VALVOLINE INC

Notes to Condensed Consolidated Financial Statements (Unaudited)

NOTE 1 –BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been prepared by Valvoline Inc. (“Valvoline” or the “Company”) in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and Securities and Exchange Commission regulations for interim financial reporting, which do not include all information and footnote disclosures normally included in annual financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with Valvoline’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Certain prior period amounts have been reclassified to conform to the current presentation.

Use of estimates, risks and uncertainties

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent matters. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions.

Sale of Global Products business

On March 1, 2023, Valvoline completed the sale of its former Global Products reportable segment (“Global Products”) to Aramco Overseas Company B.V. The operating results and cash flows associated with and directly attributed to the Global Products disposal group are reflected as discontinued operations within these condensed consolidated financial statements. Unless otherwise noted, disclosures within these remaining Notes to Condensed Consolidated Financial Statements relate solely to the Company's continuing operations.

Recent accounting pronouncements

The following accounting guidance relevant to Valvoline was either issued or adopted in the current fiscal year or is expected to have a meaningful impact on Valvoline in future periods upon adoption.

Issued but not yet adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued guidance which enhances income tax disclosure requirements to include additional disaggregation within the effective tax rate reconciliation and income taxes paid. This guidance will be effective for Valvoline beginning with its fiscal 2026 annual financial statements, with early adoption permitted. The Company plans to adopt the guidance retrospectively and has completed its assessment of the new requirements. Adoption is expected to result in enhanced income tax disclosures with no impact to its results of operations, cash flows, or financial condition.

In November 2024, the FASB issued guidance which requires enhanced disclosure of specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the face of the income statement. This guidance will be effective for Valvoline beginning with its fiscal 2028 Form 10-K and interim periods beginning in fiscal 2029, with early adoption permitted, in addition to either prospective or retrospective application. The Company is currently evaluating this guidance to determine its adoption approach and the impact on the presentation and disclosure of its consolidated income statement and expenses. The Company anticipates its processes will be enhanced to address the disaggregation and disclosure requirements, though it does not expect adoption to impact its overall results from operations.

In September 2025, the FASB issued new guidance related to accounting for internal-use software costs. The new standard removes references to software development project stages, making the guidance easier to apply and neutral across different software development methods. The update is effective for fiscal years beginning after December 15, 2027, including interim periods within those years. Early adoption is permitted and the guidance can be applied on a prospective transition approach, a retrospective transition approach, or a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption. Valvoline does not expect the adoption of this guidance to have a material impact on its consolidated financial statements, based on its existing practices and policies.

NOTE 2 -FAIR VALUE MEASUREMENTS

Recurring fair value measurements

The following tables set forth the Company’s financial assets and liabilities by level within the fair value hierarchy for those measured at fair value on a recurring basis:

(a)Funds measured at fair value using the net asset value ("NAV") per share practical expedient have not been classified in the fair value hierarchy.

Fair value disclosures

Long-term debt is reported in the Company’s Condensed Consolidated Balance Sheets at carrying value, rather than fair value and is therefore excluded from the disclosure above of financial assets and liabilities measured at fair value within the condensed consolidated financial statements on a recurring basis. The fair value of the Company's outstanding fixed rate senior notes shown below is based on recent trading values, which is considered a Level 2 input within the fair value hierarchy.

(a)Carrying values shown are net of unamortized discounts and debt issuance costs.

Refer to Note 5 for details of the senior notes and Valvoline's other debt instruments that have variable interest rates with carrying amounts that approximate fair value.

NOTE 3 -ACQUISITIONS AND DISPOSITIONS

Store acquisitions

The transactions summarized herein were accounted for as business combinations and the operating results of all acquired entities are included within the consolidated operating results of the Company from the date of each respective acquisition. The Company’s acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. The fair values are preliminary for up to one year from the date of acquisition as they may be subject to measurement period adjustments if new information is obtained about facts and circumstances that existed as of the acquisition date.

