2
inputs,
such
as
interest
rates,
related
terms
and
maturities
of
similar
obligations.
AtDecember
31,
2016,
the
fair
value
of
the
Company's
variable-rate
debt
was
estimated
to
be
$283.7
million.The
Company's
assets
and
liabilities
measured
at
fair
value
on
a
recurring
basis
at
December
31,
2016
and
2015
consisted
of
the
following:85Level
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
ownassumptions
that
market
participants
would
use
to
value
the
asset
or
liability.


2016
$s
in
thousands
Quoted
Prices
in
Active
Markets
(Level
1)
Other
Observable
Inputs
(Level
2)
Unobservable
Inputs
(Level
3)
Total
Assets:












Fixed-income
securities(1)
$607
$3,473
$—
$4,080
Money
market
funds(2)

1,707

—

—

1,707
Total
$2,314
$3,473
$—
$5,787
Liabilities:












Interest
rate
swap
agreement(3)
$—
$3,198
$—
$3,198
Total
$—
$3,198
$—
$3,198
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
8.
FAIR
VALUE
MEASUREMENTS
(Continued)NOTE
9.
CONCENTRATIONS
AND
CREDIT
RISKMajor CustomersNo
customer
accounted
for
more
than
10%
of
total
revenue
for
the
years
ended
December
31,
2016
or
2015.
Revenue
from
a
single
customer
accounted
forapproximately
10%
of
total
revenue
for
the
year
ended
December
31,
2014.No
customer
accounted
for
more
than
10%
of
total
receivables
as
of
December
31,
2016
or
2015.86


2015
$s
in
thousands
Quoted
Prices
in
Active
Markets
(Level
1)
Other
Observable
Inputs
(Level
2)
Unobservable
Inputs
(Level
3)
Total
Assets:












Fixed-income
securities(1)
$403
$3,573
$—
$3,976
Money
market
funds(2)

1,772

—

—

1,772
Total
$2,175
$3,573
$—
$5,748
Liabilities:












Interest
rate
swap
agreement(3)
$—
$4,676
$—
$4,676
Total
$—
$4,676
$—
$4,676
(1)We
invest
a
portion
of
our
Restricted
cash
and
investments
in
fixed-income
securities,
including
U.S.
Treasury
and
U.S.
agency
securities.We
measure
the
fair
value
of
U.S.
Treasury
securities
using
quoted
prices
for
identical
assets
in
active
markets.
We
measure
the
fair
valueof
U.S.
agency
securities
using
observable
market
activity
for
similar
assets.
The
fair
value
of
our
fixed-income
securities
approximates
ourcost
basis
in
the
investments.
(2)We
invest
a
portion
of
our
Restricted
cash
and
investments
in
money
market
funds.
We
measure
the
fair
value
of
these
money
market
fundinvestments
using
quoted
prices
for
identical
assets
in
active
markets.
(3)In
order
to
manage
interest
rate
exposure,
we
entered
into
an
interest
rate
swap
agreement
in
October
2014
that
effectively
converts
aportion
of
our
variable-rate
debt
to
a
fixed
interest
rate.
The
swap
is
designated
as
a
cash
flow
hedge,
with
gains
and
losses
deferred
inother
comprehensive
income
to
be
recognized
as
an
adjustment
to
interest
expense
in
the
same
period
that
the
hedged
interest
paymentsaffect
earnings.
The
interest
rate
swap
has
an
effective
date
of
December
31,
2014
with
an
initial
notional
amount
of
$250.0
million.
Thefair
value
of
the
interest
rate
swap
agreement
represents
the
difference
in
the
present
value
of
cash
flows
calculated
at
the
contractedinterest
rates
and
at
current
market
interest
rates
at
the
end
of
the
period.
We
calculate
the
fair
value
of
the
interest
rate
swap
agreementquarterly
based
on
the
quoted
market
price
for
the
same
or
similar
financial
instruments.
The
fair
value
of
the
interest
rate
swap
agreementis
included
in
Other
long-term
liabilities
in
the
Company's
consolidated
balance
sheet
as
of
December
31,
2016
and
2015.Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
9.
CONCENTRATIONS
AND
CREDIT
RISK
(Continued)Credit Risk ConcentrationWe
maintain
most
of
our
cash
and
cash
equivalents
with
nationally
recognized
financial
institutions
like
Wells
Fargo
Bank,
National
Association
("Wells
Fargo")and
Comerica,
Inc.
Substantially
all
balances
are
uninsured
and
are
not
used
as
collateral
for
other
obligations.
Concentrations
of
credit
risk
on
accounts
receivableare
believed
to
be
limited
due
to
the
number,
diversification
and
character
of
the
obligors
and
our
credit
evaluation
process.Labor ConcentrationsAs
of
December
31,
2016,
13
employees
at
our
Richland,
Washington
facility
were
represented
by
the
Paper,
Allied-Industrial
Chemical
&
Energy
WorkersInternational
Union,
AFL-CIO,
CLC
(PACE);
105
employees
at
our
Blainville,
Québec,
Canada
facility
were
represented
by
the
Communications,
Energy
andPaperworkers
Union
of
Canada;
137
employees
were
represented
by
the
Local
324
Operating
Engineers
Union;
and
10
employees
were
represented
by
theTeamsters
and
the
Operating
Engineers
Union.
As
of
December
31,
2016,
our
1,188
other
employees
did
not
belong
to
a
union.NOTE
10.
RECEIVABLESReceivables
as
of
December
31,
2016
and
2015
consisted
of
the
following:The
allowance
for
doubtful
accounts
is
a
provision
for
uncollectible
accounts
receivable
and
unbilled
receivables.
The
allowance
is
evaluated
and
adjusted
toreflect
our
collection
history
and
an
analysis
of
the
accounts
receivables
aging.
The
allowance
is
decreased
by
accounts
receivable
as
they
are
written
off.
Theallowance
is
adjusted
periodically
to
reflect
actual
experience.
The
change
in
the
allowance
during
2016,
2015
and
2014
was
as
follows:87$s
in
thousands
2016
2015
Trade
$84,487
$95,055
Unbilled
revenue

13,835

11,983
Other

831

2,568
Total
receivables

99,153

109,606
Allowance
for
doubtful
accounts

(2,334)
(3,226)Receivables,
net
$96,819
$106,380
$s
in
thousands
Balance
at
Beginning
of
Period
Charged
(Credited)
to
Costs
and
Expenses
Recoveries
(Deductions/
Write-offs)
Adjustments
Balance
at
End
of
Period
Year
ended
December
31,
2016
$3,226
$(186)$(705)$(1)$2,334
Year
ended
December
31,
2015
$704
$2,224
$848
$(550)(1)$3,226
Year
ended
December
31,
2014
$525
$1,391
$(1,211)$(1)$704
(1)Adjustment
for
the
year
ended
December
31,
2015
relates
to
the
sale
of
Allstate
on
November
1,
2015.
For
additional
information
on
thesale
of
Allstate,
see
Note
5.Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
11.
PROPERTY
AND
EQUIPMENTProperty
and
equipment
as
of
December
31,
2016
and
2015
consisted
of
the
following:Depreciation
and
amortization
expense
was
$25.3
million,
$27.9
million
and
$24.4
million
for
the
years
ended
December
31,
2016,
2015
and
2014,
respectively.NOTE
12.
GOODWILL
AND
INTANGIBLE
ASSETSGoodwill
and
intangible
assets
as
of
December
31,
2016,
were
the
result
of
our
acquisitions
of
ESI
and
the
Vernon,
California
based
RCRA
Part
B,
liquids
andsolids
waste
treatment
and
storage
facility
of
Evoqua
Water
Technologies
LLC
in
2016,
EQ
in
2014,
Dynecol
in
2012
and
Stablex
in
2010.
Changes
in
goodwillfor
the
years
ended
December
31,
2016
and
2015
were
as
follows:88$s
in
thousands
2016
2015
Cell
development
costs
$128,821
$121,473
Land
and
improvements

34,285

31,606
Buildings
and
improvements

78,081

70,990
Railcars

17,299

17,375
Vehicles
and
other
equipment

110,267

92,797
Construction
in
progress

24,392

20,067
Total
property
and
equipment

393,145

354,308
Accumulated
depreciation
and
amortization

(166,908)
(143,974)Property
and
equipment,
net
$226,237
$210,334
$s
in
thousands
Environmental
Services
Field
&
Industrial
Services
Total
Balance
at
December
31,
2015
$147,692
$44,131
$191,823
ESI
acquisition

1,011

—

1,011
Vernon
acquisition

354

—

354
Foreign
currency
translation
and
other
adjustments

433

—

433
Balance
at
December
31,
2016
$149,490
$44,131
$193,621
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
12.
GOODWILL
AND
INTANGIBLE
ASSETS
(Continued)Intangible
assets
as
of
December
31,
2016
and
2015
consisted
of
the
following:Amortization
expense
of
amortizing
intangible
assets
was
$10.6
million,
$12.3
million
and
$8.2
million
for
the
years
ended
December
31,
2016,
2015
and
2014,respectively.
Foreign
intangible
asset
carrying
amounts
are
affected
by
foreign
currency
translation.
Future
amortization
expense
of
amortizing
intangible
assets
isexpected
to
be
as
follows:NOTE
13.
EMPLOYEE
BENEFIT
PLANSDefined Contribution PlansWe
maintain
the
US
Ecology,
Inc.,
401(k)
Savings
and
Retirement
Plan
("the
Plan")
for
employees
who
voluntarily
contribute
a
portion
of
their
compensation,thereby
deferring
income
for
federal
income
tax
purposes.
The
Plan
covers
substantially
all
of
our
employees
in
the
United
States.
Participants
may
contribute
apercentage
of
salary
up
to
the
IRS
limitations.
The
Company
contributes
a
matching89


2016
2015
$s
in
thousands
Cost
Accumulated
Amortization
Net
Cost
Accumulated
Amortization
Net
Amortizing
intangible
assets:


















Permits,
licenses
and
lease
$110,341
$(9,462)$100,879
$109,652
$(6,682)$102,970
Customer
relationships

84,711

(14,519)
70,192

82,021

(9,015)
73,006
Technology—formulae
and
processes

6,770

(1,305)
5,465

6,560

(1,054)
5,506
Customer
backlog

3,652

(926)
2,726

3,652

(561)
3,091
Tradename

4,318

(3,650)
668

4,318

(2,210)
2,108
Developed
software

2,907

(994)
1,913

2,899

(678)
2,221
Non-compete
agreements

747

(742)
5

732

(732)
—
Internet
domain
and
website

540

(72)
468

540

(44)
496
Database

387

(118)
269

385

(85)
300
Total
amortizing
intangible
assets

214,373

(31,788)
182,585

210,759

(21,061)
189,698
Nonamortizing
intangible
assets:


















Permits
and
licenses

51,645

—

51,645

49,750

—

49,750
Tradename

126

—

126

123

—

123
Total
intangible
assets
$266,144
$(31,788)$234,356
$260,632
$(21,061)$239,571
$s
in
thousands
Expected
Amortization
2017
$9,848
2018

