Valvoline : 2022 Annual Report The Next Chapter

2022 Annual Report

The Next Chapter

([HFXWLYH2IƓFHUV

6DPXHO-0LWFKHOO-U &KLHI([HFXWLYH2IƓFHU

DQG'LUHFWRU

-RQDWKDQ/&DOGZHOO 6HQLRU9LFH3UHVLGHQW &KLHI3HRSOH2IƓFHU

+HLGL-0DWKHV 6HQLRU9LFH3UHVLGHQW &KLHI0DUNHWLQJDQG

7UDQVIRUPDWLRQ2IƓFHU

0DU(0HL[HOVSHUJHU &KLHI)LQDQFLDO2IƓFHU

/RUL)OHHV 3UHVLGHQW 5HWDLO6HUYLFHV

-DPDO.0XDVKVKHU 3UHVLGHQW *OREDO3URGXFWV

Julie M. O'Daniel 6HQLRU9LFH3UHVLGHQW &KLHI/HJDO2IƓFHUDQG &RUSRUDWH6HFUHWDU

7KRPDV$*HUUDOG,, 6HQLRU9LFH3UHVLGHQW &KLHI6XSSO&KDLQ

2IƓFHU

Michael S. Ryan

&KLHI$FFRXQWLQJ 2IƓFHUDQG&RQWUROOHU

9DOYROLQH%RDUGRI'LUHFWRUV

Valvoline is governed by a nine-member board of directors, eight of whom are independent directors under New York Stock Exchange (NYSE) guidelines. The board operates the following committees, all of which consist entirely of outside directors: Audit; Compensation; and Governance

DQG1RPLQDWLQJ9DOYROLQHōV&KLHI([HFXWLYH2IƓFHUDQG&KLHI)LQDQFLDO2IƓFHUKDYHHDFKVXEPLWWHGFHUWLƓFDWLRQVFRQFHUQLQJWKHDFFXUDFRI ƓQDQFLDODQGRWKHULQIRUPDWLRQLQ9DOYROLQHōVDQQXDOUHSRUWRQ)RUP.DVUHTXLUHGE6HFWLRQVDQGRIWKH6DUEDQHV2[OH$FWRI

7KHFHUWLƓFDWLRQVDUHƓOHGDVH[KLELWVWR9DOYROLQHōVDQQXDOUHSRUWRQ)RUP.,QDGGLWLRQWKH1<6(UHTXLUHVWKDWWKH&(2RIOLVWHG companies annually certify that he or she is not aware of any violation by the company of NYSE corporate governance listing standards. Valvoline's

&(26DP0LWFKHOOVXEPLWWHG9DOYROLQHōVFHUWLƓFDWLRQRQ)HE

Richard J. Freeland 2, 3

Chairman of the Board; Retired President and

&KLHI2SHUDWLQJ2IƓFHU&XPPLQV,QF

Gerald W. Evans Jr. 2, 3

5HWLUHG&KLHI([HFXWLYH2IƓFHU Hanesbrands Inc.

Carol H. Kruse 2, 3

Former Senior Vice President and Chief

0DUNHWLQJ2IƓFHU

ESPN and Cambia Health Solutions

Committees

1. Audit
2. Governance and Nominating
3. Compensation a. Committee Chair

Forward-Looking Statements:

Certain statements in this Annual Report, other than statements of historical fact, including estimates, projections and statements related to our business plans and operating results, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act

RI:HKDYHLGHQWLƓHGVRPHRIWKHVH

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 our current expectations, estimates, projections and assumptions as of the date such statements are made and are

Stephen E. Macadam 2, 3

5HWLUHG&KLHI([HFXWLYH2IƓFHUDQG3UHVLGHQW

EnPro Industries, Inc.

Vada O. Manager 1, 2a, 3

3UHVLGHQWDQG&KLHI([HFXWLYH2IƓFHU

Manager Global Consulting Holdings LLC;

Chief Strategist & Board Director of Think TRUE

Samuel J. Mitchell, Jr.

&KLHI([HFXWLYH2IƓFHU9DOYROLQH,QF

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 our Form 10-K, which has been included in this Annual Report and is available on our website

DWKWWSLQYHVWRUVYDOYROLQHFRPVHFƓOLQJV and on the SEC's website at http://www.sec. gov. We assume 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.

Non-GAAP Measures:

7KLV$QQXDO5HSRUWLQFOXGHVFHUWDLQƓQDQFLDO measures that do not conform to generally

Jennifer L. Slater 2, 3

Vice President and General Manager, Global

Heavy Vehicle and Off-Road Business, Sensata

Charles M. Sonsteby 1a, 2, 3

Retired Vice Chairman,

The Michaels Companies

Mary J. Twinem 1, 2, 3a

Retired Executive Vice President and Chief

)LQDQFLDO2IƓFHU%XIIDOR:LOG:LQJV,QF

accepted accounting principles in the U.S. (U.S. GAAP), and should not be construed as an alternative to the reported results determined in accordance with U.S. GAAP. Management believes including this non-GAAP information assists investors in understanding the ongoing operating performance of Valvoline's business

ESUHVHQWLQJFRPSDUDEOHƓQDQFLDOUHVXOWV between periods. The non-GAAP information provided may not be consistent with the methodologies used by other companies.

,QIRUPDWLRQUHJDUGLQJ9DOYROLQHōVGHƓQLWLRQV calculations and reconciliation of non-GAAP

PHDVXUHVLVLQFOXGHGLQWKHƓVFDO

Form 10-K, which has been enclosed with this Annual Report.