Breeze Autocare

On December 1, 2025, the Company acquired 100% of the equity interests in Breeze Autocare (“Breeze”) for total cash consideration of $637.4 million, subject to certain customary post-closing adjustments. Breeze is a provider of automotive quick lube and other preventive maintenance services operating predominantly under the Oil Changers SM brand with stores in California, Texas, and the Midwest. The acquisition initially included 204 service center stores and aligns with the Company’s strategy to expand the store network in key markets. The Company funded the Breeze acquisition with an amendment to its Senior Credit Agreement to add aseven-year $740.0 million term loan facility (the “Term Loan B”) commensurate with the closing of the transaction with excess proceeds used to pay down outstanding debt. Refer to Note 5 for further discussion regarding the Term Loan B.

Fair values were determined by a third-party valuation firm that utilized management inputs, estimates, and assumptions through a combination of recognized valuation methodologies including the income, market and cost approaches. Property, plant, and equipment acquired was valued using a combination of cost and market approaches. Lease assets and liabilities and identifiable intangible assets were valued using an income approach, and the held for sale disposal group fair value was estimated using a market approach. Each of these approaches utilized unobservable Level 3 inputs, which included market prices observed in comparable transactions (market approach), replacement cost (cost approach), and estimates of future cash flows (income approach). Management ultimately oversees the third-party valuation firm to ensure that the transaction-specific assumptions are appropriate for the Company.

The purchase consideration was allocated to the identifiable assets acquired and liabilities assumed based on their respective acquisition date fair values with the excess of the purchase consideration recognized as goodwill as shown below:

(a)Includes measurement period adjustments recorded through June 30, 2026.

(b)Includes finance lease assets in property, plant and equipment and finance lease liabilities in other current and noncurrent liabilities. Finance lease assets acquired were $45.1 million andfinance lease liabilities assumed were $3.9 million and $57.0 million in other current and noncurrent liabilities, respectively.

(c)Goodwill is not deductible for income tax purposes and is assigned to the Company’s single reporting unit expected to benefit from the synergies of the acquisition. Goodwill is primarily attributed to the operational synergies and potential growth expected to result in economic benefits in the respective markets of the acquisition.

(d)Intangible assets acquired December 1, 2025 have a weighted average amortization period of 10 years.

(e)The disposal group met the criteria to be classified as held for sale and was measured as a unit of account at fair value less costs to sell as of the acquisition date. Net assets held for sale were disposed on December 1, 2025 in connection with the FTC-required divestiture and sale, as discussed in the Dispositions — Breeze Disposal below, and are no longer held for sale as of June 30, 2026.

During the nine months ended June 30, 2026, the Company recorded measurement period adjustments of $29.1 million, primarily consisting of a reduction in net deferred tax liabilities of $27.9 million included within Other noncurrent liabilities on the Condensed Consolidated Balance Sheets, with a corresponding offset to decrease goodwill. The adjustments to net deferred tax liabilities primarily relate to the partial release of a valuation allowance on interest deduction carryforwards.

The Company incurred $1.1 million and $16.7 million in third-party costs pertaining to the acquisition of Breeze, which are included in Selling, general and administration expenses in the Condensed Consolidated Statements of Comprehensive Income during the three and nine months ended June 30, 2026, respectively. Net revenues and Net income from the Breeze acquisition included in the Company's results since December 1, 2025, the date of the acquisition, are $50.8 million and $5.8 million for the three months ended June 30, 2026, respectively, and $117.1 million and $13.1 million for the nine months ended June 30, 2026, respectively.

The following table presents the unaudited pro forma information summarizing the combined results of operations for Valvoline and Breeze, prepared as if the Breeze acquisition occurred on October 1, 2024:

These pro forma amounts are calculated after applying the Company's accounting policies and adjusting the results to reflect the incremental amortization of acquired intangible assets and interest expense on acquisition-related debt. Material nonrecurring adjustments, such as the $16.7 million in transaction costs and the $57.9 million pre-tax loss on the sale of the divested locations have been included as if the Breeze acquisition had occurred on October 1, 2024. The pro forma net income amounts also incorporate adjustments to reflect the income tax effects of the pro forma adjustments described above.

