Segment Information

3 Months Ended

Mar. 31, 2020

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 LLC (“ART”), Grace’s joint venture with Chevron Products Company (“Chevron”), a division of Chevron U.S.A. Inc., is managed in this segment. (See Note 15.) 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; the effects of these items on equity in earnings of unconsolidated affiliate; and certain other items that are not representative of underlying trends.

Reportable Segment Data



	Three Months Ended March 31,
(In millions)	2020			2019
Net Sales
Catalysts Technologies	$	308.0		$	349.7
Materials Technologies	113.5			119.8
Total	$	421.5		$	469.5
Adjusted EBIT
Catalysts Technologies segment operating income	$	82.0		$	101.7
Materials Technologies segment operating income	19.0			24.0
Corporate costs	(15.6		)	(16.2		)
Certain pension costs	(3.1		)	(4.8		)
Total	$	82.3		$	104.7

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.

Reconciliation of Reportable Segment Data to Financial Statements Grace Adjusted EBIT for the three months ended March 31, 2020 and 2019, is reconciled below to “income (loss) before income taxes” presented in the accompanying Consolidated Statements of Operations.



	Three Months Ended March 31,
(In millions)	2020			2019
Grace Adjusted EBIT	$	82.3		$	104.7
Costs related to legacy matters	(2.7		)	(46.9		)
Restructuring and repositioning expenses	(2.7		)	(2.3		)
Third-party acquisition-related costs	(1.5		)	(0.3		)
Taxes and interest included in equity in earnings of unconsolidated affiliate	—			(0.3		)
Interest expense, net	(17.7		)	(19.3		)
Net income (loss) attributable to noncontrolling interests	0.1			(0.1		)
Income (loss) before income taxes	$	57.8		$	35.5

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.



	Three Months Ended March 31,
(In millions)	2020		2019
Net Sales
United States	$	106.7	$	131.6
Canada	11.4		12.9
Total North America	118.1		144.5
Europe Middle East Africa	183.7		194.6
Asia Pacific	100.3		109.2
Latin America	19.4		21.2
Total	$	421.5	$	469.5