OPERATING SEGMENTS

12 Months Ended

Dec. 31, 2023

OPERATING SEGMENTS

OPERATING SEGMENTS

18. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s ten 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 and Paper 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 4. Corporate also includes intangible asset amortization specifically from the Nalco and Purolite acquisitions and special (gains) and charges, as discussed in Note 3, that are not allocated to the Company’s reportable segments.

Comparability of Reportable Segments

Effective January 1, 2023, the Company’s former Downstream operating segment is now part of the Water operating segment. This change did not have any impact on the Global Industrial reportable segment.

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 international operations at fixed currency exchange rates established by management at the beginning of 2023, rather than the 2022 established rates. The difference between the fixed currency exchange rates and the actual currency exchange rates is reported within the “Effect of foreign currency translation” row in the following table. The “Other” column shown in the following table reflects immaterial changes between reportable segments, including the movement of certain customers and cost allocations.

The impact of the preceding changes on previously reported full year 2022 and 2021 reportable segment net sales and operating income is summarized as follows:

	December 31, 2022
	2022 Reported					Fixed	2022 Reported
	Valued at 2022				Currency		Valued at 2023
(millions)	Fixed Currency Rates		Other		Rate Change		Fixed Currency Rates
Net Sales
Global Industrial		$6,944.0		$-		($207.7)		$6,736.3
Global Institutional & Specialty		4,480.0		10.2		(75.9)		4,414.3
Global Healthcare & Life Sciences		1,570.0		-		(64.2)		1,505.8
Other		1,355.0		(10.2)		(31.5)		1,313.3
Corporate		124.1		-		(0.4)		123.7
Subtotal at fixed currency rates		14,473.1		-		(379.7)		14,093.4
Effect of foreign currency translation		(285.3)		-		379.7		94.4
Consolidated reported GAAP net sales		$14,187.8		$-		$-		$14,187.8
Operating Income
Global Industrial		$977.0		$0.8		($42.0)		$935.8
Global Institutional & Specialty		634.5		(1.6)		(11.2)		621.7
Global Healthcare & Life Sciences		205.0		(1.8)		(9.9)		193.3
Other		212.8		2.6		(5.5)		209.9
Corporate		(416.7)		-		2.3		(414.4)
Subtotal at fixed currency rates		1,612.6		-		(66.3)		1,546.3
Effect of foreign currency translation		(50.1)		-		66.3		16.2
Consolidated reported GAAP operating income		$1,562.5		$-		$-		$1,562.5

	December 31, 2021
	2021 Reported					Fixed	2021 Reported
	Valued at 2022		Segment		Currency		Valued at 2023
(millions)	Fixed Currency Rates		Change		Rate Change		Fixed Currency Rates
Net Sales
Global Industrial		$6,086.8		$-		($178.3)		$5,908.5
Global Institutional & Specialty		3,908.8		10.9		(63.0)		3,856.7
Global Healthcare & Life Sciences		1,149.6		-		(48.5)		1,101.1
Other		1,201.0		(10.9)		(27.6)		1,162.5
Corporate		137.4		-		-		137.4
Subtotal at fixed currency rates		12,483.6		-		(317.4)		12,166.2
Effect of foreign currency translation		249.5		-		317.4		566.9
Consolidated reported GAAP net sales		$12,733.1		$-		$-		$12,733.1
Operating Income
Global Industrial		$985.7		$0.4		($42.7)		$943.4
Global Institutional & Specialty		545.7		(1.4)		(7.6)		536.7
Global Healthcare & Life Sciences		152.3		(1.6)		(9.7)		141.0
Other		184.0		2.6		(5.3)		181.3
Corporate		(316.6)		-		2.3		(314.3)
Subtotal at fixed currency rates		1,551.1		-		(63.0)		1,488.1
Effect of foreign currency translation		47.5		-		63.0		110.5
Consolidated reported GAAP operating income		$1,598.6		$-		$-		$1,598.6

Reportable Segment Information

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

	Net Sales						Operating Income (Loss)
(millions)	2023		2022		2021		2023		2022		2021
Global Industrial		$7,193.1		$6,736.3		$5,908.5		$1,080.7		$935.8		$943.4
Global Institutional & Specialty		4,994.0		4,414.3		3,856.7		823.0		621.7		536.7
Global Healthcare & Life Sciences		1,576.9		1,505.8		1,101.1		160.0		193.3		141.0
Other		1,442.3		1,313.3		1,162.5		255.0		209.9		181.3
Corporate		69.1		123.7		137.4		(331.7)		(414.4)		(314.3)
Subtotal at fixed currency		15,275.4		14,093.4		12,166.2		1,987.0		1,546.3		1,488.1
Effect of foreign currency translation		44.8		94.4		566.9		5.3		16.2		110.5
Consolidated reported GAAP		$15,320.2		$14,187.8		$12,733.1		$1,992.3		$1,562.5		$1,598.6

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

Consistent with the Company’s internal management reporting, Corporate amounts in the table above include sales to ChampionX in accordance with the long-term supply agreement entered into with the Transaction, as discussed in Note 17. Corporate also includes intangible asset amortization specifically from the Nalco and Purolite acquisitions and special (gains) and charges, as discussed in Note 3, that are not allocated to the Company’s reportable segments.

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)	2023		2022
United States		$2,708.6		$2,508.9
Europe		631.2		574.3
Asia Pacific		213.0		210.3
Latin America		175.1		146.5
Greater China		167.4		176.6
India, Middle East and Africa		68.2		64.1
Canada		64.6		60.9
Total		$4,028.1		$3,741.6

Geographic data for long-lived assets is based on physical location of those assets. Refer to Note 17 for net sales by geographic region.