Reportable Segment Information

6 Months Ended

Mar. 31, 2020

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									Six months ended
(In millions)	March 31									March 31
			2020			2019			2020			2019
Sales
Quick Lubes	$	212		$	200		$	430		$	389
Core North America	238			243			486			475
International	128			148			269			284
Consolidated sales	$	578		$	591		$	1,185		$	1,148

Operating income
Quick Lubes	$	40		$	44		$	78		$	82
Core North America	47			40			93			71
International	18			23			38			41
Total operating segments	105			107			209			194
Unallocated and other ^(a)	12			(11)			12			(11)
Consolidated operating income	$	117		$	96		$	221		$	183

(a) Unallocated and other includes net legacy and separation-related expenses/income and corporate costs not allocated to the reportable segments, including certain acquisition and divestiture-related costs, restructuring and related expenses, and certain current year incentive compensation adjustments.

Disaggregation of revenue

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


	Three months ended						Six months ended
	March 31						March 31
(In millions)	2020		2019		2020		2019
Quick Lubes
Company-owned operations	$	140	$	128	$	282	$	252
Non-company owned operations	72		72		148		137
Total Quick Lubes	212		200		430		389

Core North America
Retail	133		140		270		256
Installer and other	105		103		216		219
Total Core North America	238		243		486		475

International	128		148		269		284

Consolidated sales	$	578	$	591	$	1,185	$	1,148

Sales by reportable segment disaggregated by geographic market follows:


	Quick Lubes						Core North America						International				Total
(In millions)	2020		2019		2020		2019		2020		2019		2020		2019
Three months ended March 31
North America^(a)	$	212	$	200	$	238	$	243	$	—	$	—	$	450	$	443
Europe, Middle East and Africa ("EMEA")	—		—		—		—		44		47		44		47
Asia Pacific	—		—		—		—		58		73		58		73
Latin America^(a)	—		—		—		—		26		28		26		28
Totals	$	212	$	200	$	238	$	243	$	128	$	148	$	578	$	591

Six months ended March 31
North America^(a)	$	430	$	389	$	486	$	475	$	—	$	—	$	916	$	864
Europe, Middle East and Africa ("EMEA")	—		—		—		—		91		91		91		91
Asia Pacific	—		—		—		—		128		140		128		140
Latin America^(a)	—		—		—		—		50		53		50		53
Totals	$	430	$	389	$	486	$	475	$	269	$	284	$	1,185	$	1,148

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