Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 8-K

___________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 3, 2023

__________________________________

VALVOLINE INC.

(Exact name of registrant as specified in its charter)

___________________________________

Kentucky

001-37884

30-0939371

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

100 Valvoline Way, Suite 100

Lexington, Kentucky 40509

(Address of principal executive offices)

(859) 357-7777

(Registrant’s telephone number, including area code)

___________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



			☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

			☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

			☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

			☑			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

VVV

New York Stock Exchange


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.		☐


Item 2.02.			Results of Operations and Financial Condition

On August 9, 2023, Valvoline Inc. (“Valvoline” or the “Company”) issued a press release ("Earnings Press Release") announcing its financial results for the fiscal third quarter ended June 30, 2023. A copy of Valvoline's Earnings Press Release is attached to this Current Report on Form 8-K (“Form 8-K”) as Exhibit 99.1, which is incorporated by reference into this Item 2.02.


Item 5.02.			Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On August 9, 2023, the Company issued a press release (“CEO Succession Press Release”) announcing that Samuel J. Mitchell, Jr., the Company’s Chief Executive Officer (“CEO”) and a member of the Board of Directors (the “Board”), notified the Company’s Board on August 3, 2023 of his intention to retire as CEO and as a member of the Board, effective as of the close of business on September 30, 2023. The Board has appointed Lori A. Flees, the Company’s President, Retail Services, to succeed Mr. Mitchell as CEO, effective October 1, 2023.

Ms. Flees, age 52, has served as the Company’s President, Retail Services, since April 2022. In her role as President, Ms. Flees oversees Valvoline’s fast growing retail services business, which operates over 1,800 Company-owned and franchised service center locations serving consumer and fleet customers. Ms. Flees started her career in the automotive industry 35 years ago with General Motor’s GMC Truck division. After 17 years at Bain & Company, a global strategy consulting firm, Ms. Flees spent nearly a decade at Walmart where she led all aspects of Walmart’s Health & Wellness business across more than 4,800 locations. She joined Walmart to lead corporate strategy and development, and later moved into leadership roles that included the incubation of new retail capabilities via the deployment of emerging technologies, strategic partnership development with companies such as Google and Microsoft, and the leadership of the pharmacy and optical business of Sam’s Club.

In connection with her promotion to CEO, the Compensation Committee approved an increase in Ms. Flees’ annual base salary from $700,000 to $900,000 and her target annual incentive compensation opportunity from 75% to 100% of her annual base salary, effective October 1, 2023. In addition, the Compensation Committee approved an increase in Ms. Flees’ target long-term incentive compensation opportunity from $1,000,000 to $2,500,000, which will be effective with the Company’s annual grant of equity awards for fiscal 2024.

On August 3, 2023, the Board also approved the recommendation of the Governance & Nominating Committee of the Board that Ms. Flees be elected to the Board, effective October 1, 2023. As an employee director, Ms. Flees will not be entitled to receive compensation for her service as a member of the Board.

There are no arrangements or understandings between Ms. Flees and any other person pursuant to which she was elected as a director. There are not transactions or proposed transactions between Ms. Flees and the Company that would be required to be reported under Item 404(a) of Regulation S-K.

A copy of the Succession Press Release issued by the Company on August 9, 2023, announcing Mr. Mitchell’s retirement and Ms. Flees’ appointment as CEO and election to the Board is attached to this Form 8-K as Exhibit 99.2, which is incorporated by reference into this Item 5.02.


Item 7.01.			Regulation FD Disclosure

On August 9, 2023, Valvoline will make the Earnings Press Release available on its website located at http://investors.valvoline.com. On August 9, 2023, Valvoline will make available a webcast and slide presentation relating to the Earnings Press Release on Valvoline's website located at http://investors.valvoline.com.


Item 9.01.						Financial Statements and Exhibits
(d)						Exhibits
99.1						Earnings Press Release dated August 9, 2023.
99.2						Succession Press Release dated August 9, 2023.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

In connection with the disclosures set forth in Items 2.02 and 7.01, the information in this Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in this Form 8-K, including Exhibit 99.1, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing. This Form 8-K will not be deemed an admission as to the materiality of any information in this Form 8-K that is required to be disclosed solely by Regulation FD.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	VALVOLINE INC.