9,139
2019

9,139
2020

9,139
2021

9,139
Thereafter

136,181

$182,585
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
13.
EMPLOYEE
BENEFIT
PLANS
(Continued)contribution
equal
to
55%
of
participant
contributions
up
to
6%
of
eligible
compensation.
The
Company
contributed
matching
contributions
to
the
Plan
of$1.9
million,
$2.3
million
and
$521,000
in
2016,
2015
and
2014,
respectively.During
2014,
EQ
sponsored
a
defined
contribution
401(k)
plan
for
its
nonunion
employees.
The
plan
allowed
all
eligible
employees
to
make
elective
pretaxcontributions
in
an
amount
not
to
exceed
limits
established
by
the
IRS.
Additionally,
EQ
made
matching
contributions
to
the
plan
on
behalf
of
the
employee
in
theamount
of
50%
of
the
employee's
elected
contributions,
not
to
exceed
3%
of
the
employee's
compensation.
The
Company
contributed
matching
contributions
tothis
plan
of
$649,000,
for
the
post-acquisition
period
from
June
17,
2014
through
December
31,
2014.
Effective
January
1,
2015,
the
EQ
defined
contribution401(k)
plan
was
discontinued
and
all
eligible
employees
were
transitioned
to
the
Plan.We
also
maintain
the
Stablex
Canada
Inc.
Simplified
Pension
Plan
("the
SPP").
This
defined
contribution
plan
covers
substantially
all
of
our
employees
at
ourBlainville,
Québec
facility
in
Canada.
Participants
receive
a
Company
contribution
equal
to
5%
of
their
annual
salary.
The
Company
contributed
$507,000,$515,000
and
$510,000
to
the
SPP
in
2016,
2015
and
2014,
respectively.Multi-Employer Defined Benefit Pension PlansCertain
of
the
Company's
wholly-owned
subsidiaries
acquired
in
connection
with
the
acquisition
of
EQ
on
June
17,
2014
participate
in
three
multi-employerdefined
benefit
pension
plans
under
the
terms
of
collective
bargaining
agreements
covering
most
of
the
subsidiaries'
union
employees.
Contributions
aredetermined
in
accordance
with
the
provisions
of
negotiated
labor
contracts
and
are
generally
based
on
stipulated
rates
per
hours
worked.
Benefits
under
these
plansare
generally
based
on
compensation
levels
and
years
of
service.The
financial
risks
of
participating
in
multi-employer
plans
are
different
from
single
employer
defined
benefit
pension
plans
in
the
following
respects:•Assets
contributed
to
the
multi-employer
plan
by
one
employer
may
be
used
to
provide
benefits
to
employees
of
other
participating
employers.
•If
a
participating
employer
discontinues
contributions
to
a
plan,
the
unfunded
obligations
of
the
plan
may
be
borne
by
the
remaining
participatingemployers.
•If
a
participating
employer
chooses
to
stop
participating
in
a
plan,
a
withdrawal
liability
may
be
created
based
on
the
unfunded
vested
benefits
for
allemployees
in
the
plan.Information
regarding
significant
multi-employer
pension
benefit
plans
in
which
the
Company
participates
is
shown
in
the
following
table:90








Pension
Protection
Act
Certified
Zone
Status


Plan
Employer
ID
Number
Plan
NumberName
of
Plan
2016
2015Operating
Engineers
Local
324
Pension
Fund

38-1900637

001
Red
RedTable
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
13.
EMPLOYEE
BENEFIT
PLANS
(Continued)The
Company
contributed
$933,000
and
$941,000
to
the
Operating
Engineers
Local
324
Pension
Fund
(the
"Local
324
Plan")
in
2016
and
2015,
respectively.
TheCompany
also
contributed
$229,000
and
$461,000
to
other
multi-employer
plans
in
2016
and
2015,
respectively,
which
are
excluded
from
the
table
above
as
theyare
not
individually
significant.Based
on
information
as
of
April
30,
2016
and
2015,
the
year
end
of
the
Local
324
Plan,
the
Company's
contributions
made
to
the
Local
324
Plan
represented
lessthan
5%
of
total
contributions
received
by
the
Local
324
Plan
during
the
2016
and
2015
plan
years.The
certified
zone
status
in
the
table
above
is
defined
by
the
Department
of
Labor
and
the
Pension
Protection
Act
of
2006
and
represents
the
level
at
which
the
planis
funded.
Plans
in
the
red
zone
are
less
than
65%
funded;
plans
in
the
yellow
zone
are
less
than
80%
funded;
and
plans
in
the
green
zone
are
at
least
80%
funded.The
certified
zone
status
is
as
of
the
Local
324
Plan's
year
end
of
April
30,
2016
and
2015.A
financial
improvement
or
rehabilitation
plan,
as
defined
under
ERISA,
was
adopted
by
the
Local
324
Plan
on
March
17,
2011
and
the
Rehabilitation
Periodbegan
May
1,
2013.As
of
December
31,
2016,
137
employees
were
employed
under
union
collective
bargaining
agreements
with
the
Local
324
Operating
Engineers
union.
Our
threeremaining
collective
bargaining
agreements
expire
on
April
30,
2017,
May
31,
2018
and
November
30,
2020.NOTE
14.
CLOSURE
AND
POST-CLOSURE
OBLIGATIONSOur
accrued
closure
and
post-closure
liability
represents
the
expected
future
costs,
including
corrective
actions,
associated
with
closure
and
post-closure
of
ouroperating
and
non-operating
disposal
facilities.
We
record
the
fair
value
of
our
closure
and
post-closure
obligations
as
a
liability
in
the
period
in
which
theregulatory
obligation
to
retire
a
specific
asset
is
triggered.
For
our
individual
landfill
cells,
the
required
closure
and
post-closure
obligations
under
the
terms
of
ourpermits
and
our
intended
operation
of
the
landfill
cell
are
triggered
and
recorded
when
the
cell
is
placed
into
service
and
waste
is
initially
disposed
in
the
landfillcell.
The
fair
value
is
based
on
the
total
estimated
costs
to
close
the
landfill
cell
and
perform
post-closure
activities
once
the
landfill
cell
has
reached
capacity
and
isno
longer
accepting
waste.
We
perform
periodic
reviews
of
both
non-operating
and
operating
facilities
and
revise
accruals
for
estimated
closure
and
post-closure,remediation
or
other
costs
as
necessary.
Recorded
liabilities
are
based
on
our
best
estimates
of
current
costs
and
are
updated
periodically
to
include
the
effects
ofexisting
technology,
presently
enacted
laws
and
regulations,
inflation
and
other
economic
factors.We
do
not
presently
bear
significant
financial
responsibility
for
closure
and/or
post-closure
care
of
the
disposal
facilities
located
on
state-owned
land
at
our
Beatty,Nevada
site;
Provincial-owned
land
in
Blainville,
Québec;
or
state-leased
federal
land
on
the
Department
of
Energy
Hanford
Reservation
near
Richland,Washington.
The
States
of
Nevada
and
Washington
and
the
Province
of
Québec
collect
fees
from
us
based
on
the
waste
received
on
a
quarterly
or
annual
basis.Such
fees
are
deposited
in
dedicated,
government-controlled
funds
to
cover
the
future
costs
of
closure
and
post-closure
care
and
maintenance.
Such
fees
areperiodically
reviewed
for
adequacy
by
the
governmental
authorities.
We
also
maintain
a
surety
bond
for
closure
costs
associated
with
the
Stablex
facility.
Our
leaseagreement
with
the
Province
of
Québec
requires
that
the
surety
bond
be
maintained
for
25
years
after
the
lease
expires.
At
December
31,
2016
we
had
$686,000
incommercial
surety
bonds
dedicated
for
closure
obligations.91Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
14.
CLOSURE
AND
POST-CLOSURE
OBLIGATIONS
(Continued)In
accounting
for
closure
and
post-closure
obligations,
which
represent
our
asset
retirement
obligations,
we
recognize
a
liability
as
part
of
the
fair
value
of
futureasset
retirement
obligations
and
an
associated
asset
as
part
of
the
carrying
amount
of
the
underlying
asset.
This
obligation
is
valued
based
on
our
best
estimates
ofcurrent
costs
and
current
estimated
closure
and
post-closure
costs
taking
into
account
current
technology,
material
and
service
costs,
laws
and
regulations.
Thesecost
estimates
are
increased
by
an
estimated
inflation
rate,
estimated
to
be
2.6%
at
December
31,
2016.
Inflated
current
costs
are
then
discounted
using
our
credit-adjusted
risk-free
interest
rate,
which
approximates
our
incremental
borrowing
rate,
in
effect
at
the
time
the
obligation
is
established
or
when
there
are
upwardrevisions
to
our
estimated
closure
and
post-closure
costs.
Our
weighted-average
credit-adjusted
risk-free
interest
rate
at
December
31,
2016
approximated
5.9%.Changes
to
reported
closure
and
post-closure
obligations
for
the
years
ended
December
31,
2016
and
2015,
were
as
follows:Adjustment
to
the
obligations
represents
changes
in
the
expected
timing
or
amount
of
cash
expenditures
based
upon
actual
and
estimated
cash
expenditures.
Theadjustments
in
2016
were
primarily
attributable
to
a
$1.3
million
increase
in
post-closure
obligations
for
our
non-operating
facilities
due
to
changes
in
estimatedpost-closure
costs
and
a
$496,000
increase
to
the
obligation
for
our
Blainville,
Quebec,
Canada
operating
facility
associated
with
a
newly-constructed
disposal
cell.The
adjustments
in
2015
were
primarily
attributable
to
a
$945,000
decrease
to
the
obligation
for
our
Grand
View,
Idaho
facility
due
to
changes
in
the
timing
ofestimated
closure
activities,
partially
offset
by
a
$545,000
increase
to
the
obligation
for
our
Belleville,
Michigan
facility
due
to
changes
in
estimated
closure
andpost-closure
costs.Changes
in
the
reported
closure
and
post-closure
asset,
recorded
as
a
component
of
Property
and
equipment,
net,
in
the
consolidated
balance
sheet,
for
the
yearsended
December
31,
2016
and
2015
were
as
follows:92$s
in
thousands
2016
2015
Closure
and
post-closure
obligations,
beginning
of
year
$71,154
$72,870
Accretion
expense

3,953

4,584
Payments

(1,754)
(5,679)Adjustments

1,697

(349)Foreign
currency
translation

32

(272)Closure
and
post-closure
obligations,
end
of
year

75,082

71,154
Less
current
portion

(2,256)
(2,787)Long-term
portion
$72,826
$68,367
$s
in
thousands
2016
2015
Net
closure
and
post-closure
asset,
beginning
of
year
$23,043
$24,651
Additions
or
adjustments
to
closure
and
post-closure
asset