The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have actually occurred had the acquisition been completed on the date assumed, nor is it intended to project future results. The unaudited pro forma results exclude the impact of any cost synergies or integration benefits.

Other acquisitions

In addition to the Breeze acquisition, the Company acquired 21 service center stores in single and multi-store transactions, including seven former Express Care locations converted to company-operated service center stores andfour former franchise locations, for an aggregate purchase price of $19.7 million during the nine months ended June 30, 2026, inclusive of goodwill of $15.3 million as of June 30, 2026. These acquisitions expand Valvoline's retail presence in key North American markets and contributed to growing the number of company-operated service center stores to 1,232 as of June 30, 2026.

Dispositions

Breeze disposal

Immediately following the Breeze acquisition,45 of the acquired Breeze stores were sold in accordance with the Federal Trade Commission (“FTC”) Decision and Order that required the disposal of certain acquired locations for the Company to receive regulatory clearance to close the Breeze acquisition. The Company determined that these stores represented a disposal group and met the held-for-sale criteria as of the acquisition date; therefore, the Company measured the disposal group at fair value less costs to sell as a single unit of account, which was determined to be $90.0 million.

The Company determined that this disposal transaction was not orderly and the sale proceeds did not represent fair value of the disposal group due to the regulatory compulsion imposed by the FTC to sell the 45 stores under a compressed timeline, including FTC approval of the buyer and purchase agreement, and insufficient market exposure for the Company to conduct customary marketing activities for the sale of such stores. Accordingly, the fair value was estimated using a market approach, specifically the guideline merged and acquired company method, based on valuation multiples observed in comparable quick lube retail transactions. The selected valuation multiple reflected market participant assumptions and was adjusted for differences in scale, absence of brand and intellectual property, and other operational characteristics of the divested stores relative to the comparable transactions. The non-recurring fair value measurement of the disposal group has been categorized as Level 3 due to the unobservable inputs utilized in the valuation.

The table below shows the components of the pre-tax loss on sale included within Other (income) loss, net in the Condensed Consolidated Statement of Comprehensive Income for the nine months ended June 30, 2026.

(a)Carrying amount of disposal group at disposition represents fair value less costs to sell. Note that costs to sell were de minimis and waived as immaterial for further consideration.

Other dispositions

Valvoline completed the sale of 10 company-operated service center stores to a franchisee during the first fiscal quarter of 2026 and completed the sale of 39 company-operated service center stores to a new franchisee during the first fiscal quarter of 2025. Valvoline recognized pre-tax gains on sale of $14.3 million and $74.3 million within Other (income) loss, net in the Condensed Consolidated Statements of Comprehensive Income related to these transactions during the nine months ended June 30, 2026 and 2025, respectively.

NOTE 4 -INTANGIBLE ASSETS

Goodwill

The following table summarizes changes in the carrying amount of goodwill during the nine months ended June 30, 2026:

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 Condensed Consolidated Balance Sheets. The following summarizes the gross carrying amounts and accumulated amortization of the Company’s intangible assets:

The table that follows summarizes the actual and estimated amortization expense for the Company's current amortizable intangible assets:

NOTE 5 -DEBT

The following table summarizes Valvoline’s total debt as of:

(a)As of June 30, 2026, the total borrowing capacity remaining under the $475.0 million revolving credit facility was $470.1 million due to a reduction of $4.9 million for letters of credit outstanding.

As of June 30, 2026, Valvoline was in compliance with all covenants under its long-term borrowings.

Senior Credit Agreement

Key terms and conditions

In December 2025, Valvoline amended its Senior Credit Agreement commensurate with closing the acquisition of Breeze to add aseven-year $740.0 million Term Loan B.