Date: August 9, 2023	By:	/s/ Mary E. Meixelsperger
		Mary E. Meixelsperger
		Chief Financial Officer

Exhibit 99.1


			PRESS RELEASE

Valvoline Inc. Reports Third-Quarter Results

•Sales from continuing operations of $376.2 million grew 19%, while system-wide same-store sales (SSS) increased 12.5%

•Reported income from continuing operations of $64.5 million grew 62% and earnings per diluted share (EPS) of $0.40 increased 82%

•Continuing operations adjusted EPS of $0.43 increased 105% and adjusted EBITDA of $110.4 million increased 28%

•Net store additions total 23 (22 company-operated and 1 franchised) bringing total system-wide stores to 1,804

•Completed a modified “Dutch auction” tender offer to repurchase 27.0 million shares at $38.00 per share for an aggregate purchase price of $1.02 billion, excluding related fees and expenses

LEXINGTON, Ky., August 9, 2023 – Valvoline Inc. (NYSE: VVV), a trusted leader in preventive automotive maintenance delivering quick and convenient service, today reported financial results for its third fiscal quarter ended June 30, 2023. All comparisons in this press release are made to the same prior-year period unless otherwise noted.

“Valvoline continues to demonstrate the resiliency of the preventive maintenance business and our algorithm for growth with sales growing 19% and adjusted EBITDA growth of 28% versus the prior year,” said Sam Mitchell, CEO.

“We also made great progress on our commitment to return a substantial amount of the net proceeds from the sale of the Global Products business to shareholders,” continued Mitchell. “We have returned $1.39 billion to shareholders this year through both the tender offer and open market repurchases, leaving $340 million on our current share repurchase authorization. We expect to execute on the remaining repurchase authorization over the next 12 months, subject to market conditions.”

Continuing Operations - Operating Results



(In millions, except store counts)	Q3 results		YoY growth
Net revenues	$	376.2	19	%
Operating income	$	86.5	42	%
Income from continuing operations	$	64.5	62	%
Adjusted EBITDA (a)	$	110.4	28	%


System-wide stores (a)	1,804		7	%
Company-operated stores	854		11	%
Franchised stores	950		3	%
System-wide store sales (a)	$	719.6	18	%
	YoY growth
System-wide SSS (a)	12.5%


(a)			Refer to Key Business Measures, Use of Non-GAAP Measures, Table 4 - Retail Stores Operating Information and Table 7 - Non-GAAP Reconciliation - Adjusted Net Revenues and EBITDA from Continuing Operations for management’s definitions of the metrics presented above and reconciliation to the corresponding GAAP measures, where applicable.

“The summer drive season is off to a great start and demand for our quick, easy, trusted service remains high. We continue to see strong same store sales growth for both company and franchise stores, with 12.5% system-wide same store sales growth this quarter,” said Lori Flees, President, Retail Services. “This strong same store sales growth is balanced between transactions and ticket.”

“As expected, we saw EBITDA margin improvement both sequentially and over prior year,” continued Flees. “The margin improvement continues to be primarily driven by labor efficiency and SG&A leverage from the increased volume we see during the summer drive season.”

Balance Sheet and Cash Flow

•Cash, cash equivalents, and short-term investments balance of $950.8 million; total debt of $1.6 billion

•Year-to-date continuing operations cash flow from operations of $249.9 million and free cash flow of $124.0 million

•Returned $1.39 billion in cash to shareholders year-to-date via share repurchases with $340.4 million remaining on the existing authorization

•Interest income of $24.9 million earned during the quarter on invested net proceeds from the sale of Global Products

Outlook

"We continue to deliver best-in-class top-line and bottom-line growth consistent with the long-term guidance provided earlier this year,” added Mitchell.

“We are narrowing the range of our EBITDA guidance and raising our net income guidance. We are focused on creating significant value for shareholders by growing the core business, expanding the network and evolving with the car parc.”

Information regarding the Company’s updated outlook for fiscal 2023 is provided in the table below:


	Updated Outlook			Prior Outlook







Adjusted EBITDA	$375	—	$385 million	$370	—	$390 million



Adjusted net income	$185	—	$200 million	$160	—	$180 million

Valvoline’s outlook for adjusted EBITDA and adjusted net income are non-GAAP financial measures that are expected to be impacted by items affecting comparability. Valvoline is unable to reconcile these forward-looking non-GAAP financial measures to the comparable GAAP measures estimated for fiscal 2023 without unreasonable efforts, as the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact these GAAP measures in fiscal 2023 but would not impact non-GAAP adjusted results.