426

(349)Amortization
of
closure
and
post-closure
asset

(1,128)
(836)Foreign
currency
translation

67

(423)Net
closure
and
post-closure
asset,
end
of
year
$22,408
$23,043
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
15.
DEBTLong-term
debt
consisted
of
the
following:Future
maturities
of
long-term
debt,
excluding
unamortized
discount
and
debt
issuance
costs,
as
of
December
31,
2016
consist
of
the
following:On
June
17,
2014,
in
connection
with
the
acquisition
of
EQ,
the
Company
entered
into
a
new
$540.0
million
senior
secured
credit
agreement
(the
"CreditAgreement")
with
a
syndicate
of
banks
comprised
of
a
$415.0
million
term
loan
(the
"Term
Loan")
with
a
maturity
date
of
June
17,
2021
and
a
$125.0
millionrevolving
line
of
credit
(the
"Revolving
Credit
Facility")
with
a
maturity
date
of
June
17,
2019.
Upon
entering
into
the
Credit
Agreement,
the
Company
terminatedits
existing
credit
agreement
with
Wells
Fargo,
dated
October,
29,
2010,
as
amended
(the
"Former
Agreement").
Immediately
prior
to
the
termination
of
the
FormerAgreement,
there
were
no
outstanding
borrowings
under
the
Former
Agreement.
No
early
termination
penalties
were
incurred
as
a
result
of
the
termination
of
theFormer
Agreement.Term LoanThe
Term
Loan
provided
an
initial
commitment
amount
of
$415.0
million,
the
proceeds
of
which
were
used
to
acquire
100%
of
the
outstanding
shares
of
EQ
andpay
related
transaction
fees
and
expenses.
The
Term
Loan
bears
interest
at
a
base
rate
(as
defined
in
the
Credit
Agreement)
plus
2.00%
or
LIBOR
plus
3.00%,
atthe
Company's
option.
The
Term
Loan
is
subject
to
amortization
in
equal
quarterly
installments
in
an
aggregate
annual
amount
equal
to
1.00%
of
the
originalprincipal
amount
of
the
Term
Loan.
At
December
31,
2016,
the
effective
interest
rate
on
the
Term
Loan,
including
the
impact
of
our
interest
rate
swap,
was
4.76%.Interest
only
payments
are
due
either
monthly
or
on
the
last
day
of
any
interest
period,
as
applicable.
As
set
forth
in
the
Credit
Agreement,
the
Company
is
requiredto
enter
into
one
or
more
interest
rate
hedge
agreements
in
amounts
sufficient
to
fix
the
interest
rate
on
at
least
50%
of
the
principal
amount
of
the
$415.0
millionTerm
Loan.
In
October
2014,
the
Company
entered
into
an
interest
rate
swap93


December
31,
$s
in
thousands
2016
2015
Term
loan
$283,040
$300,994
Unamortized
discount
and
debt
issuance
costs

(5,678)
(7,254)Total
debt

277,362

293,740
Current
portion
of
long-term
debt

(2,903)
(3,056)Long-term
debt
$274,459
$290,684
$s
in
thousands
Maturities
2017
$2,903
2018

2,903
2019

2,903
2020

2,903
2021

271,428
Thereafter

—

$283,040
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
15.
DEBT
(Continued)agreement
with
Wells
Fargo,
effectively
fixing
the
interest
rate
on
$210.0
million,
or
74%,
of
the
Term
Loan
principal
outstanding
as
of
December
31,
2016.Revolving Credit FacilityThe
Revolving
Credit
Facility
provides
up
to
$125.0
million
of
revolving
credit
loans
or
letters
of
credit
with
the
use
of
proceeds
restricted
solely
for
workingcapital
and
other
general
corporate
purposes.
Under
the
Revolving
Credit
Facility,
revolving
loans
are
available
based
on
a
base
rate
(as
defined
in
the
CreditAgreement)
or
LIBOR,
at
the
Company's
option,
plus
an
applicable
margin
which
is
determined
according
to
a
pricing
grid
under
which
the
interest
rate
decreasesor
increases
based
on
our
ratio
of
funded
debt
to
consolidated
earnings
before
interest,
taxes,
depreciation
and
amortization
(as
defined
in
the
Credit
Agreement).At
December
31,
2016,
the
effective
interest
rate
on
the
Revolving
Credit
Facility
was
5.50%.
The
Company
is
required
to
pay
a
commitment
fee
of
0.50%
perannum
on
the
unused
portion
of
the
Revolving
Credit
Facility,
with
such
commitment
fee
to
be
reduced
based
upon
the
Company's
total
leverage
ratio
as
defined
inthe
Credit
Agreement.
The
maximum
letter
of
credit
capacity
under
the
Revolving
Credit
Facility
is
$50.0
million
and
the
Credit
Agreement
provides
for
a
letter
ofcredit
fee
equal
to
the
applicable
margin
for
LIBOR
loans
under
the
Revolving
Credit
Facility.
Interest
payments
are
due
either
monthly
or
on
the
last
day
of
anyinterest
period,
as
applicable.
At
December
31,
2016,
there
were
$2.2
million
of
working
capital
borrowings
outstanding
on
the
Revolving
Credit
Facility.
Theseborrowings
are
due
"on
demand"
and
presented
as
short-term
debt
in
the
consolidated
balance
sheets.
As
of
December
31,
2016,
the
availability
under
theRevolving
Credit
Facility
was
$116.8
million
with
$6.0
million
of
the
Revolving
Credit
Facility
issued
in
the
form
of
standby
letters
of
credit
utilized
as
collateralfor
closure
and
post-closure
financial
assurance
and
other
assurance
obligations.Except
as
set
forth
below,
the
Company
may
prepay
the
Term
Loan
or
permanently
reduce
the
Revolving
Credit
Facility
commitment
under
the
Credit
Agreementat
any
time
without
premium
or
penalty
(other
than
customary
"breakage"
costs
with
respect
to
the
early
termination
of
LIBOR
loans).
Subject
to
certainexceptions,
the
Credit
Agreement
provides
for
mandatory
prepayment
upon
certain
asset
dispositions,
casualty
events
and
issuances
of
indebtedness.
The
CreditAgreement
is
also
subject
to
mandatory
annual
prepayments
commencing
in
December
2015
if
our
total
leverage
(defined
as
the
ratio
of
our
consolidated
fundeddebt
as
of
the
last
day
of
the
applicable
fiscal
year
to
our
adjusted
EBITDA
for
such
period)
exceeds
certain
ratios
as
follows:
50%
of
our
adjusted
excess
cash
flow(as
defined
in
the
Credit
Agreement
and
which
takes
into
account
certain
adjustments)
if
our
total
leverage
ratio
is
greater
than
2.50
to
1.00,
with
step-downs
to
0%if
our
total
leverage
ratio
is
equal
to
or
less
than
2.50
to
1.00.Pursuant
to
(i)
an
unconditional
guarantee
agreement
and
(ii)
a
collateral
agreement,
each
entered
into
by
the
Company
and
its
domestic
subsidiaries
on
June
17,2014,
the
Company's
obligations
under
the
Credit
Agreement
are
jointly
and
severally
and
fully
and
unconditionally
guaranteed
on
a
senior
basis
by
all
of
theCompany's
existing
and
certain
future
domestic
subsidiaries
and
the
Credit
Agreement
is
secured
by
substantially
all
of
the
Company's
and
its
domesticsubsidiaries'
assets
except
the
Company's
and
its
domestic
subsidiaries'
real
property.The
Credit
Agreement
contains
customary
restrictive
covenants,
subject
to
certain
permitted
amounts
and
exceptions,
including
covenants
limiting
the
ability
ofthe
Company
to
incur
additional
indebtedness,
pay
dividends
and
make
other
restricted
payments,
repurchase
shares
of
our
outstanding
stock
and
create
certainliens.
We
may
only
declare
quarterly
or
annual
dividends
if
on
the
date
of
declaration,
no
event
of94Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
15.
DEBT
(Continued)default
has
occurred
and
no
other
event
or
condition
has
occurred
that
would
constitute
default
due
to
the
payment
of
the
dividend.The
Credit
Agreement
also
contains
a
financial
maintenance
covenant,
which
is
a
maximum
Consolidated
Senior
Secured
Leverage
Ratio,
as
defined
in
the
CreditAgreement,
and
is
only
applicable
to
the
Revolving
Credit
Facility.
Our
consolidated
senior
secured
leverage
ratio
as
of
the
last
day
of
any
fiscal
quarter
may
notexceed
the
ratios
indicated
below:At
December
31,
2016,
we
were
in
compliance
with
all
of
the
financial
covenants
in
the
Credit
Agreement.NOTE
16.
INCOME
TAXESThe
components
of
the
income
tax
expense
consisted
of
the
following:A
reconciliation
between
the
effective
income
tax
rate
and
the
applicable
statutory
federal
and
state
income
tax
rate
is
as
follows:95Fiscal
Quarters
Ending
Maximum
Ratio
December
31,
2016
through
September
30,
2017

3.50
to
1.00
December
31,
2017
through
September
30,
2018

3.25
to
1.00
December
31,
2018
and
thereafter

3.00
to
1.00
$s
in
thousands
2016
2015
2014
Current:









U.S.
Federal
$17,866
$17,818
$13,767
State

3,324

2,830

2,492
Foreign

2,459

3,279

4,521
Total
current

23,649

23,927

20,780
Deferred:









U.S.
Federal

(1,790)
(2,355)
2,721
State

(275)
125

(155)Foreign

(535)
(453)
(532)Total
deferred

(2,600)
(2,683)
2,034
Income
tax
expense
$21,049
$21,244
$22,814



2016
2015
2014
Taxes
computed
at
statutory
rate

35.0%
35.0%
35.0%Impairment
and
loss
on
divestiture

—

5.7

—
State
income
taxes
(net
of
federal
income
tax
benefit)

3.3

4.0

2.7
Non-deductible
transaction
costs

0.2

0.3

1.5
Foreign
rate
differential

(1.1)
(1.8)
(2.0)Other

0.7

2.1

0.2


38.1%
45.3%
37.4%Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
16.
INCOME
TAXES
(Continued)The
components
of
the
total
net
deferred
tax
assets
and
liabilities
as
of
December
31,
2016
and
2015
consisted
of
the
following:We
consider
the
undistributed
earnings
of
our
foreign
subsidiaries
as
of
December
31,
2016
to
be
indefinitely
reinvested.
Accordingly,
no
U.S.
income
and
foreignwithholding
taxes
have
been
provided
on
such
earnings.
We
have
not,
nor
do
we
anticipate
the
need
to,
repatriate
funds
to
the
U.S.
to
satisfy
domestic
liquidityneeds;
however,
in
the
event
that
we
need
to
repatriate
all
or
a
portion
of
our
foreign
cash
to
the
U.S.,
we
would
be
subject
to
additional
U.S.
income
taxes,
whichcould
be
material.
The
amount
of
temporary
differences
for
which
no
deferred
tax
liability
has
been
recognized
totaled
$36.7
million
as
of
December
31,
2016.
Wedo
not
believe
it
is
practicable
to
calculate
the
potential
tax
impact
of
repatriation,
as
there
is
a
significant
amount
of
uncertainty
around
the
calculation,
includingthe
availability
and
amount
of
foreign
tax
credits
at
the
time
of
repatriation,
tax
rates
in
effect
and
other
indirect
tax
consequences
associated
with
repatriation.As
of
December
31,
2016,
we
have
federal
net
operating
loss
carry
forwards
("NOLs")
of
approximately
$17,000.
The
NOLs
relate
to
losses
incurred
by
EQ
priorto
our
acquisition
of
EQ
on
June
17,
2014
and
expire
in
2026.
U.S.
income
tax
law
limits
the
amount
of
losses
that
we
can
use
on
an
annual
basis.
We
believe
it
ismore
likely
than
not
the
entire
balance
of
federal
NOLs
will
be
utilized
before
expiration.As
of
December
31,
2016,
we
have
approximately
$12.7
million
in
state
and
local
NOLs
for
which
we
maintain
a
valuation
allowance
on
the
majority
of
thebalance.
We
have
historically
recorded
a
valuation
allowance
for
certain
deferred
tax
assets
due
to
uncertainties
regarding
future
operating
results
and
limitationson
utilization
of
state
and
local
NOLs
for
tax
purposes.
State
and
local
NOLs
expire
between
2019
and
2036.
At
December
31,
2016
and
2015,
we
maintained
avaluation
allowance
of
approximately
$278,000
and
$1.9
million,
respectively,
for
state
NOLs
that
are
not
expected
to
be
utilizable
prior
to
expiration.96$s
in
thousands
2016
2015
Deferred
tax
assets:






