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, 2023. Certain prior period amounts disclosed herein have been reclassified to conform to the current presentation.

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.

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.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance that enhances reportable segment disclosures by requiring disclosure of significant reportable segment expenses and other items regularly provided to the Chief Operating Decision Maker (“CODM”) and included within measures of a segment’s profit or loss, inclusive of entities that operate in a single reportable segment. This guidance must be applied retrospectively to all prior periods presented and will become effective for Valvoline beginning with its fiscal 2025 annual financial statements and interim periods starting in fiscal 2026, with early adoption permitted. Valvoline is currently evaluating the impact this guidance will have on the Company and expects adoption will require enhanced disclosures regarding its CODM and the information used in assessing performance and allocating resources, including significant expenses.

In December 2023, the 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 guidance must be applied prospectively, while retrospective application is permitted. The Company is currently assessing the impact of adoption, which is expected to result in enhanced income tax disclosures.

Valvoline sources substantially all lubricant and certain ancillary products for its stores through a long-term supply agreement with Global Products. Net revenues within the results of Global Products above include product sales to the Company's continuing operations prior to the closing of the Transaction, which were considered to be effectively settled and were not eliminated. ForThese transactions totaled $34.6 million and $89.7 million for the three and six months ended DecemberMarch 31, 2022, these transactions totaled $55.1 million.2023, respectively.

Valvoline also entered into a Transition Services Agreement with Global Products, effective March 1, 2023, to provide and receive services including information technology (“IT”), legal, finance, and human resources support for a period notsupport. Transition services have lapsed periodically as business process transitions have occurred since the sale, and remaining services are generally expected to exceedconclude within 18 months.months post-closing with limited IT transition services that may extend through early calendar year 2025. The income and costs associated with these services were not material during the three and six months ended DecemberMarch 31, 2023.2024.

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:

The Company’s held-to-maturity U.S. treasury securities and long-term debt are reported in the Condensed Consolidated Balance Sheets at carrying value, rather than fair value, and are 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 following disclosures summarize the fair value of these assets and liabilities at each relevant balance sheet date.

The fair values of the Company’s U.S. treasury securities summarized below arewere determined utilizing quoted prices for identical securities from less active markets, which are considered Level 2 inputs within the fair value hierarchy. The U.S. treasury securities were fully matured as of March 31, 2024.

The fair values of the Company's outstanding fixed rate senior notes shown below are based on recent trading values, which are considered Level 2 inputs within the fair value hierarchy.

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

The Company acquired fivefifteen service center stores in single and multi-store transactions for an aggregate purchase price of $8.3$21.3 million during the threesix months ended DecemberMarch 31, 2023.2024. These acquisitions expand Valvoline's retail presence in key North American markets, increase the number of company-operated service center stores, and contribute to growing the retail footprint to 1,8901,928 system-wide service center stores.

During the threesix months ended DecemberMarch 31, 2022,2023, the Company acquired seven13 service center stores in single and multi-store transactions for an aggregate purchase price of $9.6$18.9 million.

The Company’s acquisitions are accounted for as business combinations. A summary follows of the aggregate cash consideration paid and the total assets acquired and liabilities assumed for the threesix months ended DecemberMarch 31:

The fair values above 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. The Company does not currently expect any material changes to the preliminary purchase price allocations for acquisitions completed during the last twelve months.

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

As of DecemberMarch 31, 2023,2024, Valvoline was in compliance with all covenants under its long-term borrowings.

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 increase in income tax expense for the three months ended March 31, 2024 was principally driven by higher pre-tax earnings, while the reduction in the effective tax rate was primarily attributed to the favorable impact of discrete tax benefits. The increases in income tax expense and the effective tax rate for the threesix months ended DecemberMarch 31, 2023 was2024 were driven by more normalized activity in the current year period as compared to the prior year. The prior year period which included the recognition of a $26.5 million income tax benefit for the release of a valuation allowance due to the change in expectations regarding the utilization of certain legacy tax attributes as a result of the terms of the amended tax matters agreement with Valvoline’s former parent company. This amendment also resulted in higher Net legacy and separation-related expenses of $24.4 million for the related increased indemnity obligation.obligation for the six months ended March 31, 2023.

The following table summarizes the components of pension and other postretirement plan expense:

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, Valvoline discloses matters when 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.

