VALVOLINE INC, 10-Q filed on 8/2/2018
Quarterly Report
v3.10.0.1
Document Entity Information - shares
9 Months Ended
Jun. 30, 2018
Jul. 31, 2018
Document and Entity Information [Abstract]    
Entity Registrant Name VALVOLINE INC  
Entity Central Index Key 0001674910  
Document Type 10-Q  
Document Period End Date Jun. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --09-30  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   190,747,020
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q3  
v3.10.0.1
Condensed Consolidated Statements of Comprehensive Income - USD ($)
shares in Millions, $ in Millions
3 Months Ended 9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Net Income (Loss) Attributable to Parent [Abstract]        
Sales $ 577 $ 534 $ 1,691 $ 1,537
Cost of sales 376 337 1,088 957
Gross profit 201 197 603 580
Selling, general and administrative expenses 110 102 328 294
Legacy and separation-related expenses, net (3) 13 14 25
Equity and other income (8) (5) (29) (20)
Operating income 102 87 290 281
Net pension and other postretirement plan non-service income and remeasurement adjustments (10) (17) (30) (60)
Net interest and other financing expenses 15 10 45 28
Income before income taxes 97 94 275 313
Income tax expense 33 38 154 114
Net income $ 64 $ 56 $ 121 $ 199
NET INCOME PER SHARE        
Basic (usd per share) $ 0.33 $ 0.27 $ 0.61 $ 0.97
Diluted (usd per share) $ 0.33 $ 0.27 $ 0.61 $ 0.97
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING        
Basic (shares) 195 204 199 204
Diluted (shares) 196 204 200 204
Dividends paid per common share (usd per share) $ 0.07 $ 0.05 $ 0.22 $ 0.15
COMPREHENSIVE INCOME        
Net income $ 64 $ 56 $ 121 $ 199
Other comprehensive (loss) income, net of tax        
Unrealized translation (loss) gain (13) 6 (9) 3
Amortization of pension and other postretirement plan prior service credit (3) (2) (7) (6)
Other comprehensive (loss) gain (16) 4 (16) (3)
Comprehensive income $ 48 $ 60 $ 105 $ 196
v3.10.0.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Jun. 30, 2018
Sep. 30, 2017
Current assets    
Cash and cash equivalents $ 107 $ 201
Accounts receivable, net 461 385
Inventories, net 196 175
Other current assets 26 29
Total current assets 790 790
Noncurrent assets    
Property, plant and equipment, net 399 391
Goodwill and intangibles, net 398 335
Equity method investments 33 30
Deferred income taxes 147 281
Other noncurrent assets 82 88
Total noncurrent assets 1,059 1,125
Total assets 1,849 1,915
Current liabilities    
Short-term debt 0 75
Current portion of long-term debt 26 15
Trade and other payables 176 192
Accrued expenses and other liabilities 223 196
Total current liabilities 425 478
Noncurrent liabilities    
Long-term debt 1,231 1,034
Employee benefit obligations 303 342
Other noncurrent liabilities 178 178
Total noncurrent liabilities 1,712 1,554
Commitments and contingencies
Stockholders’ deficit    
Preferred stock, no par value, 40 shares authorized; no shares issued and outstanding 0 0
Common stock, par value $0.01 per share, 400 shares authorized; 193 and 203 shares issued and outstanding at June 30, 2018 and September 30, 2017, respectively 2 2
Paid-in capital 6 5
Retained deficit (323) (167)
Accumulated other comprehensive income 27 43
Total stockholders’ deficit (288) (117)
Total liabilities and stockholders’ deficit $ 1,849 $ 1,915
v3.10.0.1
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2018
Sep. 30, 2017
Statement of Financial Position [Abstract]    
Preferred stock authorized (shares) 40,000,000 40,000,000
Preferred stock issued (shares) 0 0
Preferred stock outstanding (shares) 0 0
Common stock, par value (usd per share) $ 0.01 $ 0.01
Common stock authorized (shares) 400,000,000 400,000,000
Common stock issued (shares) 193,000,000 203,000,000
Common stock outstanding (shares) 193,000,000 203,000,000
v3.10.0.1
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Cash flows from operating activities    
Net income $ 121 $ 199
Adjustments to reconcile net income to cash flows from operating activities    
Depreciation and amortization 39 30
Debt issuance cost and discount amortization 2 2
Deferred income taxes 71 0
Equity income from affiliates (12) (10)
Distributions from equity affiliates 8 7
Pension contributions (13) (16)
Gain on pension and other postretirement plan remeasurements 0 (8)
Gain on sale of assets (4) 0
Foreign currency exchange loss 3 0
Stock-based compensation expense 10 6
Change in assets and liabilities    
Accounts receivable [1] (80) (39)
Inventories [1] (23) (41)
Payables and accrued liabilities [1] 12 43
Other assets and liabilities [1] 47 (16)
Total cash provided by operating activities 181 157
Cash flows from investing activities    
Additions to property, plant and equipment (51) (43)
Acquisitions, net of cash acquired (71) (66)
Proceeds from sale of operations 5 0
Total cash used in investing activities (117) (109)
Cash flows from financing activities    
Net transfers from Ashland 0 5
Proceeds from borrowings, net of issuance costs 170 75
Repayments on borrowings (39) (87)
Repurchases of common stock (220) (50)
Purchase of additional ownership in subsidiary (15) 0
Cash dividends paid (45) (30)
Other financing activities (6) 0
Total cash used in financing activities (155) (87)
Effect of currency exchange rate changes on cash and cash equivalents (3) (1)
Decrease in cash and cash equivalents (94) (40)
Cash and cash equivalents - beginning of period 201 172
Cash and cash equivalents - end of period $ 107 $ 132
[1] Excludes changes resulting from operations acquired or sold.
v3.10.0.1
Basis of Presentation and Significant Accounting Policies
9 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Basis of Presentation and Significant Accounting Policies
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been prepared by Valvoline Inc. (“Valvoline” or the “Company”) in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and Securities and Exchange Commission (“SEC”) regulations for interim financial reporting, which do not include all information and footnote disclosures normally included in annual financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with Valvoline’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates. In the opinion of management, the assumptions underlying the condensed consolidated financial statements for these interim periods are reasonable, and all adjustments considered necessary for a fair presentation have been made and are of a normal recurring nature unless otherwise disclosed herein. The results for the interim periods are not necessarily indicative of results to be expected for the entire year. Certain prior period amounts have been reclassified to conform to the current presentation.

Recent accounting pronouncements

A description of new U.S. GAAP accounting standards issued and adopted during the current year is required in interim financial reporting. A detailed listing of recent accounting standards relevant to Valvoline is included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2017. The following standards relevant to Valvoline were either issued or adopted in the current year, or are expected to have a meaningful impact on Valvoline in future periods.

Recently adopted

In the first fiscal quarter of 2018, Valvoline adopted the following:

In July 2015, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to simplify the subsequent measurement of certain inventories by replacing the current lower of cost or market test with a lower of cost or net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in, first out (“LIFO”) and retail inventory methods. Valvoline adopted this guidance prospectively on October 1, 2017. Valvoline utilizes LIFO to value approximately 70% of its gross inventory and there were no material differences in the Company’s previous valuation methodology for its remaining inventory using lower of cost or market to lower of cost or net realizable value.

In March 2017, the FASB issued accounting guidance that changed how employers who sponsor defined benefit pension and/or postretirement benefit plans present the net periodic benefit cost in the Condensed Consolidated Statements of Comprehensive Income. This guidance requires employers to present the service cost component of net periodic benefit cost in the same caption as other employee compensation costs for services rendered during the period. All other components of the net periodic benefit cost are presented separately outside of the operating income caption. Valvoline retrospectively adopted this guidance on October 1, 2017. Accordingly, Net pension and other postretirement plan non-service income and remeasurement adjustments has been reclassified to non-operating income for all periods presented within the Condensed Consolidated Statements of Comprehensive Income, which reduced previously reported operating income by $17 million and $60 million for the three and nine months ended June 30, 2017, respectively.

Issued but not yet adopted

In May 2014, the FASB issued accounting guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers, which supersedes most current revenue recognition guidance. This guidance introduces a five-step model for revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards under current guidance. While the Company is nearing the completion of its assessment of the accounting required under the new revenue recognition guidance and completing documentation of its conclusions, the Company’s revenue is primarily generated from the sale and service delivery of engine and automotive products to customers, which is not accounted for under industry-specific guidance and generally consists of a single delivery element whereby revenue is recognized at the point in time when ownership, risks and rewards transfer. Accordingly, Valvoline believes that most revenue transactions recorded under the new guidance will be substantially consistent with the treatment under existing guidance, and the impact of adoption is not expected to be material to net earnings on an ongoing basis.

Management will finalize its assessment and will adopt the new guidance in the first fiscal quarter of 2019. Valvoline plans to adopt this guidance using the modified retrospective method, which will recognize the cumulative effect of the changes in retained earnings at October 1, 2018, but will not retrospectively apply the new guidance to prior periods. The Company expects to adjust retained deficit at adoption primarily related to the timing of certain sales made to distributors and currently does not expect this adjustment will be material to the Condensed Consolidated Balance Sheet. In addition, the Company expects immaterial impacts to reclassify certain activities in the Condensed Consolidated Statements of Comprehensive Earnings on an ongoing basis following adoption. The specific impacts of adoption of the new guidance will be dependent on facts and circumstances at adoption and could vary from management’s preliminary estimates.

The Company anticipates expanded footnote disclosures under the new revenue guidance, including disaggregation of revenue, pro forma impacts of changes to the financial statements in the initial year of adoption, and qualitative disclosures related to the nature and terms of its sales, timing of the transfer of control and judgments used in the application of the five-step model. The Company is also in the process of identifying and implementing appropriate changes to business processes to support recognition and disclosure under the new guidance.

In February 2016, the FASB issued new accounting guidance related to lease transactions. The primary objective of this guidance is to increase transparency and comparability among organizations by requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases and to disclose key information about leasing arrangements. This new guidance is effective for the Company in the first quarter of fiscal 2020 using a modified retrospective approach. The Company has begun planning its assessment and implementation process, including identifying all forms of its outstanding leases globally, as well as analyzing the practical expedients and determining the specific impacts on its condensed consolidated financial statements. While the Company’s evaluation of this guidance is in the early stages, adoption is expected to have a material impact on the Condensed Consolidated Balance Sheet as the majority of the Company’s operating leases are expected to be recorded by establishing right of use assets and associated lease liabilities. The Company also anticipates expanded footnote disclosures related to its leases under the new guidance.
v3.10.0.1
Fair Value Measurements
9 Months Ended
Jun. 30, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
FAIR VALUE MEASUREMENTS

The following table sets forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:

 
June 30, 2018
 
September 30, 2017
 
 
 
Quoted prices in active markets for identical assets
 
 
 
Quoted prices in active markets for identical assets
(In millions)
Fair value
 
Level 1
 
Fair value
 
Level 1
Assets
 
 
 
 
 
 
 
Cash equivalents (a)
$
16

 
$
16

 
$
46

 
$
46

Foreign currency derivatives (b)

 

 
1

 
1

Non-qualified trust funds (c)
28

 
28

 
30

 
30

Total assets at fair value
$
44

 
$
44

 
$
77

 
$
77

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Foreign currency derivatives (d)
$
2

 
$
2

 
$
1

 
$
1

Total liabilities at fair value
$
2

 
$
2

 
$
1

 
$
1

 
 
 
 
 
 
 
 
(a)
Included in Cash and cash equivalents in the Condensed Consolidated Balance Sheets.
(b)
Included in Other current assets in the Condensed Consolidated Balance Sheets.
(c)
As of June 30, 2018, $3 million of this balance is included in Other current assets, with the remainder included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. As of September 30, 2017, this balance is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.
(d)
Included in Accrued expenses and other liabilities in the Condensed Consolidated Balance Sheets.

