Revenue Recognition (Tables)

9 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Cumulative Effect and Impact of New Accounting Pronouncements

The following table reconciles the Condensed Consolidated Balance Sheet line items impacted by the cumulative effect of adoption of the new revenue recognition accounting guidance on October 1, 2018:

(In millions)	September 30, 2018 as reported		Adjustments		Balances at October 1, 2018
Accounts receivable, net	$	409	$	(33)	$	376
Inventories, net	$	176	$	14	$	190
Deferred income taxes	$	138	$	6	$	144
Retained deficit	$	399	$	13	$	412

Most revenue transactions and activities recorded under the new revenue recognition accounting guidance are substantially consistent with the treatment under prior guidance. The following tables summarize the impact of the new revenue accounting guidance on Valvoline’s Condensed Consolidated Balance Sheet and Condensed Consolidated Statements of Comprehensive Income as of and for the three and nine months ended June 30, 2019:

	June 30, 2019
Impact of Changes to Condensed Consolidated Balance Sheet	As reported		Adjustments (a)		Under prior guidance
(In millions)
Accounts receivable, net	$	423	$	37	$	460
Inventories, net	$	200	$	(15)	$	185
Deferred income taxes	$	113	$	(6)	$	107
Accrued expenses and other liabilities	$	242	$	(1)	$	241
Retained deficit	$	291	$	(15)	$	276

^(a) Adjustments include the opening retained deficit adjustments as detailed in the table above.

	Three months ended June 30, 2019
Impact of Changes to Condensed Consolidated Statement of Comprehensive Income	As reported		Adjustments		Under prior guidance
(In millions)
Sales	$	613	$	(10)	$	603
Cost of sales	406		(14)		392
Gross profit	$	207	$	4	$	211
Selling, general and administrative expenses	$	116	$	3	$	119
Equity and other income, net	$	11	$	1	$	12
Operating income	$	102	$	2	$	104
Income before income taxes	$	85	$	2	$	87
Income tax expense	$	20	$	1	$	21
Net income	$	65	$	1	$	66
Basic earnings per share	$	0.34	$	0.01	$	0.35
Diluted earnings per share	$	0.34	$	0.01	$	0.35

	Nine months ended June 30, 2019
Impact of Changes to Condensed Consolidated Statement of Comprehensive Income	As reported		Adjustments		Under prior guidance
(In millions)
Sales	$	1,761	$	(34)	$	1,727
Cost of sales	1,168		(42)		1,126
Gross profit	$	593	$	8	$	601
Selling, general and administrative expenses	$	334	$	6	$	340
Equity and other income, net	$	29	$	1	$	30
Operating income	$	285	$	3	$	288
Income before income taxes	$	237	$	3	$	240
Income tax expense	$	56	$	1	$	57
Net income	$	181	$	2	$	183
Basic earnings per share	$	0.96	$	0.01	$	0.97
Diluted earnings per share	$	0.96	$	0.01	$	0.97

Schedule of Disaggregated Revenues

The following summarizes sales by primary customer channel for the Company’s reportable segments:

(In millions)	Three months ended June 30, 2019		Nine months ended June 30, 2019
Quick Lubes
Company-owned operations	$	136	$	388
Non-company owned operations	75		212
Total Quick Lubes	211		600
Core North America
Retail	143		399
Installer and other	117		336
Total Core North America	260		735
International	142		426
Consolidated sales	$	613	$	1,761

Sales by reportable segment disaggregated by geographic market follows for the three and nine months ended June 30, 2019:

(In millions)	Quick Lubes		Core North America		International		Totals
Three months ended
North America (a)	$	211	$	260	$	—	$	471
Europe, Middle East and Africa ("EMEA")	—		—		43		43
Asia Pacific	—		—		72		72
Latin America (a)	—		—		27		27
Total	$	211	$	260	$	142	$	613
Nine months ended
North America (a)	$	600	$	735	$	—	$	1,335
Europe, Middle East and Africa ("EMEA")	—		—		134		134
Asia Pacific	—		—		212		212
Latin America (a)	—		—		80		80
Total	$	600	$	735	$	426	$	1,761

(a) Valvoline includes the United States and Canada in its North America region. Mexico is included within the Latin America region.

Disaggregation of Sales by Timing of Revenue Recognized

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

(In millions)	Three months ended June 30, 2019		Nine months ended June 30, 2019
Sales at a point in time	$	602	$	1,730
Franchised revenues transferred over time	11		31
Consolidated sales	$	613	$	1,761