The following table summarizes basic and diluted earnings per share:

The following provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Statements of Cash Flows to the Condensed Consolidated Balance Sheets:

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

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

Certain statements in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, executing on its growth strategy to create shareholder value by driving the full potential in the Company’s core business, accelerating network growth and innovating to meet the needs of customers and the evolving car parc; realizing the benefits from the sale of Global Products; and future opportunities for the remaining stand-alone retail business; and any other statements regarding Valvoline's future operations, financial or operating results, capital allocation, debt leverage ratio, anticipated business levels, dividend policy, anticipated growth, market opportunities, strategies, competition, and other expectations and targets for future periods. Valvoline has identified some of these forward-looking statements with words such as “anticipates,” “believes,” “expects,” “estimates,” “is likely,” “predicts,” “projects,” “forecasts,” “may,” “will,” “should,” and “intends,” and the negative of these words or other comparable terminology. These forward-looking statements are based on Valvoline’s current expectations, estimates, projections, and assumptions as of the date such statements are made and are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures about Market Risk” in this Quarterly Report on Form 10-Q and Valvoline’s most recently filed Annual Report on Form 10-K. Valvoline assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future, unless required by law.

The following discussion and analysis should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as well as the condensed consolidated financial statements and the accompanying Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I in this Quarterly Report on Form 10-Q. Unless otherwise noted, disclosures within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations relate solely to the Company's continuing operations.

As a pure play automotive retail services provider and the trusted leader in preventive automotive maintenance, Valvoline is well positioned to create long-term shareholder value through executing the Company’s strategic initiatives, which include:

The following were the significant events for the firstsecond fiscal quarter of 2024, each of which is discussed more fully in this Quarterly Report on Form 10-Q:

The following are the non-GAAP measures management has included and how management defines them:

Non-GAAP measures include adjustments from results based on U.S. GAAP that management believes enables comparison of certain financial trends and results between periods and provides a useful supplemental presentation of Valvoline's operating performance that allows for transparency with respect to key metrics used by management in operating the business and measuring performance. The manner used to compute non-GAAP information used by management may differ from the methods used by other companies, and may not be comparable. For a reconciliation of the most comparable U.S. GAAP measures to the non-GAAP measures, refer to the “Results of Operations” and “Financial Position, Liquidity and Capital Resources” sections below.

Management believes EBITDA measures provide a meaningful supplemental presentation of Valvoline’s operating performance between periods on a comparable basis due to the depreciable assets associated with the nature of the Company’s operations as well as income tax and interest costs related to Valvoline’s tax and capital structures, respectively. Adjusted EBITDA measures enable comparison of financial trends and results between periods where certain items may not be reflective of the Company’s underlying and ongoing operations performance or vary independent of business performance.

Management uses free cash flow and discretionary free cash flow as additional non-GAAP metrics of cash flow generation. By including capital expenditures and certain other adjustments, as applicable, management is able to provide an indication of the ongoing cash being generated that is ultimately available for both debt and equity holders as well as other investment opportunities. Free cash flow includes the impact of capital expenditures, providing a supplemental view of cash generation. Discretionary free cash flow includes maintenance capital expenditures, which are routine uses of cash that are necessary to maintain the Company's operations and provides a supplemental view of cash flow generation to maintain operations before discretionary investments in growth. Free cash flow and discretionary free cash flow have certain limitations, including that they do not reflect adjustments for certain non-discretionary cash flows, such as mandatory debt repayments.

The non-GAAP measures used by management exclude key items. Key items are often related to legacy matters or market-driven events considered by management to not be reflective of the ongoing operating performance. Key items may consist of adjustments related to: legacy businesses, including the separation from Valvoline's former parent company, the former Global Products reportable segment, and associated impacts of related activity and indemnities; non-service pension and other postretirement plan activity; restructuring-related matters, including organizational restructuring plans, the separation of Valvoline’s businesses, significant acquisitions or divestitures, debt extinguishment and modification, and tax reform legislation; in addition to other matters that management considers non-operational, infrequent or unusual in nature.

Details with respect to the description and composition of key items recognized during the respective periods presented herein are set forth below in the “EBITDA and Adjusted EBITDA” section of “Results of Operations” that follows.