During the three and nine months ended June 30, 2018 and 2017, there were no transfers between levels of the fair value hierarchy.
Cash equivalents
A portion of the Company’s excess cash is held in highly liquid investments with maturities of three months or less. Cash equivalents generate interest income and are measured at fair value using prevailing market rates.
Derivatives

The Company uses derivatives not designated as hedging instruments consisting primarily of forward contracts to hedge foreign currency denominated balance sheet exposures and exchange one foreign currency for another at a fixed rate on a future date of twelve months or less. The Company had outstanding contracts with highly-rated financial institutions with notional values of $100 million and $47 million as of June 30, 2018 and September 30, 2017, respectively. Gains and losses on these instruments are recognized in Selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income as exchange rates change the fair value of these instruments and upon settlement to offset the remeasurement gain or loss on the related foreign currency-denominated exposures in the same period. During the three and nine months ended June 30, 2018 and 2017, losses recognized were not material.
Non-qualified trust fund
The Company maintains a non-qualified trust to fund benefit payments for certain of its U.S. non-qualified pension plans, which primarily consists of highly liquid fixed income U.S. government bonds. During the three and nine months ended June 30, 2018 and 2017, gains and losses related to these investments were not material and were immediately recognized within Selling, general and administrative expenses in the Condensed Consolidated Statements of Comprehensive Income.
Long-term debt
The Company’s outstanding fixed rate senior notes consist of 5.500% senior unsecured notes due 2024 with an aggregate principal amount of $375 million issued in July 2016 (the “2024 Notes”) and 4.375% senior unsecured notes due 2025 with an aggregate principal amount of $400 million issued in August 2017 (the “2025 Notes” and together with the 2024 Notes, the “Senior Notes”).
The fair values of the Senior Notes shown in the table below are based on recent trading values, which are considered Level 2 inputs within the fair value hierarchy. Long-term debt is included in the Condensed Consolidated Balance Sheets at carrying value, rather than fair value, and is therefore excluded from the fair value table above. Carrying values shown in the following table are net of unamortized discounts and issuance costs.
 
June 30, 2018
 
September 30, 2017
(In millions)
Fair value
 
Carrying value
 
Unamortized discount and issuance costs
 
Fair value
 
Carrying value
 
Unamortized discount and issuance costs
2024 Notes
$
380

 
$
370

 
$
5

 
$
401

 
$
370

 
$
5

2025 Notes
386

 
395

 
5

 
408

 
394

 
6

Total
$
766

 
$
765

 
$
10

 
$
809

 
$
764

 
$
11



Refer to Note 7 for more information on the Senior Notes and Valvoline’s other debt instruments that have variable interest rates, and accordingly, their carrying amounts approximate fair value.
v3.10.0.1
Acquisitions and Dispositions
9 Months Ended
Jun. 30, 2018
Business Combinations [Abstract]  
Acquisitions and Dispositions
ACQUISITIONS AND DISPOSITIONS

Quick Lubes store acquisitions

During the nine months ended June 30, 2018, the Company acquired 63 service center stores for a total of $71 million. These acquisitions included 60 previous franchise service center stores, of which 56 were acquired from Henley Bluewater LLC in northern Ohio and Michigan on October 2, 2017 for $60 million. During the nine months ended June 30, 2017, acquisitions totaled $70 million and included 42 service center stores, of which 14 were previous franchises.

The results of operations of the acquired stores, which were not material, have been included in the Company’s condensed consolidated financial statements from the date of each acquisition, and accordingly, pro forma disclosure of financial information has not been presented. The Company’s acquisitions are accounted for such that the assets acquired and liabilities assumed are recognized at their acquisition date fair values, with any excess of the consideration transferred over the estimated fair values of the identifiable net assets acquired recorded as goodwill. 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.

A summary follows of the aggregate cash consideration paid and the total assets acquired and liabilities assumed for the nine months ended June 30:

(In millions)
2018
 
2017
Inventory
$
1

 
$
1

Property, plant and equipment
2

 

Intangible assets
68

 
66

Other noncurrent assets

 
3

Net assets acquired
$
71

 
$
70



Included within the intangible assets above is approximately $42 million of goodwill and $26 million of reacquired franchise rights recognized during the nine months ended June 30, 2018. Prior to the acquisition of franchise service center stores, Valvoline licensed the right to operate quick lube 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 intangible assets, which are being amortized on a straight-line basis over the weighted average remaining term of approximately seven years. The effective settlement of these arrangements resulted in no settlement gain or loss as the contractual terms were at market.

During the nine months ended June 30, 2018, the purchase price allocation for the acquisition of certain franchise locations during the three months ended June 30, 2017 was adjusted to reduce goodwill and increase amortizable intangible assets by $6 million. The Company believes that these changes were not material and does not expect any additional changes to the preliminary purchase price allocations summarized above for acquisitions completed during the nine months ended June 30, 2018.

Remaining ownership interest in subsidiary

Valvoline historically owned a 70% controlling interest and consolidated the financial results of its subsidiary in Thailand. In December 2017, Valvoline purchased the remaining 30% interest for total consideration of approximately $16 million, making it a wholly-owned subsidiary of the Company. This interest was not material to the current or prior period financial statements for presentation and disclosure as a noncontrolling interest, which was eliminated as a result of this purchase through an adjustment to Paid-in capital and Retained deficit.

Dispositions

During the nine months ended June 30, 2018, the Company sold two service center stores to a franchisee within the Quick Lubes reportable segment. Valvoline received proceeds of approximately $5 million and recognized a gain of $3 million on the sale of net assets that was recorded in Equity and other income in the Condensed Consolidated Statements of Comprehensive Income for the nine months ended June 30, 2018.
v3.10.0.1
Accounts Receivable
9 Months Ended
Jun. 30, 2018
Receivables [Abstract]  
Accounts Receivable
ACCOUNTS RECEIVABLE

The following summarizes Valvoline’s accounts receivable:

(In millions)
June 30
2018
 
September 30
2017
Trade and other accounts receivable
$
467

 
$
390

Less: Allowance for doubtful accounts
(6
)
 
(5
)
 
$
461

 
$
385



In May 2017, Valvoline’s former parent company, Ashland Global Holdings Inc. (which together with its predecessors and consolidated subsidiaries is referred to as “Ashland”), distributed its remaining interest in Valvoline to Ashland shareholders (the “Distribution”). Prior to the Distribution, Ashland was party to an agreement to sell certain Valvoline customer accounts receivable in the form of drafts or bills of exchange to a financial institution. Each draft constituted an order to pay for obligations of the customer to Ashland arising from the sale of goods to the customer. The intention of the arrangement was to decrease the time accounts receivable was outstanding and increase cash flows as Ashland in turn remitted payment to Valvoline. During the nine months ended June 30, 2017, $40 million of accounts receivable were sold to the financial institution under this agreement.

Following the Distribution, Valvoline became party to the arrangement to sell certain customer accounts receivable in the form of drafts or bills of exchange to the financial institution. During the nine months ended June 30, 2018, Valvoline sold $50 million of accounts receivable to the financial institution.
v3.10.0.1
Inventories
9 Months Ended
Jun. 30, 2018
Inventory Disclosure [Abstract]  
Inventories
INVENTORIES

Certain lubricants are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method. Remaining inventories are carried at the lower of cost or net realizable value using the weighted average cost method.

The following summarizes Valvoline’s inventories:
(In millions)
June 30
2018
 
September 30
2017
Finished products
$
202

 
$
180

Raw materials, supplies and work in process
34

 
31

LIFO reserves
(37
)
 
(33
)
Obsolete inventory reserves
(3
)
 
(3
)
 
$
196

 
$
175

v3.10.0.1
Goodwill and Other Intangibles
9 Months Ended
Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangibles
GOODWILL AND OTHER INTANGIBLES

Goodwill

The following table summarizes the changes in the carrying amount of goodwill by reportable segment and in total during the nine months ended June 30, 2018.
(In millions)
Core North America
 
Quick Lubes
 
International
 
Total
September 30, 2017
$
89

 
$
201

 
$
40

 
$
330

Acquisitions (a)

 
36

 

 
36

Dispositions (b)

 
(1
)
 

 
(1
)
June 30, 2018
$
89

 
$
236

 
$
40

 
$
365

 
 
 
 
 
 
 
 
(a) Activity associated with the acquisitions of 56 service center stores from Henley Bluewater LLC and seven other quick lubes service center stores, as well as adjustments related to prior year acquisitions. Refer to Note 3 for details regarding the acquisitions.
(b) Activity associated with the derecognition of goodwill from the sale and disposition of two quick lubes service center stores. Refer to Note 3 for further details.

Other intangible assets

Valvoline’s purchased intangible assets were specifically identified when acquired and have finite lives. Intangible assets were approximately $40 million in gross carrying amount, net of $7 million in accumulated amortization as of June 30, 2018 and were reported in Goodwill and intangibles, net on the Condensed Consolidated Balance Sheet. Amortization expense recognized during the three and nine months ended June 30, 2018 was approximately $1 million and $3 million, respectively. Amortization expense recognized on intangible assets during the prior year periods was not material. Estimated amortization expense for each of the next five fiscal years, assuming no additional amortizable intangible assets, is as follows for the years ended September 30:

(In millions)
 
 
2018
  
$
5

2019
  
$
5

2020
  
$
5

2021
  
$
5

2022
  
$
4

 
 
 
v3.10.0.1
Debt Obligations
9 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  
Debt Obligations
DEBT OBLIGATIONS

The following table summarizes Valvoline’s short-term borrowings and long-term debt:
(In millions)
June 30
2018
 
September 30 2017
2025 Notes
$
400

 
$
400

2024 Notes
375

 
375

Term Loans
274

 
285

Trade Receivables Facility
174

 
75

Revolver
44

 

Other (a)
(10
)
 
(11
)
Total debt
$
1,257

 
$
1,124

Short-term debt

 
75

Current portion of long-term debt
26

 
15

Long-term debt
$
1,231

 
$
1,034

 
 
 
 
(a) At June 30, 2018, Other includes $12 million of debt issuance cost discounts and $2 million of debt acquired through acquisitions. At September 30, 2017, Other included $13 million of debt issuance cost discounts and $2 million of debt acquired through acquisitions.

Senior Notes

During August 2017, Valvoline completed the issuance of 4.375% senior unsecured notes due 2025 with an aggregate principal amount of $400 million. The net proceeds from the offering of the 2025 Notes were $394 million (after deducting initial purchasers discounts and debt issuance costs), which were used to make a voluntary contribution to the Company’s qualified U.S. pension plan.

During July 2016, Valvoline completed the issuance of 5.500% senior unsecured notes due 2024 with an aggregate principal amount of $375 million. The net proceeds from the offering of the 2024 Notes was $370 million (after deducting initial purchasers’ discounts and debt issuance costs), which were transferred to Valvoline’s former parent, Ashland.