Net
operating
loss,
foreign
tax
credit
and
capital
loss
carry
forwards
$3,307
$5,215
Accruals,
allowances
and
other

5,269

5,021
Environmental
compliance
and
other
site
related
costs

12,479

7,924
Unrealized
foreign
exchange
gains
and
losses

2,153

2,101
Unrealized
gains
and
losses
on
interest
rate
hedge

1,119

1,637
Total
deferred
tax
assets

24,327

21,898
Less:
valuation
allowance

(3,058)
(4,645)Net
deferred
tax
assets

21,269

17,253
Deferred
tax
liabilities:






Property
and
equipment

(26,258)
(23,898)Intangible
assets

(74,731)
(74,451)Other

(1,613)
(1,526)Total
deferred
tax
liabilities

(102,602)
(99,875)Net
deferred
tax
liability
$(81,333)$(82,622)Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
16.
INCOME
TAXES
(Continued)As
of
December
31,
2016,
we
have
foreign
tax
credit
carry
forwards
of
approximately
$1.8
million
that
expire
in
2024.
As
of
December
31,
2016,
we
have
capitalloss
carry
forwards
of
approximately
$2.6
million
that
expire
in
2020.
We
believe
it
is
more
likely
than
not
the
foreign
tax
credit
and
capital
loss
carry
forwardswill
not
be
utilized
and
therefore
maintain
a
valuation
allowance
on
the
entire
balance.The
domestic
and
foreign
components
of
Income
(loss)
before
income
taxes
consisted
of
the
following:The
changes
to
unrecognized
tax
benefits
(excluding
related
penalties
and
interest)
consisted
of
the
following:We
apply
the
provisions
of
ASC
740
related
to
income
tax
uncertainties
which
clarifies
the
accounting
for
income
taxes
by
prescribing
a
minimum
recognitionthreshold
a
tax
position
is
require
to
meet
before
being
recognized
in
the
consolidated
financial
statements.
As
of
December
31,
2016
we
have
no
materialunrecognized
tax
benefits.We
file
a
consolidated
U.S.
federal
income
tax
return
with
the
IRS
as
well
as
income
tax
returns
in
various
states
and
Canada.
During
2016,
the
US
Ecology,
Inc.IRS
examination
for
the
2012
tax
year
concluded
with
no
material
changes.
US
Ecology,
Inc.
is
subject
to
examination
by
the
IRS
for
tax
years
2013
through
2016.During
2016,
the
EQ
IRS
examination
for
the
2013
tax
year
concluded
with
no
material
changes,
however,
the
statute
of
limitations
remains
open.
EQ
is
alsosubject
to
examination
by
the
IRS
for
the
2014
tax
year.
We
may
be
subject
to
examinations
by
the
Canada
Revenue
Agency
as
well
as
various
state
and
localtaxing
jurisdictions
for
tax
years
2012
through
2016.
We
are
currently
not
aware
of
any
other
examinations
by
taxing
authorities.NOTE
17.
COMMITMENTS
AND
CONTINGENCIESLitigation and Regulatory ProceedingsIn
the
ordinary
course
of
business,
we
are
involved
in
judicial
and
administrative
proceedings
involving
federal,
state,
provincial
or
local
governmental
authorities,including
regulatory
agencies
that
oversee
and
enforce
compliance
with
permits.
Fines
or
penalties
may
be
assessed
by
our
regulators
for
non-compliance.
Actionsmay
also
be
brought
by
individuals
or
groups
in
connection
with
permitting
of
planned
facilities,
modification
or
alleged
violations
of
existing
permits,
or
allegeddamages
suffered
from
exposure
to97$s
in
thousands
2016
2015
2014
Domestic

47,859

36,367

46,017
Foreign

7,442

10,488

15,033
Income
before
income
taxes
$55,301
$46,855
$61,050
$s
in
thousands
2016
2015
2014
Unrecognized
tax
benefits,
beginning
of
year
$—
$—
$438
Gross
increases
in
tax
positions
in
prior
periods

—

—

—
Gross
increases
during
the
current
period

—

—

—
Settlements

—

—

—
Lapse
of
statute
of
limitations

—

—

(438)Unrecognized
tax
benefits,
end
of
year
$—
$—
$—
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
17.
COMMITMENTS
AND
CONTINGENCIES
(Continued)hazardous
substances
purportedly
released
from
our
operated
sites,
as
well
as
other
litigation.
We
maintain
insurance
intended
to
cover
property
and
damage
claimsasserted
as
a
result
of
our
operations.
Periodically,
management
reviews
and
may
establish
reserves
for
legal
and
administrative
matters,
or
other
fees
expected
tobe
incurred
in
relation
to
these
matters.We
are
not
currently
a
party
to
any
material
pending
legal
proceedings
and
are
not
aware
of
any
other
claims
that
could,
individually
or
in
the
aggregate,
have
amaterially
adverse
effect
on
our
financial
position,
results
of
operations
or
cash
flows.Operating LeasesLease
agreements
primarily
cover
railcars,
the
disposal
site
at
our
Stablex
facility
and
corporate
office
space.
Future
minimum
lease
payments
on
non-cancellableoperating
leases
as
of
December
31,
2016
are
as
follows:Rental
expense
under
operating
leases
was
$7.8
million,
$8.2
million
and
$3.9
million
for
the
years
ended
December
31,
2016,
2015
and
2014,
respectively.NOTE
18.
EQUITYStock Repurchase ProgramOn
June
1,
2016,
the
Company's
Board
of
Directors
authorized
the
repurchase
of
$25.0
million
of
the
Company's
outstanding
common
stock.
Repurchases
may
bemade
from
time
to
time
in
the
open
market
or
through
privately
negotiated
transactions.
The
timing
of
any
repurchases
will
be
based
upon
prevailing
marketconditions
and
other
factors.
The
Company
did
not
repurchase
any
shares
of
common
stock
under
the
repurchase
program
during
2016.
The
repurchase
programwill
remain
in
effect
until
June
2,
2018,
unless
extended
by
our
Board
of
Directors.Omnibus Incentive PlanOn
May
27,
2015,
our
stockholders
approved
the
Omnibus
Incentive
Plan
("Omnibus
Plan"),
which
was
approved
by
our
Board
of
Directors
on
April
7,
2015.
TheOmnibus
Plan
was
developed
to
provide
additional
incentives
through
equity
ownership
in
US
Ecology
and,
as
a
result,
encourage
employees
and
directors
tocontribute
to
our
success.
The
Omnibus
Plan
provides,
among
other
things,
the
ability
for
the
Company
to
grant
restricted
stock,
performance
stock,
options,
stockappreciation
rights,
restricted
stock
units,
performance
stock
units
("PSUs")
and
other
stock-based
awards
or
cash
awards
to
officers,
employees,
consultants
andnon-employee
directors.
Subsequent
to
the
approval
of
the
Omnibus
Plan
in98$s
in
thousands
Payments
2017
$6,189
2018

3,897
2019

2,349
2020

303
2021

127
Thereafter

329

$13,194
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
18.
EQUITY
(Continued)May
2015,
we
stopped
granting
equity
awards
under
our
2008
Stock
Option
Incentive
Plan
and
our
2006
Restricted
Stock
Plan
("Previous
Plans"),
and
thePrevious
Plans
will
remain
in
effect
solely
for
the
settlement
of
awards
granted
under
the
Previous
Plans.
No
shares
that
are
reserved
but
unissued
under
thePrevious
Plans
or
that
are
outstanding
under
the
Previous
Plans
and
reacquired
by
the
Company
for
any
reason
will
be
available
for
issuance
under
the
OmnibusPlan.
The
Omnibus
Plan
expires
on
April
7,
2025
and
authorizes
1,500,000
shares
of
common
stock
for
grant
over
the
life
of
the
Omnibus
Plan.
As
ofDecember
31,
2016,
1,266,624
shares
of
common
stock
remain
available
for
grant
under
the
Omnibus
Plan.Performance Stock UnitsOn
January
4,
2016
and
May
27,
2015,
the
Company
granted
16,000
PSUs
and
6,929
PSUs,
respectively,
to
certain
employees.
Each
PSU
represents
the
right
toreceive,
on
the
settlement
date,
one
share
of
the
Company's
common
stock.
The
total
number
of
PSUs
each
participant
is
eligible
to
earn
ranges
from
0%
to
200%of
the
target
number
of
PSUs
granted.
The
actual
number
of
PSUs
that
will
vest
and
be
settled
in
shares
is
determined
at
the
end
of
a
three-year
performance
periodbeginning
January
1,
2015
for
the
May
27,
2015
granted
PSUs
and
January
1,
2016
for
the
January
4,
2016
granted
PSUs,
based
on
total
stockholder
return
relativeto
a
set
of
peer
companies.
The
fair
value
of
the
2016
and
2015
PSUs
estimated
on
the
grant
date
using
a
Monte
Carlo
simulation
were
$41.22
and
$65.78
per
unit,respectively.
Compensation
expense
is
recorded
over
the
awards'
vesting
period.Assumptions
used
in
the
Monte
Carlo
simulation
to
calculate
the
fair
value
of
the
PSUs
granted
in
2016
and
2015
are
as
follows:Stock OptionsWe
have
stock
option
awards
outstanding
under
the
1992
Stock
Option
Plan
for
Employees
("1992
Employee
Plan")
and
the
2008
Stock
Option
Incentive
Plan("2008
Stock
Option
Plan").
Subsequent
to
the
approval
of
the
Omnibus
Plan
in
May
2015,
we
stopped
granting
equity
awards
under
the
2008
Stock
Option
Plan.The
2008
Stock
Option
Plan
will
remain
in
effect
solely
for
the
settlement
of
awards
previously
granted.
In
April
2013,
the
1992
Employee
Plan
expired
and
wascancelled
except
for
options
then
outstanding.
Stock
options
expire
ten
years
from
the
date
of
grant
and
vest
over
a
period
ranging
from
one
to
three
years
from
thedate
of
grant.
Vesting
requirements
for
non-employee
directors
are
contingent
on
attending
a
minimum
of
75%
of
regularly
scheduled
board
meetings
during
theyear.
Upon
the
exercise
of
stock
options,
common
stock
is
issued
from
treasury
stock
or,
when
depleted,
from
new
stock
issuances.99


