OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2022

OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

19. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s eleven operating segments follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at the identified operating segment level.

The Company’s operating segments that share similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment have been aggregated into three reportable segments: Global Industrial, Global Institutional & Specialty and Global Healthcare & Life Sciences. The Company’s operating segments that do not meet the quantitative criteria to be separately reported have been combined into Other. The Company provides similar information for Other as the Company considers the information regarding its underlying operating segments as useful in understanding its consolidated results.

The Company’s operating segments are aggregated as follows:

Global Industrial

Includes the Water, Food & Beverage, Paper, and Downstream operating segments. It provides water treatment and process applications, and cleaning and sanitizing solutions primarily to large industrial customers within the manufacturing, food and beverage processing, transportation, chemical, primary metals and mining, power generation, pulp and paper, commercial laundry, global petroleum and petrochemical industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics.

Global Institutional & Specialty

Includes the Institutional and Specialty operating segments. It provides specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, government and education and retail industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics.

Global Healthcare & Life Sciences

Includes the Healthcare and Life Sciences operating segments. It provides specialized cleaning and sanitizing products to the healthcare, personal care and pharmaceutical industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics.

Other

Includes the Pest Elimination operating segment which provides services to detect, eliminate and prevent pests, such as rodents and insects, the CTG operating segment which produces and sells colloidal silica, which is comprised of nano-sized particles of silica in water used primarily for binding and polishing applications and the Textile Care operating segment which provides products and services that manage the entire wash process through custom designed programs, premium products, dispensing equipment, water and energy management and reduction, and real time data management.

Corporate

Consistent with the Company’s internal management reporting, Corporate amounts in the table below include sales to ChampionX under the Master Cross Supply and Product Transfer agreements entered into as part of the ChampionX Separation, as discussed in Note 5. Corporate also includes intangible asset amortization specifically from the Nalco and Purloite acquistions and special (gains) and charges, as discussed in Note 3, that are not allocated to the Company’s reportable segments.

Comparability of Reportable Segments

The Company made immaterial changes, including the movement of certain customers and cost allocations between reportable segments. These changes are reflected in the “Other” column in the table below.

The Company evaluates the performance of its non-U.S. dollar functional currency international operations based on fixed currency exchange rates, which eliminate the impact of exchange rate fluctuations on its international operations. Fixed currency amounts are updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange rates established by management, with all periods presented using such rates. The “Fixed Currency Rate Change” column shown in the following table reflects the impact on previously reported values related to fixed currency exchange rates established by management at the beginning of 2022 and have been updated from the 2021 rates reflected in the Company’s 2021 Form 10-K. The difference between the fixed currency exchange rates and the actual currency exchanges rates is reported within the “Effect of foreign currency translation” row in the table below. The “Other” column in the table reflects immaterial changes between segments, primarily cost allocations.

The impact of the preceding changes on previously reported full year 2021 and 2020 reportable segment net sales and operating income is summarized as follows:

	December 31, 2021
	2021 Reported					Fixed	2021 Reported
	Valued at 2021				Currency		Valued at 2022
(millions)	Management Rates		Other		Rate Change		Management Rates
Net Sales
Global Industrial		$6,304.9		$-		($218.1)		$6,086.8
Global Institutional & Specialty		3,978.2		-		(69.4)		3,908.8
Global Healthcare & Life Sciences		1,195.4		-		(45.8)		1,149.6
Other		1,226.9		-		(25.9)		1,201.0
Corporate		139.4		-		(2.0)		137.4
Subtotal at fixed currency rates		12,844.8		-		(361.2)		12,483.6
Effect of foreign currency translation		(111.7)		-		361.2		249.5
Consolidated reported GAAP net sales		$12,733.1		$-		$-		$12,733.1
Operating Income
Global Industrial		$1,031.0		$4.0		($49.3)		$985.7
Global Institutional & Specialty		556.9		(3.8)		(7.4)		545.7
Global Healthcare & Life Sciences		160.9		(0.9)		(7.7)		152.3
Other		187.3		0.7		(4.0)		184.0
Corporate		(318.6)		-		2.0		(316.6)
Subtotal at fixed currency rates		1,617.5		-		(66.4)		1,551.1
Effect of foreign currency translation		(18.9)		-		66.4		47.5
Consolidated reported GAAP operating income		$1,598.6		$-		$-		$1,598.6