Valvoline tracks its operating performance and manages its business using certain key measures, including system-wide, company-operated and franchised store counts and SSS; and system-wide store sales. Management believes these measures are useful to evaluating and understanding Valvoline's operating performance and should be considered as supplements to, not substitutes for, Valvoline's net revenues and operating income, as determined in accordance with U.S. GAAP.

Net revenues are influenced by the number of service center stores and the business performance of those stores. Stores are considered open upon acquisition or opening for business. Temporary store closings remain in the respective store counts with only permanent store closures reflected in the activity and end of period store counts.

Net revenues are limited to sales at company-operated stores, in addition to royalties and other fees from independent franchised and Express Care stores. Although Valvoline does not recognize store-level sales from franchised stores as net revenues in its Statements of Condensed Consolidated Income, management believes system-wide and franchised SSS comparisons, store counts, and total system-wide store sales are useful to assess market position relative to competitors and overall store and operating performance.

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

Net revenues increased $40.6$44.2 million, or 12%12.8% for the three months ended DecemberMarch 31, 20232024 compared to the prior year period. Store operations drovefueled top-line expansion with system-wide SSS growing 7.1%increasing by 7.7% largely due to increased ticket from both ticket and transaction improvements, in addition to store growth with 144 net new stores from openings and acquisitions contributing the balance of the increase. Ticket contributed about 75% to the system-wide SSS growth where half of this benefit was driven by premiumization and non-oil change service penetration with the balance from increased pricing.net pricing and premiumization. Transaction growth contributed the balancemodestly to the system-wide SSS growth driven primarily by increased customer base as well as modest contributionsbenefits from miles driven.day mix. Additionally, revenue growth was bolstered by the addition of 147 net new stores through openings and acquisitions. The following reconciles the year-over-year change in net revenues:

Gross profit increased $16.0$19.5 million, or 14%15.4%, for the three months ended DecemberMarch 31, 20232024 compared to the prior year period. Profitability improvedincreased primarily due to cost efficiencies, primarily within labor and increasedmix improvements from non-oil change service penetration premiumization and premiumization. Additionally, strategic pricing actions driving expansioncoupled with cost efficiencies, particularly in line with thoselabor and modest benefits from storematerials increased profitability and transaction growth. More efficient labor costs were partially offset by pressures in materials andincreased store operating expenses, including higher depreciation for technology placed into service late in the prior year.

Gross profit improved retention rates where Valvoline saw low attrition consistent$35.5 million, or 14.5%, for the six months ended March 31, 2024 compared to the prior year period driven by increased average ticket from non-oil change service penetration and premiumization as well as pricing actions. Additionally, increased transactions and unit growth also provided benefits along with improved labor management. The following reconciles the Company’s experience beforeyear-over-year change in year-to-date gross profit:

Details of the components of Net operating expenses are summarized below for the periods ended DecemberMarch 31:

Net legacy and separation-related expenses decreased $25.3$3.8 million and $29.1 million for the three and six months ended DecemberMarch 31, 2023 primarily due the recognition of expense in2024, respectively, compared to the prior year periods attributable to activities that did not recur. DuringIn the prior year period, Valvoline recognizedthree and six months ended March 31, 2023, the expense was primarily associated with the modification of certain performance-based unvested stock awards as a result of the sale of Global Products as well as expense of $24.4 million to increase the indemnity obligation and reflect the utilization of certain legacy tax attributes associated with the amendment of the tax matters agreement with its former parent company.company during the six months ended March 31, 2023.

Other income, net increased $0.7$1.6 million and $2.3 million in the three and six months ended DecemberMarch 31, 2023,2024, respectively, compared to the prior year periods, primarily due to higher rental income from subleasing properties in connection with the sale of Global Products.Products partially offset by expense associated with an investment impairment of $1.0 million in the prior year period which did not recur.

Net pension and other postretirement plan expenses decreased $0.3 million forwere flat in the three months ended DecemberMarch 31, 20232024 and decreased $0.3 million in the six months ended March 31, 2024 compared to the prior year period.periods. The decrease was generally attributable to higher recurring expected returns on plan assets partially offset by higher interest costs of the rate environment as a result of the most recent annual remeasurement of the plans.

