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Information on Segments
 9 Months Ended
Sep. 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 segment gross profit as these are the metrics used by our CODM to review results, assess performance and allocate resources. We define segment 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 September 30, 2022 and 2021 (in thousands):
Three months ended September 30, 2022Three months ended September 30, 2021
InstallationOtherEliminationsConsolidatedInstallationOtherEliminationsConsolidated
Revenue$672,916 $47,748 $(1,550)$719,114 $504,161 $6,305 $(703)$509,763 
Cost of sales (exclusive of depreciation and amortization shown separately below)450,017 37,659 (1,116)486,560 339,308 4,837 (539)343,606 
Segment gross profit222,899 10,089 (434)232,554 164,853 1,468 (164)166,157 
Depreciation and amortization11,277 10,273 
Gross profit, as reported221,277 155,884 
Selling31,651 24,188 
Administrative84,345 68,056 
Amortization11,370 9,224 
Operating income93,911 54,416 
Interest expense, net10,668 7,687 
Other expense (income)185 (483)
Income before income taxes$83,058 $47,212 
Three months ended September 30, 2022Three months ended September 30, 2021
InstallationOtherEliminationsConsolidatedInstallationOtherEliminationsConsolidated
Segment gross profit percentage33.1 %21.1 %28.0 %32.3 %32.7 %23.3 %23.3 %32.6 %

The following table represents our segment information for the nine months ended September 30, 2022 and 2021 (in thousands):
Nine months ended September 30, 2022Nine months ended September 30, 2021
InstallationOtherEliminationsConsolidatedInstallationOtherEliminationsConsolidated
Revenue$1,872,544 $114,690 $(3,879)$1,983,355 $1,419,302 $17,182 $(1,557)$1,434,927 
Cost of sales (exclusive of depreciation and amortization shown separately below)1,255,521 87,425 (3,015)1,339,931 959,384 12,980 (1,207)971,157 
Segment gross profit617,023 27,265 (864)643,424 459,918 4,202 (350)463,770 
Depreciation and amortization33,035 30,573 
Gross profit, as reported610,389 433,197 
Selling86,214 67,677 
Administrative247,519 199,607 
Amortization33,728 26,798 
Operating income242,928 139,115 
Interest expense, net31,669 22,781 
Other expense (income)698 (494)
Income before income taxes$210,561 $116,828 
Nine months ended September 30, 2022Nine months ended September 30, 2021
InstallationOtherEliminationsConsolidatedInstallationOtherEliminationsConsolidated
Segment gross profit percentage33.0 %23.8 %22.3 %32.4 %32.4 %24.5 %22.5 %32.3 %
The prior period disclosures in the above table have been recast to conform to the current period segment presentation.