	December 31, 2020
	2020 Reported					Fixed	2020 Reported
	Valued at 2021		Segment		Currency		Valued at 2022
(millions)	Management Rates		Change		Rate Change		Management Rates
Net Sales
Global Industrial		$6,048.2		$-		($202.5)		$5,845.7
Global Institutional & Specialty		3,629.0		-		(69.2)		3,559.8
Global Healthcare & Life Sciences		1,241.1		-		(51.0)		1,190.1
Other		1,103.4		-		(23.6)		1,079.8
Corporate		100.6		-		(1.2)		99.4
Subtotal at fixed currency rates		12,122.3		-		(347.5)		11,774.8
Effect of foreign currency translation		(332.1)		-		347.5		15.4
Consolidated reported GAAP net sales		$11,790.2		$-		$-		$11,790.2
Operating Income
Global Industrial		$1,123.1		$1.4		($45.4)		$1,079.1
Global Institutional & Specialty		324.0		(1.6)		(6.1)		316.3
Global Healthcare & Life Sciences		218.3		(0.5)		(10.2)		207.6
Other		132.8		0.7		(2.9)		130.6
Corporate		(349.7)		-		2.0		(347.7)
Subtotal at fixed currency rates		1,448.5		-		(62.6)		1,385.9
Effect of foreign currency translation		(52.8)		-		62.6		9.8
Consolidated reported GAAP operating income		$1,395.7		$-		$-		$1,395.7

Reportable Segment Information

Financial information for each of the Company’s reportable segments were as follows:

	Net Sales						Operating Income (Loss)
(millions)	2022		2021		2020		2022		2021		2020
Global Industrial		$6,944.0		$6,086.8		$5,845.7		$977.0		$985.7		$1,079.1
Global Institutional & Specialty		4,480.0		3,908.8		3,559.8		634.5		545.7		316.3
Global Healthcare & Life Sciences		1,570.0		1,149.6		1,190.1		205.0		152.3		207.6
Other		1,355.0		1,201.0		1,079.8		212.8		184.0		130.6
Corporate		124.1		137.4		99.4		(416.7)		(316.6)		(347.7)
Subtotal at fixed currency		14,473.1		12,483.6		11,774.8		1,612.6		1,551.1		1,385.9
Effect of foreign currency translation		(285.3)		249.5		15.4		(50.1)		47.5		9.8
Consolidated reported GAAP		$14,187.8		$12,733.1		$11,790.2		$1,562.5		$1,598.6		$1,395.7

The profitability of the Company’s operating segments is evaluated by management based on operating income.

The Company has an integrated supply chain function that serves all of its reportable segments. As such, asset and capital expenditure information by reportable segment has not been provided and is not available, since the Company does not produce or utilize such information internally. In addition, although depreciation and amortization expense is a component of each reportable segment’s operating results, it is not discretely identifiable.

Geographic Information

Long-lived assets, which includes property, plant and equipment and right of use assets, at public exchange rates by geographic region were as follows:

	Long-Lived Assets, net
(millions)	2022		2021
United States		$2,508.9		$2,416.4
Europe		574.3		580.7
Asia Pacific		210.3		237.1
Greater China		176.6		186.4
Latin America		146.5		137.9
India, Middle East and Africa		64.1		60.2
Canada		60.9		66.5
Total		$3,741.6		$3,685.2

Geographic data for long-lived assets is based on physical location of those assets. Refer to Note 18 for net sales by geographic region.