Segment Information | 19. SEGMENT INFORMATION The Company has two operating segments, which are also its reportable segments. The Company's operating segments are organized based upon primary market channels and, in most instances, the end use of products. Through its Electrical Raceway segment, the Company manufactures products that deploy, isolate and protect a structure's electrical circuitry from the original power source to the final outlet. These products, which include electrical conduit, armored cable, cable trays, mounting systems and fittings, are critical components of the electrical infrastructure for maintenance, repair and remodel markets. The vast majority of the Company's Electrical Raceway net sales are made to electrical distributors, who then serve electrical contractors and the Company considers both to be customers. Through the MP&S segment, the Company provides products and services that frame, support and secure component parts in a broad range of structures, equipment and systems in electrical, industrial and construction applications. The Company's principal products in this segment are metal framing products and in-line galvanized mechanical tube. Through its metal framing business, the Company designs, manufactures and installs metal strut and fittings used to assemble mounting structures that support heavy equipment and electrical content in buildings and other structures. Both segments use Adjusted EBITDA as the primary measure of profit and loss. Segment Adjusted EBITDA is the sum of income (loss) from operations before income taxes, adjusted to exclude unallocated expenses, depreciation and amortization, interest expense, net, gain (loss) on extinguishment of debt, restructuring and impairments, stock-based compensation, certain legal matters, consulting fees, transaction costs, gain on sale of joint venture and other items, such as inventory reserves and adjustments, release of indemnified uncertain tax positions, the impact of foreign exchange gains or losses and the impact from the Fence and Sprinkler exit. Prior to fiscal 2017, income (loss) before income taxes was also adjusted to exclude net periodic pension benefit cost and routine Special Products Claims . Beginning in fiscal 2017, these costs are no longer excluded. Prior fiscal years have not been revised for this change due to the relative insignificance and nature of these amounts. Intersegment transactions primarily consist of product sales at designated transfer prices on an arm's-length basis. Gross profit earned and reported within the segment is eliminated in the Company's consolidated results. Certain manufacturing and distribution expenses are allocated between the segments on a pro rata basis due to the shared nature of activities. Recorded amounts represent a proportional amount of the quantity of product produced for each segment. Certain assets, such as machinery and equipment and facilities, are not allocated to each segment despite serving both segments. These shared assets are reported within the MP&S segment. We allocate certain corporate operating expenses that directly benefit our operating segments, such as insurance and information technology, on a basis that reasonably approximates an estimate of the use of these services. Fiscal year ended September 30, 2018 September 30, 2017 September 30, 2016 (in thousands) External Net Sales Inter- segment Sales Adjusted EBITDA External Net Sales Inter- segment Sales Adjusted EBITDA External Net Sales Inter- segment Sales Adjusted EBITDA Electrical Raceway $ 1,365,067 $ 1,544 $ 255,260 $ 1,093,500 $ 1,283 $ 189,351 $ 1,066,711 $ 1,919 $ 181,939 MP&S 470,072 81 $ 51,339 410,434 98 $ 63,687 456,673 148 $ 81,199 Eliminations — (1,625 ) — (1,381 ) — (2,067 ) Consolidated operations $ 1,835,139 $ — $ 1,503,934 $ — $ 1,523,384 $ — Capital Expenditures Total Assets (in thousands) September 30, 2018 September 30, 2017 September 30, 2016 September 30, 2018 September 30, 2017 September 30, 2016 Electrical Raceway $ 16,389 $ 13,037 $ 9,161 $ 751,024 $ 757,775 $ 566,250 MP&S 14,267 8,212 6,130 291,164 306,229 343,002 Unallocated 7,845 3,873 1,539 281,872 151,088 255,316 Consolidated operations $ 38,501 $ 25,122 $ 16,830 $ 1,324,060 $ 1,215,092 $ 1,164,568 Presented below is a reconciliation of operating segment Adjusted EBITDA to Income before income taxes : Fiscal Year Ended (in thousands) September 30, 2018 September 30, 2017 September 30, 2016 Operating segment