CEO Succession Plan

In a separate press release issued today, Valvoline announced that Sam Mitchell is retiring as Chief Executive Officer and a member of the Board, effective September 30, 2023. Current President of Retail Services, Lori Flees, was named incoming CEO and director. The full press release is accessible through Valvoline’s website at http://investors.valvoline.com.

Conference Call Webcast

Valvoline will host a live audio webcast of its fiscal third quarter 2023 conference call today, August 9, 2023, at 9 a.m. ET. The webcast and supporting materials will be accessible through Valvoline's website at http://investors.valvoline.com. Following the live event, an archived version of the webcast and supporting materials will be available.

Key Business Measures

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 sales 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. SSS is defined as net revenues by U.S. stores (company-operated, franchised and the combination of these for system-wide SSS), with new stores, including franchised conversions, excluded from the metric until the completion of their first full fiscal year in operation as this period is generally required for new store sales levels to begin to normalize.

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 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.

Use of Non-GAAP Measures

The following non-GAAP measures are included herein: Adjusted net revenues; EBITDA, adjusted EBITDA, and adjusted EBITDA margin; adjusted net income and adjusted diluted earnings per share; and free cash flow and discretionary free cash flow. Refer to the tables herein for management's definition of each non-GAAP measure and reconciliation to the most comparable U.S. GAAP measure.

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. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation from, an alternative to, or more meaningful than, the financial results presented in accordance with U.S. GAAP. The financial results presented in accordance with U.S. GAAP and the reconciliations of non-GAAP measures should be carefully evaluated. The manner used to compute the non-GAAP information used by management may differ from the methods used by other companies and may not be comparable.

Refer to the Appendix at the end of this release for descriptions of the adjustments that depart from the computations in accordance with U.S. GAAP.

About Valvoline Inc.

The Quick, Easy, Trusted name in preventive vehicle maintenance, Valvoline Inc. (NYSE: VVV) leads the industry with automotive service innovations that simplify consumers’ lives. With an average consumer rating of 4.6 out of 5 stars*, Valvoline Inc. has built the model for transparency and convenience to take the worry out of vehicle care. From its 15-minute, stay-in-your-car oil changes to battery replacements and tire rotations, the Company's model offers maintenance solutions for all types of vehicles. The Company operates and franchises over 1,800 service center locations through its Valvoline Instant Oil ChangeSM and Valvoline Great Canadian Oil Change retail brands, and helps independent operators grow their businesses through its nearly 300 Valvoline Express Care locations in North America. To learn more, or to find a Valvoline Inc. service center near you, visit vioc.com.

Forward-Looking Statements

Certain statements herein, 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, benefits and synergies of the sale of Global Products; 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. Additional information regarding these risks and uncertainties are described in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures about Market Risk” sections of Valvoline’s most recently filed periodic reports on Forms 10-K and 10-Q, which are available on Valvoline’s website at http://investors.valvoline.com/sec-filings or on the SEC’s website at http://www.sec.gov. 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.

TM Trademark, Valvoline Inc., or its subsidiaries, registered in various countries

SM Service mark, Valvoline Inc., or its subsidiaries, registered in various countries

*Based on a survey of more than 600,000 Valvoline Instant Oil Change℠ customers annually

FOR FURTHER INFORMATION

Investor Inquiries

Elizabeth B. Russell

+1 (859) 357-3155

IR@valvoline.com

Media Inquiries

Michele Gaither Sparks

+1 (859) 230-8097

michele.sparks@valvoline.com


Valvoline Inc. and Consolidated Subsidiaries							Table 1
Statements of Consolidated Income
(In millions, except per share amounts - preliminary and unaudited)

	Three months ended June 30				Nine months ended June 30

	2023		2022		2023		2022
Net revenues	$	376.2	$	317.4	$	1,053.5	$	900.7
Cost of sales	225.5		189.6		657.3		553.4
Gross profit	150.7		127.8		396.2		347.3
Selling, general and administrative expenses	65.6		59.2		194.2		182.6
Net legacy and separation-related expenses	1.6		9.9		30.8		18.9
Other income, net	(3.0)		(2.4)		(5.8)		(7.3)
Operating income	86.5		61.1		177.0		153.1
Net pension and other postretirement plan expense (income)	3.7		(9.2)		11.0		(27.7)
Net interest and other financing (income) expense	(4.6)		17.3		27.4		51.2
Income before income taxes	87.4		53.0		138.6		129.6
Income tax expense	22.9		13.2		14.2		32.6
Income from continuing operations	64.5		39.8		124.4		97.0
(Loss) income from discontinued operations	(2.9)		58.4		1,246.4		169.6
Net income	$	61.6	$	98.2	$	1,370.8	$	266.6

