Reportable Segment Information

12 Months Ended

Sep. 30, 2019

REPORTABLE SEGMENT INFORMATION

Valvoline manages and reports within the following three segments:

•Quick Lubes - services the passenger car and light truck quick lube market through company-owned and independent franchised retail quick lube service center stores and independent Express Care stores that service vehicles with Valvoline products, as well as through investment in a joint venture in China to pilot expansion of retail quick lube service center stores outside of North America.

•Core North America - sells engine and automotive maintenance products in the United States and Canada to retailers, installers, and heavy-duty customers to service vehicles and equipment.

•International - sells engine and automotive products in more than 140 countries outside of the United States and Canada for the maintenance of consumer and commercial vehicles and equipment.

These segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker in assessing segment performance and in allocating the Company’s resources. Sales and operating income are the primary U.S. GAAP measures evaluated in assessing each reportable segment’s financial performance. Operating income by segment includes the allocation of shared corporate costs, which are allocated consistently based on each segment’s proportional contribution to various financial measures. Intersegment sales are not material, and assets are not allocated and included in the assessment of segment performance; consequently, these items are not disclosed by segment herein.

To maintain operating focus on business performance, certain corporate and non-operational items, including restructuring and related expenses, as well as adjustments related to legacy businesses that no longer are attributed to Valvoline, are excluded from the segment operating results utilized by the chief operating decision maker in evaluating segment performance and are separately delineated within Unallocated and other to reconcile to total reported Operating income as shown in the table below.

Valvoline did not have a single customer that represented 10% or more of consolidated net sales in fiscal 2019, 2018 or 2017.

Reportable segment results

The following table presents sales, operating income, and depreciation and amortization by reportable segment for the years ended September 30:


(In millions)	2019		2018		2017
Sales
Quick Lubes	$	822	$	660	$	541
Core North America	994		1,035		1,004
International	574		590		539
Consolidated sales	$	2,390	$	2,285	$	2,084

Operating income
Quick Lubes	$	178	$	153	$	130
Core North America	152		172		199
International	85		84		76
Total operating segments	415		409		405
Unallocated and other ^(a)	(17)		(14)		(11)
Consolidated operating income	$	398	$	395	$	394








Depreciation and amortization
Quick Lubes	$	36	$	30	$	22
Core North America	18		18		15
International	7		6		5
Consolidated depreciation and amortization	$	61	$	54	$	42

(a)Unallocated and other includes Legacy and separation-related expenses, net and restructuring and related expenses.

Entity-wide disclosures

The following table summarizes sales by category for each reportable segment for the years ended September 30:


	Sales by category
	Quick Lubes										Core North America								International
	2019		2018		2017		2019		2018		2017		2019		2018		2017
Lubricants	84	%	85	%	84	%	86	%	85	%	86	%	88	%	89	%	89	%
Antifreeze	1	%	1	%	1	%	9	%	8	%	7	%	5	%	5	%	6	%
Filters	8	%	8	%	8	%	1	%	3	%	3	%	1	%	3	%	1	%
Chemicals and other	2	%	2	%	2	%	4	%	4	%	4	%	6	%	3	%	4	%
Franchise	5	%	4	%	5	%	—		—		—		—		—		—
Total	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%

Sales and net property, plant and equipment are attributed to the geographic area or country to which product is delivered and the assets physically reside, respectively. The following table presents sales and net property, plant and equipment by geographic area for Valvoline for the years ended and as of September 30:


	Sales from external customers										Property, plant and equipment, net
(In millions)	2019		2018		2017		2019		2018
United States	$	1,766	$	1,652	$	1,504	$	431	$	384
International	624		633		580		67		36
Total	$	2,390	$	2,285	$	2,084	$	498	$	420

Sales by geography expressed as a percentage of total consolidated sales were as follows:


	For the years ended September 30
Sales by geography	2019		2018		2017
North America ^(a)	76	%	74	%	74	%
EMEA	8	%	8	%	7	%
Asia Pacific	12	%	13	%	14	%
Latin America ^(a)	4	%	5	%	5	%
Total	100	%	100	%	100	%

(a)Valvoline includes the United States and Canada in its North American region. Mexico is included within the Latin America region.