11.

Segment Information

The Company follows the accounting guidance that requires the utilization of a “management approach” to define and report the financial results of operating segments. The management approach defines operating segments along the lines used by the Company

’s chief operating decision maker (CODM) to assess performance and make operating and resource allocation decisions. Our CODM evaluates performance and allocates resources based primarily on operating income. Our operating segments are based primarily on internal management reporting.

The Company operates in

three

reportable segments; carbon flat products, specialty metals flat products, and tubular and pipe products.

Certain of the flat products segments’ assets and resources are shared by the carbon and specialty metals segments and both segments’ products are stored in the shared facilities and, in some locations, processed on shared equipment. As such, total assets and capital expenditures are reported in the aggregate for the flat products segments. Due to the shared assets and resources, certain of the flat products segment expenses are allocated between the carbon flat products segment and the specialty metals flat products segment based upon an established allocation methodology. Through its carbon flat products segment, the Company sells and distributes large volumes of processed carbon and coated flat-rolled sheet, coil and plate products. Through its specialty metals flat products segment, the Company sells and distributes processed aluminum and stainless flat-rolled sheet and coil products, flat bar products and fabricated parts. Through its tubular and pipe products segment, the Company distributes metal tubing, pipe, bar, valve and fittings and fabricates pressure parts supplied to various industrial markets.

Corporate expenses are reported as a separate line item for segment reporting purposes. Corporate expenses include the unallocated expenses related to managing the entire Company (i.e., all

three

segments), including compensation for certain personnel, expenses related to being a publicly traded entity such as board of directors

’ expenses, audit expenses, and various other professional fees.

The following table provides financial information by segment and reconciles the Company

’s operating income by segment to the consolidated income before income taxes for the

three

and

nine

months ended

September 30, 2017

and

2016.

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
(in thousands)	2017			2016			2017			2016
Net sales
Carbon flat products	$	215,843		$	169,372		$	669,817		$	503,928
Specialty metals flat products		57,554			49,539			173,789			144,898
Tubular and pipe products		58,045			49,344			178,924			151,386
Total net sales	$	331,442		$	268,255		$	1,022,530		$	800,212

Depreciation and amortization
Carbon flat products	$	2,493		$	2,795		$	8,287		$	8,737
Specialty metals flat products		185			203			609			586
Tubular and pipe products		1,403			1,372			4,211			4,499
Corporate		25			25			76			76
Total depreciation and amortization	$	4,106		$	4,395		$	13,183		$	13,898

Operating income (loss)
Carbon flat products	$	3,698		$	(3,613	)	$	18,312		$	(122	)
Specialty metals flat products		2,074			3,003			8,918			7,326
Tubular and pipe products		1,608			2,773			6,439			7,149
Corporate expenses		(2,094	)		(2,136	)		(7,699	)		(5,952	)
Total operating income	$	5,286		$	27		$	25,970		$	8,401
Other income (loss), net		(22	)		21			(76	)		(42	)
Income before interest and income taxes		5,264			48			25,894			8,359
Interest and other expense on debt		1,966			1,336			5,380			3,895
Income (loss) before income taxes	$	3,298		$	(1,288	)	$	20,514		$	4,464

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
(in thousands)	2017		2016		2017		2016
Capital expenditures
Flat products segments	$	1,110	$	1,145	$	4,292	$	3,930
Tubular and pipe products		891		593		2,178		1,405
Total capital expenditures	$	2,001	$	1,738	$	6,470	$	5,335

	As of
	September 30,		December 31,
(in thousands)	2017		2016
Total assets
Flat products segments	$	427,786	$	363,626
Tubular and pipe products		196,834		192,088
Corporate		278		354
Total assets	$	624,898	$	556,068

There were

material revenue transactions between the

carbon flat products, specialty metals products, and tubular and pipe products segments.

The Company sells certain products internationally, primarily in Canada, Mexico and

Central and South America. International sales are immaterial to the consolidated financial results and to the individual segments’ results.