Net earnings per share
Basic earnings (loss) per share
Continuing operations	$	0.40	$	0.22	$	0.74	$	0.54
Discontinued operations	(0.02)		0.33		7.35		0.94
Basic earnings per share	$	0.38	$	0.55	$	8.09	$	1.48

Diluted earnings (loss) per share
Continuing operations	$	0.40	$	0.22	$	0.73	$	0.53
Discontinued operations	(0.02)		0.33		7.31		0.94
Diluted earnings per share	$	0.38	$	0.55	$	8.04	$	1.47

Weighted average common shares outstanding
Basic	161.5		178.6		169.5		179.6
Diluted	162.5		179.8		170.6		180.9


Valvoline Inc. and Consolidated Subsidiaries					Table 2
Condensed Consolidated Balance Sheets
(In millions - preliminary and unaudited)

			June 30		September 30
			2023		2022
Assets
	Current assets
		Cash and cash equivalents	$	526.7	$	23.4
		Receivables, net	71.9		66.1
		Inventories, net	34.1		29.4
		Prepaid expenses and other current assets	30.3		38.0
		Short-term investments	424.1		—
		Current assets held for sale	—		1,464.2
	Total current assets		1,087.1		1,621.1

	Noncurrent assets
		Property, plant and equipment, net	761.6		668.6
		Operating lease assets	264.3		248.1
		Goodwill and intangibles, net	678.0		663.1


		Other noncurrent assets	194.5		215.9


	Total assets		$	2,985.5	$	3,416.8

Liabilities and Stockholders' Equity
	Current liabilities

		Current portion of long-term debt	$	23.7	$	162.5
		Trade and other payables	96.4		45.0
		Accrued expenses and other liabilities	285.8		172.6
		Current liabilities held for sale	—		539.3
	Total current liabilities		405.9		919.4

	Noncurrent liabilities
		Long-term debt	1,567.8		1,525.1
		Employee benefit obligations	202.1		199.4
		Operating lease liabilities	245.0		229.2

		Other noncurrent liabilities	279.3		237.1

	Total noncurrent liabilities		2,294.2		2,190.8

	Stockholders' Equity		285.4		306.6

	Total liabilities and stockholders' equity		$	2,985.5	$	3,416.8


Valvoline Inc. and Consolidated Subsidiaries					Table 3
Condensed Consolidated Statements of Cash Flows
(In millions - preliminary and unaudited)

			Nine months ended
			June 30
			2023		2022
Cash flows from operating activities
	Net income		$	1,370.8	$	266.6
	Adjustments to reconcile net income to cash flows from operating activities:
		Income from discontinued operations	(1,246.4)		(169.6)

		Depreciation and amortization	60.7		52.1

		Deferred income taxes	(26.6)		29.6




		Stock-based compensation expense	8.8		11.7
		Other, net	2.1		1.6
	Change in operating assets and liabilities		80.5		(65.1)
	Operating cash flows from continuing operations		249.9		126.9
	Operating cash flows from discontinued operations		(298.3)		64.3
	Total cash (used in) provided by operating activities		(48.4)		191.2
Cash flows from investing activities
	Additions to property, plant and equipment		(125.9)		(89.5)


	Acquisitions of businesses, net of cash acquired		(27.8)		(42.7)
	Purchases of investments		(440.4)		—

	Other investing activities, net		(0.8)		8.6
	Investing cash flows from continuing operations		(594.9)		(123.6)
	Investing cash flows from discontinued operations		2,621.0		(20.0)
	Total cash provided by (used in) investing activities		2,026.1		(143.6)
Cash flows from financing activities
	Proceeds from borrowings, net of issuance costs		920.9		—

	Repayments on borrowings		(915.0)		(0.6)

