Lease Commitments

12 Months Ended

Sep. 30, 2023

Leases [Abstract]

Lease Commitments

LEASE COMMITMENTS

The following table presents the Company's lease balances as of September 30:

(In millions)	Location in Consolidated Balance Sheets	2023		2022
Assets
Operating lease assets	Operating lease assets	$	266.5	$	248.1
Finance lease assets	Property, plant and equipment, net	240.0		217.1
Amortization of finance lease assets	Property, plant and equipment, net	(50.0)		(34.2)
Total leased assets		$	456.5	$	431.0
Liabilities
Current
Operating lease liabilities	Accrued expenses and other liabilities	$	29.2	$	26.8
Finance lease liabilities	Accrued expenses and other liabilities	12.3		10.6
Noncurrent
Operating lease liabilities	Operating lease liabilities	247.3		229.2
Finance lease liabilities	Other noncurrent liabilities	198.9		189.8
Total lease liabilities		$	487.7	$	456.4

The following table presents the components of total lease costs for the years ended September 30:

(In millions)	Location in Consolidated Statements of Comprehensive Income	2023		2022
Operating lease cost	Cost of sales and Selling, general and administrative expenses	$	40.7	$	36.8
Finance lease costs
Amortization of lease assets	Cost of sales	15.8		14.1
Interest on lease liabilities	Net interest and other financing expenses	10.2		9.3
Variable lease cost	Cost of sales and Selling, general and administrative expenses	3.7		2.4
Sublease income	Other income, net	(7.6)		(5.9)
Total lease cost		$	62.8	$	56.7

Other information related to the Company's leases follows for the years ended September 30:

(In millions)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (a)	$	38.7	$	34.9
Operating cash flows from finance leases	$	10.2	$	9.3
Financing cash flows from finance leases	$	10.8	$	8.8
Lease assets obtained in exchange for lease obligations:
Operating leases	$	46.4	$	46.8
Finance leases	$	21.3	$	18.6

(a)Included within the change in Other assets and liabilities within the Consolidated Statements of Cash Flows offset by noncash operating lease asset amortization and liability accretion.

The following table reconciles the undiscounted cash flows for the next five fiscal years ended September 30 and thereafter to the operating and finance lease liabilities recorded within the Consolidated Balance Sheet as of September 30, 2023:

(In millions)	Operating leases		Finance leases
2024	$	41.1	$	22.5
2025	39.6		22.7
2026	38.1		23.3
2027	35.4		23.1
2028	32.7		23.3
Thereafter	159.8		168.9
Total future lease payments	346.7		283.8
Imputed interest	70.2		72.6
Present value of lease liabilities	$	276.5	$	211.2

As of September 30, 2023, Valvoline has additional leases primarily related to its retail service center stores that have not yet commenced with approximately $61.0 million in undiscounted future lease payments that are not included in the table above. These leases are expected to commence over the next twelve months and generally have lease terms of 15 years.

The weighted average remaining lease terms and interest rates as of September 30, 2023 were:

	Operating leases		Finance leases
Weighted average remaining lease term (in years)	9.6		12.1
Weighted average discount rate	4.6	%	5.3	%

Lease Commitments

LEASE COMMITMENTS

The following table presents the Company's lease balances as of September 30:

(In millions)	Location in Consolidated Balance Sheets	2023		2022
Assets
Operating lease assets	Operating lease assets	$	266.5	$	248.1
Finance lease assets	Property, plant and equipment, net	240.0		217.1
Amortization of finance lease assets	Property, plant and equipment, net	(50.0)		(34.2)
Total leased assets		$	456.5	$	431.0
Liabilities
Current
Operating lease liabilities	Accrued expenses and other liabilities	$	29.2	$	26.8
Finance lease liabilities	Accrued expenses and other liabilities	12.3		10.6
Noncurrent
Operating lease liabilities	Operating lease liabilities	247.3		229.2
Finance lease liabilities	Other noncurrent liabilities	198.9		189.8
Total lease liabilities		$	487.7	$	456.4

The following table presents the components of total lease costs for the years ended September 30:

(In millions)	Location in Consolidated Statements of Comprehensive Income	2023		2022
Operating lease cost	Cost of sales and Selling, general and administrative expenses	$	40.7	$	36.8
Finance lease costs
Amortization of lease assets	Cost of sales	15.8		14.1
Interest on lease liabilities	Net interest and other financing expenses	10.2		9.3
Variable lease cost	Cost of sales and Selling, general and administrative expenses	3.7		2.4
Sublease income	Other income, net	(7.6)		(5.9)
Total lease cost		$	62.8	$	56.7

Other information related to the Company's leases follows for the years ended September 30:

(In millions)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (a)	$	38.7	$	34.9
Operating cash flows from finance leases	$	10.2	$	9.3
Financing cash flows from finance leases	$	10.8	$	8.8
Lease assets obtained in exchange for lease obligations:
Operating leases	$	46.4	$	46.8
Finance leases	$	21.3	$	18.6

(a)Included within the change in Other assets and liabilities within the Consolidated Statements of Cash Flows offset by noncash operating lease asset amortization and liability accretion.

The following table reconciles the undiscounted cash flows for the next five fiscal years ended September 30 and thereafter to the operating and finance lease liabilities recorded within the Consolidated Balance Sheet as of September 30, 2023:

(In millions)	Operating leases		Finance leases
2024	$	41.1	$	22.5
2025	39.6		22.7
2026	38.1		23.3
2027	35.4		23.1
2028	32.7		23.3
Thereafter	159.8		168.9
Total future lease payments	346.7		283.8
Imputed interest	70.2		72.6
Present value of lease liabilities	$	276.5	$	211.2

As of September 30, 2023, Valvoline has additional leases primarily related to its retail service center stores that have not yet commenced with approximately $61.0 million in undiscounted future lease payments that are not included in the table above. These leases are expected to commence over the next twelve months and generally have lease terms of 15 years.

The weighted average remaining lease terms and interest rates as of September 30, 2023 were:

	Operating leases		Finance leases
Weighted average remaining lease term (in years)	9.6		12.1
Weighted average discount rate	4.6	%	5.3	%