Acquisitions and Dispositions

12 Months Ended

Sep. 30, 2024

ACQUISITIONS AND DISPOSITIONS

Acquisitions

Fiscal 2024

The Company acquired 36 service center stores in single and multi-store transactions, including five former franchise locations and two former Express Care locations that were converted to company-operated service center stores, for an aggregate purchase price of $53.3 million during the year ended September 30, 2024. These acquisitions expand Valvoline’s retail presence in key North American markets and contribute to growing the number of company-operated service center stores to 950 as of the year ended September 30, 2024.

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.

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 were converted to company-operated service stores, for an aggregate purchase price of $50.7 million during the year ended September 30, 2022.

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)	2024		2023		2022


Inventories	$	0.2	$	0.4	$	—
Other current assets	—		—		0.2
Property, plant and equipment (a)	5.0		6.4		10.0
Operating lease assets	23.2		9.7		9.6

Goodwill (b)	44.3		29.0		39.1
Intangible assets (c)
Reacquired franchise rights (d)	6.4		4.0		2.8


Other	0.5		0.3		0.4



Other current liabilities	(0.1)		(0.7)		(0.8)
Operating lease liabilities	(23.2)		(9.1)		(8.9)
Other noncurrent liabilities (a)	(3.0)		(3.7)		(1.7)
Total net assets acquired	$	53.3	$	36.3	$	50.7
Non-cash consideration	(0.6)		—		—
Total cash consideration transferred	$	52.7	$	36.3	$	50.7

(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, 2024, 2023 and 2022, finance lease assets acquired were $3.1 million, $3.8 million and $1.8 million, respectively; finance lease liabilities in Other current liabilities were $0.1 million, $0.2 million and $0.1 million, respectively; and finance lease liabilities in Other noncurrent liabilities were $3.0 million, $3.7 million and $1.7 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 seven years for fiscal 2024, and nine years for fiscal 2023 and 2022.

(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 seven years for fiscal 2024, nine years for fiscal 2023, and 10 years for fiscal 2022. 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.

Dispositions

Sale of company-operated service center stores

During the fourth fiscal quarter of 2024, Valvoline entered into agreements and completed the sale of company-operated service center stores to franchisees. Upon completion of the transactions, Valvoline derecognized the net assets associated with the service center stores and recorded a gain of $41.8 million which was reported in Other income, net in the Consolidated Statements of Comprehensive Income during the year ended September 30, 2024.

Sale of former Global Products business

During the first quarter of fiscal 2024, Valvoline completed the sale of a former Global Products business whose operations were suspended in fiscal 2022. This business was not included in the Global Products disposal group and was classified as held for sale as of September 30, 2023. As a result, the Company evaluated the business for impairment and determined the carrying value of the disposal group was in excess of its fair value resulting in a pre-tax impairment loss of $8.1 million that was recognized within Other income, net in the Consolidated Statement of Comprehensive Income during the year ended September 30, 2023. Upon completion of the sale in fiscal 2024,

Valvoline derecognized the remaining net liabilities of $3.9 million inclusive of a cumulative translation loss attributable to the business.