Dear Fellow Stakeholders:

Fiscal year 2022 was a transformative year for Valvoline with the successful conclusion of our separation review and the announced sale of our Global Products business for $2.65B. This transaction marks the completion of Valvoline's transformation into a pure-play automotive retail service business with best-in-class service, operations,

DQGƓQDQFLDOSHUIRUPDQFH

With the success of our service delivery model, our former Retail Services segment has grown to a point where it can thrive as an independent business. The sale of our former Global Products segment will position both businesses with the opportunity to focus on their own investment attributes, strategic priorities, and growth and SURƓWGULYHUV

The new Valvoline is a high-growth,high-margin business, making it a top-tier consumer services growth stock and investment opportunity. We will have both the capital structure and capital allocation strategy that enables targeted investments to capture opportunities in an evolving car parc. Our retail services business is poised to ZLQZLWKDFOHDUVWUDWHJDQGWDOHQWHGWHDPOHGERXUQHZ3UHVLGHQW/RUL)OHHVZKREULQJVVLJQLƓFDQWUHWDLO knowledge into the position.

This year marks 16 consecutive years of system-widesame-store sales growth in our retail business. With such a strong foundation, we are focusing on three key strategies:

• 1. Driving full potential in our core business. We continue to invest in our people, processes, and technology
• WRVWUHQJWKHQRXUDELOLWWRHIƓFLHQWOGHOLYHUDVXSHULRUFXVWRPHUH[SHULHQFHDFURVVDOORXUVWRUHVŊHYHUGD
  The result is consistent growth in ticket and market share (vehicles served per day), both driven by increases in
• QRQRLOFKDQJHUHYHQXHDQGWKHVKLIWWRVQWKHWLFVDVZHOODVPDUJLQH[SDQVLRQ
• 1. Accelerating our network growth. We anticipate growing our network footprint from more than 1,700 retail
• ORFDWLRQVWRRYHUWLPH2XUIUDQFKLVHJURZWKZLOOSODDNHUROHLQWKLVQHWZRUNH[SDQVLRQZLWKD
• UHQHZHGIRFXVRQUHFUXLWLQJQHZIUDQFKLVHSDUWQHUVDQGSDUWQHULQJZLWKRXUH[LVWLQJIUDQFKLVHHVWRƓQG opportunities to drive more growth.
• 1. Preparing for the future. :HZLOOFRQWLQXHWRH[SDQGLQWRQHZVHUYLFHVWRPHHWWKHQHHGVRIDQHYROYLQJ
• FDUSDUF7KLVVXPPHUZHH[SDQGHGRXU(9VHUYLFHSLORWLQWRWZRQHZPDUNHWV:KLOH(9SHQHWUDWLRQRIWKH car parc is currently around 1% nationally, Valvoline is focused on enhancing its leading preventive automotive maintenance service to customers regardless of their vehicle type.

,QDGGLWLRQRXUŴHHWEXVLQHVVKDVEHHQJURZLQJDWDQHYHQIDVWHUUDWHWKDQRXUFRQVXPHUEXVLQHVVZLWKDŴHHW vehicle more frequently serviced and with a more than 20% higher average ticket than a consumer vehicle. We

DUHDOVRGHYHORSLQJFDSDELOLWLHVWRVHUYHPHGLXPGXWŴHHWYHKLFOHVDFURVVRXUQHWZRUN

I want to thank our global Valvoline team, both in our Global Products and Retail Services businesses, for their hard work, tenacity and winning approach this past year. Both businesses delivered strong growth against a challenging macro-economic backdrop, in addition to focusing on our corporate strategic actions. At Valvoline, we say it all starts with our people and once again, they have delivered above and beyond this past year.

:LWKWKHVDOHRI*OREDO3URGXFWVRQWUDFNWRFORVHLQHDUOFDOHQGDU,DPH[FLWHGDERXWZKDWWKHQHZ

9DOYROLQHFDQGHOLYHUIRURXUVKDUHKROGHUV:HKDYHEXLOWDEXVLQHVVPRGHOWKDWJHQHUDWHVVLJQLƓFDQWFRQVLVWHQW DQGSUHGLFWDEOHSURƓWFDVKŴRZDQGUHWXUQRQLQYHVWHGFDSLWDO2XUIRFXVRQPDNLQJYHKLFOHFDUHHDVE GHOLYHULQJDVXSHULRU4XLFN(DV 7UXVWHGFXVWRPHUH[SHULHQFHFRQWLQXHVWRGULYHORDOWDQGQHZFXVWRPHU JURZWK:LWKDOORIWKLVLQPLQGZHFDUUH[FHOOHQWPRPHQWXPLQWRƓVFDODQGEHRQG

Sincerely,

Samuel J. Mitchell, Jr. &KLHI([HFXWLYH2IƓFHU

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

• ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2022

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to ___________

Commission file number 001-37884

VALVOLINE INC.

Kentucky	30-0939371
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 Valvoline Way,

Lexington, Kentucky 40509

Telephone Number [phone]

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	VVV	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.	Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.	Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

The aggregate market value of voting common stock held by non-affiliates at March 31, 2022 was approximately $5.6 billion. At November 18, 2022, there were 174,620,302 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement for its 2023 Annual Meeting of Shareholders (the "Proxy Statement") are incorporated by reference into Part III of this Annual Report on Form 10-K and will be filed within 120 days of the registrant's fiscal year end.