	Repurchases of common stock		(1,395.5)		(103.5)
	Cash dividends paid		(21.8)		(67.1)
	Other financing activities		(16.0)		(13.6)
	Financing cash flows from continuing operations		(1,427.4)		(184.8)
	Financing cash flows from discontinued operations		(108.1)		6.8
	Total cash used in financing activities		(1,535.5)		(178.0)
	Effect of currency exchange rate changes on cash, cash equivalents and restricted cash		0.6		(1.4)
Increase (decrease) in cash, cash equivalents and restricted cash			442.8		(131.8)
Cash, cash equivalents and restricted cash - beginning of period			83.9		231.4
Cash, cash equivalents and restricted cash - end of period			$	526.7	$	99.6


Valvoline Inc. and Consolidated Subsidiaries										Table 4
Retail Stores Operating Information
(Preliminary and unaudited)

	Three months ended June 30						Nine months ended June 30

	2023			2022			2023			2022
Sales information
System-wide store sales - in millions (a)	$	719.6		$	610.4		$	2,023.5		$	1,718.3
Year-over-year growth (a)	17.9		%	16.0		%	17.8		%	21.4		%

Same-store sales growth (b)
Company-operated	12.1		%	7.1		%	13.0		%	12.5		%
Franchised (a)	12.8		%	12.1		%	12.3		%	17.6		%
System-wide (a)	12.5		%	9.9		%	12.6		%	15.4		%











		Number of stores at end of period
		Third Quarter 2023	Second Quarter 2023	First Quarter 2023	Fourth Quarter 2022		Third Quarter 2022

Company-operated		854	832	813	790		772
Franchised (a)		950	949	933	925		918


















					June 30
					2023		2022
System-wide store count (a)					1,804		1,690
Year-over-year growth (a)					6.7	%	7.7	%

(a)	Measures include Valvoline franchisees, which are independent legal entities. Valvoline does not consolidate the results of operations of its franchisees.
(b)	Valvoline determines SSS growth as sales by U.S. stores, with new stores, including franchised conversions, excluded from the metric until the completion of their first full fiscal year in operation.


Valvoline Inc. and Consolidated Subsidiaries						Table 5
System-wide Retail Stores
(Preliminary and unaudited)

		Company-operated
		Third Quarter 2023	Second Quarter 2023	First Quarter 2023	Fourth Quarter 2022	Third Quarter 2022
Beginning of period		832	813	790	772	757
	Opened	12	13	17	12	5
	Acquired	8	6	5	3	9
	Net conversions between company-operated and franchised	2	—	2	3	1
	Closed	—	—	(1)	—	—
End of period		854	832	813	790	772

		Franchised (a)
		Third Quarter 2023	Second Quarter 2023	First Quarter 2023	Fourth Quarter 2022	Third Quarter 2022
Beginning of period		949	933	925	918	904
	Opened	3	16	11	10	16
	Acquired	—	—	—	—	—
	Net conversions between company-operated and franchised	(2)	—	(2)	(3)	(1)
	Closed	—	—	(1)	—	(1)
End of period		950	949	933	925	918

Total system-wide stores (a)		1,804	1,781	1,746	1,715	1,690






(a)	Measures include Valvoline franchisees, which are independent legal entities. Valvoline does not consolidate the results of operations of its franchisees.


Valvoline Inc. and Consolidated Subsidiaries								Table 6
Non-GAAP Reconciliation - Income from Continuing Operations and Diluted Earnings per Share
(In millions, except per share amounts - preliminary and unaudited)

		Three months ended June 30				Nine months ended June 30

		2023		2022		2023		2022

Reported income from continuing operations		$	64.5	$	39.8	$	124.4	$	97.0
Adjustments:
	Net pension and other postretirement plan expense (income)	3.7		(9.2)		11.0		(27.7)
	Net legacy and separation-related expenses	1.6		9.9		30.8		18.9
	Information technology transition costs	1.1		—		1.8		2.6
	Suspended operations	(0.4)		(2.2)		(0.5)		1.5

	Investment and divestiture-related costs	—		—		1.0		—
	Debt extinguishment and modification costs	0.1		—		1.0		—

	Total adjustments, pre-tax	6.1		(1.5)		45.1		(4.7)
	Income tax (benefit) expense of adjustments	(1.5)		(0.1)		(31.8)		1.8

	Total adjustments, after tax	4.6		(1.6)		13.3		(2.9)
Adjusted income from continuing operations (a) (b)		$	69.1	$	38.2	$	137.7	$	94.1


















