Segment Information

9 Months Ended

Sep. 28, 2019

Each of the Company’s reportable segments is composed of certain operating segments that are aggregated primarily by the nature of products offered as follows:

Piping Systems

Piping Systems is composed of the following operating segments: Domestic Piping Systems Group, Great Lakes Copper, Heatlink Group, Die-Mold, European Operations, Trading Group, and Jungwoo-Mueller (the Company’s South Korean joint venture). The Domestic Piping Systems Group manufactures copper tube, fittings, and line sets. These products are manufactured in the U.S., sold in the U.S., and exported to markets worldwide. Outside the U.S., Great Lakes Copper manufactures copper tube and line sets in Canada and sells the products primarily in the U.S. and Canada. Heatlink Group produces a complete line of products for PEX plumbing and radiant systems in Canada and sells these products in Canada and the U.S. Die-Mold manufactures PEX and other plumbing-related fittings and plastic injection tooling in Canada and sells these products in Canada and the U.S. European Operations manufacture copper tube in the U.K. which is sold primarily in Europe. The Trading Group manufactures pipe nipples and resells brass and plastic plumbing valves, malleable iron fittings, faucets, and plumbing specialty products in the U.S. and Mexico. Jungwoo-Mueller manufactures copper-based joining products that are sold worldwide. The Piping Systems segment’s products are sold primarily to plumbing, refrigeration, and air-conditioning wholesalers, hardware wholesalers and co-ops, building product retailers, and air-conditioning original equipment manufacturers (OEMs).

Industrial Metals

Industrial Metals is composed of the following operating segments: Brass Rod & Copper Bar Products, Impacts & Micro Gauge, and Brass Value-Added Products. These businesses manufacture brass rod, impact extrusions, and forgings, as well as a wide variety of end products including plumbing brass, automotive components, valves, fittings, and gas assemblies. These products are manufactured in the U.S. and sold primarily to OEMs in the U.S., many of which are in the industrial, transportation, construction, heating, ventilation, and air-conditioning, plumbing, refrigeration, and energy markets.

Climate

Climate is composed of the following operating segments: Refrigeration Products, Fabricated Tube Products, Westermeyer, Turbotec, and ATCO. These domestic businesses manufacture and fabricate valves, assemblies, high pressure components, coaxial heat exchangers, and insulated HVAC flexible duct systems primarily for the heating, ventilation, air-conditioning, and refrigeration markets in the U.S.

Summarized segment information is as follows:



	For the Quarter Ended September 28, 2019
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations			Total

Net sales	$	390,917	$	135,443	$	90,938	$	(8,696	)	$	608,602

Cost of goods sold	330,418		117,893		70,523		(8,046		)	510,788
Depreciation and amortization	5,751		1,836		2,491		745			10,823
Selling, general, and administrative expense	18,738		3,115		9,961		8,925			40,739

Operating income	36,010		12,599		7,963		(10,320		)	46,252

Interest expense										(6,148		)
Other income, net										533

Income before income taxes										$	40,637



	For the Quarter Ended September 29, 2018
(In thousands)	Piping Systems			Industrial Metals			Climate		Corporate and Eliminations			Total

Net sales	$	410,525		$	158,709		$	81,619	$	(4,895	)	$	645,958

Cost of goods sold	363,174			141,435			66,832		(4,485		)	566,956
Depreciation and amortization	5,946			1,864			2,123		686			10,619
Selling, general, and administrative expense	17,387			3,086			6,890		11,526			38,889
Gain on sale of assets	(1,390		)	(1,301		)	—		—			(2,691		)
Insurance recovery	—			(1,486		)	—		—			(1,486		)

Operating income	25,408			15,111			5,774		(12,622		)	33,671

Interest expense												(6,746		)
Other income, net												411

Income before income taxes												$	27,336

Segment information (continued):



	For the Nine Months Ended September 28, 2019
(In thousands)	Piping Systems		Industrial Metals		Climate		Corporate and Eliminations			Total

Net sales	$	1,193,274	$	434,037	$	276,853	$	(17,387	)	$	1,886,777

Cost of goods sold	1,019,546		372,542		212,201		(18,160		)	1,586,129
Depreciation and amortization	16,953		5,518		6,932		2,453			31,856
Selling, general, and administrative expense	56,620		9,280		24,336		31,602			121,838

Operating income	100,155		46,697		33,384		(33,282		)	146,954

Interest expense										(20,135		)
Other income, net										823

Income before income taxes										$	127,642



	For the Nine Months Ended September 29, 2018
(In thousands)	Piping Systems			Industrial Metals			Climate		Corporate and Eliminations			Total

Net sales	$	1,294,672		$	511,932		$	156,854	$	(14,667	)	$	1,948,791

Cost of goods sold	1,120,890			445,259			124,806		(14,509		)	1,676,446
Depreciation and amortization	17,568			5,715			3,371		2,427			29,081
Selling, general, and administrative expense	57,931			9,908			12,009		32,229			112,077
(Gain) loss on sale of assets	(2,093		)	(1,301		)	—		3,060			(334		)
Insurance recovery	—			(1,486		)	—		—			(1,486		)

Operating income	100,376			53,837			16,668		(37,874		)	133,007

Interest expense												(18,728		)
Other income, net												1,557

Income before income taxes												$	115,836

The following tables represent a disaggregation of revenue from contracts with customers, along with the reportable segment for each category:



	For the Quarter Ended September 28, 2019
(In thousands)	Piping Systems		Industrial Metals		Climate		Total

Tube and fittings	$	320,789	$	—	$	—	$	320,789
Brass rod and forgings	—		103,616		—		103,616
OEM components, tube & assemblies	7,059		11,724		32,334		51,117
Valves and plumbing specialties	63,069		—		—		63,069
Other	—		20,103		58,604		78,707

	390,917		135,443		90,938		617,298

Intersegment sales							(8,696		)

Net sales							$	608,602



	For the Quarter Ended September 29, 2018
(In thousands)	Piping Systems		Industrial Metals		Climate		Total

Tube and fittings	$	340,269	$	—	$	—	$	340,269
Brass rod and forgings	—		122,411		—		122,411
OEM components, tube & assemblies	7,618		12,292		35,555		55,465
Valves and plumbing specialties	62,638		—		—		62,638
Other	—		24,006		46,064		70,070

	410,525		158,709		81,619		650,853

Intersegment sales							(4,895		)

Net sales							$	645,958

Disaggregation of revenue from contracts with customers (continued):



	For the Nine Months Ended September 28, 2019
(In thousands)	Piping Systems		Industrial Metals		Climate		Total

Tube and fittings	$	986,783	$	—	$	—	$	986,783
Brass rod and forgings	—		333,622		—		333,622
OEM components, tube & assemblies	21,786		37,613		106,542		165,941
Valves and plumbing specialties	184,705		—		—		184,705
Other	—		62,802		170,311		233,113

	1,193,274		434,037		276,853		1,904,164

Intersegment sales							(17,387		)

Net sales							$	1,886,777



	For the Nine Months Ended September 29, 2018
(In thousands)	Piping Systems		Industrial Metals		Climate		Total

Tube and fittings	$	1,077,525	$	—	$	—	$	1,077,525
Brass rod and forgings	—		394,880		—		394,880
OEM components, tube & assemblies	22,128		41,956		110,790		174,874
Valves and plumbing specialties	195,019		—		—		195,019
Other	—		75,096		46,064		121,160

	1,294,672		511,932		156,854		1,963,458

Intersegment sales							(14,667		)

Net sales							$	1,948,791