Lease Commitments

12 Months Ended

Sep. 30, 2024

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	2024		2023
Assets
Operating lease assets	Operating lease assets	$	298.6	$	266.5
Finance lease assets	Property, plant and equipment, net	261.7		240.0
Amortization of finance lease assets	Property, plant and equipment, net	(67.4)		(50.0)
Total leased assets		$	492.9	$	456.5
Liabilities
Current
Operating lease liabilities	Accrued expenses and other liabilities	$	31.2	$	29.2
Finance lease liabilities	Accrued expenses and other liabilities	13.4		12.3
Noncurrent
Operating lease liabilities	Operating lease liabilities	279.7		247.3
Finance lease liabilities	Other noncurrent liabilities	207.3		198.9
Total lease liabilities		$	531.6	$	487.7

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	2024		2023
Operating lease cost	Cost of sales and Selling, general and administrative expenses	$	45.8	$	40.7
Finance lease costs
Amortization of lease assets	Cost of sales	17.4		15.8
Interest on lease liabilities	Net interest and other financing expenses	11.1		10.2
Variable lease cost	Cost of sales and Selling, general and administrative expenses	3.7		3.7
Sublease income	Other income, net	(9.3)		(7.6)
Total lease cost		$	68.7	$	62.8

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

(In millions)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (a)	$	43.1	$	38.7
Operating cash flows from finance leases	$	11.1	$	10.2
Financing cash flows from finance leases	$	12.0	$	10.8
Lease assets obtained in exchange for lease obligations:
Operating leases	$	63.4	$	46.4
Finance leases	$	22.4	$	21.3

(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, 2024:

(In millions)	Operating leases		Finance leases
2025	$	45.9	$	24.1
2026	44.9		25.0
2027	42.6		25.1
2028	39.9		25.3
2029	37.2		25.1
Thereafter	193.1		171.5
Total future lease payments	403.6		296.1
Imputed interest	92.7		75.4
Present value of lease liabilities	$	310.9	$	220.7

As of September 30, 2024, Valvoline has additional leases primarily related to its retail service center stores that have not yet commenced with approximately $30.1 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, 2024 were:

	Operating leases		Finance leases
Weighted average remaining lease term (in years)	9.9		11.7
Weighted average discount rate	5.1	%	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	2024		2023
Assets
Operating lease assets	Operating lease assets	$	298.6	$	266.5
Finance lease assets	Property, plant and equipment, net	261.7		240.0
Amortization of finance lease assets	Property, plant and equipment, net	(67.4)		(50.0)
Total leased assets		$	492.9	$	456.5
Liabilities
Current
Operating lease liabilities	Accrued expenses and other liabilities	$	31.2	$	29.2
Finance lease liabilities	Accrued expenses and other liabilities	13.4		12.3
Noncurrent
Operating lease liabilities	Operating lease liabilities	279.7		247.3
Finance lease liabilities	Other noncurrent liabilities	207.3		198.9
Total lease liabilities		$	531.6	$	487.7

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	2024		2023
Operating lease cost	Cost of sales and Selling, general and administrative expenses	$	45.8	$	40.7
Finance lease costs
Amortization of lease assets	Cost of sales	17.4		15.8
Interest on lease liabilities	Net interest and other financing expenses	11.1		10.2
Variable lease cost	Cost of sales and Selling, general and administrative expenses	3.7		3.7
Sublease income	Other income, net	(9.3)		(7.6)
Total lease cost		$	68.7	$	62.8

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

(In millions)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (a)	$	43.1	$	38.7
Operating cash flows from finance leases	$	11.1	$	10.2
Financing cash flows from finance leases	$	12.0	$	10.8
Lease assets obtained in exchange for lease obligations:
Operating leases	$	63.4	$	46.4
Finance leases	$	22.4	$	21.3

(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, 2024:

(In millions)	Operating leases		Finance leases
2025	$	45.9	$	24.1
2026	44.9		25.0
2027	42.6		25.1
2028	39.9		25.3
2029	37.2		25.1
Thereafter	193.1		171.5
Total future lease payments	403.6		296.1
Imputed interest	92.7		75.4
Present value of lease liabilities	$	310.9	$	220.7

As of September 30, 2024, Valvoline has additional leases primarily related to its retail service center stores that have not yet commenced with approximately $30.1 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, 2024 were:

	Operating leases		Finance leases
Weighted average remaining lease term (in years)	9.9		11.7
Weighted average discount rate	5.1	%	5.3	%