Information on Business Segments

12 Months Ended

Dec. 31, 2019

20. Information on Business Segments

We report our operating segments based on how operating results are regularly reviewed by our chief operating decision maker for making decisions about resource allocations to segments and assessing performance. The Company’s operating segments and types of products from which each segment derives revenues are described below.

The Cabinets segment includes custom, semi-custom and stock cabinetry for the kitchen, bath and other parts of the home under brand names including Aristokraft, Diamond, Mid-Continent, Kitchen Craft, Homecrest, Omega, StarMark, Ultracraft, Kemper, Schrock, Decora and Mantra. In addition, cabinets are distributed under the Thomasville Cabinetry brand names. The Plumbing segment manufactures or assembles and sells faucets, bath furnishings, accessories and kitchen sinks and waste disposals predominantly under the Moen, Riobel, ROHL, Victoria+Albert, Perrin & Rowe and Shaws brands. The Doors & Security segment includes residential fiberglass and steel entry door systems under the Therma-Tru brand name, urethane millwork product lines under the Fypon brand name, locks, safety and security devices and electronic security products under the Master Lock and American Lock brand names, fire resistant safes, security containers and commercial cabinets under the SentrySafe brand name and composite decking and railing under the Fiberon brand name. Corporate expenses consist of headquarters administrative expenses and defined benefit plans costs, primarily interest costs and expected return on plan assets, as well as actuarial gains and losses arising from the periodic remeasurement of our liabilities. Corporate assets consist primarily of cash.

The Company’s subsidiaries operate principally in the United States, Canada, Mexico, China and Western Europe.

(In millions)	2019		2018		2017
Net sales:
Cabinets	$	2,388.5	$	2,418.6	$	2,467.1
Plumbing		2,027.2		1,883.3		1,720.8
Doors & Security		1,348.9		1,183.2		1,095.4
Net sales	$	5,764.6	$	5,485.1	$	5,283.3

Net sales to two of the Company’s customers, The Home Depot, Inc. (“The Home Depot”) and Lowe’s Companies, Inc. (“Lowe’s”) each accounted for greater than 10% of the Company’s net sales in 2019, 2018 and 2017. All segments sell to both The Home Depot and Lowe’s. Net sales to The Home Depot were 14%, 13% and 13% of net sales in 2019, 2018 and 2017, respectively. Net sales to Lowe’s were 14%, 14% and 14% of net sales in 2019, 2018 and 2017, respectively.

(In millions)	2019			2018			2017
Operating income:
Cabinets	$	178.3		$	143.5		$	267.2
Plumbing		427.6			375.3			358.5
Doors & Security		172.3			155.6			146.9
Less: Corporate expenses^(a)		(79.7	)		(79.2	)		(90.1	)
Operating income	$	698.5		$	595.2		$	682.5

(a) Below is a table detailing Corporate expenses:

General and administrative expense	$	(79.7	)	$	(79.2	)	$	(85.0	)
Long-lived asset impairment		—			—			(5.1	)
Total Corporate expenses	$	(79.7	)	$	(79.2	)	$	(90.1	)

(In millions)	2019			2018			2017
Total assets:
Cabinets	$	2,355.7		$	2,318.7		$	2,416.3
Plumbing		2,110.8			1,943.1			1,854.1
Doors & Security		1,596.6			1,526.0			1,032.2
Corporate		228.2			176.8			208.8
Total assets	$	6,291.3		$	5,964.6		$	5,511.4
Depreciation expense:
Cabinets	$	44.3		$	50.9		$	42.8
Plumbing		32.0			29.1			26.9
Doors & Security		32.3			30.2			25.9
Corporate		2.7			3.3			3.0
Depreciation expense	$	111.3		$	113.5		$	98.6
Amortization of intangible assets:
Cabinets	$	17.8		$	19.6		$	19.7
Plumbing		10.3			10.4			7.7
Doors & Security		13.3			6.1			4.3
Amortization of intangible assets	$	41.4		$	36.1		$	31.7
Capital expenditures:
Cabinets	$	30.9		$	73.8		$	63.4
Plumbing		35.7			41.4			43.5
Doors & Security		63.6			34.3			40.1
Corporate		1.6			0.6			18.0
Capital expenditures, gross		131.8			150.1			165.0
Less: proceeds from disposition of assets		(4.2	)		(6.1	)		(0.4	)
Capital expenditures, net	$	127.6		$	144.0		$	164.6
Net sales by geographic region ^(a):
United States	$	4,823.7		$	4,606.6		$	4,492.2
Canada		401.0			433.1			427.6
China		355.4			260.6			202.3
Other international		184.5			184.8			161.2
Net sales	$	5,764.6		$	5,485.1		$	5,283.3
Property, plant and equipment, net:
United States	$	641.9		$	628.9		$	562.3
Mexico		103.2			103.4			89.0
Canada		43.9			46.0			50.5
China		22.5			22.5			24.8
Other international		12.7			12.6			13.4
Property, plant and equipment, net	$	824.2		$	813.4		$	740.0

^(a)	Based on country of destination