The Company has seven operating segments based on geographic operations that it aggregates into one reportable segment. The Company defines operating segments as components of the organization for which discrete financial information is available and operating results are evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) in order to assess performance and allocate resources. The Company’s CODM is its Chief Executive Officer. The Company determined it has seven operating segments based on the Company’s seven geographic divisions, which are Central, Midwest, Northeast, Southern, Southeast, Western and Canada. The Company aggregates its operating segments into a single reportable segment based on similarities between the operating segments’ economic characteristics, nature of products sold, production process, type of customer and methods of distribution. The accounting policies of the operating segments are the same as those described in the summary of significant policies. In addition to the Company’s reportable segment, the Company’s consolidated results include both corporate activities and certain other activities. Corporate includes the Company’s corporate office building and support services provided to its subsidiaries. Other includes Tool Source Warehouse, Inc., which functions primarily as an internal distributor of tools.

The CODM assesses the Company’s performance based on the periodic review of net sales, Adjusted EBITDA and certain other measures for each of the operating segments. Adjusted EBITDA is not a recognized financial measure under GAAP. However, we believe it assists investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA is helpful in highlighting trends in our operating results, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments.

In addition, we utilize Adjusted EBITDA in certain calculations under the ABL Facility and the First Lien Facility. The ABL Facility and the First Lien Facility permit us to make certain additional adjustments in calculating Consolidated EBITDA, such as projected net cost savings, which are not reflected in the Adjusted EBITDA data presented in this Quarterly Report on Form 10-Q.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations -- Non-GAAP Financial Measures” for a further discussion of this non-GAAP measure.

The following tables present segment results for the three months ended July 31, 2019 and 2018:

The following table presents a reconciliation of Adjusted EBITDA to net income for the three months ended July 31, 2019 and 2018:

(a)	Represents non-cash expense related to stock appreciation rights agreements.

(b)	Represents non-cash compensation expense related to changes in the fair values of noncontrolling interests.

(c)	Represents non-cash equity-based compensation expense related to the issuance of share-based awards.

(d)	Represents severance expenses and other costs permitted in calculations under the ABL Facility and the First Lien Facility.

(e)	Represents costs related to acquisitions paid to third parties.

(f)	Represents the non-cash cost of sales impact of purchase accounting adjustments to increase inventory to its estimated fair value.

(g)	Represents the mark-to-market adjustments for derivative financial instruments.

(h)	Represents costs paid to third-party advisors related to debt refinancing activities.

During the three months ended July 31, 2019, the Company recorded operating lease ROU assets as a result of the adoption of the new lease guidance. The Company’s geographic divisions, other and corporate segments, recorded $113.3 million, $0.3 million and $5.2 million, respectively, of operating lease ROU assets as of the transition date.

Revenues by Product

The following table presents the Company’s net sales to external customers by main product lines for the three months ended July 31, 2019 and 2018:


	Three Months Ended
	July 31,
	2019		2018
	(in thousands)
Wallboard	$	341,595	$	317,735
Ceilings		129,110		115,855
Steel framing		131,829		129,112
Other products		244,642		215,442
Total net sales	$	847,176	$	778,144

Geographic Information

The following table presents the Company’s net sales by major geographic area for the three months ended July 31, 2019 and 2018:


	Three Months Ended
	July 31,
	2019		2018
	(in thousands)
United States	$	731,343	$	690,731
Canada		115,833		87,413
Total net sales	$	847,176	$	778,144

Net sales for Canada for the three months ended July 31, 2019 includes three months of net sales compared to two months for the three months ended July 31, 2018 due to our acquisition of Titan on June 1, 2018. The average exchange rate for translating Canada net sales from Canadian dollars to U.S. dollars was 0.7518 for the three months ended July 31, 2019 and 0.7652 for the two months ended July 31, 2018.

The following table presents the Company’s property and equipment, net, by major geographic area as of July 31, 2019 and April 30, 2019:


	July 31,		April 30,
	2019		2019
	(in thousands)
United States	$	255,037	$	249,857
Canada		32,498		32,492
Total property and equipment, net	$	287,535	$	282,349