On June 30, 2026, the Company further amended the Senior Credit Agreement to refinance the interest rates for the Term Loan B. Under the amended agreement, at Valvoline’s option, amounts outstanding under the Term Loan B bear interest at either the adjusted term Secured Overnight Financing Rate (“SOFR”) plus 1.750% per year (2.000% per year prior to latest amendment) or the base rate plus 0.750% per year (1.000% per year prior to latest amendment). The effective interest rate for the Term Loan B was 5.393% as of June 30, 2026.

The principal balance of the Term Loan B is required to be repaid in quarterly installments of approximately $1.9 million with the balance due at maturity. Amounts outstanding under the Term Loan B may be prepaid at any time, and from time to time, in whole or part, with a 1.000% premium for certain pricing transactions occurring within the six-month period following June 30, 2026.

Summary of activity

The net proceeds from the Term Loan B were used to fund the Breeze acquisition with the remaining proceeds used to pay down the outstanding balance on the revolving credit facility (“Revolver”).

During the three months ended June 30, 2026, Valvoline made a $50.0 million prepayment of principal on the Term Loan A.

Lease and franchisee guarantees

The Company guaranteed future payments related to certain leases assigned in connection with divesting retail stores and the Global Products business. Valvoline is obligated to perform if the buyers of the divested businesses default on the leases, which have remaining terms ranging from 9 months to 30 years. The undiscounted maximum potential future payments under the lease guarantees were $93.4 million as of June 30, 2026. In addition, the Company guaranteed certain outstanding franchisee debt obligations that have remaining terms ranging from 5 months tofour years and total $12.4 million as of June 30, 2026. The Company has not recorded a liability for these guarantees as the likelihood of making future payments is not considered probable.

NOTE 6 –INCOME TAXES

Income tax provisions for interim quarterly periods are based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent or unusual discrete items related specifically to interim periods. The following summarizes income tax expense and the effective tax rate in each interim period:

The year-over-year change in the effective tax rate for the three months ended June 30, 2026 reflected lower nondeductible transaction costs associated with the Breeze acquisition as acquisition-related activities were substantially completed.

The year-over-year change in the effective tax rate for the nine months ended June 30, 2026, was primarily attributed to the Breeze acquisition and the immediate FTC-required divestiture of 45 acquired stores. The $57.9 million pre-tax loss on divestiture did not generate a tax benefit; rather, nondeductible goodwill drove an unfavorable tax effect and contributed to a taxable gain on the divestiture that resulted in $6.3 million of income tax expense in the nine months ended June 30, 2026. Additionally, certain transaction costs became nondeductible in connection with the acquisition close and increased income tax expense by $4.3 million in the current year-to-date period.

NOTE 7 –EMPLOYEE BENEFIT PLANS

The following table summarizes the components of Net pension and other postretirement plan income within the Condensed Consolidated Statements of Comprehensive Income:

NOTE 8 –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 condensed 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 condensed 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 condensed consolidated financial statements.

NOTE 9 -EARNINGS PER SHARE

The following table summarizes basic and diluted earnings per share:

(a)There were 0.5 million and 0.6 million outstanding stock appreciation rights excluded from the computation of diluted earnings per share in the three and nine months ended June 30, 2026, respectively, and 0.1 million in the three and nine months ended June 30, 2025, respectively, because the effect would have been antidilutive.

NOTE 10 -REPORTABLE SEGMENT 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 Condensed 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) loss, net, Net pension and postretirement income, Net interest and other financing expenses, and Income tax expense, which are included in the Company’s Condensed Consolidated Statements of Comprehensive Income.

NOTE 11 -SUPPLEMENTAL FINANCIAL INFORMATION

Accounts and other receivables

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

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

Revenue recognition

The following disaggregates the Company’s net revenues by timing of revenue recognized:

The following table summarizes net revenues by category: