Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.10.0.1
Segment Information
12 Months Ended
Dec. 31, 2018
Segment Information  
Segment Information

7.  SEGMENT INFORMATION

 

Our reportable segments are Installation (TruTeam) and Distribution (Service Partners).

 

Our Installation segment installs insulation and other building products.  We sell primarily to the residential new construction market, with increasing activity in both the commercial construction industry and repair/remodel of residential housing.  In addition to insulation, we install other building products including rain gutters, glass and windows, after-paint products, fireproofing, garage doors and fireplaces. 

 

Our Distribution segment sells and distributes insulation and other building products including rain gutters, fireplaces, closet shelving, and roofing materials.  Distributed products are sold primarily to contractors and dealers (including lumber yards) from distribution centers in various parts of the United States.

 

Our segments are based on our operating units, for which financial information is regularly evaluated by our Chief Operating Decision Maker in determining resource allocation and assessing performance.  Accounting policies for the segments are generally the same as those for the Company.  The key performance metric we use to evaluate our businesses is segment operating profit.  Operating profit for the individual segments includes corporate costs which are allocated to the segments based on various metrics including sales and headcount. 

 

Intercompany sales from the Distribution segment to the Installation segment are recorded by the Distribution segment with a profit margin and by our Installation segment at cost.

 

The following table is a summary of the annual percentage of net sales by product category for the years ended December 31:

 

 

 

 

 

 

 

 

 

 

 

 

    

2018

 

    

2017

 

    

2016

 

Insulation

 

71

%

 

72

%

 

71

%

Rain gutters

 

6

 

 

7

 

 

7

 

Accessories

 

4

 

 

5

 

 

5

 

Afterpaint (shower enclosures, closet shelving, bath accessories, etc.)

 

4

 

 

3

 

 

2

 

Glass and windows

 

3

 

 

1

 

 

1

 

All other

 

12

 

 

12

 

 

14

 

 

 

100

%

 

100

%

 

100

%

 

Key information by segment is as follows, for the years ended December 31, in thousands:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

Operating Profit (b)

 

 

 

2018

 

 

2017

 

 

2016

 

 

2018

 

 

2017

 

 

2016

Our operations by segment were (a):

    

 

    

    

 

    

    

 

    

    

 

    

    

 

    

    

 

    

Installation (exclusive of significant legal settlement, shown separately below)

 

$

1,680,967

 

$

1,281,296

 

$

1,150,168

 

$

196,986

 

$

139,316

 

$

97,140

Significant legal settlement (Installation segment) (c)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(30,000)

 

 

 —

Distribution

 

 

820,309

 

 

719,759

 

 

676,672

 

 

78,739

 

 

68,733

 

 

59,654

Intercompany eliminations and other adjustments

 

 

(117,027)

 

 

(94,789)

 

 

(83,990)

 

 

(20,899)

 

 

(16,463)

 

 

(14,388)

Total

 

$

2,384,249

 

$

1,906,266

 

$

1,742,850

 

 

254,826

 

 

161,586

 

 

142,406

General corporate expense, net (d)

 

 

 

 

 

 

 

 

 

 

 

(45,873)

 

 

(24,722)

 

 

(20,802)

Operating profit, as reported

 

 

 

 

 

 

 

 

 

 

 

208,953

 

 

136,864

 

 

121,604

Other expense, net

 

 

 

 

 

 

 

 

 

 

 

(28,129)

 

 

(8,824)

 

 

(5,331)

Income before income taxes

 

 

 

 

 

 

 

 

 

 

$

180,824

 

$

128,040

 

$

116,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property Additions

 

Depreciation and
Amortization

 

Total Assets

 

 

2018

 

2017

 

2016

 

2018

 

2017

 

2016

 

2018

 

2017

Our operations by segment were (a):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Installation

 

$

69,497

 

$

21,956

 

$

7,584

 

$

31,661

 

$

12,208

 

$

8,149

 

$

1,618,032

 

$

1,061,418

Distribution

 

 

11,121

 

 

5,845

 

 

3,348

 

 

6,616

 

 

3,561

 

 

3,604

 

 

698,337

 

 

599,503

Corporate

 

 

6,796

 

 

1,620

 

 

3,433

 

 

1,142

 

 

684

 

 

258

 

 

138,162

 

 

88,628

Total, as reported

 

$

87,414

 

$

29,421

 

$

14,365

 

$

39,419

 

$

16,453

 

$

12,011

 

$

2,454,531

 

$

1,749,549


 

 

(a)

All of our operations are located in the U.S.

(b)

Segment operating profit includes an allocation of general corporate expenses attributable to the operating segments which is based on direct benefit or usage (such as salaries of corporate employees who directly support the segment). 

(c)

Significant legal settlement expense of $30 million incurred for the year ended December 31, 2017, related to the settlement agreement with Owens Corning.  For more information see Note 10 – Other Commitments and Contingencies.

(d)

General corporate expense, net includes expenses not specifically attributable to our segments for functions such as corporate human resources, finance, and legal, including salaries, benefits, and other related costs