VALVOLINE INC

The following summarizes the results of the Company’s continuing operations for the periods ended June 30:

(a)Refer to the “Use of Non-GAAP Measures” and “Continuing operations EBITDA and Adjusted EBITDA” for management’s definitions of the metrics presented above and reconciliation to the corresponding GAAP measures, where applicable.

Net revenues

Net revenues increased $17.6 million, or 4.2% for the three months ended June 30, 2025 compared to the same prior year period. The increase was primarily due to higher volume, supported by continued network expansion from net new store openings and acquisitions, along with a 4.9% increase in system-wide SSS. The improvement in system-wide SSS was driven by higher average ticket from ongoing premiumization, net pricing benefits, and continued non-oil change service penetration. An increase in transactions also contributed to system-wide SSS growth reflecting an expanding customer base. These increases were partially offset by lower net revenues due to the Refranchising Transactions. The following reconciles the year-over-year change in net revenues:

Net revenues increased $73.0 million, or 6.2% for nine months ended June 30, 2025 compared to the same prior year period. The increase was primarily attributable to higher volume, largely driven by continued network growth through both net new store openings and acquisitions. Favorable service mix also contributed, along with a 6.2% increase in system-wide SSS, reflecting growth in average ticket from premiumization, non-oil change service penetration, and pricing, as well as higher transactions supported by an expanding customer base. These benefits were partially offset by reduced net revenues due to the Refranchising Transactions. The following reconciles the year-over-year change in year-to-date net revenues:

Gross profit

Gross profit increased $10.1 million, or 6.0%, for the three months ended June 30, 2025 compared to the prior year period. The increase was largely attributable to volume expansion, pricing, and improvements in service mix, reflecting continued traction in premiumization and non-oil change services. These benefits were partially offset by higher store operating expenses and lower contributions from recently refranchised locations. The following reconciles the year-over-year change in gross profit:

Gross profit margin improved in the three months ended June 30, 2025 compared to the prior year period. The increase was primarily a result of improved labor efficiency through enhanced demand planning and improved scheduling practices, along with leverage in products costs, and benefits from service mix. These gains were partially offset by the impact of the Refranchising Transactions and by higher store operating expenses, including increased depreciation from investments in store growth.

Gross profit improved $32.5 million, or 7.2% for the nine months ended June 30, 2025 compared to the prior year period, primarily driven by higher service volume and improvements in service mix. These gains were partially offset by the impacts from the Refranchising Transactions, and increased store operating expenses, including higher depreciation related to ongoing store investments. The following reconciles the year-over-year change in year-to-date gross profit:

Gross profit margin improved in the nine months ended June 30, 2025 compared to the prior year period. The margin expansion reflects improved labor efficiency, leverage in product costs, and benefits from service mix. These gains were partially offset by higher operating expenses, including depreciation and the impacts from the Refranchising Transactions.

Net operating expenses

Details of the components of net operating expenses are summarized below for the periods ended June 30:

Selling, general and administrative expenses increased by $8.3 million and $30.6 million for the three and nine months ended June 30, 2025, respectively, compared to the prior year periods. The increases reflect continued investments to scale the business and support long-term growth. The primary contributors were technology, including outside services, talent, and advertising, which combined to increase expense by $6.1 million and $21.3 million in the three and nine month periods ended June 30, 2025, respectively. Additionally, investment and divestiture activity increased selling, general and administrative expenses by $1.1 million and $5.3 million for the three and nine months ended June 30, 2025 respectively, primarily related to consulting fees and professional services to support legal, regulatory, diligence and integration efforts.

Net legacy and separation-related expenses increased $0.3 million and $1.4 million for the three and nine months ended June 30, 2025, respectively, compared to the prior year periods. The increases were driven by expenses associated with legacy businesses and certain limited realignment costs incurred to support the Company’s transition to a stand-alone retail business following the sale of the former Global Products reportable segment.

Other income, net decreased $0.2 million and increased $72.3 million for the three and nine months ended June 30, 2025, respectively, compared to the prior year periods. The year-to-date increase was largely driven by the $74.3 million gain on sale of operations recognized upon closing the Refranchising Transaction during the first quarter of fiscal 2025.

Net pension and other postretirement plan activity

Net pension and other postretirement plan activity was favorable by $4.3 million and $13.1 million for the three and nine months ended June 30, 2025, respectively, compared to the prior year periods as a result of higher recurring expected returns on plan assets and lower interest cost as a result of the decline in discount rates in the most recent annual remeasurement of the plans.

Net interest and other financing expenses

Net interest and other financing expenses decreased $6.2 million and $0.9 million for the three and nine months ended June 30, 2025, respectively, compared to the prior year periods. The decrease for the quarter was primarily due to the prior year recognition of $7.3 million in debt modification charges and related fees in connection with the repurchase of the $600.0 million 4.250% senior unsecured notes (the “2030 Notes”).

These lower debt modification expenses were partially offset by higher net interest expense of $5.0 million and were the primary drivers of the reduction for the year-to-date compared to the prior year period. Higher net interest expense was driven by $20.4 million of lower benefits due to the prior year maturities of invested net proceeds from the sale of Global Products and the remaining interest rate swaps. These lower benefits were partially offset by reduced interest expense of $13.8 million attributed to the prior year repurchase of the 2030 Notes.

Income tax provision

The following table summarizes the income tax provision and the effective tax rate for the current and prior year periods:

The changes in income tax expense year-over-year for the three and nine months ended June 30, 2025 were principally driven by pre-tax earnings. The increase in the effective tax rate for the nine months ended June 30, 2025 was attributable to decreases in the favorable impact of discrete tax benefits compared to the prior year period.

On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was signed into law. The Act maintains the 21 percent corporate tax rate and makes permanent many of the beneficial expired and expiring tax provisions originally enacted in the Tax Cuts and Jobs Act, including 100 percent bonus depreciation for qualified assets, immediate expensing of domestic research and development expenditures, and more favorable interest deductibility. The Act has staggered effective dates beginning in 2025 and continuing through 2027. Valvoline is currently evaluating the Act’s impact on its consolidated financial statements and related disclosures and anticipates the most significant impact to be a modest reduction in cash tax payments for the remainder of fiscal 2025 and a more meaningful impact in future periods as a result of the 100 percent bonus depreciation.

Loss from discontinued operations, net of tax

The following summarizes Loss from discontinued operations, net of tax for the current and prior year periods:

Loss from discontinued operations, net of tax decreased $1.8 million and $2.7 million in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods primarily due to lower costs associated with the separation of processes and systems related to the sale of the former Global Products reportable segment.

Continuing operations EBITDA and Adjusted EBITDA

The following table reconciles Income from continuing operations to EBITDA and Adjusted EBITDA for the current and prior year periods:

Adjusted EBITDA from continuing operations increased $6.3 million and $18.2 million in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods. This increase is primarily driven by gross profit expansion from strong operational performance including improvements in volumes and mix which more than offset the impacts from the Refranchising Transactions and growth investments in selling, general and administrative expenses.