2016
2015Stock
price
on
grant
date
$35.05
$46.89Expected
term
3.0
years
2.6
yearsExpected
volatility
29%
29%Risk-free
interest
rate
1.3%
0.9%Expected
dividend
yield
2.1%
1.5%Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
18.
EQUITY
(Continued)A
summary
of
our
stock
option
activity
is
as
follows:The
weighted
average
grant
date
fair
value
of
all
stock
options
granted
during
2016,
2015
and
2014
was
$8.19,
$11.83
and
$9.78
per
share,
respectively.
The
totalintrinsic
value
of
stock
options
exercised
during
2016,
2015
and
2014
was
$307,000,
$2.0
million
and
$3.5
million,
respectively.
During
2016,
option
holdersexercised
7,873
options
via
net
share
settlement.The
fair
value
of
each
stock
option
is
estimated
as
of
the
date
of
grant
using
the
Black-Scholes
option-pricing
model.
Expected
volatility
is
estimated
based
on
anaverage
of
actual
historical
volatility
and
implied
volatility
corresponding
to
the
stock
option's
estimated
expected
term.
We
believe
this
approach
to
determinevolatility
is
representative
of
future
stock
volatility.
The
expected
term
of
a
stock
option
is
estimated
based
on
analysis
of
stock
options
already
exercised
andforeseeable
trends
or
changes
in
behavior.
The
risk-free
interest
rates
are
based
on
the
U.S.
Treasury
securities
maturities
as
of
each
applicable
grant
date.
Thedividend
yield
is
based
on
analysis
of
actual
historical
dividend
yield.The
significant
weighted-average
assumptions
relating
to
the
valuation
of
each
option
grant
are
as
follows:Restricted StockWe
have
restricted
stock
awards
outstanding
under
the
2006
Restricted
Stock
Plan
and
the
Omnibus
Plan.
Subsequent
to
the
approval
of
the
Omnibus
Plan
in
May2015,
we
stopped
granting
equity
awards
under
the
2006
Restricted
Stock
Plan.
The
2006
Restricted
Stock
Plan
will
remain
in
effect
solely
for
the
settlement
ofawards
previously
granted.
Generally,
restricted
stock
awards
vest
annually
over
a
three-year
period.
Vesting
of
restricted
stock
awards
to
non-employee
directorsis
contingent
on
the
non-employee
director
attending
a
minimum
of
75%
of
regularly
scheduled
board
meetings
and
75%
of
the
meetings
of
each
committee
ofwhich
the
non-employee
director
is
a
member
during
the
year.
Upon
the
vesting
of
restricted
stock
awards,
common
stock
is
issued
from
treasury
stock
or,
whendepleted,
from
new
stock
issuances.100$s
in
thousands,
except
per
share
amounts
Shares
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Weighted
Average
Remaining
Contractual
Term
(Years)
Outstanding
as
of
December
31,
2015

336,417
$35.83






Granted

147,660

37.83






Exercised

(13,939)
23.25






Cancelled,
expired
or
forfeited

(23,640)
43.27






Outstanding
as
of
December
31,
2016

446,498
$36.49
$5,651

7.6
Exercisable
as
of
December
31,
2016

153,535
$33.33
$2,430

6.5



2016
2015
2014Expected
life
3.8
years
3.6
years
3.6
yearsExpected
volatility
31%
35%
36%Risk-free
interest
rate
1.1%
1.2%
0.8%Expected
dividend
yield
1.7%
1.6%
2.0%Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
18.
EQUITY
(Continued)A
summary
of
our
restricted
stock
plan
activity
is
as
follows:The
total
fair
value
of
restricted
stock
vested
during
2016,
2015
and
2014
was
$1.4
million,
$1.4
million
and
$975,000,
respectively.Treasury StockDuring
2016,
the
Company
issued
10,412
shares
of
restricted
stock,
under
the
Omnibus
Plan,
from
our
treasury
stock
at
an
average
cost
of
$39.82
per
share
andrepurchased
6,589
shares
of
the
Company's
common
stock
in
connection
with
the
net
share
settlement
of
employee
equity
awards
at
an
average
cost
of
$40.95
pershare.Share-Based Compensation ExpenseAll
share-based
compensation
is
measured
at
the
grant
date
based
on
the
fair
value
of
the
award,
and
is
recognized
as
an
expense
in
earnings
over
the
requisiteservice
period.
The
components
of
pre-tax
share-based
compensation
expense
(primarily
included
in
Selling,
general
and
administrative
expenses
in
ourconsolidated
statements
of
operations)
and
related
tax
benefits
were
as
follows:Unrecognized Share-Based Compensation ExpenseAs
of
December
31,
2016,
there
was
$3.9
million
of
unrecognized
compensation
expense
related
to
unvested
share-based
awards
granted
under
our
share-basedaward
plans.
The
expense
is
expected
to
be
recognized
over
a
weighted
average
remaining
vesting
period
of
approximately
two
years.101


Shares
Weighted
Average
Grant
Date
Fair
Value
Outstanding
as
of
December
31,
2015

59,413
$42.67
Granted

55,130

38.35
Vested

(32,279)
37.83
Cancelled,
expired
or
forfeited

(7,133)
40.33
Outstanding
as
of
December
31,
2016

75,131
$41.80
$s
in
thousands
2016
2015
2014
Share-based
compensation
from:









Stock
options
$1,123
$808
$442
Restricted
stock

1,488

1,375

808
Performance
stock
units

314

114

—
Total
share-based
compensation

2,925

2,297

1,250
Income
tax
benefit

(1,113)
(1,041)
(467)Share-based
compensation,
net
of
tax
$1,812
$1,256
$783
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
19.
EARNINGS
PER
SHARENOTE
20.
SEGMENT
REPORTINGFinancial Information by SegmentOur
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,
treatmentand
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
sitesand
through
our
10-day
transfer
facilities.
Services
include
on-site
management,
waste
characterization,
transportation
and
disposal
of
non-hazardous
andhazardous
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
includetypical
corporate
items
such
as
legal,
accounting
and
other
items
of
a
general
corporate
nature.
Income
taxes
are
assigned
to
Corporate,
but
all
other
items
areincluded
in
the
segment
where
they
originated.
Inter-company
transactions
have
been
eliminated
from
the
segment
information
and
are
not
significant
betweensegments.Effective
January
1,
2016,
we
changed
our
internal
reporting
structure
by
moving
the
financial
results
of
our
Sulligent,
Alabama
and
Tampa,
Florida
facilities
fromour
Environmental
Services
segment
to
our
Field
&
Industrial
Services
segment.
The
purpose
of
this
change
is
to
align
our
internal
reporting
structure
with
how
wemanage
our
business
based
on
the
primary
service
offering
of
each
facility.
Throughout
this
Annual
Report
on
Form
10-K,
our
segment
results
for
all
periodspresented
have
been
recast
to
reflect
this
change.102


2016
2015
2014
$s
and
shares
in
thousands,
except
per
share
amounts
Basic
Diluted
Basic
Diluted
Basic
Diluted
Net
income
$34,252
$34,252
$25,611
$25,611
$38,236
$38,236
Weighted
average
basic
shares
outstanding

21,704

21,704

21,637

21,637

21,537

21,537
Dilutive
effect
of
stock
options
and
restricted
stock




85




96




118
Weighted
average
diluted
shares
outstanding




21,789




21,733




21,655
Earnings
per
share
$1.58
$1.57
$1.18
$1.18
$1.78
$1.77
Anti-dilutive
shares
excluded
from
calculation




249




192




58
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
20.
SEGMENT
REPORTING
(Continued)Summarized
financial
information
of
our
reportable
segments
for
the
years
ended
December
31,
2016,
2015
and
2014
is
as
follows:

103


2016
$s
in
thousands
Environmental
Services
Field
&
Industrial
Services
Corporate
Total
Treatment
&
Disposal
Revenue
$275,236
$12,582
$—
$287,818
Services
Revenue:












Transportation
and
Logistics(1)

62,535

17,839

—

80,374
Industrial
Cleaning(2)

—

21,021

—

21,021
Technical
Services(3)

—

74,191

—

74,191
Remediation(4)

—

11,600

—

11,600
Other(5)

—

2,661

—

2,661
Total
Revenue
$337,771
$139,894
$—
$477,665
Depreciation,
amortization
and
accretion
$33,839
$5,481
$512
$39,832
Capital
expenditures
$30,098
$2,572
$3,026
$35,696
Total
assets
$599,300
$119,198
$57,902
$776,400



2015
$s
in
thousands
Environmental
Services
Field
&
Industrial
Services(6)
Corporate
Total
Treatment
&
Disposal
Revenue
$291,062
$12,911
$—
$303,973
Services
Revenue:












Transportation
and
Logistics(1)

67,978

29,060

—

97,038
Industrial
Cleaning(2)

—

85,783

—

85,783
Technical
Services(3)

—

67,479

—

67,479
Remediation(4)

—

6,734

—

6,734
Other(5)

—

2,063

—

2,063
Total
Revenue
$359,040
$204,030
$—
$563,070
Depreciation,
amortization
and
accretion
$34,870
$9,425
$527
$44,822
Capital
expenditures
$29,823
$7,513
$2,034
$39,370
Total
assets
$586,561
$124,127
$61,299
$771,987
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
20.
SEGMENT
REPORTING
(Continued)The
primary
financial
measure
used
by
management
to
assess
segment
performance
is
Adjusted
EBITDA.
Adjusted
EBITDA
is
defined
as
net
income
beforeinterest
expense,
interest
income,
income
tax
expense,
depreciation,
amortization,
stock
based
compensation,
accretion
of
closure
and
post-closure
liabilities,foreign
currency
gain/loss,
non-cash
impairment
charges,
loss
on
divestiture
and
other
income/expense.
Adjusted
EBITDA
is
a
complement
to
results
provided
inaccordance
with
accounting
principles
generally
accepted
in
the
United
States
("GAAP")
and
we
believe
that
such
information
provides
additional
usefulinformation
to
analysts,
stockholders
and
other
users
to
understand
the
Company's
operating
performance.
Since
Adjusted
EBITDA
is
not
a
measurementdetermined
in
accordance
with
GAAP
and
is
thus
susceptible
to
varying
calculations,
Adjusted
EBITDA
as
presented
may
not
be
comparable
to
other
similarlytitled
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
orfinancing
activities,
or
other
financial
statement
data
presented
in
the
consolidated
financial
statements
as
indicators
of
financial
performance
or
liquidity.
AdjustedEBITDA
has
limitations104


