VALVOLINE INC

NOTE 6 –LEASE COMMITMENTS

The following table presents the Company's lease balances as of September 30:

The following table presents the components of total lease costs for the years ended September 30:

Other information related to the Company's leases follows for the years ended September 30:

(a)Included within the change in Other assets and liabilities within the Consolidated Statements of Cash Flows offset by noncash operating lease asset amortization and liability accretion.

The following table reconciles the undiscounted cash flows for the next five fiscal years ended September 30 and thereafter to the operating and finance lease liabilities recorded within the Consolidated Balance Sheet as of September 30, 2025:

As of September 30, 2025, Valvoline has additional leases primarily related to its retail service center stores that have not yet commenced with approximately $39.1 million in undiscounted future lease payments that are not included in the table above. These leases are expected to commence over the next twelve months and generally have lease terms of 15 years.

The weighted average remaining lease terms and interest rates as of September 30, 2025 were:

NOTE 7 –INTANGIBLE ASSETS

Goodwill

The following summarizes the changes in the carrying amount of goodwill during fiscal 2025 and 2024:

Other intangible assets

Valvoline’s purchased intangible assets were specifically identified when acquired, have finite lives, and are reported in Goodwill and intangibles, net within the Consolidated Balance Sheets. The following summarizes the gross carrying amounts and accumulated amortization of the Company’s intangible assets as of September 30:

Amortization expense was $14.5 million, $16.7 million, and $16.8 million for the years ended September 30, 2025, 2024, and 2023, respectively. The table that follows summarizes estimated amortization expense for the Company's current intangible assets for the years ended September 30:

NOTE 8 –DEBT

The following table summarizes Valvoline’s debt as of September 30:

Interest expense on long-term debt was $61.9 million, $74.3 million, and $68.5 million, in fiscal 2025, 2024, and 2023, respectively.

Senior Notes

2031 Notes

As of September 30, 2025 and 2024, Valvoline had 3.625% senior unsecured notes due 2031 with an aggregate principal amount of $535.0 million (the “2031 Notes”) outstanding. The 2031 Notes are subject to customary events of default for similar debt securities, which if triggered, may accelerate payment of principal and accrued but unpaid interest. If a change of control repurchase event occurs, Valvoline may be required to offer to purchase the 2031 Notes from the holders thereof. The 2031 Notes are not otherwise required to be repaid prior to maturity, although they may be redeemed at the option of Valvoline at any time prior to maturity in the manner specified in the governing indentures.

2030 Notes

On April 16, 2024, Valvoline completed a tender offer (the “Debt Tender Offer”) with 99.7% of the outstanding principal amount tendered by the holders of the 4.250% senior unsecured notes due 2030 (the “2030 Notes”). The Debt Tender Offer was made to comply with the requirements of the asset sale covenant under the indenture governing the 2030 Notes in connection with the sale of Global Products and Valvoline’s use of the related net proceeds.

The Company used cash and cash equivalents on hand, in addition to borrowing $175.0 million on the Revolver to facilitate the $598.3 million purchase of the 2030 Notes at par, plus accrued and unpaid interest, and cancelled the 2030 Notes accepted for purchase. The Company elected to repurchase the remaining balance outstanding of $1.7 million on April 29, 2024 pursuant to the terms and conditions of the indenture governing the 2030 Notes. In connection with the completion of the Debt Tender Offer, Valvoline recognized a loss on extinguishment of the 2030 Notes of $5.1 million within Net interest and other financing expenses in the Consolidated Statements of Comprehensive Income during the year ended September 30, 2024, comprised of the write-off of related unamortized debt issuance costs and discounts.

Senior Credit Agreement

Key terms and conditions

The Senior Credit Agreement provides an aggregate principal amount of $950.0 million in senior secured credit facilities comprised of (i) afive-year $475.0 million term loan facility (the “Term Loan”) and (ii) afive-year $475.0 million revolving credit facility (the “Revolver”), including a $100.0 million letter of credit sublimit.