Reported diluted earnings per share from continuing operations		$	0.40	$	0.22	$	0.73	$	0.53



Adjusted diluted earnings per share from continuing operations (b) (c)		$	0.43	$	0.21	$	0.81	$	0.52



Weighted average diluted common shares outstanding		162.5		179.8		170.6		180.9


(a)	Adjusted income from continuing operations is defined as income from continuing operations adjusted for the effects of key items.
(b)	Represents a non-GAAP measure. Refer to “Use of Non-GAAP Measures” and the Appendix for additional details.
(c)	Adjusted diluted earnings per share from continuing operations is defined as diluted earnings per share calculated using adjusted income from continuing operations.


Valvoline Inc. and Consolidated Subsidiaries										Table 7
Non-GAAP Reconciliation - Adjusted Net Revenues and EBITDA from Continuing Operations
(In millions - preliminary and unaudited)

	Three months ended June 30						Nine months ended June 30

	2023			2022			2023			2022

Reported net revenues	$	376.2		$	317.4		$	1,053.5		$	900.7
Adjustments:
Suspended operations	—			(1.2)			(0.2)			(11.4)
Adjusted net revenues (a) (b)	$	376.2		$	316.2		$	1,053.3		$	889.3

Income from continuing operations	$	64.5		$	39.8		$	124.4		$	97.0
Add:
Income tax expense	22.9			13.2			14.2			32.6
Net interest and other financing (income) expense	(4.6)			17.3			27.4			51.2
Depreciation and amortization	21.6			17.6			60.7			52.1
EBITDA from continuing operations (b) (c)	104.4			87.9			226.7			232.9
Key items:
Net pension and other postretirement plan expense (income)	3.7			(9.2)			11.0			(27.7)
Net legacy and separation-related expenses	1.6			9.9			30.8			18.9
Information technology transition costs	1.1			—			1.8			2.6
Suspended operations	(0.4)			(2.2)			(0.5)			1.5
Investment and divestiture-related costs	—			—			1.0			—
Key items - subtotal	6.0			(1.5)			44.1			(4.7)
Adjusted EBITDA from continuing operations (b) (c)	$	110.4		$	86.4		$	270.8		$	228.2

Net profit margin (d)	17.1		%	12.5		%	11.8		%	10.8		%
Adjusted EBITDA margin (b) (e)	29.3		%	27.3		%	25.7		%	25.7		%


(a)			Adjusted net revenues are reported net revenues adjusted for key items.
(b)			Represents a non-GAAP measure. Refer to “Use of Non-GAAP Measures” and the Appendix for additional details.
(c)			EBITDA from continuing operations is defined as income from continuing operations, plus income tax expense, net interest and other financing (income) expense, and depreciation and amortization attributable to continuing operations. Adjusted EBITDA from continuing operations is EBITDA adjusted for key items attributable to continuing operations.
(d)			Net profit margin is defined as reported income from continuing operations divided by reported net revenues.
(e)			Adjusted EBITDA margin is defined as Adjusted EBITDA from continuing operations divided by adjusted net revenues.


Valvoline Inc. and Consolidated Subsidiaries			Table 8
Non-GAAP Reconciliation - Free Cash Flows from Continuing Operations
(In millions - preliminary and unaudited)

Free cash flow (a)	Nine months ended
	June 30
	2023		2022
Total cash flows provided by operating activities from continuing operations	$	249.9	$	126.9
Adjustments:
Additions to property, plant and equipment from continuing operations	(125.9)		(89.5)

Free cash flow from continuing operations (b)	$	124.0	$	37.4

Discretionary free cash flow (c)	Nine months ended
	June 30
	2023		2022
Total cash flows provided by operating activities from continuing operations	$	249.9	$	126.9
Adjustments:
Maintenance additions to property, plant and equipment from continuing operations	(18.0)		(13.0)

Discretionary free cash flow from continuing operations (b)	$	231.9	$	113.9


(a)			Free cash flow from continuing operations is defined as operating cash flows from continuing operations less capital expenditures of the continuing operations and certain other adjustments attributable to continuing operations, as applicable.
(b)			Represents a non-GAAP measure. Refer to “Use of Non-GAAP Measures” and the Appendix for additional details.
(c)			Discretionary free cash flow from continuing operations is defined as operating cash flows from continuing operations less maintenance capital expenditures of the continuing operations and certain other adjustments attributable to continuing operations, as applicable.

