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| Segment Information |
7. SEGMENT INFORMATION
Our business consists of two reportable segments: Installation and Specialty Distribution. We operate primarily in the U.S. and to a lesser extent Canada.
Our Installation segment installs insulation and other building products. Installation sells primarily to the residential new construction market, with increasing activity in the commercial/industrial construction market, along with repair/remodel of residential housing. In addition to insulation, it installs other building products including glass and windows, rain gutters, garage doors, closet shelving, and fireplaces, among other items.
Our Specialty Distribution segment distributes building and mechanical insulation, insulation accessories and other building product materials for the residential and commercial/industrial end markets. In addition to insulation and accessories, it distributes rain gutters, closet shelving, and roofing materials, among other items. Distributed products are sold from distribution centers in various parts of the United States and Canada, primarily to contractors and dealers (including lumber yards) serving a wide variety of commercial/industrial markets.
Intercompany sales from the Specialty Distribution segment to the Installation segment are recorded by the Specialty Distribution segment with a profit margin and by our Installation segment at cost. This intercompany profit is eliminated in consolidation.
Our CODM is our Chief Executive Officer. Our CODM measures performance for our reportable segments based on segment net sales and operating profit. Our CODM uses these measures to evaluate resource allocation and other strategic initiatives (e.g., making acquisitions and internal investments). Segment performance measures are compared to budgeted and forecasted amounts periodically to assist in evaluating performance versus expectations and to inform future allocation and strategic decisions.
Key information is presented below by segment for our profit measures for the three months ended March 31, 2025 and 2024, in thousands:
(a) The significant expense categories align with the segment-level information that is regularly provided to our CODM. (b) Cost of sales is primarily composed of labor, material costs and overhead. Includes $13.5 million of one-time charges ($7.1 million for our Installation segment and $6.4 million for our Specialty Distribution segment) to optimize our branch footprint and align our cost structure with current demand levels during the three months ended March 31, 2025. These one-time expenses primarily relate to non-cash facility impairment and severance. (c) Selling, general and administrative expenses include allocation of corporate overhead, bad debt, bank fees, selling expenses, employee compensation, insurance, legal and consulting, office equipment & supplies, telecommunication & subscriptions, and travel & entertainment. Includes $1.9 million of one-time charges ($1.2 million for our Installation segment, $0.5 million for our Specialty Distribution segment and $0.2 million for our Branch Support Center) to align our cost structure with current demand levels during the three months ended March 31, 2025. These one-time expenses primarily relate to severance. (d) General corporate expense, net includes expenses for functions such as corporate human resources, finance, and legal, including salaries, benefits, and other related costs. (e) Other expense, net is presented on the accompanying condensed consolidated statement of operations and is primarily composed of interest expense and interest income.
Key information by segment is as follows for the three months ended March 31, 2025 and 2024, in thousands:
(a) Represents amounts held at Corporate not specifically attributed to or allocated to the segments. (b) Represents total by segment, inclusive of amounts presented within cost of sales and selling, general and administrative expenses, as applicable. (c) Property additions include assets acquired in business combinations in each respective year. |
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