Segments

Segment information is presented in accordance with Accounting Standards Codification ("ASC") 280, Segment Reporting, which establishes standards for reporting information about operating segments. It also establishes standards for related disclosures about customers, products and geographic areas. Operating segments are defined as components of an enterprise that engage in business activities that earn revenues, incur expenses and prepare separate financial information that is evaluated regularly by the Company’s CODM in order to allocate resources and assess performance. Resources are allocated and performance is assessed by the CODM.

Based on the provisions of ASC 280, the Company has defined its operating segments by considering management structure and product offerings. This evaluation resulted in the following reportable segments:

•

Specialty Building Products—SBP distributes wallboard and accessories, metal framing, suspended ceiling systems and other products. Other products include stucco and exterior insulation and finish systems, as well as complementary offerings, such as tools, safety accessories and fasteners. The primary end markets served are new non-residential, new residential and non-residential repair and remodel construction markets.


•	Mechanical Insulation—MI distributes and fabricates commercial and industrial insulation for pipes and mechanical systems and the primary end markets served are new non-residential construction, non-residential repair and remodel construction and industrial markets.

In addition to the two reportable segments, the Company’s consolidated results include corporate activities and depreciation and amortization.

For purposes of evaluation under these segment reporting principles, the CODM assesses the Company’s ongoing performance based on the periodic review of net sales and gross profit. The Company has not disclosed asset information by segment as its CODM does not use such information for purposes of allocating resources and assessing performance.

The following tables present net sales and gross profit for each reportable segment (in thousands):



	Three Months Ended June 30,
	2017					2016
	Net Sales			Gross Profit		Net Sales			Gross Profit
SBP	$	460,086		$	130,729	$	270,147		$	79,335
MI	69,144			18,803		—			—
Consolidated	$	529,230		$	149,532	$	270,147		$	79,335
Total gross profit	$	149,532				$	79,335
Total operating expenses	(132,629		)			(76,306		)
Interest expense	(14,876		)			(8,478		)
Other income, net	95					4
Income (loss) before income taxes	$	2,122				$	(5,445	)



	Six Months Ended June 30,
	2017					2016
	Net Sales			Gross Profit		Net Sales			Gross Profit
SBP	$	878,549		$	253,155	$	514,752		$	151,580
MI	130,138			36,288		—			—
Consolidated	$	1,008,687		$	289,443	$	514,752		$	151,580
Total gross profit	$	289,443				$	151,580
Total operating expenses	(264,087		)			(142,690		)
Interest expense	(30,125		)			(16,514		)
Other income, net	13,384					14
Income (loss) before income taxes	$	8,615				$	(7,610	)

Revenues are attributed to each country based on the location in which sales originate and in which assets are located. The following table provides information about the Company by geographic areas (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
United States	$	470,079	$	270,147	$	897,020	$	514,752
Canada	59,151		—		111,667		—
Total	$	529,230	$	270,147	$	1,008,687	$	514,752

The Company’s net sales by segment and major product line, and segment gross profit and gross margin, are as follows (in thousands):



	Three Months Ended June 30,										Change
	2017					2016					$			%
SBP Segment
Wallboard	$	181,062		39.4	%	$	117,507		43.5	%	$	63,555		54.1	%
Suspended ceiling systems	83,271			18.1	%	29,679			11.0	%	53,592			180.6	%
Metal framing	72,404			15.7	%	48,485			17.9	%	23,919			49.3	%
Other	123,349			26.8	%	74,476			27.6	%	48,873			65.6	%
Total SBP net sales	$	460,086		100.0	%	$	270,147		100.0	%	$	189,939		70.3	%

MI Segment
Commercial and industrial insulation	$	49,730		71.9	%	$	—		—		$	49,730		—	%
Non-insulation products	19,414			28.1	%	—			—		19,414			—	%
Total MI net sales	$	69,144		100.0	%	$	—		—		$	69,144		—	%
Total net sales	$	529,230				$	270,147

Gross profit - SBP	$	130,729				$	79,335				$	51,394		64.8	%
Gross profit - MI	18,803					—					18,803			—	%
Total gross profit	$	149,532				$	79,335				$	70,197		88.5	%

Gross margin - SBP	28.4		%			29.4		%			(1.0		)%
Gross margin - MI	27.2		%			—		%			—		%
Total gross margin	28.3		%			29.4		%			(1.1		)%



	Six Months Ended June 30,										Change
	2017					2016					$			%
SBP Segment
Wallboard	$	349,576		39.8	%	$	226,441		44.0	%	$	123,135		54.4	%
Suspended ceiling systems	155,984			17.8	%	55,835			10.8	%	100,149			179.4	%
Metal framing	141,065			16.1	%	91,465			17.8	%	49,600			54.2	%
Other	231,924			26.3	%	141,011			27.4	%	90,913			64.5	%
Total SBP net sales	$	878,549		100.0	%	$	514,752		100.0	%	$	363,797		70.7	%

MI Segment
Commercial and industrial insulation	$	95,041		73.0	%	$	—		—		$	95,041		—	%
Non-insulation products	35,097			27.0	%	—			—		35,097			—	%
Total MI net sales	$	130,138		100.0	%	$	—		—		$	130,138		—	%
Total net sales	$	1,008,687				$	514,752

Gross profit - SBP	$	253,155				$	151,580				$	101,575		67.0	%
Gross profit - MI	36,288					—					36,288			—	%
Total gross profit	$	289,443				$	151,580				$	137,863		91.0	%

Gross margin - SBP	28.8		%			29.4		%			(0.6		)%
Gross margin - MI	27.9		%			—		%			—		%
Total gross margin	28.7		%			29.4		%			(0.7		)%