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Information on Segments
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
INFORMATION ON SEGMENTS INFORMATION ON SEGMENTS
Our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), reviews financial information of our three operating segments consisting of Installation, Distribution and Manufacturing for the purpose of assessing business performance, managing the business and allocating resources.
Our Installation operating segment represents the majority of our net revenue and gross profit and forms our one reportable segment. This operating segment represents the service-based installation of insulation and complementary building products in the residential new construction, repair and remodel and commercial construction end markets from our national network of branch locations. These branch locations have similar economic and operating characteristics including the nature of products and services offered, operating procedures and risks, customer bases, employee incentives, material procurement and shared corporate resources which led us to conclude that they combine to form one operating segment.
The Other category reported below reflects the operations of our two remaining operating segments, Distribution and Manufacturing, which do not meet the quantitative thresholds for separate reporting. Our Distribution operating segment
includes our distribution businesses that sell insulation, gutters and accessories primarily to installers of these products who operate in multiple end markets. Our Manufacturing operating segment consists of our cellulose insulation manufacturing operation. In addition to sales of cellulose insulation, revenues from this operating segment consist of sales of asphalt and industrial fibers to distributors and installers of these products.
The Installation reportable segment includes substantially all of our net revenue from services while net revenue included in the Other category includes substantially all of our net revenue from sales of products. The intercompany sales from the Other category to the Installation reportable segment include a profit margin while our Installation segment records these transactions at cost. These transactions are shown in the Eliminations column in the tables below.
The key metrics used by our CODM to assess performance, review results and allocate resources of our operating segments are revenue and segment gross profit. We define segment gross profit as revenue less cost of sales, excluding depreciation and amortization. We do not report total assets, depreciation and amortization expenses included in reported cost of sales, operating expenses or other expense, net by segment because our CODM does not regularly receive or use this information. The following tables represent our segment information for the years ended December 31, 2023, 2022 and 2021 (in millions):
Year ended December 31, 2023
InstallationOtherEliminationsConsolidated
Revenue$2,605.6 $182.0 $(9.0)$2,778.6 
Cost of sales (1)
1,674.7 130.7 (6.7)1,798.7 
Segment gross profit$930.9 $51.3 $(2.3)$979.9 
Segment gross profit percentage35.7 %28.2 %25.6 %35.3 %
Year ended December 31, 2022
InstallationOtherEliminationsConsolidated
Revenue$2,513.6 $162.4 $(6.2)$2,669.8 
Cost of sales (1)
1,678.8 123.7 (4.9)1,797.6 
Segment gross profit$834.8 $38.7 $(1.3)$872.2 
Segment gross profit percentage33.2 %23.8 %21.5 %32.7 %
Year ended December 31, 2021
InstallationOtherEliminationsConsolidated
Revenue$1,941.5 $29.3 $(2.1)$1,968.7 
Cost of sales (1)
1,317.7 22.2 (1.7)1,338.2 
Segment gross profit$623.8 $7.1 $(0.4)$630.5 
Segment gross profit percentage32.1 %24.5 %23.6 %32.0 %
(1)Cost of sales included in segment gross profit is exclusive of depreciation and amortization for the years ended December 31, 2023, 2022 and 2021.
The reconciliation between consolidated segment gross profit for each period as shown in the tables above to consolidated income before income taxes is as follows (in millions):
Years ended December 31,
202320222021
Segment gross profit - Consolidated$979.9 $872.2 $630.5 
Depreciation and amortization (1)
49.2 44.4 41.0 
Gross profit, as reported930.7 827.8 589.5 
Operating expenses561.6 482.4 401.6 
Operating income369.1 345.4 187.9 
Other expense, net36.0 42.1 32.4 
Income before income taxes$333.1 $303.3 $155.5 
(1)Cost of sales included in segment gross profit is exclusive of depreciation and amortization for the years ended December 31, 2023, 2022 and 2021.