Net interest and other financing expenses increased $2.2 million and decreased $5.1$2.9 million during the three and six months ended DecemberMarch 31, 2023,2024, respectively, compared to the prior year period. Interestperiods. While higher rates on outstanding borrowings increased expense during the periods, interest income of $7.8 million earned on theinvested remaining net proceeds from the sale of Global Products drove benefits. These benefits more than offset bythe increased interest expense from higher rates on outstanding borrowings in the current year period.year-to-date period and were lower to partially offset increased expense in the quarter as the investments matured prior to executing the Tender Offer in April 2024.

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

The increase in income tax expense for the three months ended March 31, 2024 was principally driven by higher pre-tax earnings, while the reduction in the effective tax rate was primarily attributed to the favorable impact of discrete tax benefits. The increases in income tax expense and the effective tax rate for the threesix months ended DecemberMarch 31, 2023 was2024 were driven by more normalized activity in the current year period as compared to the prior year. The prior year period which included the recognition of a $26.5 million income tax benefit for the release of a valuation allowance due to the change in expectations regarding the utilization of certain legacy tax attributes as a result of the terms of the amended tax matters agreement with Valvoline’s former parent company. This amendment also resulted in higher Net legacy and separation-related expenses of $24.4 million for the related increased indemnity obligation.obligation for the six months ended March 31, 2023.

Earnings from discontinued operations declined $56.9 million$1.196 billion and $1.253 billion in the three and six months ended DecemberMarch 31, 20232024, respectively, compared to the prior year periods primarily due to the recognition of a gain on the sale of the Global Products business in March 2023 resulting in the current year period reflecting costs associated with the separation of processes

and systems and no longer reflecting operational results from the underlying business.

The following table reconciles Net revenues to Adjusted net revenues for the current and prior year periods:

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

The Company closely manages its liquidity and capital resources. Valvoline’s liquidity requirements depend on key variables, including the level of investment needed to support business strategies, the performance of the business, capital expenditures, borrowing arrangements, and working capital management. Capital expenditures, acquisitions, share repurchases, and dividend payments are components of the Company’s cash flow and capital management strategy, which to a large extent, can be adjusted in response to economic and other changes in the business environment. The Company has a disciplined approach to capital allocation, which focuses on investing in key priorities that support Valvoline’s business and growth strategies and returning capital to shareholders, while funding ongoing operations.

Valvoline’s continuing operations cash flows as reflected in the Condensed Consolidated Statements of Cash Flows are summarized as follows for the threesix months ended DecemberMarch 31:

The decrease in cash flows provided by operating activities of $26.6$81.4 million from the prior year was due to unfavorableprimarily driven by changes in net working capital, primarily driven by the timingcapital. Unfavorable changes in payables and accruals of payments, which included higher current period spend for franchisee incentives and technology investments, in additionapproximately $60 million were due to the establishment of the supply agreement and other separation-related matters with Global Products in the prior year. Additionally, a lengthened collection cycle during the current year receiptdue to billing delays in connection with the implementation of a legacy-related settlement benefit which did not recur. These unfavorable changes were partially offset by higher cash earnings.new enterprise resource planning (“ERP”) system contributed approximately $25 million to the growth in working capital.

The decrease in cash flows used in investing activities of $220.7$326.9 million from the prior year was substantially driven by proceeds from the maturities of short-term investments of $230.0$350.0 million. This cash inflow was partially offset by a net outflow of $3.7 million for cash transferred in connection with selling a former Global Products business during the current year, in addition to loans extended to franchisees, net of repayments of $2.6$5.2 million, an increase in acquisition activity of $2.4 million, and increased capital expenditures of $2.4 million.$7.8 million to support investments in store growth.

The increasedecrease in cash flows used in financing activities of $197.2$41.8 million from the prior year was primarily due to returning $84.3$45.2 million moreless in cash to shareholders through share repurchases.repurchases from utilizing the remaining authorization under the 2022 Share Repurchase Authorization during the second quarter of fiscal 2024 in addition to a $23.7 million decrease in cash inflows from net borrowing activity. This increaseddecreased use of cash from the prior year was partially offset by a $136.5 million decrease in cash inflows from net borrowing activity, in addition to lower dividends paid of $21.8 million as the Company discontinued its dividend during the second quarter of fiscal 2023 following the sale of Global Products.