The principal amount of the Term Loan under the Senior Credit Agreement is required to be repaid in quarterly installments of approximately $5.9 million, which commenced with the first fiscal quarter after the sale of Global Products, with the remainder due at maturity and prepayment required in the amount of the net cash proceeds from certain events. Amounts outstanding under the Senior Credit Agreement may be prepaid at any time, and from time to time, in whole or part, without premium or penalty. At Valvoline’s option, amounts outstanding under the Senior Credit Agreement will bear interest at either the Secured Overnight Financing Rate (“SOFR”) or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate will fluctuate between SOFR plus 1.375% per year and SOFR plus 2.250% per year (or between the alternate base rate plus 0.375% per year and the alternate base rate plus 1.250% per year), based upon Valvoline’s consolidated total net leverage ratio.

Summary of activity

As of September 30, 2025 and 2024, the Term Loan had outstanding balances of $415.6 million and $439.4 million, respectively, and the Revolver had outstanding balances of $130.0 million and $125.0 million, respectively. Valvoline made payments on the Term Loan of $23.8 million during both fiscal 2025 and 2024. The total borrowing capacity remaining under the Revolver was $341.6 million as of September 30, 2025 due to reductions of $130.0 million and $3.4 million for outstanding borrowings and letters of credit, respectively.

The effective interest rate for the Term Loan was 6.040% and 7.015% as of September 30, 2025 and 2024, respectively, while the effective interest rate for the Revolver was 6.000% and 7.065% as of September 30, 2025 and 2024, respectively.

In fiscal 2023, proceeds from the Term Loan, in addition to a portion of the proceeds from the sale of Global Products, were used to pay in full the outstanding borrowings under the prior Credit Agreement, including the principal balance of the term loan facility of $445.6 million and outstanding borrowings under the revolving credit facility of $290.0 million, as well as accrued and unpaid interest and fees and expenses related to the amendment. The Company recognized $1.1 million of expense within Net interest and other financing expenses in the Consolidated Statements of Comprehensive Income during the year ended September 30, 2023 associated with the modification of the Credit Agreement, which included accelerated amortization of previously capitalized debt issuance costs.

Covenants and guarantees

The Company is required to satisfy certain covenants pursuant to its long-term borrowings. These covenants contain customary limitations, including limitations on liens, additional indebtedness, investments, restricted payments, asset sales, mergers, and affiliate transactions. The maintenance of financial covenants as of the end of each fiscal quarter is required, as defined in the Senior Credit Agreement, including: i) a maximum net leverage ratio of 4.5, which is calculated as net debt divided by Adjusted EBITDA and ii) a minimum interest coverage ratio of 3.0, which is calculated as Adjusted EBITDA divided by net interest expense. Cross-default provisions also exist between certain debt instruments. As of September 30, 2025 and 2024, the Company was in compliance with all debt covenants.

Valvoline’s existing and future subsidiaries (other than certain immaterial subsidiaries, joint ventures, special purpose financing subsidiaries, regulated subsidiaries, non-U.S. subsidiaries and certain other subsidiaries) guarantee obligations under the Senior Credit Agreement, which is also secured by a first-priority security interest in substantially all the personal property assets and certain real property assets of Valvoline and the guarantors, including all or a portion of the equity interests of certain of Valvoline’s domestic subsidiaries and first-tier non-U.S. subsidiaries, and in certain cases, a portion of the equity interests of other non-U.S. subsidiaries. Valvoline's subsidiaries that guarantee obligations under its Senior Credit Agreement also guarantee the Senior Notes, which have not been and are not expected to be registered in exchange offers as debt securities.

Long-term debt maturities

The future maturities of debt outstanding as of September 30, 2025, excluding debt issuance costs and discounts, are as follows:

Lease and franchisee guarantees

The Company guaranteed future payments related to certain leases assigned in connection with the Refranchising Transactions and selling Global Products. Valvoline is obligated to perform if the buyers default on the leases, which have remaining terms ranging from three months to 15 years. The undiscounted maximum potential future payments under the lease guarantees were $63.8 million as of September 30, 2025. In addition, the Company guarantees certain outstanding franchisee debt obligations that have remaining terms ranging fromone tofive years and total $12.4 million as of September 30, 2025. The Company has not recorded a liability for these guarantees as the likelihood of making future payments is not considered probable.

