Reportable Segment Information

3 Months Ended

Dec. 31, 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 maintenance 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.

Segment financial results

The following table presents sales and operating income for each reportable segment:


	Three months ended
(In millions)	December 31
			2019			2018
Sales
Quick Lubes	$	218		$	189
Core North America	248			232
International	141			136
Consolidated sales	$	607		$	557

Operating income
Quick Lubes	$	38		$	38
Core North America	46			31
International	20			18
Total operating segments	104			87
Unallocated and other ^(a)	—			—
Consolidated operating income	$	104		$	87

(a) Unallocated and other includes net legacy and separation-related income and restructuring and related expenses.

Disaggregation of revenue

The following table summarizes sales by primary customer channel for the Company’s reportable segments:


	Three months ended
	December 31
(In millions)	2019		2018
Quick Lubes
Company-owned operations	$	142	$	124
Non-company owned operations	76		65
Total Quick Lubes	218		189

Core North America
Retail	137		116
Installer and other	111		116
Total Core North America	248		232

International	141		136

Consolidated sales	$	607	$	557

Sales by reportable segment disaggregated by geographic market follows:


	Three months ended December 31, 2019
(In millions)	Quick Lubes		Core North America		International		Totals
North America ^(a)	$	218	$	248	$	—	$	466
Europe, Middle East and Africa ("EMEA")	—		—		47		47
Asia Pacific	—		—		70		70
Latin America ^(a)	—		—		24		24
Totals	$	218	$	248	$	141	$	607

	Three months ended December 31, 2018
(In millions)	Quick Lubes		Core North America		International		Totals
North America ^(a)	$	189	$	232	$	—	$	421
Europe, Middle East and Africa ("EMEA")	—		—		44		44
Asia Pacific	—		—		67		67
Latin America ^(a)	—		—		25		25
Totals	$	189	$	232	$	136	$	557

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