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Information on Segments | 9 Months Ended
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Sep. 30, 2023
Segment Reporting [Abstract] |
Information on Segments | INFORMATION ON SEGMENTS Our segment structure includes 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 and therefore 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 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. 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 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 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 Chief Executive Officer, who is also our Chief Operating Decision Maker ("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, depreciation and amortization expenses included in reported cost of sales, operating expenses or other expense, net by segment because our CODM does not use this information to assess segment performance or allocate resources. The following tables represent our segment information for the three and nine months ended September 30, 2023 and 2022 (in thousands):
| Three months ended September 30, 2023 |  | Nine months ended September 30, 2023
| Installation |  | Other |  | Eliminations |  | Consolidated |  | Installation |  | Other |  | Eliminations |  | Consolidated
Revenue | $ | 661,191 |  | $ | 47,435 |  | $ | (2,161) |  | $ | 706,465 |  | $ | 1,935,799 |  | $ | 128,440 |  | $ | (6,365) |  | $ | 2,057,874
Cost of sales (1) | 419,479 |  | 33,942 |  | (1,591) |  | 451,830 |  | 1,248,524 |  | 92,771 |  | (4,940) |  | 1,336,355
Segment gross profit | $ | 241,712 |  | $ | 13,493 |  | $ | (570) |  | $ | 254,635 |  | $ | 687,275 |  | $ | 35,669 |  | $ | (1,425) |  | $ | 721,519
Segment gross profit percentage | 36.6 | % |  | 28.4 | % |  | 26.4 | % |  | 36.0 | % |  | 35.5 | % |  | 27.8 | % |  | 22.4 | % |  | 35.1 | %
| Three months ended September 30, 2022 |  | Nine months ended September 30, 2022
| Installation |  | Other |  | Eliminations |  | Consolidated |  | Installation |  | Other |  | Eliminations |  | Consolidated
Revenue | $ | 672,916 |  | $ | 47,748 |  | $ | (1,550) |  | $ | 719,114 |  | $ | 1,872,544 |  | $ | 114,690 |  | $ | (3,879) |  | $ | 1,983,355
Cost of sales (1) | 450,017 |  | 37,659 |  | (1,116) |  | 486,560 |  | 1,255,521 |  | 87,425 |  | (3,015) |  | 1,339,931
Segment gross profit | $ | 222,899 |  | $ | 10,089 |  | $ | (434) |  | $ | 232,554 |  | $ | 617,023 |  | $ | 27,265 |  | $ | (864) |  | $ | 643,424
Segment gross profit percentage | 33.1 | % |  | 21.1 | % |  | 28.0 | % |  | 32.3 | % |  | 33.0 | % |  | 23.8 | % |  | 22.3 | % |  | 32.4 | %
(1)Cost of sales included in segment gross profit is exclusive of depreciation and amortization for the three and nine months ended September 30, 2023 and 2022. The reconciliation between consolidated segment gross profit for each period as shown in the tables above to consolidated income before income taxes is as follows (in thousands):
| Three months ended September 30, |  | Nine months ended September 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Segment gross profit - consolidated | $ | 254,635 |  |  | $ | 232,554 |  |  | $ | 721,519 |  |  | $ | 643,424 |
Depreciation and amortization (1) | 12,541 |  |  | 11,277 |  |  | 36,528 |  |  | 33,035 |
Gross profit, as reported | 242,094 |  |  | 221,277 |  |  | 684,991 |  |  | 610,389 |
Operating expenses | 139,786 |  |  | 127,366 |  |  | 413,474 |  |  | 367,461 |
Operating income | 102,308 |  |  | 93,911 |  |  | 271,517 |  |  | 242,928 |
Other expense, net | 9,513 |  |  | 10,853 |  |  | 28,672 |  |  | 32,367 |
Income before income taxes | $ | 92,795 |  |  | $ | 83,058 |  |  | $ | 242,845 |  |  | $ | 210,561 |
(1)Depreciation and amortization is excluded from segment gross profit for the three and nine months ended September 30, 2023 and 2022.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 22 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-22 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-15 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 31 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-31 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-42 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 40 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-40 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//280/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 26 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-26 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 34 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-34 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 41 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-41 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 + Details
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