The Senior Notes are subject to customary events of default for similar debt securities, which if triggered may accelerate payment of principal, premium, if any, and accrued but unpaid interest on the notes. Such events of default include non-payment of principal and interest, non-performance of covenants and obligations, default on other material debt, and bankruptcy or insolvency. If a change of control repurchase event occurs, Valvoline may be required to offer to purchase the Senior Notes from the holders thereof. The Senior Notes are not otherwise required to be repaid prior to maturity, although they may be redeemed at the option of Valvoline at any time prior to their maturity in the manner specified in the governing indentures. The Senior Notes are guaranteed by each of Valvoline’s subsidiaries that guarantee obligations under the existing senior secured credit facility described below.

In December 2017, Valvoline completed registered exchange offers for the Senior Notes.

Senior Credit Agreement

The 2016 Senior Credit Agreement provides for an aggregate principal amount of $1,325 million in senior secured credit facilities (“2016 Credit Facilities”), composed of (i) a five-year $875 million term loan facility (“Term Loans”), and (ii) a five-year $450 million revolving credit facility (including a $100 million letter of credit sublimit) (“Revolver”). At June 30, 2018 and September 30, 2017, the Term Loans had outstanding principal balances of $274 million and $285 million, respectively. At June 30, 2018, there was $44 million outstanding under the Revolver, and there was no amount outstanding at September 30, 2017. During the nine months ended June 30, 2018, Valvoline borrowed $70 million and made payments of $26 million on the Revolver. As of June 30, 2018, the total borrowing capacity remaining under the Revolver was $395 million due to a reduction of $11 million for letters of credit outstanding.

The outstanding principal balance of the Term Loans is required to be repaid in quarterly installments of approximately $4 million for fiscal 2018, $8 million for fiscal 2019 and 2020, and $15 million for fiscal 2021 with the balance due at maturity. At Valvoline’s option, amounts outstanding under the 2016 Senior Credit Agreement bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate fluctuates between LIBOR plus 1.500% per annum and LIBOR plus 2.500% per annum (or between the alternate base rate plus 0.500% per annum and the alternate base rate plus 1.500% annum), based upon Valvoline’s corporate credit ratings or the consolidated first lien net leverage ratio (as defined in the 2016 Senior Credit Agreement).

The 2016 Credit Facilities are guaranteed by Valvoline’s existing and future subsidiaries (other than certain immaterial subsidiaries, joint ventures, special purpose financing subsidiaries, regulated subsidiaries, foreign subsidiaries and certain other subsidiaries), and are secured by a first-priority security interest in substantially all the personal property assets and certain real property assets of Valvoline and the guarantors, including all or a portion of the equity interests of certain of Valvoline’s domestic subsidiaries and first-tier foreign subsidiaries. The 2016 Credit Facilities may be prepaid at any time without premium.

The 2016 Senior Credit Agreement contains usual and customary representations and warranties and usual and customary affirmative and negative covenants, including limitations on liens, additional indebtedness, investments, restricted payments, asset sales, mergers, affiliate transactions and other customary limitations, as well as financial covenants (including maintenance of a maximum consolidated net leverage ratio and a minimum consolidated interest coverage ratio). As of the end of any fiscal quarter, the maximum consolidated net leverage ratio and minimum consolidated interest coverage ratio permitted under the 2016 Senior Credit Agreement are 4.5 and 3.0, respectively. As of June 30, 2018, Valvoline was in compliance with all covenants under the 2016 Senior Credit Agreement.

Trade Receivables Facility

On November 29, 2016, Valvoline entered into a $125 million, one-year revolving trade receivables securitization facility (“Trade Receivables Facility”) with certain financial institutions. On November 20, 2017, the Company amended the Trade Receivables Facility to extend the maturity date to November 19, 2020 and increase the maximum funding under the facility to $175 million based on the availability of eligible receivables and other customary factors and conditions.

Under the Trade Receivables Facility, Valvoline sells and/or transfers a majority of its U.S. trade receivables to a wholly-owned, bankruptcy-remote subsidiary as they are originated, and advances by the lenders to that subsidiary (in the form of cash or letters of credit) are secured by those trade receivables. The assets of this financing subsidiary are restricted as collateral for the payment of its obligations under the Trade Receivables Facility, and its assets and credit are not available to satisfy the debts and obligations owed to the creditors of the Company. The Company includes the assets, liabilities and results of operations of this financing subsidiary in its condensed consolidated financial statements.

During the first fiscal quarter of 2017, Valvoline borrowed $75 million under the Trade Receivables Facility and used the net proceeds to repay an equal amount of the Term Loans. During the nine months ended June 30, 2018, Valvoline made payments of $1 million and borrowed $100 million under the Trade Receivables Facility, using the proceeds to supplement the Company’s daily cash needs.

The Company accounts for the Trade Receivables Facility as secured borrowings. Based upon the maturity dates in place in each respective period, as of June 30, 2018, the $174 million balance outstanding was classified as Long-term debt and the $75 million balance outstanding as of September 30, 2017 was classified as Short-term debt in the Condensed Consolidated Balance Sheets. Based on the availability of eligible receivables, the total borrowing capacity remaining under the Trade Receivables Facility at June 30, 2018 was less than $1 million. The financing subsidiary owned $282 million and $247 million of outstanding accounts receivable as of June 30, 2018 and September 30, 2017, respectively, and these amounts are included in Accounts receivable, net in the Company’s Condensed Consolidated Balance Sheets.

The financing subsidiary pays customary fees to the lenders, and advances by a lender under the Trade Receivables Facility accrue interest for which the weighted average interest rates were 2.9% and 2.6% for the three and nine months ended June 30, 2018, respectively, and 1.8% and 1.7% for the three and nine months ended June 30, 2017. The Trade Receivables Facility contains various customary affirmative and negative covenants and default and termination provisions, which provide for acceleration of amounts owed under the Trade Receivables Facility in circumstances including, but not limited to, the failure to pay interest or other amounts when due, defaults on certain other indebtedness, certain insolvency events, and breach of representation.
v3.10.0.1
Income Taxes
9 Months Ended
Jun. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES

Income tax provisions for interim quarterly periods are based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent or unusual items related specifically to interim periods. Income tax expense for the three months ended June 30, 2018 was $33 million, an effective tax rate of 34.0%, compared to expense of $38 million, an effective tax rate of 40.4%, for the three months ended June 30, 2017. The decrease in income tax expense and the effective tax rate was primarily driven by the reduction in the corporate federal income tax rate resulting from the enactment of U.S. tax reform legislation in December 2017, which was more than offset by an increase in income tax expense of approximately $7 million resulting from the enactment of Kentucky tax reform legislation in April 2018.

Income tax expense for the nine months ended June 30, 2018 was $154 million, an effective tax rate of 56.0%, compared to expense of $114 million, an effective tax rate of 36.4%, for the nine months ended June 30, 2017. The increase in income tax expense and the effective tax rate was principally driven by the enactment of U.S. and Kentucky tax reform legislation, which resulted in a net increase in income tax expense of approximately $76 million that more than offset benefits related to the reduction in the estimated annual effective tax rate for fiscal 2018.

Tax reform legislation

On December 22, 2017, the President of the United States signed into law tax reform legislation (the “Act”), which generally became effective January 1, 2018. The Act includes a number of provisions, including lowering the federal corporate income tax rate from a maximum of 35% to 21% and changing or limiting certain tax deductions. While the Company expects this rate reduction will ultimately benefit Valvoline, the Act also includes provisions that are expected to offset some of the benefit of the rate reduction, including the repeal of the deduction for domestic production activities and the expansion of the limitation on the deduction of certain executive compensation. In addition, the Act alters the landscape of taxation of non-U.S. operations and provides immediate deductions for certain new investments, among other provisions.

Based on the effective date of the rate reduction in the Act, the Company’s federal corporate statutory income tax rate will be a blended rate of 24.5% for fiscal 2018, declining to 21% for fiscal 2019 and beyond.

During the nine months ended June 30, 2018, enactment of the Act resulted in the following provisional impacts on income tax expense:

The remeasurement of net deferred tax assets at the lower enacted corporate tax rate resulted in a net $66 million increase in income tax expense;
Income tax expense increased by $4 million related to the deemed repatriation tax on unremitted non-U.S. earnings and profits and $2 million for withholding taxes due to the Company’s change in indefinite reinvestment assertion regarding its undistributed earnings; and
The remeasurement of net indemnity liabilities associated with the Tax Matters Agreement increased pre-tax expense by $7 million and generated a $3 million tax benefit primarily related to the higher expected utilization of tax attributes payable to Ashland.

The impacts of the Act recorded during the nine months ended June 30, 2018 are provisional, and the Company will continue to assess the impact of the Act and will record adjustments through the income tax provision in the relevant period as amounts are known and reasonably estimable. Accordingly, the impact of the Act may differ from the Company’s provisional estimates due to and among other factors, information currently not available, changes in interpretations and the issuance of additional guidance, as well as changes in assumptions the Company has currently made, including actions the Company may take in future periods as a result of the Act.


Many states have enacted state specific tax reform and legislation in response to the Act. In general, these impacts are not material to the Company’s financial statements. Valvoline is incorporated in Kentucky, which enacted income tax reform on April 13, 2018. The provisions of Kentucky tax reform generally become effective in fiscal 2019 and include a number of provisions, notably lowering the corporate income tax rate from a maximum of 6% to 5%. While the Company expects this rate reduction will ultimately benefit Valvoline, during the three and nine months ended June 30, 2018, the enactment of Kentucky tax reform resulted in the following impacts on income tax expense:

The remeasurement of net deferred tax assets at the lower enacted Kentucky corporate tax rate resulted in a net $3 million increase in income tax expense; and
The remeasurement of the net indemnity liabilities associated with the Tax Matters Agreement increased pre-tax income by $4 million and generated $4 million of income tax expense primarily related to the lower expected utilization of tax attributes payable to Ashland.

The Company will continue to monitor enacted state legislation and make relevant updates to estimates when warranted.

Deferred tax remeasurement

The Company’s net deferred income taxes represent benefits that will be used to reduce corporate taxes expected to be paid as well as differences between the tax bases and carrying amounts of assets and liabilities that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. As changes in tax laws or rates occur, deferred tax assets and liabilities are adjusted in the period changes are enacted through income tax expense.

The Company’s net deferred tax assets of $281 million were determined at September 30, 2017 based on the then-current enacted income tax rates prior to the passage of the Act. As a result of the reduction in the federal corporate income tax rate from 35% to 21% under the Act and the reduction of the Kentucky corporate income tax rate from 6% to 5% under Kentucky tax reform, the Company revalued its net deferred tax assets, which resulted in a reduction in the value of net deferred tax assets of approximately $69 million that was recorded as additional income tax expense in the Company’s Condensed Consolidated Statements of Comprehensive Income for the nine months ended June 30, 2018 as noted above.

Deemed repatriation

The Act implements a new territorial tax system that imposes a one-time transition tax, or deemed repatriation, on unremitted earnings of certain non-U.S. subsidiaries that is based in part on the amount of these earnings held in cash and other specified assets. The mandatory deemed repatriation resulted in a $23 million gross liability, but allows for the realization of $19 million of previously unrecognized foreign tax credits related to taxes previously paid in relevant local jurisdictions. The net result was $4 million of income tax expense which was recognized during the nine months ended June 30, 2018.