2014
$s
in
thousands
Environmental
Services
Field
&
Industrial
Services(6)
Corporate
Total
Treatment
&
Disposal
Revenue
$252,471
$6,859
$—
$259,330
Services
Revenue:












Transportation
and
Logistics(1)

59,015

24,585

—

83,600
Industrial
Cleaning(2)

—

49,823

—

49,823
Technical
Services(3)

—

37,415

—

37,415
Remediation(4)

—

16,410

—

16,410
Other(5)

—

833

—

833
Total
Revenue
$311,486
$135,925
$—
$447,411
Depreciation,
amortization
and
accretion
$28,130
$6,843
$303
$35,276
Capital
expenditures
$19,656
$7,870
$908
$28,434
Total
assets
$618,524
$219,815
$71,708
$910,047
(1)Includes
such
services
as
collection,
transportation
and
disposal
of
non-hazardous
and
hazardous
waste.
Prior
to
the
acquisition
of
EQ
onJune
17,
2014,
services
within
Environmental
Services
included
transportation
services.
(2)Includes
such
services
as
industrial
cleaning
and
maintenance
for
refineries,
chemical
plants,
steel
and
automotive
plants,
and
refineryservices
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.
(6)Financial
data
includes
the
operations
of
our
Allstate
business.
We
completed
the
divestiture
of
Allstate
on
November
1,
2015.Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
20.
SEGMENT
REPORTING
(Continued)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
thefuture,
and
Adjusted
EBITDA
does
not
reflect
any
cash
requirements
for
such
replacements.A
reconciliation
of
Net
Income
to
Adjusted
EBITDA
for
the
years
ended
December
31,
2016,
2015
and
2014
is
as
follows:Adjusted
EBITDA,
by
operating
segment,
for
the
years
ended
December
31,
2016,
2015
and
2014
is
as
follows:105$s
in
thousands
2016
2015
2014
Net
income
$34,252
$25,611
$38,236
Income
tax
expense

21,049

21,244

22,814
Interest
expense

17,317

23,370

10,677
Interest
income

(96)
(65)
(107)Foreign
currency
loss

138

2,196

1,499
Loss
(gain)
on
divestiture

(2,034)
542

—
Other
income

(597)
(1,267)
(669)Impairment
charges

—

6,700

—
Depreciation
and
amortization
of
plant
and
equipment

25,304

27,931

24,413
Amortization
of
intangibles

10,575

12,307

8,207
Stock-based
compensation

2,925

2,297

1,250
Accretion
and
non-cash
adjustment
of
closure
&
post-closure
liabilities

3,953

4,584

2,656
Adjusted
EBITDA:
$112,786
$125,450
$108,976
$s
in
thousands
2016
2015
2014
Adjusted
EBITDA:









Environmental
Services
$139,698
$150,067
$123,086
Field
&
Industrial
Services

16,342

21,388

8,638
Corporate

(43,254)
(46,005)
(22,748)Total
$112,786
$125,450
$108,976
Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
20.
SEGMENT
REPORTING
(Continued)Revenue and Long-Lived Assets Outside of the United StatesWe
provide
services
in
the
United
States
and
Canada.
Revenues
by
geographic
location
where
the
underlying
services
were
performed
for
the
years
endedDecember
31,
2016,
2015
and
2014
were
as
follows:Long-lived
assets,
comprised
of
property
and
equipment
and
intangible
assets
net
of
accumulated
depreciation
and
amortization,
by
geographic
location
as
ofDecember
31,
2016
and
2015
are
as
follows:NOTE
21.
QUARTERLY
FINANCIAL
DATA
(unaudited)The
unaudited
consolidated
quarterly
results
of
operations
for
2016
and
2015
were
as
follows:106$s
in
thousands
2016
2015
2014
United
States
$428,778
$521,092
$388,084
Canada

48,887

41,978

59,327

$477,665
$563,070
$447,411
$s
in
thousands
2016
2015
United
States
$405,767
$400,320
Canada

54,826

49,585

$460,593
$449,905



Three-Months
Ended



$s
and
shares
in
thousands,
except
per
share
amounts
Mar.
31,
June
30,
Sept.
30,
Dec.
31,
Year
2016















Revenue
$113,318
$122,351
$124,824
$117,172
$477,665
Gross
profit

35,208

36,906

39,354

36,127

147,595
Operating
income

15,783

17,087

20,915

16,244

70,029
Net
income

7,517

8,938

10,114

7,683

34,252
Earnings
per
share—diluted(1)
$0.35
$0.41
$0.46
$0.35
$1.57
Weighted
average
common
shares
outstanding
used
in
thediluted
earnings
per
share
calculation

21,745

21,790

21,804

21,814

21,789
Dividends
paid
per
share
$0.18
$0.18
$0.18
$0.18
$0.72
2015















Revenue
$136,651
$139,732
$148,414
$138,273
$563,070
Gross
profit

39,844

41,470

45,940

44,156

171,410
Operating
income

14,951

12,095

22,433

22,152

71,631
Net
income

5,865

2,138

9,904

7,704

25,611
Earnings
per
share—diluted(1)
$0.27
$0.10
$0.46
$0.35
$1.18
Weighted
average
common
shares
outstanding
used
in
thediluted
earnings
per
share
calculation

21,689

21,748

21,749

21,748

21,733
Dividends
paid
per
share
$0.18
$0.18
$0.18
$0.18
$0.72
(1)Diluted
earnings
per
common
share
for
each
quarter
presented
above
are
based
on
the
respective
weighted
average
number
of
commonshares
for
the
respective
quarter.
The
dilutive
potential
common
shares
outstanding
for
each
period
and
the
sum
of
the
quarters
may
notnecessarily
be
equal
to
the
full
year
diluted
earnings
per
common
share
amount.Table
of
ContentsUS
ECOLOGY,
INC.NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
(Continued)NOTE
22.
SUBSEQUENT
EVENTOn
January
3,
2017
the
Company
declared
a
dividend
of
$0.18
per
common
share
for
stockholders
of
record
on
January
20,
2017.
The
dividend
was
paid
from
cashon
hand
on
January
27,
2017
in
an
aggregate
amount
of
$3.9
million.107Table
of
ContentsITEM
9.



CHANGES
IN
AND
DISAGREEMENTS
WITH
ACCOUNTANTS
ON
ACCOUNTING
AND
FINANCIAL
DISCLOSURE
NoneITEM
9A.



CONTROLS
AND
PROCEDURES
An
evaluation
was
performed
under
the
supervision
and
with
the
participation
of
the
Company's
management,
including
both
the
Chief
Executive
Officer
andChief
Financial
Officer,
of
the
effectiveness
of
the
Company's
disclosure
controls
and
procedures,
as
such
term
is
defined
under
Rule
13a-15e
under
the
SecuritiesExchange
Act
of
1934,
as
amended
(the
"Exchange
Act")
as
of
December
31,
2016.
Based
on
that
evaluation,
the
Company's
management,
including
the
ChiefExecutive
and
Chief
Financial
Officer,
concluded
that
the
Company's
disclosure
controls
and
procedures
are
effective
to
provide
reasonable
assurance
thatinformation
required
to
be
disclosed
by
the
Company
in
reports
that
it
files
or
submits
under
the
Exchange
Act
is
recorded,
processed,
summarized
and
reported
asspecified
in
SEC
rules
and
forms
and
that
such
information
is
accumulated
and
communicated
to
the
Company's
management,
including
the
Chief
ExecutiveOfficer
and
Chief
Financial
Officer,
or
persons
performing
similar
functions,
as
appropriate
to
allow
timely
decisions
regarding
required
disclosure.There
were
no
changes
in
the
Company's
internal
control
over
financial
reporting
identified
in
connection
with
the
evaluation
of
such
controls
that
occurred
duringthe
Company's
most
recent
fiscal
quarter
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
the
Company's
internal
control
over
financialreporting.Management's
Annual
Report
on
Internal
Controls
over
Financial
Reporting.Management
is
responsible
for
and
maintains
a
system
of
internal
controls
over
financial
reporting
that
is
designed
to
provide
reasonable
assurance
that
its
recordsand
filings
accurately
reflect
the
transactions
engaged
in
Section
404
of
Sarbanes-Oxley
Act
of
2002
and
related
rules
issued
by
the
SEC
requiring
management
toissue
a
report
on
its
internal
controls
over
financial
reporting.There
are
inherent
limitations
in
the
effectiveness
of
any
internal
control,
including
the
possibility
of
human
error
and
the
circumvention
or
overriding
of
controls.Accordingly,
even
effective
internal
control
can
provide
only
reasonable
assurance
with
respect
to
financial
statement
preparation.
Further,
because
of
changes
inconditions,
the
effectiveness
of
internal
controls
may
vary
over
time.Management
has
conducted
an
assessment
of
its
internal
controls
over
financial
reporting
as
of
December
31,
2016
based
on
criteria
established
in
Internal
Control—Integrated
Framework
(2013)
issued
by
the
Committee
of
Sponsoring
Organizations
("COSO")
of
the
Treadway
Commission.
Based
on
this
assessment,management
concluded
that
our
internal
controls
over
financial
reporting,
excluding
ESI
and
the
Vernon,
California
facility,
were
effective
to
provide
reasonableassurance
regarding
the
reliability
of
financial
reporting.
Under
guidelines
established
by
the
SEC,
companies
are
permitted
to
exclude
certain
acquisitions
fromtheir
first
assessment
of
internal
control
over
financial
reporting
following
the
date
of
an
acquisition.
Based
on
those
guidelines,
management's
assessment
of
theeffectiveness
of
the
Company's
internal
control
over
financial
reporting
as
of
December
31,
2016
excluded
ESI
and
the
Vernon,
California
facility,
which
wereacquired
by
the
Company
in
purchase
business
combinations
on
May
2,
2016
and
October
1,
2016,
respectively.
Total
assets
for
ESI
and
the
Vernon,
Californiafacility
constituted
approximately
1%
and
1%,
respectively,
of
the
Company's
total
consolidated
assets
at
December
31,
2016.
For
ESI,
this
includes
$1.0
millionof
goodwill
and
$1.5
million
of
acquired
intangible
assets.
For
the
Vernon,
California
facility,
this
includes
$354,000
of
goodwill
and
$3.2
million
of
acquiredintangible
assets.
Total
revenues
of
ESI
constituted
1%
of
the
consolidated
financial
statement
revenues
for
the
year
ended
December
31,
2016.
Total
revenues
ofthe
Vernon,
California
facility
constituted
less
than
1%
of
the
consolidated
financial
statement
revenues
for
the
year
ended
December
31,
2016.108Table
of
ContentsOur
independent
registered
public
accounting
firm,
Deloitte
and
Touche
LLP,
has
audited
the
effectiveness
of
internal
control
over
financial
reporting
as
ofDecember
31,
2016,
as
stated
in
their
report,
which
is
included
in
Part
II,
Item
8
of
this
Annual
Report
on
Form
10-K.ITEM
9B.



OTHER
INFORMATION
None109Table
of
ContentsPART
III
ITEM
10.



