Business Combinations

12 Months Ended

Sep. 30, 2023

BUSINESS COMBINATIONS

Fiscal 2023

The Company acquired 31 service center stores in single and multi-store transactions for an aggregate purchase price of $36.3 million during the year ended September 30, 2023. 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 1,852 system-wide service center stores.

Fiscal 2022

The Company acquired 37 service center stores in single and multi-store transactions, including four former

franchise locations and five former Express Care locations, which converted to company-operated service center stores, for an aggregate purchase price of $50.7 million during the year ended September 30, 2022.

Fiscal 2021

During fiscal 2021, Valvoline acquired 134 service center stores in single and multi-store transactions, including 50 former franchise locations converted to company-operated service centers stores and 12 franchise-operated service center stores, for an aggregate purchase price of $281.7 million. These acquisitions provided an opportunity to expand Valvoline's system of service center stores within key markets and included:

•Fourteen company-operated service center stores in Texas acquired from Kent Lubrication Centers Ltd. (doing business as Avis Lube) on October 1, 2020;

•Twenty-one former franchise locations converted to company-operated service center stores in Kansas and Missouri acquired from Westco Lube, Inc. on October 15, 2020;

•Twelve company-operated service center stores in Idaho acquired from L&F Enterprises (doing business as Einstein's Oilery) on October 30, 2020;

•Twenty-seven Mister Oil Change Express® locations (15 company-operated and 12 franchise-operated) across seven states acquired from Car Wash Partners, Inc. on December 11, 2020;

•Sixteen former franchise locations converted to company-operated service center stores in Texas acquired from AWC Premium Automotive Service Ltd. on April 30, 2021;

•Thirteen former franchise and fourteen former joint venture locations converted to company-operated service center stores acquired in single and multi-store transactions; and

•Eleven company-operated service center stores and six former Express Care locations acquired in single and multi-store transactions.

Summary

The following table summarizes the aggregate cash consideration paid and the total assets acquired and liabilities assumed for the years ended September 30:


(In millions)	2023		2022		2021


Inventories	$	0.4	$	—	$	2.8
Other current assets	—		0.2		0.1
Property, plant and equipment (a)	6.4		10.0		98.6
Operating lease assets	9.7		9.6		36.4

Goodwill (b)	29.0		39.1		204.4
Intangible assets (c)
Reacquired franchise rights (d)	4.0		2.8		58.6
Customer relationships	—		—		0.1

Other	0.3		0.4		3.1



Other current liabilities	(0.7)		(0.8)		(8.3)
Operating lease liabilities	(9.1)		(8.9)		(33.5)
Other noncurrent liabilities (a)	(3.7)		(1.7)		(80.6)
Total net assets acquired	$	36.3	$	50.7	$	281.7

(a)Includes finance lease assets in Property, plant and equipment and finance lease liabilities in Other current and noncurrent liabilities. During the years ended September 30, 2023, 2022 and 2021, finance lease assets acquired were $3.8 million, $1.8 million and $84.3 million, respectively; finance lease liabilities in Other current liabilities were $0.2 million, $0.1 million and $3.7 million, respectively; and finance lease liabilities in Other noncurrent liabilities were $3.7 million, $1.7 million and $80.6 million, respectively.

(b)Goodwill is generally expected to be deductible for income tax purposes and is primarily attributed to the operational synergies and potential growth expected to result in economic benefits in the respective markets of the acquisitions.

(c)Weighted average amortization period of intangible assets acquired is 9 years for fiscal 2023 and fiscal 2022 and 10 years for fiscal 2021.

(d)Prior to the acquisition of former franchise service center stores, Valvoline licensed the right to operate franchised service centers, including use of the Company’s trademarks and trade name. In connection with these acquisitions, Valvoline reacquired those rights and recognized separate definite-lived reacquired franchise rights intangible assets, which are being amortized on a straight-line basis over the weighted average remaining term of approximately 9 years for fiscal 2023 and 10 years for fiscal 2022 and fiscal 2021. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market.

The Company did not record any material measurement period adjustments and does not expect any material changes to the preliminary purchase price allocations summarized above for acquisitions completed during the last twelve months.