The Company has historically intended to indefinitely reinvest undistributed earnings of its non-U.S. subsidiaries. As undistributed earnings of the Company’s non-U.S. subsidiaries were subject to the one-time deemed repatriation tax, the Company reevaluated its intentions to indefinitely reinvest its non-U.S. undistributed earnings. As a result, the Company no longer intends to indefinitely reinvest non-U.S. undistributed earnings and accordingly, recorded $2 million for estimated incremental withholding taxes during the nine months ended June 30, 2018. The Company is presently not aware of any significant restrictions on the ability to transfer these funds, and additional taxes and other costs that may arise between the deemed and actual distribution dates are not estimated to be material.

Tax Matters Agreement

Total liabilities related to obligations owed to Ashland under the Tax Matters Agreement were $65 million and $62 million at June 30, 2018 and September 30, 2017, respectively. At June 30, 2018 and September 30, 2017, $3 million and $1 million was recorded in Accrued expenses and other liabilities, respectively, with the remainder recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheets at each balance sheet date.

Under the Tax Matters Agreement, Valvoline has net indemnification obligations for a number of tax matters, including certain taxes that arise upon audit or examination related to the periods prior to the Distribution and Valvoline’s utilization of legacy tax attributes contributed as part of the separation from Ashland. During the three and nine months ended June 30, 2018, Valvoline recognized a $3 million benefit and $5 million of expense, respectively, in Legacy and separation-related expenses, net for the estimated adjustments in net amounts due and a $2 million benefit during the three and nine months ended June 30, 2017. During the nine months ended June 30, 2018, expense was recognized due to the increase in estimated net amounts due to Ashland principally as a result of the reduction of the federal tax rate and the reduced federal benefit of state tax deductions, which drove increases in the expected utilization of tax attributes. These impacts were partially offset by the benefit recognized in the three months ended June 30, 2018 for the decline in estimated net amounts due to Ashland primarily related to the rate reduction and associated decrease in certain state tax deductions as a result of Kentucky tax reform. In connection with these impacts recorded in Legacy and separation-related expenses, net, Valvoline recognized income tax expense of $4 million and $1 million during the three and nine months ended June 30, 2018, respectively, related to these changes.

Uncertainties in income taxes

The Company records reserves related to its uncertain tax positions when it is more likely than not that the tax position may not be sustained on examination by the taxing authorities. As of June 30, 2018, the Condensed Consolidated Balance Sheet includes an $11 million liability for uncertain income tax positions which is primarily recorded within the obligations owed to Ashland under the Tax Matters Agreement described above. During the nine months ended June 30, 2018, there were no significant changes in Valvoline’s uncertain tax positions or related reserves. As tax examinations are completed or settled, statutes of limitations expire, or other new information becomes available, the Company will adjust its liabilities for uncertain tax positions in the respective period through payment or through the income tax provision. The Company has provided adequate reserves for its income tax uncertainties in all open tax years based on the recognition and measurement considerations in the relevant accounting principles and any adjustments are not expected to have a material effect on its condensed consolidated financial statements at this time; however, it is reasonably possible that there could be changes to the Company’s reserves related to its uncertain tax positions due to activities of the taxing authorities, resolution of examination issues, or reassessment of existing uncertain tax positions.

Although the timing and nature of the resolution and/or closure of examinations cannot be predicted with certainty, management estimates that it is reasonably possible that reserves related to uncertain tax positions may decrease by as much as $3 million from the resolution of tax examinations in U.S. jurisdictions during the quarter ended September 30, 2018.
v3.10.0.1
Employee Benefit Plans
9 Months Ended
Jun. 30, 2018
Retirement Benefits [Abstract]  
Employee Benefit Plans
EMPLOYEE BENEFIT PLANS

The total pension and other postretirement benefit income was $10 million and $29 million during the three and nine months ended June 30, 2018, respectively, and $16 million and $58 million during the three and nine months ended June 30, 2017, respectively.

Contributions to the U.S. non-qualified and non-U.S. pension plans during the nine months ended June 30, 2018 were $13 million. For the remainder of fiscal 2018, Valvoline expects to contribute approximately $5 million to these plans, for a total of $18 million in fiscal 2018.

Components of net periodic benefit income

Due to the freeze of U.S. pension benefits effective September 30, 2016, service costs are related to certain international pension benefits, which are reported in the respective reportable segment and caption of the Condensed Consolidated Statements of Comprehensive Income as the other employee compensation costs from services rendered. All other components of net periodic benefit income are recognized below operating income within Net pension and other postretirement plan non-service income and remeasurement adjustments in the Condensed Consolidated Statements of Comprehensive Income.

Effective January 1, 2017, Valvoline discontinued certain other postretirement health and life insurance benefits. The effect of these plan amendments resulted in a remeasurement gain of $8 million during the nine months ended June 30, 2017 as shown in the table below. The following table summarizes the components of pension and other postretirement benefit income for the three and nine months ended June 30:

 
 
 
 
 
 
Other postretirement benefits
 
 
Pension benefits
 
(In millions)
 
2018
 
2017
 
2018
 
2017
Three months ended June 30
 
 
 
 
 
 
 
 
Service cost
 
$

 
$
1

 
$

 
$

Interest cost
 
19

 
22

 

 

Expected return on plan assets
 
(26
)
 
(36
)
 

 

Amortization of prior service credit
 

 

 
(3
)
 
(3
)
Net periodic benefit income
 
$
(7
)
 
$
(13
)
 
$
(3
)
 
$
(3
)
 
 
 
 
 
 
 
 
 
Nine months ended June 30
 
 
 
 
 
 
 
 
Service cost
 
$
1

 
$
2

 
$

 
$

Interest cost
 
56

 
65

 
1

 
1

Expected return on plan assets
 
(78
)
 
(109
)
 

 

Amortization of prior service credit
 

 

 
(9
)
 
(9
)
Actuarial gain
 

 

 

 
(8
)
Net periodic benefit income
 
$
(21
)
 
$
(42
)
 
$
(8
)
 
$
(16
)

Multiemployer pension plan partial withdrawal
Valvoline participates in two multiemployer pension plans that provide pension benefits to certain union-represented employees under the terms of collective bargaining agreements. Valvoline assumed responsibility for contributions to these plans in connection with the separation from Ashland. Contributions to these plans were not material for the three and nine months ended June 30, 2018 and 2017.
In April 2018, Valvoline received a demand for payment of a partial withdrawal liability assessment of approximately $30 million related to the sale of a business by Ashland in fiscal 2011 and the associated reduction in the number of employees covered by one of the multiemployer pension plans and the related decline in contributions. The Company is vigorously contesting the assessment and the calculation method utilized in determining the assessment and will submit a formal arbitration request, if necessary. The Company’s current best estimate of cost associated with this assessment is not material to the condensed consolidated financial statements as of and for the periods ended June 30, 2018.
v3.10.0.1
Commitments and Contingencies
9 Months Ended
Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES

From time to time, Valvoline is party to lawsuits, claims and other legal proceedings that arise in the ordinary course of business. The Company establishes liabilities for the outcome of such matters where losses are determined to be probable and reasonably estimable. Where appropriate, the Company has recorded liabilities with respect to these matters, which were immaterial for the periods presented as reflected in the condensed consolidated financial statements herein. There are certain claims and legal proceedings pending where loss is not determined to be probable or reasonably estimable, and therefore, accruals have not been made. In addition, Valvoline discloses matters for which management believes a material loss is at least reasonably possible.

In all instances, management has assessed each matter based on current information available and made a judgment concerning its potential outcome, giving due consideration to the amount and nature of the claim and the probability of success. As disclosed herein, the Company believes it has established adequate accruals for liabilities that are probable and reasonably estimable.

Although the ultimate resolution of these matters cannot be predicted with certainty and there can be no assurances that the actual amounts required to satisfy liabilities from these matters will not exceed the amounts reflected in the condensed consolidated financial statements, based on information available at this time, it is the opinion of management that such pending claims or proceedings will not have a material adverse effect on its condensed consolidated financial statements.
v3.10.0.1
Earnings Per Share
9 Months Ended
Jun. 30, 2018
Earnings Per Share [Abstract]  
Earnings Per Share
EARNINGS PER SHARE

The following is the computation of basic and diluted earnings per share (“EPS”) for the three and nine months ended June 30, 2018 and 2017. EPS is reported under the treasury stock method.

 
 
Three months ended
 
Nine months ended
 
 
June 30
 
June 30
(In millions except per share data)
 
2018
 
2017
 
2018
 
2017
Numerator
 
 
 
 
 
 
 
 
Net income
 
$
64

 
$
56

 
$
121

 
$
199

Denominator
 
 
 
 
 
 
 
 
Weighted average shares used to compute basic EPS
 
195

 
204

 
199

 
204

Dilutive effect of share-based awards (a)
 
1

 

 
1

 

Weighted average shares used to compute diluted EPS
 
196


204

 
200

 
204

 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
Basic
 
$
0.33

 
$
0.27

 
$
0.61

 
$
0.97

Diluted
 
$
0.33

 
$
0.27

 
$
0.61

 
$
0.97

 
 
 
 
 
 
 
 
 
(a) During the three and nine months ended June 30, 2017, there was not a significant dilutive impact from potential common shares.
v3.10.0.1
Stockholders' Deficit
9 Months Ended
Jun. 30, 2018
Equity [Abstract]  
Stockholders' Deficit
STOCKHOLDERS’ DEFICIT

Changes in stockholders’ deficit in the nine months ended June 30, 2018 were as follows:

(In millions)
 
Balance as of September 30, 2017
$
(117
)
 
 
 
 
Net income
121

 
Repurchases of common stock (a)
(224
)
 
Stock-based compensation plans
7

 
Dividends paid, $0.2235 per common share
(45
)
 
Purchase of remaining ownership interest in subsidiary (b)
(14
)
 
Accumulated other comprehensive loss, net of tax:
 
 
Unrealized currency translation loss
(9
)
 
Amortization of pension and other postretirement prior service credits in income (c)
(7
)
Balance as of June 30, 2018
$
(288
)
 
 
 
(a)
During the nine months ended June 30, 2018, the Company repurchased approximately 10 million shares of its common stock for $224 million. Upon repurchase, shares are retired.
(b)
Refer to Note 3 for details regarding the Company’s purchase of the remaining ownership interest in a controlled and consolidated subsidiary during the nine months ended June 30, 2018.
(c)
Amortization of unrecognized prior service credits is included in net periodic benefit income within Net pension and other postretirement plan non-service income and remeasurement adjustments in the Condensed Consolidated Statements of Comprehensive Income.
v3.10.0.1
Related Party Transactions
9 Months Ended
Jun. 30, 2018
Related Party Transactions [Abstract]  
Related Party Transactions
RELATED PARTY TRANSACTIONS

At June 30, 2018, Valvoline had total net obligations due to Ashland of $78 million, of which $3 million was recorded in Accrued expenses and other liabilities and the remainder was primarily recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheets.

At September 30, 2017, Valvoline had total net obligations due to Ashland of $74 million, of which $2 million was recorded in Accrued expenses and other liabilities and the remainder was primarily recorded in Other noncurrent liabilities in the Condensed Consolidated Balance Sheets.