DIRECTORS,
EXECUTIVE
OFFICERS
AND
CORPORATE
GOVERNANCE
The
information
regarding
directors
and
nominees
for
directors
of
the
Company,
including
identification
of
the
members
of
the
audit
committee
and
auditcommittee
financial
expert,
is
presented
under
the
headings
"Corporate
Governance—Committees
of
the
Board
of
Directors,"
and
"Election
of
Directors—Nominees
For
Directors"
in
the
Company's
definitive
proxy
statement
for
use
in
connection
with
the
2016
Annual
Meeting
of
Stockholders
(the
"ProxyStatement")
to
be
filed
within
120
days
after
the
end
of
the
Company's
fiscal
year
ended
December
31,
2016.
The
information
contained
under
these
headings
isincorporated
herein
by
reference.
Information
regarding
the
executive
officers
of
the
Company
is
included
in
this
Annual
Report
on
Form
10-K
under
Item
1
ofPart
I
as
permitted
by
Instruction
3
to
Item
401(b)
of
Regulation
S-K.We
have
adopted
a
code
of
ethics
that
applies
to
our
Chief
Executive
Officer
and
Chief
Financial
Officer.
This
code
of
ethics
is
available
on
our
Web
site
atwww.usecology.com
. If
we
make
any
amendments
to
this
code
other
than
technical,
administrative
or
other
non-substantive
amendments,
or
grant
any
waivers,including
implicit
waivers,
from
a
provision
of
this
code
to
our
Chief
Executive
Officer
or
Chief
Financial
Officer,
we
will
disclose
the
nature
of
the
amendment
orwaiver,
its
effective
date
and
to
whom
it
applies
in
a
report
filed
with
the
SEC.ITEM
11.



EXECUTIVE
COMPENSATION
Information
concerning
executive
and
director
compensation
is
presented
under
the
heading
"Compensation
Discussion
and
Analysis"
in
the
Proxy
Statement.
Theinformation
contained
under
these
headings
is
incorporated
herein
by
reference.ITEM
12.



SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICAL
OWNERS
AND
MANAGEMENT
AND
RELATED
STOCKHOLDER
MATTERS
Information
with
respect
to
security
ownership
of
certain
beneficial
owners
and
management
is
set
forth
under
the
heading
"Security
Ownership
of
CertainBeneficial
Owners
and
Directors
and
Officers"
in
the
Proxy
Statement.
The
information
contained
under
these
headings
is
incorporated
herein
by
reference.The
following
table
provides
information
as
of
December
31,
2016,
about
the
common
stock
that
has
been
issued
under
all
of
our
equity
compensation
plans,including
the
Omnibus
Plan,
the
1992
Employee
Plan,
the
2006
Restricted
Stock
Plan
and
the
2008
Stock
Option
Plan.
All
of
these
plans
have
been
approved
byour
stockholders.
The
Omnibus
Plan,
approved
in
May
2015,
superseded
our
Previous
Plans,
and
the
Previous
Plans
remain
in
effect
solely
for
the
settlement
ofawards
granted
under
the
Previous
Plans.
The
number
of
securities
remaining
available
for
future
issuance
presented
in
column
(c)
in
the
table
below
representssecurities
available
under
the
Omnibus
Plan
only.
No
shares
that
are
reserved
but
unissued110Table
of
Contentsunder
the
Previous
Plans
or
that
are
outstanding
under
the
Previous
Plans
and
reacquired
by
the
Company
for
any
reason
will
be
available
for
issuance
under
theOmnibus
Plan.ITEM
13.



CERTAIN
RELATIONSHIPS
AND
RELATED
TRANSACTIONS,
AND
DIRECTOR
INDEPENDENCE
Information
concerning
related
transactions
is
presented
under
the
heading
"Certain
Relationships
and
Related
Transactions"
in
the
Proxy
Statement.
Theinformation
contained
under
this
heading
is
incorporated
herein
by
reference.ITEM
14.



PRINCIPAL
ACCOUNTING
FEES
AND
SERVICES
Information
concerning
principal
accounting
fees
and
services
is
presented
under
the
heading
"Ratification
of
Appointment
of
Independent
Registered
PublicAccounting
Firm"
in
the
Proxy
Statement.
The
information
contained
under
this
heading
is
incorporated
herein
by
reference.PART
IV
ITEM
15.



EXHIBITS,
FINANCIAL
STATEMENTS
AND
SCHEDULES
(a)The
following
documents
are
filed
as
part
of
this
report:
1)Consolidated
Financial
Statements:
See
Index
to
Consolidated
Financial
Statements
at
Item
8
of
this
Annual
Report.
2)Financial
Statement
Schedules.
Schedules
have
been
omitted
because
they
are
not
required
or
because
the
information
is
included
in
the
financialstatements
at
Item
8
of
this
Annual
Report.
3)Exhibits
are
incorporated
herein
by
reference
or
are
filed
with
this
Annual
Report
as
set
forth
in
the
Index
to
Exhibits
on
page
113
hereof.ITEM
16.



FORM
10-K
SUMMARY
None111


Number
of
securities
to
be
issued
upon
exercise
of
outstanding
options,
warrants
and
rights
(a)(1)
Weighted-average
exercise
price
of
outstanding
options,
warrants
and
rights
(b)(2)
Number
of
securities
remaining
available
for
future
issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column
(a))
(c)
Equity
compensation
plans
approved
by
security
holders

541,092
$36.49

1,266,624
Equity
compensation
plans
not
approved
by
security
holders

—

—

—
Total

541,092
$36.49

1,266,624
(1)Includes
75,131
shares
of
unvested
restricted
stock
awards
and
19,463
performance
stock
units
outstanding
under
the
Omnibus
Plan
and2006
Restricted
Stock
Plan.
(2)The
weighted-average
exercise
price
does
not
take
into
account
the
shares
issuable
upon
vesting
of
outstanding
restricted
stock
awards,which
have
no
exercise
price.Table
of
ContentsSignatures
Pursuant
to
the
requirements
of
Section
13
or
15(d)
of
the
Securities
Exchange
Act
of
1934,
the
registrant
has
duly
caused
this
report
to
be
signed
on
its
behalf
bythe
undersigned,
thereunto
duly
authorized.Date:
February
27,
2017Pursuant
to
the
requirements
of
the
Securities
Exchange
Act
of
1934,
this
report
has
been
signed
below
by
the
following
persons
on
behalf
of
the
registrant
and
inthe
capacities
indicated
as
of
February
27,
2017.112

US
ECOLOGY,
INC.

By:
/s/
ERIC
L.
GERRATT
Eric
L.
Gerratt
Executive Vice President, Chief Financial Officer andTreasurer/s/
JEFFREY
R.
FEELER
Jeffrey
R.
Feeler
(Director) President and Chief Executive Officer
/s/
ERIC
L.
GERRATT
Eric
L.
Gerratt
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)/s/
SIMON
G.
BELL
Simon
G.
Bell.
Executive Vice President and Chief Operating Officer
/s/
STEVEN
D.
WELLING
Steven
D.
Welling.
Executive Vice President of Sales and Marketing/s/
STEPHEN
A.
ROMANO
Stephen
A.
Romano
(Director)
/s/
JOE
F.
COLVIN
Joe
F.
Colvin
(Director)/s/
DANIEL
FOX
Daniel
Fox
(Director)
/s/
KATINA
DORTON
Katina
Dorton
(Director)/s/
JOHN
T.
SAHLBERG
John
Sahlberg
(Director)

Table
of
ContentsIndex
to
Exhibits
113
Exhibit
No.
Description
Incorporated
by
Reference
from
Registrant's

2.2
Stock
Purchase
Agreement
among
EQ
ParentCompany,
Inc.,
EQ
Group,
LLC
and
US
Ecology,
Inc.dated
April
6,
2014
2
nd

Qtr
2014
Form
10-Q
filed
8-11-14

3.1
Restated
Certificate
of
Incorporation
2009
Form
10-K

3.3
Amended
and
Restated
Bylaws
Form
8-K
filed
12-11-2007

10.1
Sublease
dated
July
27,
2005,
between
the
State
ofWashington
and
US
Ecology
Washington,
Inc.
Form
8-K
filed
7-27-05

10.2
Lease
Agreement
as
amended
between
AmericanEcology
Corporation
and
the
State
of
Nevada
2
nd

Qtr
2007
Form
10-Q
filed
8-7-2007

10.3
*Amended
and
Restated
American
EcologyCorporation
1992
Employee
Stock
Option
Plan
Proxy
Statement
dated
4-16-03

10.4
*Management
Incentive
Plan
Effective
January
1,
2013
2
nd

Qtr
2013
Form
10-Q
filed
8-1-13

10.5
*2006
Restricted
Stock
Plan
Proxy
Statement
dated
3-31-06

10.6
*2008
Stock
Option
Incentive
Plan
Proxy
Statement
dated
4-10-2008

10.7
*Omnibus
Incentive
Plan
Proxy
Statement
dated
4-15-2015

10.8
*Executive
Employment
Agreement,
datedFebruary
25,
2016,
between
Jeffrey
R.
Feeler
and
USEcology,
Inc.
2015
Form
10-K

10.9
Amended
and
Restated
2005
Non-Employee
DirectorCompensation
Plan
2012
Form
10-K

10.10
*Employment
Agreement,
effective
February
25,
2016,between
the
Company
and
Eric
L.
Gerratt
2015
Form
10-K

10.11
*Employment
Agreement,
effective
February
25,
2016,between
the
Company
and
Steven
D.
Welling
2015
Form
10-K

10.12
*Employment
Agreement,
effective
February
25,
2016,between
the
Company
and
Simon
G.
Bell
2015
Form
10-K

10.13
*Employment
Agreement,
effective
February
25,
2016,between
the
Company
and
Mario
H.
Romero
2015
Form
10-K

10.14
*US
Ecology,
Inc.
2014
Management
Incentive
Plan(Executive)
1
st

Qtr
2014
Form
10-Q
filed
5-7-14Table
of
Contents114
Exhibit
No.
Description
Incorporated
by
Reference
from
Registrant's

10.15
Credit
Agreement,
dated
June
17,
2014,
by
and
amongUS
Ecology,
Inc.,
the
lenders
referred
to
therein,
WellsFargo
Bank,
N.A.,
as
administrative
agent,
Wells
FargoSecurities,
LLC
and
Credit
Suisse
Securities(USA)
LLC,
as
joint
lead
arrangers
and
jointbookrunners,
and
Comerica
Bank,
as
documentationagent
2
nd

Qtr
2014
Form
10-Q
filed
8-11-14

10.16
Guaranty
Agreement,
dated
June
17,
2014,
by
andamong
the
guarantors
from
time
to
time
party
theretoand
Wells
Fargo
Bank,
N.A.
2
nd

Qtr
2014
Form
10-Q
filed
8-11-14

10.17
Collateral
Agreement,
dated
June
17,
2014,
by
andamong
US
Ecology,
Inc.,
the
other
grantors
from
timeto
time
party
thereto
and
Wells
Fargo
Bank,
N.A.
2
nd