The following sets forth free cash flow and discretionary free cash flow and reconciles cash flows from operating activities to both measures. These free cash flow measures have certain limitations, including that they do not reflect adjustments for certain non-discretionary cash flows, such as mandatory debt repayments. Refer to the “Use of Non-GAAP Measures” section included above in this Item 2 for additional information regarding these non-GAAP measures.

The decrease in free cash flow from continuing operations over the prior year was driven by lower cash flow provided by operating activities in addition to increased capital expenditures during the current period. The increase in maintenance capital expenditures over the prior year period was driven by facility and equipment expenditures due to the growing store count. In addition, the higher growth capital expenditures over the prior year period primarily relate to new store construction. The Company continues to focus the majority of its capital spend toward growth, which is expected to drive a high return on invested capital. The increase in capital expenditures over the prior year period was driven by higher maintenance capital, primarily attributed to timing of the completion of the related projects and spend.

The cash flows of the discontinued operation are reflected in the Condensed Consolidated Statements of Cash Flows and are summarized below for the threesix months ended DecemberMarch 31:

The declines in cash flows used in operating and investingfinancing activities and those provided from financinginvesting activities of the discontinued operation were due to the completion of the sale of Global Products in March 2023, where prior year cash flows were from conducting business within the former Global Products segment and the current year cash flows generally relate to the completion of the separation of the business processes and systems. During the prior year period, cash flows used in operating activities of the discontinued operation were largely driven by trade and other payables activity operating in an unfavorable working capital environment, in addition to transaction costs to support the sale of the Global Products business. Prior year discontinued operations cash flows used inprovided by investing activities were relateddue to capital expenditures, largely maintenance capital, andthe cash consideration received, net of cash transferred to Global Products entities, at the close of the sale of Global Products of $2.6 billion. The decrease in cash flows used in financing activities cash inflows were primarilyof discontinued operations was due to net proceeds fromrepayments on borrowings which were subsequently required to be repaid in connection withduring the sale.prior year period, driven by the extinguishment of the $175 million Trade Receivables Facility.

Inclusive of the interest rate swap agreements, approximately 82%83% of Valvoline's outstanding borrowings at DecemberMarch 31, 20232024 had fixed interest rates, with the remainder bearing variable rates. As of DecemberMarch 31, 2023,2024, Valvoline was in compliance with all covenants of its debt obligations and had borrowing capacity remaining of $471.6$471.8 million under its Revolver.Revolver, which was reduced to $296.8 million from borrowing $175.0 million to facilitate the purchase of the 2030 Notes in April 2024.

On March 14, 2024, the Company commenced the Tender Offer to purchase its outstanding 2030 Notes. The indenture forTender Offer was made to comply with the 2030 Senior Notes contains anrequirements of the asset sale covenant that requires Valvoline to make an offer to holders to purchaseunder the indenture governing the 2030 SeniorNotes in connection with the sale of Global Products.

On April 16, 2024, Valvoline completed the Tender Offer with 99.7% of the outstanding principal amount tendered by the holders of the 2030 Notes. 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 any accrued and unpaid interest, with any Excess Proceeds from an Asset Sale, each as defined inand cancelled the indenture.2030 Notes accepted for purchase. The Company elected to redeem 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. Valvoline currently expects that the sale of Global Products will require the Company to offer to repurchase allrecognize a loss on extinguishment of the 2030 Senior Notes of $5.1 million during the secondthird quarter of fiscal 2024 absent an amendmentdue to the indenture or other transaction related to these Senior Notes.write-off of unamortized debt issuance costs and discounts. The 2030 Notes are reported in Current portion of long-term debt within the Condensed Consolidated Balance Sheet as of March 31, 2024.

Refer to Note 5 of the Notes to Condensed Consolidated Financial Statements for additional details regarding the Company’s debt instruments.

During the threesix months ended DecemberMarch 31, 2023,2024, the Company repurchased 5.46.3 million shares of its common stock for $171.1 million.$211.5 million utilizing the remaining authorization available from the Board of Directors for the Company to repurchase up to $1.6 billion of its common stock announced on November 15, 2022 (the “2022 Share Repurchase Authorization”). As of DecemberMarch 31, 2023, $40.4 million remained available for repurchase2024, the Company repurchased the full amount of its common stock under the 2022 Share Repurchase Authorization.Authorization and no other share repurchase authorizations have been approved.