These liabilities generally relate to net obligations due to Ashland under the Tax Matters Agreement as well as reimbursements for certain other contractual obligations, including those that are intended to transfer to Valvoline as part of the Distribution of Ashland’s remaining interest in Valvoline. Refer to Note 8 for additional details regarding the Tax Matters Agreement and related obligations.
v3.10.0.1
Reportable Segment Information
9 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Reportable Segment Information
REPORTABLE SEGMENT INFORMATION

Valvoline manages and reports within the following three segments: 

Core North America - sells Valvoline and other branded products and solutions in the United States and Canada to retailers for consumers to perform their own automotive and engine maintenance, as well as to installer and heavy-duty customers who use Valvoline products to service vehicles and equipment.
Quick Lubes - services the passenger car and light truck quick lube market through: company-owned and franchised Valvoline Instant Oil Change (“VIOC”) retail quick lube service stores, and its Express Care stores for independent operators to purchase Valvoline motor oil and other products and display Valvoline branded signage.
International - sells Valvoline and other branded products in approximately 140 countries outside of the United States and Canada for the maintenance of consumer and commercial 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 assessing segment performance and in allocating the Company’s resources. Sales and operating income are the primary measures evaluated in assessing each reportable segment’s financial performance. Intersegment sales are not material, and assets are not regularly included in the assessment of segment performance; consequently, these items are not disclosed by segment herein.

To maintain operating focus on business performance, certain corporate and non-operational items, including adjustments related to legacy businesses that no longer are attributed to Valvoline, are excluded from the segment operating results utilized by the chief operating decision maker in evaluating segment performance and are separately delineated within Unallocated and other to reconcile to total reported Operating income as shown in the table below.

The following table presents sales and operating income for each reportable segment:



(In millions)
 
Three months ended
June 30
 
Nine months ended June 30
 
2018
 
2017
 
2018
 
2017
Sales
 
 
 
 
 
 
 
 
Core North America
 
$
264

 
$
258

 
$
773

 
$
748

Quick Lubes
 
167

 
139

 
479

 
394

International
 
146

 
137

 
439

 
395

Consolidated sales
 
$
577

 
$
534

 
$
1,691

 
$
1,537

 
 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
 
Core North America
 
$
41

 
$
48

 
$
130

 
$
156

Quick Lubes
 
38

 
34

 
111

 
94

International
 
20

 
18

 
63

 
56

Total operating segments
 
$
99

 
$
100

 
$
304

 
$
306

Unallocated and other (a)
 
3

 
(13
)
 
(14
)
 
(25
)
Consolidated operating income
 
$
102

 
$
87

 
$
290

 
$
281

 
 
 
 
 
 
 
 
 
(a)
Unallocated and other includes legacy and separation-related expenses, net.
v3.10.0.1
Guarantor Financial Information
9 Months Ended
Jun. 30, 2018
Condensed Financial Information Disclosure [Abstract]  
Guarantor Financial Information
GUARANTOR FINANCIAL INFORMATION

The Senior Notes are general unsecured senior obligations of Valvoline Inc. and are fully and unconditionally guaranteed on a senior unsecured basis, jointly and severally, by the combined “Guarantor Subsidiaries.” Other subsidiaries (the “Non-Guarantor Subsidiaries”) largely represent the international operations of the Company, which do not guarantee the Senior Notes. Under the terms of the indentures, Valvoline Inc. and the Guarantor Subsidiaries each fully and unconditionally, jointly and severally, guarantee the payment of interest, principal and premium, if any, on each of the notes included in the Senior Notes. Refer to Note 7 for additional information.

The Guarantor Subsidiaries are subject to release in certain circumstances, including (i) the sale of all of the capital stock of the subsidiary, (ii) the designation of the subsidiary as an “Unrestricted Subsidiary” under the indentures governing the Senior Notes; or (iii) the release of the subsidiary as a guarantor from the Company’s 2016 Senior Credit Agreement described further in Note 7.

In connection with the registered exchange offers for the Senior Notes completed in December 2017, the Company is required to comply with Rule 3-10 of SEC Regulation S-X (“Rule 3-10”), and has therefore included the accompanying condensed consolidating financial statements in accordance with Rule 3-10(f) of SEC Regulation S-X.

The following tables present, on a consolidating basis, the condensed statements of comprehensive income; condensed balance sheets; and condensed statements of cash flows for the parent issuer of these Senior Notes, the Guarantor Subsidiaries on a combined basis, the Non-Guarantor Subsidiaries on a combined basis and the eliminations necessary to arrive at the Company’s consolidated results.

Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the three months ended June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
456

 
$
137

 
$
(16
)
 
$
577

Cost of sales

 
294

 
98

 
(16
)
 
376

Gross profit

 
162

 
39

 

 
201

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
3

 
81

 
26

 

 
110

Legacy and separation-related expenses, net
(3
)
 

 

 

 
(3
)
Equity and other (income) expenses

 
(11
)
 
3

 

 
(8
)
Operating income

 
92

 
10

 

 
102

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(10
)
 

 

 
(10
)
Net interest and other financing expenses
14

 
1

 

 

 
15

(Loss) income before income taxes
(14
)
 
101

 
10

 

 
97

Income tax (benefit) expense
(1
)
 
30

 
4

 

 
33

Equity in net income of subsidiaries
(77
)
 
(6
)
 

 
83

 

Net income
$
64

 
$
77

 
$
6

 
$
(83
)
 
$
64

 
 
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
$
48

 
$
61

 
$
(5
)
 
$
(56
)
 
$
48

Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the three months ended June 30, 2017
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
418

 
$
131

 
$
(15
)
 
$
534

Cost of sales

 
259

 
93

 
(15
)
 
337

Gross profit

 
159

 
38

 

 
197

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
3

 
77

 
22

 

 
102

Legacy and separation-related expenses, net
(2
)
 
15

 

 

 
13

Equity and other (income) expenses

 
(8
)
 
3

 

 
(5
)
Operating (loss) income
(1
)
 
75

 
13

 

 
87

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(17
)
 

 

 
(17
)
Net interest and other financing expenses
8

 
1

 
1

 

 
10

(Loss) income before income taxes
(9
)
 
91

 
12

 

 
94

Income tax (benefit) expense
(2
)
 
37

 
3

 

 
38

Equity in net income of subsidiaries
(63
)
 
(9
)
 

 
72

 

Net income
$
56

 
$
63

 
$
9

 
$
(72
)
 
$
56

 
 
 
 
 
 
 
 
 
 
Total comprehensive income
$
60

 
$
67

 
$
19

 
$
(86
)
 
$
60


Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the nine months ended June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
1,319

 
$
413

 
$
(41
)
 
$
1,691

Cost of sales

 
832

 
297

 
(41
)
 
1,088

Gross profit

 
487

 
116

 

 
603

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
10

 
247

 
71

 

 
328

Legacy and separation-related expenses, net
4

 
10

 

 

 
14

Equity and other (income) expenses

 
(37
)
 
8

 

 
(29
)
Operating (loss) income
(14
)
 
267

 
37

 

 
290

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(30
)
 

 

 
(30
)
Net interest and other financing expenses
39

 
4

 
2

 

 
45

(Loss) income before income taxes
(53
)
 
293

 
35

 

 
275

Income tax expense
16

 
128

 
10

 

 
154

Equity in net income of subsidiaries
(190
)
 
(25
)
 

 
215

 

Net income
$
121

 
$
190

 
$
25

 
$
(215
)
 
$
121

 
 
 
 
 
 
 
 
 
 
Total comprehensive income
$
105

 
$
174

 
$
17

 
$
(191
)
 
$
105

Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the nine months ended June 30, 2017
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
1,197

 
$
382

 
$
(42
)
 
$
1,537

Cost of sales

 
724

 
275

 
(42
)
 
957

Gross profit

 
473

 
107

 

 
580

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
7

 
218

 
69

 

 
294

Legacy and separation-related expenses, net
(2
)
 
27

 

 

 
25

Equity and other (income) expenses

 
(29
)
 
9

 

 
(20
)
Operating (loss) income
(5
)
 
257

 
29

 

 
281

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(60
)
 

 

 
(60
)
Net interest and other financing expenses
25

 
2

 
1

 

 
28

(Loss) income before income taxes
(30
)
 
315

 
28

 

 
313

Income tax (benefit) expense
(10
)
 
115

 
9

 

 
114

Equity in net income of subsidiaries
(219
)
 
(19
)
 

 
238

 

Net income
$
199

 
$
219

 
$
19

 
$
(238
)
 
$
199

 
 
 
 
 
 
 
 
 
 
Total comprehensive income
$
196

 
$
216

 
$
27

 
$
(243
)
 
$
196


Condensed Consolidating Balance Sheets
 
 
 
 
 
 
 
 
As of June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
 
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$
7

 
$
100

 
$

 
$
107

Accounts receivable, net
 
1

 
98

 
517

 
(155
)
 
461

Inventories, net
 

 
112

 
84

 

 
196

Other current assets
 

 
23

 
3

 

 
26

Total current assets
 
1

 
240

 
704

 
(155
)
 
790

Noncurrent assets
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net
 

 
363

 
36

 

 
399

Goodwill and intangibles, net
 

 
397

 
1

 

 
398

Equity method investments
 

 
33

 

 

 
33

Investment in subsidiaries
 
762

 
477

 

 
(1,239
)
 

Deferred income taxes
 
60

 
73

 
14

 

 
147

Other noncurrent assets
 
51

 
75

 
5

 
(49
)
 
82

Total noncurrent assets
 
873

 
1,418

 
56

 
(1,288
)
 
1,059

Total assets
 
$
874

 
$
1,658

 
$
760

 
$
(1,443
)
 
$
1,849

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Deficit
 
 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
26

 
$

 
$

 
$

 
$
26

Trade and other payables
 

 
280

 
51

 
(155
)
 
176

Accrued expenses and other liabilities
 
50

 
135

 
38

 

 
223

Total current liabilities
 
76

 
415

 
89

 
(155
)
 
425

Noncurrent liabilities
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
1,055

 
2

 
174

 

 
1,231

Employee benefit obligations
 

 
285

 
18

 

 
303

Other noncurrent liabilities
 
31

 
194

 
2

 
(49
)
 
178

Total noncurrent liabilities
 
1,086

 
481

 
194

 
(49
)
 
1,712

Commitments and contingencies
 

 

 

 

 

Stockholders’ (deficit) equity
 
(288
)
 
762

 
477

 
(1,239
)
 
(288
)
Total liabilities and stockholders’ deficit/equity
 
$
874

 
$
1,658

 
$
760

 
$
(1,443
)
 
$
1,849


Condensed Consolidating Balance Sheets
 
 
 
 
 
 
 
 
As of September 30, 2017
 
 
 
 
 
 
 
 
(In millions)
 
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$
99

 
$
102

 
$

 
$
201

Accounts receivable, net
 

 
57

 
389

 
(61
)
 
385

Inventories, net
 

 
94

 
81

 

 
175

Other current assets
 

 
25

 
4

 

 
29

Total current assets
 

 
275

 
576

 
(61
)
 
790

Noncurrent assets
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net
 

 
353

 
38

 

 
391

Goodwill and intangibles, net
 

 
333

 
2

 

 
335

Equity method investments
 

 
30

 

 

 
30

Investment in subsidiaries
 
606

 
447

 

 
(1,053
)
 

Deferred income taxes
 
145

 
122

 
14

 

 
281

Other noncurrent assets
 
314

 
80

 
6

 
(312
)
 
88

Total noncurrent assets
 
1,065

 
1,365

 
60

 
(1,365
)
 
1,125

Total assets
 
$
1,065

 
$
1,640

 
$
636

 
$
(1,426
)
 
$
1,915

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Deficit
 
 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
 
 
 
Short-term debt
 
$

 
$

 
$
75

 
$

 
$
75

Current portion of long-term debt
 
15

 

 

 

 
15

Trade and other payables
 
2

 
198

 
53

 
(61
)
 