Valvoline Inc. and Consolidated Subsidiaries

Appendix - Description of Non-GAAP Measures and Adjustments

EBITDA Measures

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.

Free Cash Flow and Discretionary Free Cash Flow

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.

Adjusted Net Revenue and Profitability Measures

Adjusted net revenue and profitability measures (i.e., adjusted net income, diluted earnings per share and EBITDA) enable the comparison of financial trends and results between periods where certain items may not be reflective of the Company’s underlying and ongoing operational performance or vary independent of business performance.

Key Items

The non-GAAP measures used by management exclude the impact of certain unusual, infrequent or non-operational activity not directly attributable to the underlying business, which management believes impacts the comparability of operational results between periods (“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.

Refer to the below for descriptions of the key items that comprise the adjustments which depart from the computations in accordance with U.S. GAAP:

Net pension and other postretirement plan expense (income): Includes several elements impacted by changes in plan assets and obligations that are primarily driven by the debt and equity markets, including remeasurement gains and losses, when applicable; and recurring non-service pension and other postretirement net periodic activity, which consists of interest cost, expected return on plan assets and amortization of prior service credits. Management considers that these elements are more reflective of changes in current conditions in global markets (in particular, interest rates), outside the operational performance of the business, and are also legacy amounts that are not directly related to the underlying business and do not have an impact on the compensation and benefits provided to eligible employees for current service.

Net legacy and separation-related expenses: Activity associated with legacy businesses and the separation from Valvoline’s former parent company and its former Global Products reportable segment. This activity includes the recognition of and adjustments to indemnity obligations to its former parent company; certain legal, financial, professional advisory and consulting fees; and other expenses incurred by the continuing operations in connection with and directly related to these separation transactions and legacy matters. This incremental activity directly attributable to legacy matters and separation transactions is not considered reflective of the underlying operating performance of the Company’s continuing operations.

Of specific note, the Company recognized $24.4 million of pre-tax expense during the nine months ended June 30, 2023 to reflect its increased estimated indemnity obligation, which also resulted in an income tax benefit of $26.5 million to reflect the release of valuation allowances in connection with the amendment of the Tax Matters Agreement with Valvoline’s former parent company.

Information technology transition costs: Consist of redundant expenses incurred from duplicative technology platforms required while implementing the Company’s stand-alone enterprise resource planning software system during fiscal 2023 and transitioning its data centers during fiscal 2022. These expenses are reflective of incremental costs directly associated with technology transitions and are not considered to be reflective of the ongoing expenses of operating the Company’s technology platforms.

Suspended operations: Represents the results of a former Global Products business where operations were suspended during fiscal 2022 that were not included in the sale. These results are not indicative of the operating performance of the Company’s ongoing continuing operations.

Investment and divestiture-related costs: Expense recognized to reduce the carrying value of an investment interest determined to be impaired. This cost is not considered to be reflective of the underlying performance of the Company’s ongoing continuing operations.

Debt extinguishment and modification costs: Relates to the modification of the Senior Credit Agreement and includes the accelerated amortization of previously capitalized debt issuance costs, as well as third-party fees expensed in connection with the execution of the amended Senior Credit Agreement. These expenses are not considered to be indicative of the future servicing costs of the Company’s ongoing debt facilities.

Exhibit 99.2


			PRESS RELEASE

Valvoline Announces CEO Succession Plan

Sam Mitchell to retire as CEO and member of the Board of Directors, effective September 30, 2023

Current President, Lori Flees, named CEO

Lexington, Ky., Aug. 9, 2023 – Valvoline Inc. (NYSE: VVV), a trusted leader in preventive automotive maintenance delivering quick and convenient service, today announced that Sam Mitchell is retiring as Chief Executive Officer and a member of the Board of Directors, effective September 30, 2023. Mitchell will be succeeded by Lori Flees, current President of Retail Services, as the Company’s Chief Executive Officer. Flees will also join the Company’s Board.

Rich Freeland, Chairman of the Valvoline Board of Directors, said, “On behalf of the Board, I want to thank Sam for his leadership of Valvoline for the last 21 years. During this time, Sam has led the Company through a period of exceptional growth and performance, which included a very successful IPO in 2016, and most recently, the restructuring and separation of Valvoline’s Retail Services and Global Products businesses. Today Valvoline is the leader in preventive automotive maintenance, and it is from this position of strength that the Board has accepted Sam’s retirement decision.”

