VALVOLINE INC

The following summarizes the results of the Company’s continuing operations for the periods ended March 31:

(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 $100.6 million, or 25.0% for the three months ended March 31, 2026 compared to the prior year period, primarily reflecting network growth of 331 net new system-wide stores, driven by the Breeze acquisition and other openings. System-wide SSS also increased 8.2%, supported by higher average ticket from net pricing benefits, ongoing premiumization, and non-oil change service penetration, along with favorable transaction trends. These increases were partially offset by lower net revenues due to disposition activity. The following reconciles the year-over-year change in net revenues:

For the six months ended March 31, 2026, Net revenues increased $148.1 million, or 18.1% compared to the prior year, driven primarily by network growth, including the Breeze acquisition, as well as improvements in service mix and pricing. System-wide SSS revenue grew 7.0%, reflecting higher average ticket from net pricing benefits, continued premiumization, and favorable transaction trends. These benefits were partially offset by the impact of disposition activity. The following reconciles the year-over-year change in year-to-date net revenues:

Gross profit

Gross profit increased $36.5 million, or 24.3%, for the three months ended March 31, 2026 compared to the prior year period driven by contributions from acquired stores and service mix. These increases were partially offset by higher expenses associated with network expansion, including depreciation, as well as higher labor and other service delivery costs. The following reconciles the year-over-year change in gross profit:

Gross profit margin declined slightly in the three months ended March 31, 2026 compared to the prior year period, primarily reflecting higher store operating expenses, including depreciation related to new store growth, the impact of recent dispositions, and higher labor and other service delivery costs. These impacts were partially offset by improved product cost leverage.

Gross profit improved $56.1 million, or 18.5%, for the six months ended March 31, 2026 compared to the prior year period, primarily driven by volume growth, including contributions from acquired stores, service mix, and pricing. These increases were partially offset by higher expenses associated with network expansion, including depreciation from new stores and other store growth investments. The following reconciles the year-over-year change in year-to-date gross profit:

Gross profit margin improved in the six months ended March 31, 2026 compared to the prior year period, primarily reflecting favorable product costs and labor efficiency, partially offset by higher store operating expenses related to new store growth and the impact of the recent dispositions.

Net operating expenses

Details of the components of net operating expenses are summarized below for the periods ended March 31:

Selling, general and administrative expenses increased by $15.1 million and $41.5 million for the three and six months ended March 31, 2026 compared to the prior year periods. The increases reflect continued investments to scale the business and support long-term growth. The primary contributors were outside services, talent, and advertising, which combined to increase expense by $8.3 million and $18.2 million in the three and six months ended March 31, 2026, respectively. Additionally, investment and divestiture activity increased selling, general and administrative expenses by $4.5 million and $18.9 million in the three and six months ended March 31, 2026, respectively primarily related to consulting fees and professional services to support legal, regulatory, diligence and integration efforts.

Net legacy and separation-related expenses increased $0.1 million and $4.9 million for the three and six months ended March 31, 2026, respectively, compared to the prior year primarily due to expenses associated with legacy businesses and an increase in estimated reserves related to certain obligations assumed from the Company’s former parent company.

Other loss (income), net was unfavorable by $2.2 million and $116.1 million for the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the Company’s disposition activity. For the six months ended March 31, 2026, the variance was due in large part to the $57.9 million pre-tax loss on the FTC-required divestiture of 45 Breeze stores immediately following the Breeze acquisition. Further, in the current year-to-date period, the Company recorded a $14.8 million gain on the sale of 10 company-operated stores, compared to a $74.2 million gain on the sale of 39 stores in the prior year.

Net pension and other postretirement plan activity

Net pension and other postretirement plan activity was favorable compared to the prior year by $0.3 million and $0.6 million for the three and six months ended March 31, 2026, respectively, due to lower interest costs attributed to the decline in discount rates, partially offset by lower recurring expected returns on plan assets as a result of the most recent annual remeasurement of the plans.

Net interest and other financing expenses

Net interest and other financing expenses increased $10.8 million and $18.8 million for the three and six months ended March 31, 2026, respectively, compared to the prior year periods. The increases were primarily driven by higher interest expense of $10.2 million and $12.8 million, respectively, largely attributable to the addition of the Term Loan B.

Additionally, during the six months ended March 31, 2026, the Company incurred $4.7 million of fees to maintain access to the Term Loan B and related financing in advance of the Breeze acquisition closing, at which time the Term Loan B became effective.

Income tax provision

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

The year-over-year changes in the effective tax rate for the three and six months ended March 31, 2026 were primarily attributed to the Breeze acquisition and immediate divestiture required for 45 of the acquired stores. The pre-tax loss on divestiture did not generate a tax benefit; rather, nondeductible goodwill drove an unfavorable tax effect of $20.0 million and contributed to a taxable gain on the divestiture that resulted in $6.3 million of income tax expense in the six months ended March 31, 2026. Additionally, certain transaction costs became nondeductible in connection with the acquisition close and increased income tax expense by $4.8 million in the current year-to-date period.

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 $0.2 million and $1.9 million in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the reduced level of post-sale activity following the divestiture of the former Global Products business. As time has passed since the sale, separation activities have concluded, and the remaining expenses are largely limited to post-closing tax matters and indemnities.

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 $29.2 million and $43.8 million in the three and six months ended March 31, 2026, respectively, compared to the prior year periods. The increase was primarily driven by gross profit expansion, including higher volumes, contributions from network growth, and improvements in pricing and cost efficiency. These benefits more than offset the impacts of dispositions and higher selling, general, and administrative expenses.