Qtr
2014
Form
10-Q
filed
8-11-14

10.18
*Form
of
Indemnification
Agreement
between
USEcology,
Inc.
and
each
of
the
Company's
Directors
andOfficers
Form
8-K
filed
11-12-2014

12.1
Ratio
of
Earnings
to
Fixed
Charges



21
List
of
Subsidiaries



23.1
Consent
of
Deloitte
and
Touche
LLP



31.1
Certifications
of
December
31,
2016
Form
10-K
byChief
Executive
Officer
dated
February
27,
2017



31.2
Certifications
of
December
31,
2016
Form
10-K
byChief
Financial
Officer
dated
February
27,
2017



32.1
Certifications
of
December
31,
2016
Form
10-K
byChief
Executive
Officer
dated
February
27,
2017



32.2
Certifications
of
December
31,
2016
Form
10-K
byChief
Financial
Officer
dated
February
27,
2017

Table
of
Contents115
Exhibit
No.
Description
Incorporated
by
Reference
from
Registrant's

101
The
following
materials
from
the
Annual
Report
onForm
10-K
of
US
Ecology,
Inc.
for
the
fiscal
yearended
December
31,
2016
formatted
in
ExtensibleBusiness
Reporting
Language
(XBRL):(i)
Consolidated
Balance
Sheets,
(ii)
ConsolidatedStatements
of
Operations,
(iii)
Consolidated
Statementsof
Comprehensive
Income,
(iv)
ConsolidatedStatements
of
Cash
Flows,
(v)
Consolidated
Statementsof
Stockholders'
Equity,
and
(vi)
Notes
to
theConsolidated
Financial
Statements

*Identifies
management
contracts
or
compensatory
plans
or
arrangements
required
to
be
filed
as
an
exhibit
hereto.QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
12.1
Ratio
of
Earnings
to
Fixed
Charges
(Unaudited)



For
the
Year
Ended
December
31,
$s
in
thousands
2016
2015
2014
2013
2012
Earnings
(as
defined):















Earnings
before
income
taxes
$55,301
$46,855
$61,050
$50,147
$41,718
Fixed
charges

17,517

23,556

10,732

856

900
Earnings
$72,818
$70,411
$71,782
$51,003
$42,618
Fixed
charges
(as
defined):















Interest
expense
$17,317
$23,370
$10,677
$828
$878
Estimated
interest
within
rental
expense

200

186

55

28

22
Fixed
charges
$17,517
$23,556
$10,732
$856
$900
Ratio
of
earnings
to
fixed
charges

4.2

3.0

6.7

59.6

47.3
QuickLinks
Exhibit
12.1
Ratio
of
Earnings
to
Fixed
Charges
(Unaudited)
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
21
List
of
SubsidiariesSubsidiary
Name
State
of
FormationAmerican
Ecology
Environmental
Services
Corporation
Texas
CorporationAmerican
Ecology
Recycle
Center,
Inc.

Delaware
CorporationStablex
Canada
Inc.

Canadian
Federal
CorporationUS
Ecology
Michigan,
Inc.

Michigan
CorporationUS
Ecology
Thermal
Services,
Inc.

Delaware
CorporationUS
Ecology
Idaho,
Inc.

Delaware
CorporationUS
Ecology
Illinois,
Inc.

California
CorporationUS
Ecology
Nevada,
Inc.

Delaware
CorporationUS
Ecology
Stablex
Holdings,
Inc.

Delaware
CorporationUS
Ecology
Canada
Holdings
Inc.

Canadian
Federal
CorporationEnvironmental
Services
Inc.

Ontario
CorporationUS
Ecology
Texas,
Inc.

Delaware
CorporationUS
Ecology
Washington,
Inc.

Delaware
CorporationUS
Ecology
Vernon,
Inc.

Deleware
CorporationEQ
Parent
Company,
Inc.

Delaware
CorporationEQ
Holdings,
Inc.

Delaware
CorporationEnvirite
Transportation,
LLC
Ohio
Limited
Liability
CompanyEnvirite
of
Pennsylvania,
Inc.

Delaware
CorporationEnvirite
of
Illinois,
Inc.

Delaware
CorporationEnvirite
of
Ohio,
Inc.

Delaware
CorporationEQ
Augusta,
Inc.

Michigan
CorporationEQ
Alabama,
Inc.

Michigan
CorporationEQ
Detroit,
Inc.

Michigan
CorporationEQ
Oklahoma,
Inc.

Michigan
CorporationEQ
Industrial
Services,
Inc.

Michigan
CorporationEQ
Florida,
Inc.

Michigan
CorporationEQ
The
Environmental
Quality
Company
Michigan
CorporationEQ
Mobile
Recycling,
Inc.

Michigan
CorporationEQ
Northeast,
Inc.

Massachusetts
CorporationEQ
Resource
Recovery,
Inc.

Michigan
CorporationMichigan
Disposal,
Inc.

Michigan
CorporationWayne
Disposal,
Inc.

Michigan
CorporationWayne
Energy
Recovery,
Inc.

Michigan
CorporationEQ
Metals
Recovery,
LLC
Ohio
Limited
Liability
CompanyVac-All
Service,
Inc.

Michigan
CorporationRTF
Romulus,
LLC
Michigan
Limited
Liability
CompanyEQ
de
Mexico,
Inc.

Mexican
CorporationQuickLinks
Exhibit
21
QuickLinks
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here
to
rapidly
navigate
through
this
documentExhibit
23.1
CONSENT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
We
consent
to
the
incorporation
by
reference
in
Registration
Statement
Nos.
333-157529,
333-68868,
333-93105,
333-140419,
333-69863,
and
333-207811
onForm
S-8,
Registration
Statement
No.
333-211807
on
Form
S-3,
and
Registration
Statement
No.
333-187003
on
Form
S-4,
of
our
report
dated
February
27,
2017,relating
to
the
consolidated
financial
statements
of
US
Ecology
Inc.
and
subsidiaries,
and
the
effectiveness
of
US
Ecology
Inc.'s
internal
control
over
financialreporting,
appearing
in
this
Annual
Report
on
Form
10-K
of
US
Ecology
Inc.
for
the
year
ended
December
31,
2016./s/ DELOITTE & TOUCHE LLPBoise,
Idaho
February
27,
2017QuickLinks
Exhibit
23.1
CONSENT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
31.1
I,
Jeffrey
R.
Feeler,
certify
that:1.I
have
reviewed
this
annual
report
on
Form
10-K
of
US
Ecology,
Inc.;
2.Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
thestatements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;
3.Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
the
financialcondition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;
4.The
registrant's
other
certifying
officer
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
ExchangeAct
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
Exchange
Act
Rules
13a-15(f)
and
15d-15(f))
for
theregistrant
and
have:
a)Designed
such
disclosure
controls
and
procedures,
or
caused
such
disclosure
controls
and
procedures
to
be
designed
under
our
supervision,
toensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
thoseentities,
particularly
during
the
period
in
which
this
report
is
being
prepared;
b)Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
oursupervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
externalpurposes
in
accordance
with
generally
accepted
accounting
principles;
c)Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
the
effectivenessof
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and
d)Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recent
fiscalquarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,the
registrant's
internal
control
over
financial
reporting;
and
5.The
registrant's
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
theregistrant's
auditors
and
the
audit
committee
of
the
registrant's
board
of
directors
(or
persons
performing
the
equivalent
functions):
a)All
significant
deficiencies
and
material
weaknesses
in
the
design
or
operation
of
internal
control
over
financial
reporting
which
are
reasonablylikely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
and
b)Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
controlover
financial
reporting.February
27,
2017/s/
JEFFREY
R.
FEELER
President and Chief Executive Officer

QuickLinks
Exhibit
31.1
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
31.2
I,
Eric
L.
Gerratt,
certify
that:1.I
have
reviewed
this
annual
report
on
Form
10-K
of
US
Ecology,
Inc.;
2.Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
thestatements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;
3.Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
the
financialcondition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;
4.The
registrant's
other
certifying
officer
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
ExchangeAct
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
Exchange
Act
Rules
13a-15(f)
and
15d-15(f))
for
theregistrant
and
have:
a)Designed
such
disclosure
controls
and
procedures,
or
caused
such
disclosure
controls
and
procedures
to
be
designed
under
our
supervision,
toensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
thoseentities,
particularly
during
the
period
in
which
this
report
is
being
prepared;
b)Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
oursupervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
externalpurposes
in
accordance
with
generally
accepted
accounting
principles;
c)Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
the
effectivenessof
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and
d)Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recent
fiscalquarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,the
registrant's
internal
control
over
financial
reporting;
and
5.The
registrant's
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
theregistrant's
auditors
and
the
audit
committee
of
the
registrant's
board
of
directors
(or
persons
performing
the
equivalent
functions):
a)All
significant
deficiencies
and
material
weaknesses
in
the
design
or
operation
of
internal
control
over
financial
reporting
which
are
reasonablylikely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
and
b)Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
controlover
financial
reporting.February
27,
2017/s/
ERIC
L.
GERRATT
Executive Vice President, Chief Financial Officer and Treasurer

QuickLinks
Exhibit
31.2
QuickLinks
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Click
here
to
rapidly
navigate
through
this
documentExhibit
32.1
Written
Statement
of
the
Chief
Executive
Officer
Pursuant
to
18
U.S.C.
§1350Solely
for
the
purposes
of
complying
with
18
U.S.C.
§1350,
I,
the
undersigned
Chief
Executive
Officer
of
US
Ecology,
Inc.,
(the
"Company"),
hereby
certify,
thatto
my
knowledge,
the
Annual
Report
on
Form
10-K
of
the
Company
for
the
period
ended
December
31,
2016
(the
"Report")
fully
complies
with
the
requirementsof
Section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934
and
that
information
contained
in
the
Report
fairly
presents,
in
all
material
respects,
the
financialcondition
and
results
of
operations
of
the
Company
as
of
the
dates
hereof
and
for
the
periods
expressed
in
this
Report.February
27,
2017/s/
JEFFREY
R.
FEELER
President and Chief Executive Officer

QuickLinks
Exhibit
32.1
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
32.2
Written
Statement
of
the
Chief
Financial
Officer
Pursuant
to
18
U.S.C.
§1350Solely
for
the
purposes
of
complying
with
18
U.S.C.
§1350,
I,
the
undersigned
Chief
Financial
Officer
of
US
Ecology,
Inc.,
(the
"Company"),
hereby
certify,
thatto
my
knowledge,
the
Annual
Report
on
Form
10-K
of
the
Company
for
the
period
ended
December
31,
2016
(the
"Report")
fully
complies
with
the
requirementsof
Section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934
and
that
information
contained
in
the
Report
fairly
presents,
in
all
material
respects,
the
financialcondition
and
results
of
operations
of
the
Company
as
of
the
dates
hereof
and
for
the
periods
expressed
in
this
Report.February
27,
2017/s/
ERIC
L.
GERRATT
Executive Vice President, Chief Financial Officer and Treasurer

QuickLinks
Exhibit
32.2