Business Segments
The Company’s business is organized in two reportable segments: Sealing Systems and Fluid Handling Systems. These reportable segments represent the operating segments that are evaluated by management, including the Chief Operating Decision Maker (“CODM”), to assess performance and allocate resources. Both segments meet the quantitative thresholds for separate disclosure under ASC 280. All other business activities are reported in Corporate, eliminations and other.
The Company’s CODM, the Chairman and Chief Executive Officer, uses segment adjusted EBITDA as the measure of earnings to evaluate the performance of each segment and to allocate resources, including employees, property, plant and equipment, as well as financial and capital resources. The CODM regularly reviews budget-to-actual variances on a monthly basis for segment adjusted EBITDA to assess performance and make resource allocation decisions. The results of each segment include certain allocations for general, administrative and other shared costs. Segment adjusted EBITDA as used by the Company may not be directly comparable to similarly titled measures reported by other companies.
The measure of segment assets used by the CODM to evaluate segment performance and allocate resources is reported as total assets on the consolidated balance sheets. While inventory and tooling balances by segment are regularly provided to the CODM, this information is not used as a basis for assessing segment performance or determining resource allocation decisions.
The accounting policies of the Company’s segments are consistent with those described in Note 2. “Basis of Presentation and Summary of Significant Accounting Policies.”
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.