192

Accrued expenses and other liabilities
 
103

 
60

 
33

 

 
196

Total current liabilities
 
120

 
258

 
161

 
(61
)
 
478

Noncurrent liabilities
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
1,032

 
2

 

 

 
1,034

Employee benefit obligations
 

 
321

 
21

 

 
342

Other noncurrent liabilities
 
30

 
453

 
7

 
(312
)
 
178

Total noncurrent liabilities
 
1,062

 
776

 
28

 
(312
)
 
1,554

Commitments and contingencies
 

 

 

 

 

Stockholders’ (deficit) equity
 
(117
)
 
606

 
447

 
(1,053
)
 
(117
)
Total liabilities and stockholders’ deficit/equity
 
$
1,065

 
$
1,640

 
$
636

 
$
(1,426
)
 
$
1,915



Condensed Consolidating Statements of Cash Flows
 
 
 
 
 
 
For the nine months ended June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Cash flow (used in) provided by operating activities
$
(28
)
 
$
287

 
$
(78
)
 
$

 
$
181

 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Additions to property, plant and equipment

 
(48
)
 
(3
)
 

 
(51
)
Acquisitions, net of cash required

 
(71
)
 

 

 
(71
)
Proceeds from sale of operations

 
5

 

 

 
5

Return of advance from subsidiary
263

 

 

 
(263
)
 

Total cash provided by (used in) investing activities
263

 
(114
)
 
(3
)
 
(263
)
 
(117
)
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Proceeds from borrowings, net of issuance costs
70

 

 
100

 

 
170

Repayments on borrowings
(38
)
 

 
(1
)
 

 
(39
)
Repurchases of common stock
(220
)
 

 

 

 
(220
)
Purchase of additional ownership in subsidiary

 

 
(15
)
 

 
(15
)
Cash dividends paid
(45
)
 

 

 

 
(45
)
Other financing activities
(2
)
 
(2
)
 
(2
)
 

 
(6
)
Other intercompany activity, net

 
(263
)
 

 
263

 

Total cash (used in) provided by financing activities
(235
)
 
(265
)
 
82

 
263

 
(155
)
Effect of currency exchange rate changes on cash and cash equivalents

 

 
(3
)
 

 
(3
)
Decrease in cash and cash equivalents

 
(92
)
 
(2
)
 

 
(94
)
Cash and cash equivalents - beginning of year

 
99

 
102

 

 
201

Cash and cash equivalents - end of period
$

 
$
7

 
$
100

 
$

 
$
107

 
 
 
 
 
 
 
 
 
 

Condensed Consolidating Statements of Cash Flows
 
 
 
 
 
 
For the nine months ended June 30, 2017
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Cash flows provided by (used in) operating activities
$
101

 
$
112

 
$
(56
)
 
$

 
$
157

 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Additions to property, plant and equipment

 
(42
)
 
(1
)
 

 
(43
)
Acquisitions, net of cash required

 
(66
)
 

 

 
(66
)
Advance from subsidiary
66

 

 

 
(66
)
 

Total cash provided by (used in) investing activities
66

 
(108
)
 
(1
)
 
(66
)
 
(109
)
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Net transfers from Ashland
5

 

 

 

 
5

Proceeds from borrowings

 

 
75

 

 
75

Repayments on borrowings
(87
)
 

 

 

 
(87
)
Repurchases of common stock
(50
)
 

 

 

 
(50
)
Cash dividends paid
(30
)
 

 

 

 
(30
)
Other intercompany activity, net
(5
)
 
(61
)
 

 
66

 

Total cash (used in) provided by financing activities
(167
)
 
(61
)
 
75

 
66

 
(87
)
Effect of currency exchange rate changes on cash and cash equivalents

 

 
(1
)
 

 
(1
)
(Decrease) increase in cash and cash equivalents

 
(57
)
 
17

 

 
(40
)
Cash and cash equivalents - beginning of year

 
93

 
79

 

 
172

Cash and cash equivalents - end of period
$

 
$
36

 
$
96

 
$

 
$
132

v3.10.0.1
Subsequent Events
9 Months Ended
Jun. 30, 2018
Subsequent Events [Abstract]  
Subsequent Events
SUBSEQUENT EVENTS

Quick Lubes acquisition

On July 13, 2018, the Company completed the acquisition of the business assets of Great Canadian Oil Change Franchising Ltd. to add 73 franchise service center stores in Canada for approximately $53 million. This acquisition provides an opportunity to expand Valvoline’s Quick Lubes footprint outside of the United States and increases the Quick Lubes system to more than 1,200 company-owned and franchised locations in North America.

Dividend declared

On July 24, 2018, the Board of Directors of Valvoline declared a quarterly cash dividend of $0.0745 per share on Valvoline common stock. The dividend is payable on September 17, 2018 to shareholders of record on August 31, 2018.

Share repurchases

The Company repurchased nearly 2 million shares for an aggregate amount of $42 million in the period from July 1, 2018 through July 31, 2018 pursuant to the Board of Directors authorization on January 31, 2018 to repurchase up to $300 million of common stock through September 30, 2020 (the “2018 Share Repurchase Authorization”). The Company has approximately $134 million in aggregate share repurchase authority remaining under the 2018 Share Repurchase Authorization.

Borrowing activity

In the period from July 1, 2018 through July 31, 2018, the Company had net borrowings of $86 million under the Revolver to fund its daily cash needs, bringing the total borrowing capacity remaining under the Revolver to $309 million due to a reduction of $11 million for letters of credit outstanding.
v3.10.0.1
Basis of Presentation and Significant Accounting Policies (Policies)
9 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared by Valvoline Inc. (“Valvoline” or the “Company”) in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and Securities and Exchange Commission (“SEC”) regulations for interim financial reporting, which do not include all information and footnote disclosures normally included in annual financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with Valvoline’s Annual Report on Form 10-K for the fiscal year ended September 30, 2017.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates. In the opinion of management, the assumptions underlying the condensed consolidated financial statements for these interim periods are reasonable, and all adjustments considered necessary for a fair presentation have been made and are of a normal recurring nature unless otherwise disclosed herein. The results for the interim periods are not necessarily indicative of results to be expected for the entire year. Certain prior period amounts have been reclassified to conform to the current presentation.

Recent accounting pronouncements
Recent accounting pronouncements

A description of new U.S. GAAP accounting standards issued and adopted during the current year is required in interim financial reporting. A detailed listing of recent accounting standards relevant to Valvoline is included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2017. The following standards relevant to Valvoline were either issued or adopted in the current year, or are expected to have a meaningful impact on Valvoline in future periods.

Recently adopted

In the first fiscal quarter of 2018, Valvoline adopted the following:

In July 2015, the Financial Accounting Standards Board (“FASB”) issued accounting guidance to simplify the subsequent measurement of certain inventories by replacing the current lower of cost or market test with a lower of cost or net realizable value test. The guidance applies only to inventories for which cost is determined by methods other than last-in, first out (“LIFO”) and retail inventory methods. Valvoline adopted this guidance prospectively on October 1, 2017. Valvoline utilizes LIFO to value approximately 70% of its gross inventory and there were no material differences in the Company’s previous valuation methodology for its remaining inventory using lower of cost or market to lower of cost or net realizable value.

In March 2017, the FASB issued accounting guidance that changed how employers who sponsor defined benefit pension and/or postretirement benefit plans present the net periodic benefit cost in the Condensed Consolidated Statements of Comprehensive Income. This guidance requires employers to present the service cost component of net periodic benefit cost in the same caption as other employee compensation costs for services rendered during the period. All other components of the net periodic benefit cost are presented separately outside of the operating income caption. Valvoline retrospectively adopted this guidance on October 1, 2017. Accordingly, Net pension and other postretirement plan non-service income and remeasurement adjustments has been reclassified to non-operating income for all periods presented within the Condensed Consolidated Statements of Comprehensive Income, which reduced previously reported operating income by $17 million and $60 million for the three and nine months ended June 30, 2017, respectively.

Issued but not yet adopted

In May 2014, the FASB issued accounting guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers, which supersedes most current revenue recognition guidance. This guidance introduces a five-step model for revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards under current guidance. While the Company is nearing the completion of its assessment of the accounting required under the new revenue recognition guidance and completing documentation of its conclusions, the Company’s revenue is primarily generated from the sale and service delivery of engine and automotive products to customers, which is not accounted for under industry-specific guidance and generally consists of a single delivery element whereby revenue is recognized at the point in time when ownership, risks and rewards transfer. Accordingly, Valvoline believes that most revenue transactions recorded under the new guidance will be substantially consistent with the treatment under existing guidance, and the impact of adoption is not expected to be material to net earnings on an ongoing basis.

Management will finalize its assessment and will adopt the new guidance in the first fiscal quarter of 2019. Valvoline plans to adopt this guidance using the modified retrospective method, which will recognize the cumulative effect of the changes in retained earnings at October 1, 2018, but will not retrospectively apply the new guidance to prior periods. The Company expects to adjust retained deficit at adoption primarily related to the timing of certain sales made to distributors and currently does not expect this adjustment will be material to the Condensed Consolidated Balance Sheet. In addition, the Company expects immaterial impacts to reclassify certain activities in the Condensed Consolidated Statements of Comprehensive Earnings on an ongoing basis following adoption. The specific impacts of adoption of the new guidance will be dependent on facts and circumstances at adoption and could vary from management’s preliminary estimates.

The Company anticipates expanded footnote disclosures under the new revenue guidance, including disaggregation of revenue, pro forma impacts of changes to the financial statements in the initial year of adoption, and qualitative disclosures related to the nature and terms of its sales, timing of the transfer of control and judgments used in the application of the five-step model. The Company is also in the process of identifying and implementing appropriate changes to business processes to support recognition and disclosure under the new guidance.

In February 2016, the FASB issued new accounting guidance related to lease transactions. The primary objective of this guidance is to increase transparency and comparability among organizations by requiring lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases and to disclose key information about leasing arrangements. This new guidance is effective for the Company in the first quarter of fiscal 2020 using a modified retrospective approach. The Company has begun planning its assessment and implementation process, including identifying all forms of its outstanding leases globally, as well as analyzing the practical expedients and determining the specific impacts on its condensed consolidated financial statements. While the Company’s evaluation of this guidance is in the early stages, adoption is expected to have a material impact on the Condensed Consolidated Balance Sheet as the majority of the Company’s operating leases are expected to be recorded by establishing right of use assets and associated lease liabilities. The Company also anticipates expanded footnote disclosures related to its leases under the new guidance.
Inventories
INVENTORIES

Certain lubricants are valued at the lower of cost or market using the last-in, first-out (“LIFO”) method. Remaining inventories are carried at the lower of cost or net realizable value using the weighted average cost method.
Earnings Per Share
EPS is reported under the treasury stock method.
v3.10.0.1
Fair Value Measurements (Tables)
9 Months Ended
Jun. 30, 2018
Fair Value Disclosures [Abstract]  
Schedule of Assets and Liabilities at Fair Value
The following table sets forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:

 
June 30, 2018
 
September 30, 2017
 
 
 
Quoted prices in active markets for identical assets
 
 
 
Quoted prices in active markets for identical assets
(In millions)
Fair value
 
Level 1
 
Fair value
 
Level 1
Assets
 
 
 
 
 
 
 
Cash equivalents (a)
$
16

 
$
16

 
$
46

 
$
46

Foreign currency derivatives (b)

 

 
1

 
1

Non-qualified trust funds (c)
28

 
28

 
30

 
30

Total assets at fair value
$
44

 
$
44

 
$
77

 
$
77

 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Foreign currency derivatives (d)
$
2

 
$
2

 
$
1

 
$
1

Total liabilities at fair value
$
2

 
$
2

 
$
1

 
$
1

 
 
 
 
 
 
 
 
(a)
Included in Cash and cash equivalents in the Condensed Consolidated Balance Sheets.
(b)
Included in Other current assets in the Condensed Consolidated Balance Sheets.
(c)
As of June 30, 2018, $3 million of this balance is included in Other current assets, with the remainder included in Other noncurrent assets in the Condensed Consolidated Balance Sheets. As of September 30, 2017, this balance is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.
(d)
Included in Accrued expenses and other liabilities in the Condensed Consolidated Balance Sheets.
Summary of Fair Value of Debt
Carrying values shown in the following table are net of unamortized discounts and issuance costs.
 
