Segments

Segment information is presented in accordance with 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—Specialty building products ("SBP") distributes wallboard, metal framing, suspended ceiling systems and complementary and other products. Other products include wallboard accessories, stucco and EIFS, as well as other 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—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, which include 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, gross profit, and certain other measures for each reportable segment (in thousands):



	Year Ended December 31,
	2017					2016
	Net Sales			Gross Profit		Net Sales			Gross Profit
SBP	$	1,790,114		$	522,189	$	1,293,496		$	371,715
MI	270,788			75,672		99,013			25,090
Consolidated	$	2,060,902		$	597,861	$	1,392,509		$	396,805
Total gross profit	$	597,861				$	396,805
Total operating expenses	(538,414		)			(380,225		)
Interest expense	(61,071		)			(52,511		)
Other income (expense), net	81,502					(7,172		)
Income (loss) before income taxes	$	79,878				$	(43,103	)

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):



	Year Ended December 31,
	2017		2016
United States	$	1,827,392	$	1,305,503
Canada	233,510		87,006
Total	$	2,060,902	$	1,392,509

For the year ended December 31, 2017 (Successor), the year ended December 31, 2016 (Successor), for the period from October 9, 2015 to December 31, 2015 (Successor) and for the period from January 1, 2015 to October 8, 2015 (Predecessor), no customer comprised more than 10% of net sales.

The following table sets forth property, plant and equipment, goodwill and intangibles by geographic area (in thousands):



	Year Ended December 31,
	2017		2016
Property, plant and equipment, net
United States	$	135,330	$	128,861
Canada	16,078		15,526
Total property, plant and equipment, net	$	151,408	$	144,387
Goodwill
United States	$	431,476	$	411,538
Canada	27,261		26,397
Total goodwill	$	458,737	$	437,935
Intangibles, net
United States	$	182,070	$	207,837
Canada	7,700		7,544
Total intangibles, net	$	189,770	$	215,381

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



	Year Ended December 31,										Change
	2017					2016					$			%
SBP Segment
Wallboard	$	701,467		39.2	%	$	525,044		40.6	%	$	176,423		33.6	%
Suspended ceiling systems	328,815			18.3	%	191,964			14.8	%	136,851			71.3	%
Metal framing	280,410			15.7	%	219,994			17.0	%	60,416			27.5	%
Complementary other products	479,422			26.8	%	356,494			27.6	%	122,928			34.5	%
Total SBP net sales	$	1,790,114		100.0	%	$	1,293,496		100.0	%	$	496,618		38.4	%

MI Segment
Commercial and industrial insulation	$	206,668		76.3	%	$	75,929		76.7	%	$	130,739		172.2	%
Non-insulation products	64,120			23.7	%	23,084			23.3	%	41,036			177.8	%
Total MI net sales	$	270,788		100.0	%	$	99,013		100.0	%	$	171,775		173.5	%
Total net sales	$	2,060,902				$	1,392,509				$	668,393		48.0	%

Gross profit - SBP	$	522,189				$	371,715				$	150,474		40.5	%
Gross profit - MI	75,672					25,090					50,582			201.6	%
Total gross profit	$	597,861				$	396,805				$	201,056		50.7	%

Gross margin - SBP	29.2		%			28.7		%			0.5		%
Gross margin - MI	27.9		%			25.3		%			2.6		%
Total gross margin	29.0		%			28.5		%			0.5		%