OPERATING SEGMENTS

9 Months Ended

Sep. 30, 2024

OPERATING SEGMENTS

OPERATING SEGMENTS

16. OPERATING SEGMENTS

The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s eight operating segments follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker at the identified operating segment level.

The Company’s operating segments that share similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment have been aggregated into four reportable segments: Global Industrial, Global Institutional & Specialty, Global Healthcare & Life Sciences and Global Pest Elimination.

Comparability of Reportable Segments

Effective January 1, 2024, the Company’s former Textile Care and Colloidal Technologies Group (“CTG”) operating segments are now part of the Water operating segment which continues to remain in the Global Industrial reportable segment. Additionally, the Pest Elimination operating segment, formerly aggregated with the Textile Care and CTG operating segments within Other, is now reported as the stand-alone Global Pest Elimination reportable segment. The Company made other immaterial changes, including the movement of certain customers and cost allocations between reportable segments. These changes are presented in "Other" columns of the table below. Prior period amounts have been recast to conform with current period presentation.

The Company evaluates the performance of its non-U.S. dollar functional currency international operations based on fixed currency exchange rates, which eliminates the impact of exchange rate fluctuations on its international operations. Fixed currency amounts are updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange rates established by management, with all periods presented using such rates. The “Fixed Currency Rate Change” column shown in the following table reflects international operations at fixed currency exchange rates established by management at the beginning of 2024, rather than the 2023 established rates. The difference between the fixed currency exchange rates and the actual currency exchange rates is reported within the “Effect of foreign currency translation” row in the following table.

The impact of the preceding changes on previously reported full year 2023 reportable segment net sales and operating income is summarized as follows:

	December 31, 2023
	2023 Reported					Fixed	2023 Reported
	Valued at 2023				Currency		Valued at 2024
(millions)	Management Rates		Other		Rate Change		Management Rates
Net Sales
Global Industrial		$7,193.1		$407.3		$40.1		$7,640.5
Global Institutional & Specialty		4,994.0		-		20.6		5,014.6
Global Healthcare & Life Sciences		1,576.9		-		30.6		1,607.5
Global Pest Elimination		-		1,061.5		8.7		1,070.2
Other		1,442.3		(1,442.3)		-		-
Corporate		69.1		(26.5)		0.1		42.7
Subtotal at fixed currency rates		15,275.4		-		100.1		15,375.5
Effect of foreign currency translation		44.8		-		(100.1)		(55.3)
Consolidated reported GAAP net sales		$15,320.2		$-		$-		$15,320.2
Operating Income
Global Industrial		$1,080.7		$39.0		$2.3		$1,122.0
Global Institutional & Specialty		823.0		14.9		3.9		841.8
Global Healthcare & Life Sciences		160.0		(6.7)		7.5		160.8
Global Pest Elimination		-		209.0		1.4		210.4
Other		255.0		(255.0)		-		-
Corporate		(331.7)		(1.2)		0.1		(332.8)
Subtotal at fixed currency rates		1,987.0		-		15.2		2,002.2
Effect of foreign currency translation		5.3		-		(15.2)		(9.9)
Consolidated reported GAAP operating income		$1,992.3		$-		$-		$1,992.3

Reportable Segment Information

Financial information for the Company’s reportable segments, is as follows:

	Third Quarter Ended				Nine Months Ended
	September 30				September 30
(millions)	2024		2023		2024		2023
Net Sales
Global Industrial		$1,993.0		$1,940.8		$5,790.7		$5,655.4
Global Institutional & Specialty		1,403.6		1,314.1		4,046.6		3,719.0
Global Healthcare & Life Sciences		334.1		408.3		1,112.0		1,189.7
Global Pest Elimination		308.7		283.1		872.6		797.4
Corporate		-		10.7		-		32.0
Subtotal at fixed currency rates		4,039.4		3,957.0		11,821.9		11,393.5
Effect of foreign currency translation		(40.9)		1.1		(85.7)		(11.7)
Consolidated reported GAAP net sales		$3,998.5		$3,958.1		$11,736.2		$11,381.8
Operating Income
Global Industrial		$349.1		$299.1		$926.0		$783.8
Global Institutional & Specialty		325.6		254.9		894.3		598.4
Global Healthcare & Life Sciences		35.8		44.7		106.5		113.3
Global Pest Elimination		63.1		59.0		174.1		155.9
Corporate		281.5		(91.6)		138.9		(248.3)
Subtotal at fixed currency rates		1,055.1		566.1		2,239.8		1,403.1
Effect of foreign currency translation		(10.3)		(0.1)		(20.2)		(0.8)
Consolidated reported GAAP operating income		$1,044.8		$566.0		$2,219.6		$1,402.3

The profitability of the Company’s operating segments is evaluated by management based on operating income.

Consistent with the Company’s internal management reporting, Corporate amounts in the table above include sales to ChampionX in accordance with the transitional supply agreement entered into with the Transaction, as discussed in Note 15. Corporate also includes intangible asset amortization specifically from the Nalco and Purolite acquisitions and special (gains) and charges, as discussed in Note 3, that are not allocated to the Company’s reportable segments.