“Leading this Company has been the highlight of my career. I will always be grateful for the experience of working with the talented and dedicated people at Valvoline, and I wish them all future success,” said Mitchell. “I have had the privilege of working side by side with Lori for the past year. Throughout her career and in our time working together, she has proven to be a strategic thinker with a natural ability to unite teams and drive results. The Board and I have great confidence that she is the right leader for Valvoline as the Company focuses on its future as a high-growth, high-margin, pure-play retail services business.”

Flees has served as President of Valvoline Retail Services for the past year. In this role, she has led the Company’s operations, driving top and bottom-line growth to new record levels. She will continue in her role as President, in addition to serving as the Company’s CEO.

“Lori is a talented executive with a proven track record of delivering results,” continued Freeland. “Over the past year, Lori has become a highly respected member of the management team. Her substantial retail and leadership experience uniquely qualify her to lead Valvoline as it continues to deliver best-in-class retail automotive services. She has quickly gained intimate knowledge of the business and has galvanized the team around Valvoline’s strategic direction. Lori’s experience in strategy development, incubating innovative retail capabilities, and her deep consumer focus make her the ideal choice to oversee Valvoline’s next phase of growth as a pure-play retailer.”

“It is an honor and a privilege to be named the next CEO of Valvoline,” said Flees. “Together with our talented team and strong franchise partners, we will continue to deliver a quick, easy, and trusted customer experience, while investing strategically to drive best-in-class value creation for our shareholders. I want to thank the Board for their trust in me. I also would like to express my appreciation to Sam Mitchell for his mentorship and successful leadership of Valvoline through a critical time of change and growth.”

About Lori Flees

Flees was named President of Valvoline’s Retail Services business segment in April 2022. In her role as President, she oversees Valvoline’s fast-growing retail services business, which operates more than 1,800 Company-owned and franchised service center locations serving consumer and fleet customers.

Flees started her career in the automotive industry 35 years ago within General Motor’s GMC Truck division. After 17 years at Bain & Company, a global strategy consulting firm, Flees spent nearly a decade at Walmart where most recently she led all aspects of Walmart’s Health & Wellness business across more than 4,800 locations. She joined Walmart to lead corporate strategy and development, and later moved into leadership roles that included the incubation of new retail capabilities via the deployment of emerging technologies, strategic partnership development with companies such as Google and Microsoft, and the leadership of the pharmacy and optical business of Sam’s Club.

Third Quarter 2023 Financial Results and Conference Call

In a separate release issued today, Valvoline Inc. announced its financial results for the third quarter ended June 30, 2023. Valvoline’s management will host a live audio webcast today, August 9, 2023, at 9:00 a.m. EDT to discuss financial results and business highlights. The audio webcast, along with supplemental financial information, can be accessed via the investor relations page of the Company’s website at investors.Valvoline.com.

About Valvoline Inc.

The Company operates and franchises more than 1,800 service center locations through its Valvoline Instant Oil ChangeSM and Valvoline Great Canadian Oil Change retail brands, and helps independent operators grow their businesses through its nearly 300 Valvoline Express Care locations in North America. To learn more, or to find a Valvoline Inc. service center near you, visit vioc.com.

TM Trademark, Valvoline Inc. or its subsidiaries, registered in various countries

SM Service mark, Valvoline Inc. or its subsidiaries, registered in various countries

* Based on a survey of more than 600,000 Valvoline Instant Oil Change customers annually

For Further Information

Investor Relations

Elizabeth B. Russell

+1 (859) 357-3155

ir@valvoline.com

Media Relations

Michele Gaither Sparks

+1 (859) 230-8097

michele.sparks@valvoline.com

Cover Page	Aug. 03, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Aug. 03, 2023
Entity Registrant Name	VALVOLINE INC
Entity Incorporation, State or Country Code	KY
Entity File Number	001-37884
Entity Tax Identification Number	30-0939371
Entity Address, Address Line One	100 Valvoline Way, Suite 100
Entity Address, City or Town	Lexington
Entity Address, State or Province	KY
Entity Address, Postal Zip Code	40509
City Area Code	(859)
Local Phone Number	357-7777
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	true
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	VVV
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0001674910
Amendment Flag	false