June 30, 2018
 
September 30, 2017
(In millions)
Fair value
 
Carrying value
 
Unamortized discount and issuance costs
 
Fair value
 
Carrying value
 
Unamortized discount and issuance costs
2024 Notes
$
380

 
$
370

 
$
5

 
$
401

 
$
370

 
$
5

2025 Notes
386

 
395

 
5

 
408

 
394

 
6

Total
$
766

 
$
765

 
$
10

 
$
809

 
$
764

 
$
11

v3.10.0.1
Acquisitions and Dispositions (Tables)
9 Months Ended
Jun. 30, 2018
Business Combinations [Abstract]  
Summary of Consideration Paid and Assets and Liabilities Acquired
A summary follows of the aggregate cash consideration paid and the total assets acquired and liabilities assumed for the nine months ended June 30:

(In millions)
2018
 
2017
Inventory
$
1

 
$
1

Property, plant and equipment
2

 

Intangible assets
68

 
66

Other noncurrent assets

 
3

Net assets acquired
$
71

 
$
70

v3.10.0.1
Accounts Receivable (Tables)
9 Months Ended
Jun. 30, 2018
Receivables [Abstract]  
Summary of Accounts Receivable
The following summarizes Valvoline’s accounts receivable:

(In millions)
June 30
2018
 
September 30
2017
Trade and other accounts receivable
$
467

 
$
390

Less: Allowance for doubtful accounts
(6
)
 
(5
)
 
$
461

 
$
385

v3.10.0.1
Inventories (Tables)
9 Months Ended
Jun. 30, 2018
Inventory Disclosure [Abstract]  
Summary of Inventory
The following summarizes Valvoline’s inventories:
(In millions)
June 30
2018
 
September 30
2017
Finished products
$
202

 
$
180

Raw materials, supplies and work in process
34

 
31

LIFO reserves
(37
)
 
(33
)
Obsolete inventory reserves
(3
)
 
(3
)
 
$
196

 
$
175

v3.10.0.1
Goodwill and Other Intangibles (Tables)
9 Months Ended
Jun. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Goodwill
The following table summarizes the changes in the carrying amount of goodwill by reportable segment and in total during the nine months ended June 30, 2018.
(In millions)
Core North America
 
Quick Lubes
 
International
 
Total
September 30, 2017
$
89

 
$
201

 
$
40

 
$
330

Acquisitions (a)

 
36

 

 
36

Dispositions (b)

 
(1
)
 

 
(1
)
June 30, 2018
$
89

 
$
236

 
$
40

 
$
365

 
 
 
 
 
 
 
 
(a) Activity associated with the acquisitions of 56 service center stores from Henley Bluewater LLC and seven other quick lubes service center stores, as well as adjustments related to prior year acquisitions. Refer to Note 3 for details regarding the acquisitions.
(b) Activity associated with the derecognition of goodwill from the sale and disposition of two quick lubes service center stores. Refer to Note 3 for further details.
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense
Estimated amortization expense for each of the next five fiscal years, assuming no additional amortizable intangible assets, is as follows for the years ended September 30:

(In millions)
 
 
2018
  
$
5

2019
  
$
5

2020
  
$
5

2021
  
$
5

2022
  
$
4

 
 
 
v3.10.0.1
Debt Obligations (Tables)
9 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  
Schedule of Short-Term Borrowings and Long-term Debt
The following table summarizes Valvoline’s short-term borrowings and long-term debt:
(In millions)
June 30
2018
 
September 30 2017
2025 Notes
$
400

 
$
400

2024 Notes
375

 
375

Term Loans
274

 
285

Trade Receivables Facility
174

 
75

Revolver
44

 

Other (a)
(10
)
 
(11
)
Total debt
$
1,257

 
$
1,124

Short-term debt

 
75

Current portion of long-term debt
26

 
15

Long-term debt
$
1,231

 
$
1,034

 
 
 
 
(a) At June 30, 2018, Other includes $12 million of debt issuance cost discounts and $2 million of debt acquired through acquisitions. At September 30, 2017, Other included $13 million of debt issuance cost discounts and $2 million of debt acquired through acquisitions.
v3.10.0.1
Employee Benefit Plans (Tables)
9 Months Ended
Jun. 30, 2018
Retirement Benefits [Abstract]  
Components of Pension and Other Postretirement Benefit Income
The following table summarizes the components of pension and other postretirement benefit income for the three and nine months ended June 30:

 
 
 
 
 
 
Other postretirement benefits
 
 
Pension benefits
 
(In millions)
 
2018
 
2017
 
2018
 
2017
Three months ended June 30
 
 
 
 
 
 
 
 
Service cost
 
$

 
$
1

 
$

 
$

Interest cost
 
19

 
22

 

 

Expected return on plan assets
 
(26
)
 
(36
)
 

 

Amortization of prior service credit
 

 

 
(3
)
 
(3
)
Net periodic benefit income
 
$
(7
)
 
$
(13
)
 
$
(3
)
 
$
(3
)
 
 
 
 
 
 
 
 
 
Nine months ended June 30
 
 
 
 
 
 
 
 
Service cost
 
$
1

 
$
2

 
$

 
$

Interest cost
 
56

 
65

 
1

 
1

Expected return on plan assets
 
(78
)
 
(109
)
 

 

Amortization of prior service credit
 

 

 
(9
)
 
(9
)
Actuarial gain
 

 

 

 
(8
)
Net periodic benefit income
 
$
(21
)
 
$
(42
)
 
$
(8
)
 
$
(16
)
v3.10.0.1
Earnings Per Share (Tables)
9 Months Ended
Jun. 30, 2018
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
The following is the computation of basic and diluted earnings per share (“EPS”) for the three and nine months ended June 30, 2018 and 2017. EPS is reported under the treasury stock method.

 
 
Three months ended
 
Nine months ended
 
 
June 30
 
June 30
(In millions except per share data)
 
2018
 
2017
 
2018
 
2017
Numerator
 
 
 
 
 
 
 
 
Net income
 
$
64

 
$
56

 
$
121

 
$
199

Denominator
 
 
 
 
 
 
 
 
Weighted average shares used to compute basic EPS
 
195

 
204

 
199

 
204

Dilutive effect of share-based awards (a)
 
1

 

 
1

 

Weighted average shares used to compute diluted EPS
 
196


204

 
200

 
204

 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
Basic
 
$
0.33

 
$
0.27

 
$
0.61

 
$
0.97

Diluted
 
$
0.33

 
$
0.27

 
$
0.61

 
$
0.97

 
 
 
 
 
 
 
 
 
(a) During the three and nine months ended June 30, 2017, there was not a significant dilutive impact from potential common shares.

v3.10.0.1
Stockholders' Deficit (Tables)
9 Months Ended
Jun. 30, 2018
Equity [Abstract]  
Schedule of Changes in Stockholders' Deficit
Changes in stockholders’ deficit in the nine months ended June 30, 2018 were as follows:

(In millions)
 
Balance as of September 30, 2017
$
(117
)
 
 
 
 
Net income
121

 
Repurchases of common stock (a)
(224
)
 
Stock-based compensation plans
7

 
Dividends paid, $0.2235 per common share
(45
)
 
Purchase of remaining ownership interest in subsidiary (b)
(14
)
 
Accumulated other comprehensive loss, net of tax:
 
 
Unrealized currency translation loss
(9
)
 
Amortization of pension and other postretirement prior service credits in income (c)
(7
)
Balance as of June 30, 2018
$
(288
)
 
 
 
(a)
During the nine months ended June 30, 2018, the Company repurchased approximately 10 million shares of its common stock for $224 million. Upon repurchase, shares are retired.
(b)
Refer to Note 3 for details regarding the Company’s purchase of the remaining ownership interest in a controlled and consolidated subsidiary during the nine months ended June 30, 2018.
(c)
Amortization of unrecognized prior service credits is included in net periodic benefit income within Net pension and other postretirement plan non-service income and remeasurement adjustments in the Condensed Consolidated Statements of Comprehensive Income.


v3.10.0.1
Reportable Segment Information (Tables)
9 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information
The following table presents sales and operating income for each reportable segment:



(In millions)
 
Three months ended
June 30
 
Nine months ended June 30
 
2018
 
2017
 
2018
 
2017
Sales
 
 
 
 
 
 
 
 
Core North America
 
$
264

 
$
258

 
$
773

 
$
748

Quick Lubes
 
167

 
139

 
479

 
394

International
 
146

 
137

 
439

 
395

Consolidated sales
 
$
577

 
$
534

 
$
1,691

 
$
1,537

 
 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
 
Core North America
 
$
41

 
$
48

 
$
130

 
$
156

Quick Lubes
 
38

 
34

 
111

 
94

International
 
20

 
18

 
63

 
56

Total operating segments
 
$
99

 
$
100

 
$
304

 
$
306

Unallocated and other (a)
 
3

 
(13
)
 
(14
)
 
(25
)
Consolidated operating income
 
$
102

 
$
87

 
$
290

 
$
281

 
 
 
 
 
 
 
 
 
(a)
Unallocated and other includes legacy and separation-related expenses, net.
v3.10.0.1
Guarantor Financial Information (Tables)
9 Months Ended
Jun. 30, 2018
Condensed Financial Information Disclosure [Abstract]  
Condensed Consolidating Statements of Comprehensive Income
Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the three months ended June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
456

 
$
137

 
$
(16
)
 
$
577

Cost of sales

 
294

 
98

 
(16
)
 
376

Gross profit

 
162

 
39

 

 
201

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
3

 
81

 
26

 

 
110

Legacy and separation-related expenses, net
(3
)
 

 

 

 
(3
)
Equity and other (income) expenses

 
(11
)
 
3

 

 
(8
)
Operating income

 
92

 
10

 

 
102

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(10
)
 

 

 
(10
)
Net interest and other financing expenses
14

 
1

 

 

 
15

(Loss) income before income taxes
(14
)
 
101

 
10

 

 
97

Income tax (benefit) expense
(1
)
 
30

 
4

 

 
33

Equity in net income of subsidiaries
(77
)
 
(6
)
 

 
83

 

Net income
$
64

 
$
77

 
$
6

 
$
(83
)
 
$
64

 
 
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
$
48

 
$
61

 
$
(5
)
 
$
(56
)
 
$
48

Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the three months ended June 30, 2017
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
418

 
$
131

 
$
(15
)
 
$
534

Cost of sales

 
259

 
93

 
(15
)
 
337

Gross profit

 
159

 
38

 

 
197

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
3

 
77

 
22

 

 
102

Legacy and separation-related expenses, net
(2
)
 
15

 

 