The share repurchase authorization is part of a broader capital allocation framework to deliver value to shareholders by first driving growth in the business, organically and through acquisitions and franchise development, and then returning excess cash to shareholders through share repurchases. The Company anticipates repurchasing shares of its common stock up to the full amount remaining under the authorization from the Board of Directors for the Company to repurchase up to $1.6 billion of its common stock announced on November 15, 2022 (the “2022 Share Repurchase Authorization”) during fiscal 2024, subject to market conditions.

Valvoline’s continuing operationsAs of March 31, 2024, Valvoline had cash and cash equivalents of $420.7 million, short-term investments of $119.7$494.5 million, total debt of $1,580.6$1,575.1 million, and total remaining borrowing capacity of $471.6$471.8 million, aswhich decreased to $296.8 million subsequent to borrowing $175.0 million on the Revolver to facilitate the purchase of December 31, 2023.the 2030 Notes in April 2024. Valvoline’s ability to continue to generate positive cash flows from operations is dependent on general economic conditions, the competitive environment in the industry, and is subject to the business and other risk factors described in Item 1A of Part II of this Quarterly Report on Form 10-Q and Item 1A of Part I of the Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Management believes that the Company has sufficient liquidity based on its current cash, cash equivalents, and short-term investments position, cash generated from business operations, and existing financing to meet its required pension and other postretirement plan contributions; debt servicing obligations, including the expected offer to repurchasepurchase of the 2030 Senior Notes;Notes in connection with the Tender Offer; tax-related and other material cash and operating requirements for the next twelve months.

For a discussion and analysis of recently issued accounting pronouncements and the impacts on Valvoline, refer to Note 1 in the Notes to Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

The Company’s critical accounting estimates are described in Item 7 of Part II in Valvoline’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Management reassessed the critical accounting estimates as disclosed in the Annual Report on Form 10-K, and determined there were no changes in the threesix months ended DecemberMarch 31, 2023.2024.

The Company’s market risks are discussed in Item 7A of Part II in Valvoline's Annual Report on Form 10-K for the fiscal year ended September 30, 2023. Management reassessed the quantitative and qualitative market risk disclosures as described in the Annual Report on Form 10-K and determined there were no material changes to market risks in the threesix months ended DecemberMarch 31, 2023.2024.

Valvoline’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), with the assistance of management, have evaluated the effectiveness of the Company’s disclosureDisclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), and based upon such evaluation, have concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures were effective. These controls are designed to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to Valvoline’s management, including the CEOChief Executive Officer (“CEO”) and CFO,Chief Financial Officer (“CFO”), to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.

ThereDuring the three months ended March 31, 2024, Valvoline implemented a new ERP system to facilitate the separation from its former Global Products reportable segment that was sold in March 2023. This new ERP system will better accommodate the Company’s retail business model and support its continued growth. As a result of the ERP system implementation, Valvoline implemented new or modified certain pre-existing internal controls, processes and procedures. These modifications also concluded certain transition services between the Company and its former Global Products reportable segment, whereby certain stand-alone processes were implemented commensurate with the system go-live. Other than these changes and the ongoing remedial efforts described further below, there have been no significant changes in Valvoline’sthe Company’s internal control over financial reporting that occurred during the fiscal quarter ended DecemberMarch 31, 20232024 that materially affected, or are reasonably likely to materially affect, Valvoline’s internal control over financial reporting.

From time to time, the Company’s officers and directors enter into equity trading plans with their brokers, which are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Securities and Exchange Act of 1934 (a “Rule 10b5-1 Trading Plan”). A Rule 10b5-1 Trading Plan is a written agreement between the officer or director and such person’s broker that pre-establishes the formula for determining the amounts, prices, and dates of Valvoline common stock and does not permit the officer or director to exercise any subsequent influence over how, when or whether to effect purchases or sales. In addition, the officer or director must represent that he or she is not aware of any material nonpublic information concerning Valvoline or its common stock upon execution of the Rule 10b5-1 Trading Plan. The Company’s insider trading policy requires a 90-day cooling-off period before transactions may be executed pursuant an officer’s or director’s Rule 10b5-1 Trading Plan.

During the three months ended DecemberMarch 31, 2023,2024, no director or officer, as defined in Rule 16a-1(f), of Valvoline adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non Rule 10b5-1 trading arrangement” as defined in Item 408 of Regulation S-K.