Operating Segment Information

12 Months Ended

Dec. 31, 2019

Grace is a global producer of specialty chemicals and specialty materials. Grace’s two reportable business segments are Grace Catalysts Technologies and Grace Materials Technologies. Grace Catalysts Technologies includes catalysts and related products and technologies used in petrochemical, refining, and other chemical manufacturing applications. Advanced Refining Technologies (“ART”), Grace’s joint venture with Chevron Products Company, a division of Chevron U.S.A. Inc. (“Chevron”), is managed in this segment. (See Note 19.) Grace Catalysts Technologies comprises two operating segments, Grace Refining Technologies and Grace Specialty Catalysts, which are aggregated into one reportable segment based upon similar economic characteristics, the nature of the products and production processes, type and class of customer, and channels of

distribution. Grace Materials Technologies includes specialty materials, including silica-based and silica-alumina-based materials, used in consumer/pharma, coatings, and chemical process applications. The table below presents information related to Grace’s reportable segments. Only those corporate expenses directly related to the reportable segments are allocated for reporting purposes. All remaining corporate items are reported separately and labeled as such.

Grace excludes defined benefit pension expense from the calculation of segment operating income. Grace believes that the exclusion of defined benefit pension expense provides a better indicator of its reportable segment performance as defined benefit pension expense is not managed at a reportable segment level.

Grace defines Adjusted EBIT to be net income attributable to W. R. Grace & Co. shareholders adjusted for interest income and expense; income taxes; costs related to legacy matters; restructuring and repositioning expenses and asset impairments; pension costs other than service and interest costs, expected returns on plan assets, and amortization of prior service costs/credits; gains and losses on sales or exits of businesses, product lines, and certain other investments; third-party acquisition-related costs and the amortization of acquired inventory fair value adjustment; and certain other items that are not representative of underlying trends.

Reportable Segment Data



	Year Ended December 31,
(In millions)	2019			2018			2017
Net Sales
Catalysts Technologies	$	1,496.7		$	1,463.5		$	1,276.5
Materials Technologies	461.4			468.6			440.0
Total	$	1,958.1		$	1,932.1		$	1,716.5
Adjusted EBIT
Catalysts Technologies segment operating income	$	466.5		$	440.5		$	395.4
Materials Technologies segment operating income	97.8			105.6			100.6
Corporate costs	(72.7		)	(73.5		)	(69.0		)
Certain pension costs	(18.4		)	(15.9		)	(13.0		)
Total	$	473.2		$	456.7		$	414.0
Depreciation and Amortization
Catalysts Technologies	$	81.9		$	81.7		$	87.1
Materials Technologies	14.2			15.5			19.6
Corporate	4.2			3.6			4.8
Total	$	100.3		$	100.8		$	111.5
Capital Expenditures
Catalysts Technologies	$	114.6		$	150.3		$	100.9
Materials Technologies	68.8			56.1			20.9
Corporate	10.7			9.9			3.4
Total	$	194.1		$	216.3		$	125.2
Total Assets
Catalysts Technologies	$	2,556.1		$	2,326.6		$	1,757.1
Materials Technologies	430.3			375.9			326.8
Corporate	946.2			862.8			823.1
Total	$	3,932.6		$	3,565.3		$	2,907.0

Corporate costs include functional costs and other costs such as professional fees, incentive compensation, and insurance premiums. Certain pension costs include only ongoing costs recognized quarterly, which include service and interest costs, expected returns on plan assets, and amortization of prior service costs/credits.

See Note 17 for sales of similar products within each reportable segment.

Reconciliation of Reportable Segment Data to Financial Statements

Grace Adjusted EBIT for the years ended December 31, 2019, 2018, and 2017 is reconciled below to income (loss) before income taxes presented in the accompanying Consolidated Statements of Operations.



	Year Ended December 31,
(In millions)	2019			2018			2017
Grace Adjusted EBIT	$	473.2		$	456.7		$	414.0
Costs related to legacy product, environmental and other claims	(103.5		)	(82.3		)	(33.1		)
Pension MTM adjustment and other related costs, net	(85.9		)	15.2			(51.1		)
Restructuring and repositioning expenses	(13.7		)	(46.4		)	(26.7		)
Benefit plan adjustment	(5.0		)	—			—
Third-party acquisition-related costs	(3.6		)	(7.3		)	(2.9		)
Write-off of MTO inventory	(3.6		)	—			—
Amortization of acquired inventory fair value adjustment	—			(6.9		)	—
Loss on early extinguishment of debt	—			(4.8		)	—
Accounts receivable reserve—Venezuela	—			—			(10.0		)
Interest expense, net	(74.8		)	(78.5		)	(78.5		)
Net income (loss) attributable to noncontrolling interests	0.4			(0.8		)	(0.8		)
Income (loss) before income taxes	$	183.5		$	244.9		$	210.9

Geographic Area Data

The table below presents information related to the geographic areas in which Grace operates. Sales are attributed to geographic areas based on the location to which the product is transported.



	Year Ended December 31,
(In millions)	2019		2018		2017
Net Sales
United States	$	540.2	$	533.8	$	437.3
Canada	57.6		47.9		48.7
Total North America	597.8		581.7		486.0
Europe Middle East Africa	791.6		752.2		667.7
Asia Pacific	475.4		481.5		459.8
Latin America	93.3		116.7		103.0
Total	$	1,958.1	$	1,932.1	$	1,716.5
Long-Lived Assets(1)
United States	$	937.9	$	793.0	$	599.8
Canada	18.9		16.5		15.5
Total North America	956.8		809.5		615.3
Germany	228.2		172.5		142.2
Rest of Europe Middle East Africa	45.2		48.9		45.3
Total Europe Middle East Africa	273.4		221.4		187.5
Asia Pacific	80.3		72.9		21.1
Latin America	7.2		6.7		7.9
Total	$	1,317.7	$	1,110.5	$	831.8

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(1)

Long-lived assets include properties and equipment and the current asset related to a hydroprocessing catalyst plant to be transferred to ART upon completion. (See Note 19.)