| Segment Information |
7. SEGMENT INFORMATION
Our reportable segments are as follows:
Installation principally includes the sale and installation of insulation and other building products. We sell primarily to the residential new construction market, but have seen increasing activity in both the commercial construction industry and repair/remodel of residential housing. In addition to insulation, our installed product lines include rain gutters, garage doors, fireplaces, fireproofing and firestopping products, shower enclosures, closet shelving, and other building products.
Distribution principally includes the distribution of insulation and other building products. Our distributed products include insulation, insulation accessories, rain gutters, and roofing, among others. 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 corporate operating executives 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:
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2016
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2015
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2014
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Insulation
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71
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%
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72
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%
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71
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%
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Rain gutters
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7
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7
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7
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Accessories
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5
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4
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4
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Afterpaint (shower enclosures, closet shelving, mirrors/glass, bath accessories, etc.)
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3
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4
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4
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Garage doors
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2
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3
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3
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Fireplaces
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2
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2
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2
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Roofing materials
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2
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2
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2
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Fireproofing and firestopping
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2
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2
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1
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Other
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6
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4
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6
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100
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%
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100
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%
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100
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%
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Information about us by segment is as follows, for the years ended December 31, in thousands:
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Net Sales
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Operating Profit (b)
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2016
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2015
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2014
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2016
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2015
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2014
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Our operations by segment were (a):
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Installation
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$
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1,150,168
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$
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1,057,553
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$
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963,351
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$
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97,140
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$
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55,232
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$
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23,970
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Distribution
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676,672
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646,441
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628,810
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59,654
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55,700
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52,334
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Intercompany eliminations and other adjustments (c)
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(83,990)
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(87,414)
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(80,084)
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(14,388)
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(4,796)
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(13,639)
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Total
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$
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1,742,850
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$
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1,616,580
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$
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1,512,077
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142,406
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106,136
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62,665
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General corporate expense, net (d)
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(20,802)
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(22,605)
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(21,948)
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Operating profit, as reported
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121,604
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83,531
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40,717
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Other expense, net
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(5,331)
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(9,416)
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(12,379)
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Income from continuing operations before income taxes
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$
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116,273
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$
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74,115
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$
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28,338
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Property Additions
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Depreciation and
Amortization
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Total Assets
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2016
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2015
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2014
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2016
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2015
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2014
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2016
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2015
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Our operations by segment were (a):
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Installation
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$
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7,584
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$
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9,802
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$
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9,270
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$
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8,149
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$
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8,371
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$
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22,564
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$
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934,499
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$
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927,303
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Distribution
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3,348
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3,123
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3,871
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3,604
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3,699
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3,515
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584,421
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574,601
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Corporate
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3,433
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1,302
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—
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258
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38
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—
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171,199
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140,345
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Total, as reported
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$
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14,365
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$
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14,227
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$
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13,141
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$
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12,011
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$
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12,108
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$
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26,079
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$
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1,690,119
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$
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1,642,249
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(a)
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All of our operations are located in the United States.
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(b)
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Segment operating profit for year ended December 31, 2016, 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). Segment operating profit for years ended December 31, 2015 and 2014 include an estimate of general corporate expense calculated based on a percentage of sales. For the years ended December 31, 2015 and 2014, the $7.2 million and $0.5 million differences, respectively, between estimated expense and actual corporate expense, are recorded in intercompany eliminations and other adjustments.
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(c)
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Intercompany eliminations include the elimination of intercompany profit of $14.4 million, $15.6 million, and $14.1 million for the years ended December 31, 2016, 2015, and 2014, respectively. Other adjustments primarily include differences between estimated and actual corporate costs allocated to the segments for years ended December 31, 2015 and 2014, as noted in footnote (b) above.
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(d)
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General corporate expense, net included expenses not specifically attributable to our segments for functions such as corporate human resources, finance, and legal, including salaries, benefits, and other related costs.
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