OPERATING SEGMENTS

Operating segments are defined as components of an enterprise that engage in business activities and by which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker to make decisions about how to allocate resources to the segment and assess the performance of the segment. On February 22, 2018, the Company announced changes to NCI’s reportable business segments, effective January 28, 2018 for the first quarter of fiscal 2018, to align with changes in how the Company manages its business, reviews operating performance and allocates resources. We have revised our segment reporting to represent how we now manage our business, restating prior periods to conform to the current segment presentation.

We have four operating segments: Engineered Building Systems; Metal Components; Insulated Metal Panels; and Metal Coil Coating. All operating segments operate primarily in the nonresidential construction market. Sales and earnings are influenced by general economic conditions, the level of nonresidential construction activity, metal roof repair and retrofit demand and the availability and terms of financing available for construction. Products of our operating segments use similar basic raw materials enabling us to leverage our supply chain. The Metal Coil Coating segment consists of cleaning, treating, painting and slitting continuous steel coils before the steel is fabricated for use by construction and industrial users. The Metal Components segment products include metal roof and wall panels, doors, metal partitions, metal trim, and other related accessories. The Insulated Metal Panels segment produces panels consisting of rigid foam encased between two sheets of coated metal in a variety of modules, lengths and reveal combinations which are used in architectural, commercial, industrial and cold storage market applications. The Engineered Building Systems segment manufactures custom designed and engineered products such as structural frames, Long Bay® Systems, metal roofing and wall systems, and the related value-added engineering and drafting, to provide customers a complete building envelope solution. The operating segments follow the same accounting policies used for our consolidated financial statements.

We evaluate a segment’s performance based primarily upon operating income before corporate expenses. Intersegment sales are recorded based on standard material costs plus a standard markup to cover labor and overhead and consist of (i) hot-rolled, light gauge painted and slit material and other services provided by the Metal Coil Coating segment to the Engineered Building Systems, Metal Components and Insulated Metal Panels segments; (ii) building components provided by the Metal Components and Insulated Metal Panels segment to the Engineered Building Systems segment; and (iii) structural framing provided by the Engineered Building Systems segment to the Metal Components segment.

Corporate assets consist primarily of cash, but also include deferred taxes and property, plant and equipment associated with our headquarters in Houston, Texas. These items (and income and expenses related to these items) are not allocated to the operating segments. Corporate unallocated expenses include share-based compensation expenses, and executive, legal, finance, tax, treasury, human resources, information technology, strategic sourcing, and corporate travel expenses. Additional unallocated amounts primarily include interest income, interest expense and other (expense) income.

The following table represents summary financial data attributable to these operating segments for the periods indicated (in thousands):



	Fiscal Three Months Ended						Fiscal Six Months Ended
	April 29, 2018			April 30, 2017			April 29, 2018			April 30, 2017
Total sales:
Engineered Building Systems	$	167,240		$	162,624		$	324,204		$	313,887
Metal Components	168,456			154,895			315,288			289,068
Insulated Metal Panels	113,413			102,937			224,207			198,132
Metal Coil Coating	95,190			86,729			183,533			175,069
Intersegment sales	(87,230		)	(86,721		)	(168,814		)	(163,989		)
Total sales	$	457,069		$	420,464		$	878,418		$	812,167
External sales:
Engineered Building Systems	$	157,136		$	154,456		$	305,424		$	299,477
Metal Components	147,661			133,290			275,189			248,847
Insulated Metal Panels	99,792			86,773			$	197,305		169,214
Metal Coil Coating	52,480			45,945			100,500			94,629
Total sales	$	457,069		$	420,464		$	878,418		$	812,167
Operating income (loss):
Engineered Building Systems	$	9,271		$	6,894		$	17,534		$	13,397
Metal Components	22,082			19,997			39,171			32,373
Insulated Metal Panels	1,540			19,377			$	8,611		21,569
Metal Coil Coating	7,129			6,227			12,505			12,933
Corporate	(21,066		)	(20,023		)	(45,967		)	(37,914		)
Total operating income	$	18,956		$	32,472		$	31,854		$	42,358
Unallocated other expense, net	(26,722		)	(6,892		)	(33,253		)	(13,463		)
Income before income taxes	$	(7,766	)	$	25,580		$	(1,399	)	$	28,895



	April 29, 2018		October 29, 2017
Total assets:
Engineered Building Systems	$	205,839	$	195,426
Metal Components	192,958		186,369
Insulated Metal Panels	368,363		380,308
Metal Coil Coating	176,837		175,046
Corporate	62,610		93,963
Total assets	$	1,006,607	$	1,031,112