Adjusted EBITDA Electrical Raceway $ 255,260 $ 189,351 $ 181,939 MP&S 51,339 63,687 81,199 Total $ 306,599 $ 253,038 $ 263,138 Unallocated expenses (a) (35,050 ) (25,430 ) (28,136 ) Depreciation and amortization (66,890 ) (54,727 ) (55,017 ) Interest expense, net (40,694 ) (26,598 ) (41,798 ) Gain (loss) on extinguishment of debt — (9,805 ) 1,661 Restructuring & impairments (1,849 ) (1,256 ) (4,096 ) Net periodic pension benefit cost — — (441 ) Stock-based compensation (14,664 ) (12,788 ) (21,127 ) Special products claims impact — — (850 ) Certain legal matters 4,833 (7,551 ) (1,382 ) Consulting fees — — (15,425 ) Transaction costs (9,314 ) (4,779 ) (7,832 ) Gain on sale of a business 27,575 — — Gain on sale of joint venture — 5,774 — Other (b) (4,194 ) 10,247 (1,103 ) Impact of Fence and Sprinkler exit — — (811 ) Income before income taxes $ 166,352 $ 126,125 $ 86,781 (a) Represents unallocated selling, general and administrative activities and associated expenses including, in part, executive, legal, finance, human resources, information technology, business development and communications, as well as certain costs and earnings of employee-related benefits plans, such as stock-based compensation and a portion of self-insured medical costs. (b) Represents other items, such as inventory reserves and adjustments, release of indemnified uncertain tax positions and the impact of foreign exchange gains or losses. The Company's long-lived assets and net sales by geography were as follows: Long-lived assets Net sales (in thousands) September 30, 2018 September 30, 2017 September 30, 2016 September 30, 2018 September 30, 2017 September 30, 2016 United States $ 201,101 $ 202,823 $ 204,640 $ 1,651,636 $ 1,367,907 $ 1,395,750 Other Americas 138 164 175 43,013 37,908 40,573 Europe 11,090 9,306 1,295 90,915 55,181 40,246 Asia-Pacific 2,386 3,378 3,826 49,575 42,938 46,815 Total $ 214,715 $ 215,671 $ 209,936 $ 1,835,139 $ 1,503,934 $ 1,523,384 The table below shows the amount of net sales from external customers for each of the Company's product categories which accounted for 10% or more of consolidated net sales in any of the last three fiscal years: Fiscal Year Ended (in thousands) September 30, 2018 September 30, 2017 September 30, 2016 Metal Electrical Conduit and Fittings $ 517,935 $ 349,239 $ 331,526 Armored Cable and Fittings 336,388 323,070 318,279 PVC Electrical Conduit & Fittings 311,811 265,389 258,954 Other raceway products 198,933 155,802 157,952 Electrical Raceway 1,365,067 1,093,500 1,066,711 Mechanical Pipe 253,381 211,245 249,473 Other MP&S products 216,691 199,189 199,384 Impact of Fence and Sprinkler — — 7,816 MP&S 470,072 410,434 456,673 Net sales $ 1,835,139 $ 1,503,934 $ 1,523,384 Risks and Concentrations Concentration of Credit Risk — The Company extends credit to various customers in the retail and construction industries. Collection of trade receivables may be affected by changes in economic or other industry conditions and may, accordingly, impact the Company's overall credit risk. Although the Company generally does not require collateral, the Company performs ongoing credit evaluations of customers and maintains reserves for potential credit losses. As of September 30, 2018, one customer, Sonepar Management US, Inc., represented 11% of the Company's accounts receivable balance due to increased sales in the last 60 days of the year. As of November 28, 2018, all amounts outstanding as of September 30, 2018, that are due to be paid from Sonepar Management US, Inc., have been received. In fiscal 2017 and 2016, no single customer accounted for more than 10% of sales or accounts receivable. Concentration of Employees — As of September 30, 2018 , approximately 26% of the Company's employees were represented by a union under a collective bargaining agreement. All unions are either located in the United States or Canada with no unions or Worker's Councils at any of the other locations abroad. Our Harvey, Illinois Special Metal Processing Facility agreement with the United Steelworkers Union, involving a bargaining unit of 12 employees, expired on November 11, 2018. We anticipate that the new collective bargaining agreement will be ratified by the union members within calendar 2018. Our Harvey Illinois collective bargaining agreement with the United Steelworkers, involving nearly 400 represented employees, does not expire until April 2020. The Company believes its relationship with their employees is good. |