Reportable Segment Information

9 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Reportable Segment Information

REPORTABLE SEGMENT INFORMATION

Valvoline manages its business through the following two reportable segments:

•Retail Services - delivers automotive services to vehicle owners and fleets throughout the United States and Canada across a broad array of preventive maintenance services and capabilities performed through Valvoline’s retail network of company-operated and independent franchised service center stores, and independent Express Care stores that service vehicles with Valvoline products.

•Global Products - sells engine and automotive preventive maintenance products in more than 140 countries and territories to mass market and automotive parts retailers, installers, and commercial customers, including original equipment manufacturers (“OEM”), to service light- and heavy-duty vehicles and equipment.

These segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker in allocating resources and evaluating performance of the business. Adjusted EBITDA is the primary measure used in making these operating decisions, which Valvoline defines as segment operating income adjusted for depreciation and amortization and certain key items impacting comparability.

Certain indirect expenses are recognized within each segment based on the estimated utilization of indirect resources. Costs to support corporate functions and certain non-operational and corporate activity that is not directly attributable to a particular segment are not included in the segment operating results regularly utilized by the chief operating decision maker. This activity is separately delineated within Corporate to reconcile to consolidated results.

Segment financial results

The following presents sales and adjusted EBITDA for each reportable segment:

	Three months ended				Nine months ended
	June 30				June 30
(in millions)	2022		2021		2022		2021
Sales
Retail Services	$	384	$	330	$	1,080	$	869
Global Products	573		462		1,621		1,277
Consolidated sales	$	957	$	792	$	2,701	$	2,146
Adjusted EBITDA
Retail Services	$	113	$	112	$	306	$	277
Global Products	87		81		245		255
Total operating segments	200		193		551		532
Corporate	(20)		(20)		(57)		(53)
Consolidated Adjusted EBITDA	180		173		494		479
Reconciliation to income before income taxes:
Net interest and other financing expenses	(19)		(17)		(54)		(92)
Depreciation and amortization	(25)		(24)		(75)		(68)
Key items: (a)
Net pension and other postretirement plan income	10		14		28		41
Legacy and separation-related expenses	(11)		(1)		(20)		(2)
LIFO charge	(8)		(17)		(17)		(26)
Business interruption recoveries (losses)	2		—		(3)		3
Information technology transition costs	—		—		(3)		—
Income before income taxes	$	129	$	128	$	350	$	335

(a)Key items represent adjustments to U.S. GAAP results and consist of non-operational matters, including pension and other postretirement plan non-service income and remeasurement adjustments, legacy and separation-related activity, changes in the last-in, first-out ("LIFO") inventory reserve, and certain other corporate matters excluded from operating results that management believes impacts the comparability of operational results between periods.

Disaggregation of revenue

Sales by primary customer channel for the Company’s reportable segments are summarized below:

	Three months ended				Nine months ended
	June 30				June 30
(In millions)	2022		2021		2022		2021
Retail Services
Company operations	$	273	$	234	$	762	$	616
Non-company operations	111		96		318		253
Total Retail Services	384		330		1,080		869
Global Products
Do-It-Yourself	219		166		584		453
Installer and other	354		296		1,037		824
Total Global Products	573		462		1,621		1,277
Consolidated sales	$	957	$	792	$	2,701	$	2,146

Sales by reportable segment disaggregated by geographic market follows:

	Retail Services				Global Products				Total
(In millions)	2022		2021		2022		2021		2022		2021
Three months ended June 30
North America (a)	$	384	$	330	$	370	$	278	$	754	$	608
Europe, Middle East and Africa ("EMEA")	—		—		58		56		58		56
Asia Pacific	—		—		96		96		96		96
Latin America (a)	—		—		49		32		49		32
Totals	$	384	$	330	$	573	$	462	$	957	$	792
Nine months ended June 30
North America (a)	$	1,080	$	869	$	1,004	$	755	$	2,084	$	1,624
EMEA	—		—		192		161		192		161
Asia Pacific	—		—		298		267		298		267
Latin America (a)	—		—		127		94		127		94
Totals	$	1,080	$	869	$	1,621	$	1,277	$	2,701	$	2,146