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Information on Segments
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
INFORMATION ON SEGMENTS INFORMATION ON SEGMENTS
During the first quarter of 2022, our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), changed the manner in which he reviews financial information for purposes of assessing business performance, managing the business and allocating resources. In conjunction with this change, we realigned our segment structure resulting in our Company having three operating segments consisting of Installation, Distribution and Manufacturing.
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 recently acquired 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 which was previously combined with our Installation operating segment. 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 key metrics used to assess the performance of our operating segments are revenue and adjusted gross profit as these are the metrics used by our CODM to review results, assess performance and allocate resources. We define adjusted gross profit as revenue less cost of sales, excluding depreciation and amortization. We do not report total assets or related depreciation and amortization expenses by segment because our CODM does not use this information to assess segment performance or allocate resources.
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.
The following table represents our segment information for the three months ended June 30, 2022 and 2021 (in thousands):
Three months ended June 30, 2022Three months ended June 30, 2021
InstallationOtherEliminationsConsolidatedInstallationOtherEliminationsConsolidated
Revenue$637,998 $40,291 $(1,540)$676,749 $482,965 $5,623 $(490)$488,098 
Cost of sales (exclusive of depreciation and amortization shown separately below)419,812 30,392 (1,290)448,914 322,244 4,076 (386)325,934 
Adjusted gross profit218,186 9,899 (250)227,835 160,721 1,547 (104)162,164 
Depreciation and amortization11,126 10,278 
Gross profit, as reported216,709 151,886 
Selling29,371 22,631 
Administrative84,030 66,474 
Amortization11,261 9,178 
Operating income92,047 53,603 
Interest expense, net10,401 7,520 
Other expense (income)368 (92)
Income before income taxes$81,278 $46,175 
Three months ended June 30, 2022Three months ended June 30, 2021
InstallationOtherEliminationsConsolidatedInstallationOtherEliminationsConsolidated
Adjusted gross profit percentage34.2 %24.6 %16.2 %33.7 %33.3 %27.5 %21.2 %33.2 %

The following table represents our segment information for the six months ended June 30, 2022 and 2021 (in thousands):
Six months ended June 30, 2022Six months ended June 30, 2021
InstallationOtherEliminationsConsolidatedInstallationOtherEliminationsConsolidated
Revenue$1,199,629 $66,941 $(2,329)$1,264,241 $915,142 $10,877 $(855)$925,164 
Cost of sales (exclusive of depreciation and amortization shown separately below)805,504 49,765 (1,899)853,370 620,077 8,143 (669)627,551 
Adjusted gross profit394,125 17,176 (430)410,871 295,065 2,734 (186)297,613 
Depreciation and amortization21,759 20,300 
Gross profit, as reported389,112 277,313 
Selling54,563 43,489 
Administrative163,174 131,551 
Amortization22,358 17,574 
Operating income149,017 84,699 
Interest expense, net21,001 15,094 
Other expense (income)513 (11)
Income before income taxes$127,503 $69,616 
Six months ended June 30, 2022Six months ended June 30, 2021
InstallationOtherEliminationsConsolidatedInstallationOtherEliminationsConsolidated
Adjusted gross profit percentage32.9 %25.7 %18.5 %32.5 %32.2 %25.1 %21.8 %32.2 %
The prior period disclosures in the above table have been recast to conform to the current period segment presentation.