NOTE 9 –INCOME TAXES

Components of income tax expense

Income tax expense consisted of the following for the years ended September 30:

The following presents pre-tax income and the principal components of the reconciliation between the effective tax rate and the U.S. federal statutory income tax rate in effect for the years ended September 30:

The higher effective tax rate in fiscal 2025 primarily reflects decreases in the favorable impact of return to provision adjustments and valuation allowance activity. The higher effective tax rate in fiscal 2024 compared to fiscal 2023 reflects more normalized activity, as fiscal 2023 included a $29.0 million income tax benefit from releasing a valuation allowance under the amended tax matters agreement with Valvoline’s former parent company.

Deferred taxes

A summary of the deferred tax assets and liabilities included in the Consolidated Balance Sheets follows as of September 30:

(a)Gross non-U.S. net operating loss carryforwards of $1.7 million expire in fiscal years 2043 to 2044.

(b)Apportioned gross state net operating loss carryforwards of $108.1 million expire in fiscal years 2029 to 2045.

(c)Credit carryforwards consist primarily of state tax credits that generally expire in fiscal years 2025 through 2032.

(d)Valuation allowances at September 30, 2025 primarily relate to nondeductible executive compensation and net operating loss carryforwards that are not expected to be realized or realizable.

(e)Balances are presented in the Consolidated Balance Sheets based on the net position of each tax jurisdiction.

Prepaid income taxes of $22.3 million and $25.1 million are included in Prepaid expenses and other current assets within the Consolidated Balance Sheets as of September 30, 2025 and 2024, respectively.

Tax indemnities

In connection with Valvoline’s separation from Ashland Global Holdings Inc. (“Ashland”) in fiscal 2017, the Company entered into an agreement (the “Tax Matters Agreement”) with Ashland in September 2016, which provided that Valvoline indemnify Ashland for certain tax matters. Similarly, in connection with the sale of VGO in fiscal 2023, the purchase agreement provided for certain indemnities between Valvoline and VGO. Adjustments to these net indemnities are recorded within Net legacy and separation-related expenses (income), with any resulting impacts to Valvoline's stand-alone income tax provision recorded in Income tax expense within the Consolidated Statements of Comprehensive Income.

During fiscal 2023, Valvoline recognized an income tax benefit of $29.0 million in connection with releasing its valuation allowance and $25.7 million of pre-tax expense within Net legacy and separation-related expenses in the Consolidated Statement of Comprehensive Income, reflecting its increased estimated indemnity obligation under the terms of the amended Tax Matters Agreement to Ashland.

Unrecognized tax benefits

The aggregate changes in the balance of gross unrecognized tax benefits were as follows for the years ended September 30:

(a)These unrecognized tax benefits would favorably impact the effective income tax rate, primarily for discontinued operations, if recognized. Accruals for interest and penalties were $6.5 million and $1.8 million as of September 30, 2025 and 2024, respectively.

The Company's U.S. federal income tax returns remain open to examination from fiscal 2019 forward and Canada from fiscal 2021 and forward. Fiscal years including and after 2019 remain open to examination by certain U.S. state jurisdictions.

Because Valvoline is routinely under examination by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during fiscal 2026. Due to the complexity and number of open years, it is not practical to estimate the amount or range of such change at this time. Based on current information available, management does not expect a material change to the Company's gross unrecognized tax benefits within fiscal 2026.

NOTE 10 –EMPLOYEE BENEFIT PLANS

Pension and other postretirement plans

The components of pension and other postretirement plans net periodic benefit costs (income) and the assumptions used in this determination are summarized below for the years ended September 30:

Valvoline recognizes the change in the fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for remeasurement. These gains and losses are reported within Net pension and other postretirement plan expenses (income) in the Consolidated Statements of Comprehensive Income and included a loss of $26.6 million for the year ended September 30, 2025, a gain of $2.4 million for the year ended September 30, 2024, and a gain of $41.6 million for the year ended September 30, 2023.

The fiscal 2025 loss was primarily attributed to lower-than-expected returns on plan assets, partially offset by an increase in discount rates. The fiscal 2024 gain was primarily attributed to lower discount rates, partially offset by higher-than-expected returns on plan assets. The fiscal 2023 gain was primarily attributed to an increase in discount rates, partially offset by lower-than-expected returns on plan assets.

