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 $105.6 million, or 24.1% for the three months ended June 30, 2026 compared to the prior year period, primarily driven by network growth of 332 net new system-wide stores, including contributions from the Breeze acquisition and other store openings. System-wide SSS also increased 8.0%, supported by higher average ticket from pricing actions, ongoing premiumization, and non-oil change service penetration, along with modest growth in transactions. These increases were partially offset by lower net revenues resulting from disposition activity. The following reconciles the year-over-year change in net revenues:

For the nine months ended June 30, 2026, Net revenues increased $253.7 million, or 20.2% compared to the prior year, primarily driven by network expansion, including the Breeze acquisition and other store openings, which increased the system-wide store base. System-wide SSS revenue grew 7.4%, reflecting the benefits of pricing actions, continued growth in premiumization, and higher transaction volumes. These favorable impacts were partially offset by lower revenues associated with disposition activity. The following reconciles the year-over-year change in year-to-date net revenues:

Gross profit

Gross profit increased $37.3 million, or 21.0%, for the three months ended June 30, 2026 compared to the prior year period driven by contributions from acquired stores and network growth. These increases were partially offset by higher expenses associated with network expansion, including labor, depreciation, occupancy, and other service delivery costs. The following reconciles the year-over-year change in gross profit:

Gross profit margin declined 1.0% in the three months ended June 30, 2026 compared to the prior year period, primarily reflecting higher store operating expenses, including depreciation and occupancy costs associated with network expansion and acquisitions, as well as higher labor, and other service delivery costs.

Gross profit improved $93.4 million, or 19.4%, for the nine months ended June 30, 2026 compared to the prior year period, primarily driven by favorable service mix, volume growth, including contributions from acquired stores, and pricing. These increases were partially offset by higher costs associated with supporting network expansion, including labor, occupancy, depreciation, and other service delivery expenses. The following reconciles the year-over-year change in year-to-date gross profit:

Gross profit margin declined 0.3% in the nine months ended June 30, 2026 compared to the prior year period, as favorable product costs and labor efficiency were more than offset by higher store operating expenses associated with network growth and the impact of recent dispositions.

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 (“SG&A”) increased by $20.2 million and $61.7 million for the three and nine months ended June 30, 2026, respectively, compared to the prior year periods. The increases reflect continued investments to scale the business and support long-term growth, including the current year Breeze acquisition. The primary contributors were outside services, talent, advertising, and technology which combined to increase expense by $13.5 million and $33.5 million in the three and nine months ended June 30, 2026, respectively. Additionally, investment and divestiture activity, namely the acquisition of Breeze, increased SG&A by $5.2 million and $24.1 million in the three and nine months ended June 30, 2026, respectively, primarily related to consulting fees and professional services to support legal, regulatory, diligence and integration efforts.

Net legacy and separation-related expenses decreased $0.3 million for the three months ended June 30, 2026 compared to the prior year period, primarily due to lower expenses associated with legacy businesses. Net legacy and separation-related expenses increased $4.6 million for the nine months ended June 30, 2026 compared to the prior year period, primarily due to an increase in estimated reserves related to certain obligations assumed from the Company's former parent company.

Other (income) loss, net was favorable by $0.1 million for the three months ended June 30, 2026 and unfavorable by $116.0 million for the nine months ended June 30, 2026 compared to the prior year periods, reflecting differences in the Company's store disposition activity between periods. The year-to-date variance was primarily driven by a $57.9 million pre-tax loss recognized on the FTC-required divestiture of 45 Breeze stores immediately following the Breeze acquisition. Further, in the current year-to-date period, the Company recognized a $14.3 million gain on the sale of 10 company-operated stores, compared to a $74.3 million gain on the sale of 39 stores in the prior year period.

Net pension and other postretirement plan activity

Net pension and other postretirement plan activity was favorable compared to the prior year by $0.4 million and $1.0 million for the three and nine months ended June 30, 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 $9.3 million and $28.1 million for the three and nine months ended June 30, 2026, respectively, compared to the prior year periods. The increases were primarily driven by higher recurring interest expense of $10.1 million and $22.8 million, respectively, largely attributable to the addition of the Term Loan B following the Breeze acquisition. The increase for the three months ended June 30, 2026 was partially offset by lower financing costs, as the prior year period included acquisition-related financing fees that exceeded costs incurred in connection with the Term Loan B repricing in the current year period. Additionally, for the nine months ended June 30, 2026, financing and debt modification costs increased by $4.0 million, primarily due to a $3.2 million increase in fees incurred to maintain access to the Term Loan B and related financing prior to the closing of the Breeze acquisition.

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 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.

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 was flat for the three months ended June 30, 2026 and decreased $1.9 million for the nine months ended June 30, 2026, compared to the prior year periods, reflecting a reduced level of post-sale activity as separation-related matters continue to wind down following the divestiture of the former Global Products business, with remaining activity 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 $32.9 million and $76.7 million in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods. The increase was primarily driven by gross profit growth and strong revenue performance, including higher volumes, favorable pricing and service mix, as well as contributions from the Breeze acquisition. These benefits more than offset the impacts of dispositions and higher selling, general, and administrative expenses to support growth.