The following table summarizes the net periodic benefit costs (income) and the amortization of prior service credits recognized during the years ended September 30:

Obligations and funded status

Changes in benefit obligations and the fair value of plan assets, as well as key assumptions used to determine the benefit obligations, and the amounts in the Consolidated Balance Sheets for the Company’s pension and other postretirement plans are summarized below as of September 30:

(a)Noncurrent benefit assets are recorded in Other noncurrent assets within the Consolidated Balance Sheets.

(b)Current benefit liabilities are recorded in Accrued expenses and other liabilities within the Consolidated Balance Sheets.

(c)Noncurrent benefit liabilities are recorded in Employee benefit obligations within the Consolidated Balance Sheets and also include $0.4 million as of September 30, 2025 and 2024 for liabilities associated with a long-term disability benefit plan sponsored by Valvoline.

(d)The assumed pre-65 health care cost trend rate continues to be reduced to 4.0% in 2050 and thereafter.

Accumulated benefit obligation

The accumulated benefit obligation for all pension plans was $1.5 billion and $1.6 billion as of September 30, 2025 and 2024, respectively. Pension plans with projected and accumulated benefit obligations in excess of the fair value of plan assets follows for the Company’s plans as of September 30:

Plan assets

Pension plan asset investments and their level within the fair value hierarchy is summarized below as of:

The carrying value of cash and cash equivalents approximates fair value.

Government securities

Government securities are valued based on Level 2 inputs, which include yields available for comparable securities of issuers with similar credit ratings.

Corporate debt instruments

Corporate debt instruments are valued based on Level 2 inputs that are observable in the market or may be derived principally from, or corroborated by, recently executed transactions, observable market data such as pricing for similar securities, cash flow models with yield curves, counterparty credit ratings, and credit spreads applied using the maturity and coupon interest rate terms of the debt instrument.

Private equity and hedge funds

Private equity and hedge funds primarily represent alternative investments not traded on an active market which are valued at the NAV per share determined by the manager of the fund based on the fair value of the underlying net assets owned by the fund divided by the number of shares or units outstanding.

Collective trust funds

Collective trust funds are comprised of a diversified portfolio of investments across various asset classes, including U.S. and international equities, fixed-income securities, commodities and currencies. The collective trust funds are valued using a NAV provided by the manager of each fund, which is based on the underlying net assets owned by the fund, divided by the number of shares outstanding.

Other investments

Other investments are primarily comprised of swaps that are valued using closing market swap curves and market derived inputs.

The following summarizes investments for which fair value is measured using the NAV per share practical expedient as of September 30, 2025:

(a)These hedge funds and private equity instruments are in the process of liquidation and the timing is unknown.

Investments and strategy

In developing an investment strategy for its defined benefit plans, Valvoline considered the following factors: the nature of the liabilities of the plans; the allocation of liabilities between active, deferred and retired plan participants; the funded status of the plans; the applicable investment horizon; the respective size of the plans; and historical and expected investment returns. Valvoline’s pension plan assets are managed by outside investment managers, which are monitored against investment benchmark returns and Valvoline's established investment strategy. Investment managers are selected based on an analysis of, among other things, their investment process, historical investment results, frequency of management turnover, cost structure, and assets under management. Assets are periodically reallocated between investment managers to optimize returns and maintain an appropriate asset mix and diversification of investments.

The current target asset allocation for the plans is 90% fixed income securities and 10% equity-based securities. Fixed income securities are liability matching assets that primarily include long duration, high grade corporate debt obligations. Equity-based securities are return-seeking assets that include both traditional equities as well as a mix of non-traditional assets such as hedge and commingled funds and private equity. Investment managers may employ a limited use of futures or other derivatives to manage risk within the portfolio through efficient exposure to markets. Valvoline’s pension plans hold a variety of investments designed to diversify risk and achieve an adequate net investment return to provide for future benefit payments to its participants.

The weighted-average asset allocations for Valvoline’s plans by asset category follow as of September 30:

The basis for determining the expected long-term rate of return is a combination of future return assumptions for the various asset classes in Valvoline’s investment portfolio based on active management, historical analysis of previous returns, market indices, and a projection of inflation, net of plan expenses.

Funding and benefit payments

During fiscal 2026, Valvoline does not plan to contribute to its qualified pension plans and contributions to its non-qualified pension plans are not expected to be material.

The following benefit payments, which reflect future service expectations, are projected to be paid in each of the next five fiscal years ended September 30 and the five fiscal years thereafter in aggregate:

Other plans

Defined contribution and other defined benefit plans

Valvoline sponsors certain defined contribution savings plans that provide matching contributions. Expense associated with these plans was $15.2 million in fiscal 2025, $14.1 million in fiscal 2024 and $12.5 million in fiscal 2023.

NOTE 11 –LITIGATION, CLAIMS AND CONTINGENCIES

From time to time, Valvoline is party to lawsuits, claims and other legal proceedings that arise in the ordinary course of business. The Company establishes liabilities for the outcome of such matters where losses are determined to be probable and reasonably estimable. Where appropriate, the Company has recorded liabilities with respect to these matters, which were not material for the periods presented as reflected in the consolidated financial statements herein. There are certain claims and legal proceedings pending where loss is not determined to be probable or reasonably estimable, and therefore, accruals have not been made. In addition, there are currently no matters for which management believes a material loss is at least reasonably possible.

In all instances, management has assessed each matter based on current information available and made a judgment concerning its potential outcome, giving due consideration to the amount and nature of the claim and the probability of success. The Company believes it has established adequate accruals for liabilities that are probable and reasonably estimable.

Although the ultimate resolution of these matters cannot be predicted with certainty and there can be no assurances that the actual amounts required to satisfy liabilities from these matters will not exceed the amounts reflected in the consolidated financial statements, based on information available at this time, it is the opinion of management that such pending claims or proceedings will not have a material adverse effect on its consolidated financial statements.

NOTE 12 -EARNINGS PER SHARE

The following summarizes basic and diluted EPS for the years ended September 30:

(a)There were 0.1 million outstanding securities, primarily SARs, not included in the computation of diluted earnings per share in the years ended September 30, 2025, and 2024 because the effect would have been antidilutive and 0.2 million for the year ended September 30, 2023.

NOTE 13 -STOCKHOLDERS' EQUITY

Accumulated other comprehensive income

Changes in Accumulated other comprehensive income by component for fiscal years 2025 and 2024 were as follows:

Amounts reclassified from Accumulated other comprehensive (loss) income follow for the years ended September 30:

(a)Amortization of unrecognized prior service credits included in net periodic benefit income for pension and other postretirement plans was reported in Net pension and other postretirement plan expenses (income) within the Consolidated Statements of Comprehensive Income. The Company releases the income tax effects from Accumulated other comprehensive income as benefit plan credits are amortized into earnings.

(b)Reflects the realization of $4.4 million of currency translation losses included in the net assets held for sale, recognized upon recording an impairment loss in connection with the classification of a former Global Products business as held for sale and realized upon the completion of the sale in the first quarter of fiscal 2024. Additionally, includes the realization of $30.7 million in currency translation losses and $0.1 million in unamortized pension prior service credits, both recognized within (Loss) income from discontinued operations, net of tax in the Consolidated Statement of Comprehensive Income in fiscal 2023.

(c)Represents the realization of gains from cash flow hedges reported in Net interest and other financing expenses within the Consolidated Statements of Comprehensive Income.

Modified “Dutch auction” tender offer

During fiscal 2023, Valvoline completed a modified “Dutch auction” tender offer and accepted 27.0 million shares for an aggregate purchase price of $1.024 billion, excluding fees and related expenses. Valvoline incurred $16.4 million in fees and expenses, which included $10.2 million for excise taxes on share repurchases. These costs were recognized within Retained earnings during the year ended September 30, 2023 as costs to repurchase the Company’s common stock. Shares repurchased were retired and returned to the status of authorized, unissued shares.

NOTE 14 -REPORTABLE SEGMENTS INFORMATION

The Chief Executive Officer serves as Valvoline’s Chief Operating Decision Maker (“CODM”). The CODM evaluates financial performance and makes operating decisions, including the allocation of resources, based on financial data presented on a consolidated basis as the Company has determined that it operates as a single reportable segment.

Income from continuing operations, as reported in the Consolidated Statements of Comprehensive Income, is the primary measure used by the CODM to assess performance and guide operating decisions. In addition, the CODM uses income from continuing operations to identify underlying trends in business performance and to monitor actual results against budget.

The following table presents the significant segment expenses and the Company’s measure of profit or loss:

(a)Other segment items primarily include items such as net legacy and separation-related expenses, other income, net, net pension and postretirement costs, net interest and other financing expense, and income tax expense, which are included in the Company’s Consolidated Statements of Comprehensive Income.

NOTE 15 –SUPPLEMENTAL BALANCE SHEET INFORMATION

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets to the totals shown within the Consolidated Statements of Cash Flows for the years ended September 30:

(a)Refer to Note 3 for additional information regarding the asset group classified as held for sale at September 30, 2023.

(b)Included in Prepaid expenses and other current assets within the Consolidated Balance Sheets.

Accounts and other receivables

The following summarizes Valvoline’s accounts and other receivables in the Consolidated Balance Sheets as of September 30:

(a) Included in Other noncurrent assets within the Consolidated Balance Sheets.

Property, plant and equipment

The following table summarizes the various components of property, plant and equipment within the Consolidated Balance Sheets as of September 30:

The following table summarizes finance lease assets included in net property, plant and equipment as of September 30:

Non-cash transactions, including finance leases, recognized within total property, plant and equipment were $64.2 million and $18.3 million during the years ended September 30, 2025 and 2024, respectively.

The following summarizes expense associated with property, plant and equipment recognized within the Consolidated Statements of Comprehensive Income for the years ended September 30:

Long-lived assets

The following presents long-lived assets comprised of net property, plant and equipment and operating lease assets by geographic area in which the assets physically reside for the years ended September 30:

Accrued payroll expenses

Included in Accrued expenses and other liabilities within the Consolidated Balance Sheets were $20.5 million and $18.8 million of accrued payroll expenses as of September 30, 2025 and September 30, 2024, respectively.

Obligations to former parent company

Liabilities due to Valvoline’s former parent company, Ashland, represent the indemnities estimated to be due per the Tax Matters Agreement and reimbursements for certain other contractual obligations that were transferred in connection with the separation. These obligations were $25.2 million and $28.0 million as of September 30, 2025 and September 30, 2024, respectively, and are reflected within the Consolidated Balance Sheets primarily as Accrued expenses and other liabilities based on the required and currently expected timing of resolution. The recorded obligations represent management’s best estimates and ultimate resolution of these matters could result in additional costs that are currently not reasonably estimable.

NOTE 16 –SUBSEQUENT EVENTS

Refranchising

During October 2025, the Company entered into an agreement and completed the sale of 10 company-owned service center stores and related net assets to a franchisee. The Company will derecognize the related net assets and expects to recognize a gain on sale in the first quarter of fiscal 2026 to reflect the completion of this transaction.

Breeze Autocare acquisition

In February 2025, Valvoline signed a definitive agreement to acquire Breeze Autocare from Greenbriar. Breeze Autocare is an independent provider of automotive quick lube and other preventive maintenance services operating predominantly under the Oil Changers brand, with an extensive footprint in California, Texas, and the Midwest.

In November 2025, Valvoline received clearance from the Federal Trade Commission (“FTC”) to close the acquisition of Breeze Autocare subject to a Decision and Order from the FTC. Valvoline will acquire 207 Breeze Autocare stores, and consistent with the Decision and Order, Valvoline will divest 45 of those locations to Mainstreet Auto, LLC (“Mainstreet”), for a net purchase price of $593 million, subject to (i) adjustments for store acquisitions and sale-leaseback transactions completed by Breeze Autocare since signing and (ii) customary closing adjustments. The Breeze Autocare acquisition is expected to close on December 1, 2025, with the divestiture to Mainstreet occurring shortly thereafter. The Company intends to fund the Breeze Autocare acquisition with a newly issued $740 million Term Loan B commensurate with the closing of the transaction with excess proceeds being used to pay down outstanding debt.