 
13

Equity and other (income) expenses

 
(8
)
 
3

 

 
(5
)
Operating (loss) income
(1
)
 
75

 
13

 

 
87

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(17
)
 

 

 
(17
)
Net interest and other financing expenses
8

 
1

 
1

 

 
10

(Loss) income before income taxes
(9
)
 
91

 
12

 

 
94

Income tax (benefit) expense
(2
)
 
37

 
3

 

 
38

Equity in net income of subsidiaries
(63
)
 
(9
)
 

 
72

 

Net income
$
56

 
$
63

 
$
9

 
$
(72
)
 
$
56

 
 
 
 
 
 
 
 
 
 
Total comprehensive income
$
60

 
$
67

 
$
19

 
$
(86
)
 
$
60


Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the nine months ended June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
1,319

 
$
413

 
$
(41
)
 
$
1,691

Cost of sales

 
832

 
297

 
(41
)
 
1,088

Gross profit

 
487

 
116

 

 
603

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
10

 
247

 
71

 

 
328

Legacy and separation-related expenses, net
4

 
10

 

 

 
14

Equity and other (income) expenses

 
(37
)
 
8

 

 
(29
)
Operating (loss) income
(14
)
 
267

 
37

 

 
290

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(30
)
 

 

 
(30
)
Net interest and other financing expenses
39

 
4

 
2

 

 
45

(Loss) income before income taxes
(53
)
 
293

 
35

 

 
275

Income tax expense
16

 
128

 
10

 

 
154

Equity in net income of subsidiaries
(190
)
 
(25
)
 

 
215

 

Net income
$
121

 
$
190

 
$
25

 
$
(215
)
 
$
121

 
 
 
 
 
 
 
 
 
 
Total comprehensive income
$
105

 
$
174

 
$
17

 
$
(191
)
 
$
105

Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the nine months ended June 30, 2017
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
1,197

 
$
382

 
$
(42
)
 
$
1,537

Cost of sales

 
724

 
275

 
(42
)
 
957

Gross profit

 
473

 
107

 

 
580

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
7

 
218

 
69

 

 
294

Legacy and separation-related expenses, net
(2
)
 
27

 

 

 
25

Equity and other (income) expenses

 
(29
)
 
9

 

 
(20
)
Operating (loss) income
(5
)
 
257

 
29

 

 
281

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(60
)
 

 

 
(60
)
Net interest and other financing expenses
25

 
2

 
1

 

 
28

(Loss) income before income taxes
(30
)
 
315

 
28

 

 
313

Income tax (benefit) expense
(10
)
 
115

 
9

 

 
114

Equity in net income of subsidiaries
(219
)
 
(19
)
 

 
238

 

Net income
$
199

 
$
219

 
$
19

 
$
(238
)
 
$
199

 
 
 
 
 
 
 
 
 
 
Total comprehensive income
$
196

 
$
216

 
$
27

 
$
(243
)
 
$
196


Condensed Income Statement
Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the three months ended June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
456

 
$
137

 
$
(16
)
 
$
577

Cost of sales

 
294

 
98

 
(16
)
 
376

Gross profit

 
162

 
39

 

 
201

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
3

 
81

 
26

 

 
110

Legacy and separation-related expenses, net
(3
)
 

 

 

 
(3
)
Equity and other (income) expenses

 
(11
)
 
3

 

 
(8
)
Operating income

 
92

 
10

 

 
102

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(10
)
 

 

 
(10
)
Net interest and other financing expenses
14

 
1

 

 

 
15

(Loss) income before income taxes
(14
)
 
101

 
10

 

 
97

Income tax (benefit) expense
(1
)
 
30

 
4

 

 
33

Equity in net income of subsidiaries
(77
)
 
(6
)
 

 
83

 

Net income
$
64

 
$
77

 
$
6

 
$
(83
)
 
$
64

 
 
 
 
 
 
 
 
 
 
Total comprehensive income (loss)
$
48

 
$
61

 
$
(5
)
 
$
(56
)
 
$
48

Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the three months ended June 30, 2017
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
418

 
$
131

 
$
(15
)
 
$
534

Cost of sales

 
259

 
93

 
(15
)
 
337

Gross profit

 
159

 
38

 

 
197

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
3

 
77

 
22

 

 
102

Legacy and separation-related expenses, net
(2
)
 
15

 

 

 
13

Equity and other (income) expenses

 
(8
)
 
3

 

 
(5
)
Operating (loss) income
(1
)
 
75

 
13

 

 
87

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(17
)
 

 

 
(17
)
Net interest and other financing expenses
8

 
1

 
1

 

 
10

(Loss) income before income taxes
(9
)
 
91

 
12

 

 
94

Income tax (benefit) expense
(2
)
 
37

 
3

 

 
38

Equity in net income of subsidiaries
(63
)
 
(9
)
 

 
72

 

Net income
$
56

 
$
63

 
$
9

 
$
(72
)
 
$
56

 
 
 
 
 
 
 
 
 
 
Total comprehensive income
$
60

 
$
67

 
$
19

 
$
(86
)
 
$
60


Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the nine months ended June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
1,319

 
$
413

 
$
(41
)
 
$
1,691

Cost of sales

 
832

 
297

 
(41
)
 
1,088

Gross profit

 
487

 
116

 

 
603

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
10

 
247

 
71

 

 
328

Legacy and separation-related expenses, net
4

 
10

 

 

 
14

Equity and other (income) expenses

 
(37
)
 
8

 

 
(29
)
Operating (loss) income
(14
)
 
267

 
37

 

 
290

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(30
)
 

 

 
(30
)
Net interest and other financing expenses
39

 
4

 
2

 

 
45

(Loss) income before income taxes
(53
)
 
293

 
35

 

 
275

Income tax expense
16

 
128

 
10

 

 
154

Equity in net income of subsidiaries
(190
)
 
(25
)
 

 
215

 

Net income
$
121

 
$
190

 
$
25

 
$
(215
)
 
$
121

 
 
 
 
 
 
 
 
 
 
Total comprehensive income
$
105

 
$
174

 
$
17

 
$
(191
)
 
$
105

Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
For the nine months ended June 30, 2017
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Sales
$

 
$
1,197

 
$
382

 
$
(42
)
 
$
1,537

Cost of sales

 
724

 
275

 
(42
)
 
957

Gross profit

 
473

 
107

 

 
580

 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
7

 
218

 
69

 

 
294

Legacy and separation-related expenses, net
(2
)
 
27

 

 

 
25

Equity and other (income) expenses

 
(29
)
 
9

 

 
(20
)
Operating (loss) income
(5
)
 
257

 
29

 

 
281

Net pension and other postretirement plan non-service income and remeasurement adjustments

 
(60
)
 

 

 
(60
)
Net interest and other financing expenses
25

 
2

 
1

 

 
28

(Loss) income before income taxes
(30
)
 
315

 
28

 

 
313

Income tax (benefit) expense
(10
)
 
115

 
9

 

 
114

Equity in net income of subsidiaries
(219
)
 
(19
)
 

 
238

 

Net income
$
199

 
$
219

 
$
19

 
$
(238
)
 
$
199

 
 
 
 
 
 
 
 
 
 
Total comprehensive income
$
196

 
$
216

 
$
27

 
$
(243
)
 
$
196


Condensed Consolidating Balance Sheets
Condensed Consolidating Balance Sheets
 
 
 
 
 
 
 
 
As of June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
 
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$
7

 
$
100

 
$

 
$
107

Accounts receivable, net
 
1

 
98

 
517

 
(155
)
 
461

Inventories, net
 

 
112

 
84

 

 
196

Other current assets
 

 
23

 
3

 

 
26

Total current assets
 
1

 
240

 
704

 
(155
)
 
790

Noncurrent assets
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net
 

 
363

 
36

 

 
399

Goodwill and intangibles, net
 

 
397

 
1

 

 
398

Equity method investments
 

 
33

 

 

 
33

Investment in subsidiaries
 
762

 
477

 

 
(1,239
)
 

Deferred income taxes
 
60

 
73

 
14

 

 
147

Other noncurrent assets
 
51

 
75

 
5

 
(49
)
 
82

Total noncurrent assets
 
873

 
1,418

 
56

 
(1,288
)
 
1,059

Total assets
 
$
874

 
$
1,658

 
$
760

 
$
(1,443
)
 
$
1,849

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Deficit
 
 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
 
 
 
Current portion of long-term debt
 
$
26

 
$

 
$

 
$

 
$
26

Trade and other payables
 

 
280

 
51

 
(155
)
 
176

Accrued expenses and other liabilities
 
50

 
135

 
38

 

 
223

Total current liabilities
 
76

 
415

 
89

 
(155
)
 
425

Noncurrent liabilities
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
1,055

 
2

 
174

 

 
1,231

Employee benefit obligations
 

 
285

 
18

 

 
303

Other noncurrent liabilities
 
31

 
194

 
2

 
(49
)
 
178

Total noncurrent liabilities
 
1,086

 
481

 
194

 
(49
)
 
1,712

Commitments and contingencies
 

 

 

 

 

Stockholders’ (deficit) equity
 
(288
)
 
762

 
477

 
(1,239
)
 
(288
)
Total liabilities and stockholders’ deficit/equity
 
$
874

 
$
1,658

 
$
760

 
$
(1,443
)
 
$
1,849


Condensed Consolidating Balance Sheets
 
 
 
 
 
 
 
 
As of September 30, 2017
 
 
 
 
 
 
 
 
(In millions)
 
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$

 
$
99

 
$
102

 
$

 
$
201

Accounts receivable, net
 

 
57

 
389

 
(61
)
 
385

Inventories, net
 

 
94

 
81

 

 
175

Other current assets
 

 
25

 
4

 

 
29

Total current assets
 

 
275

 
576

 
(61
)
 
790

Noncurrent assets
 
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net
 

 
353

 
38

 

 
391

Goodwill and intangibles, net
 

 
333

 
2

 

 
335

Equity method investments
 

 
30

 

 

 
30

Investment in subsidiaries
 
606

 
447

 

 
(1,053
)
 

Deferred income taxes
 
145

 
122

 
14

 

 
281

Other noncurrent assets
 
314

 
80

 
6

 
(312
)
 
88

Total noncurrent assets
 
1,065

 
1,365

 
60

 
(1,365
)
 
1,125

Total assets
 
$
1,065

 
$
1,640

 
$
636

 
$
(1,426
)
 
$
1,915

 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Deficit
 
 
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
 
 
 
 
Short-term debt
 
$

 
$

 
$
75

 
$

 
$
75

Current portion of long-term debt
 
15

 

 

 

 
15

Trade and other payables
 
2

 
198

 
53

 
(61
)
 
192

Accrued expenses and other liabilities
 
103

 
60

 
33

 

 
196

Total current liabilities
 
120

 
258

 
161

 
(61
)
 
478

Noncurrent liabilities
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
1,032

 
2

 

 

 
1,034

Employee benefit obligations
 

 
321

 
21

 

 
342

Other noncurrent liabilities
 
30

 
453

 
7

 
(312
)
 
178

Total noncurrent liabilities
 
1,062

 
776

 
28

 
(312
)
 
1,554

Commitments and contingencies
 

 

 

 

 

Stockholders’ (deficit) equity
 
(117
)
 
606

 
447

 
(1,053
)
 
(117
)
Total liabilities and stockholders’ deficit/equity
 
$
1,065

 
$
1,640

 
$
636

 
$
(1,426
)
 
$
1,915

Condensed Consolidating Statements of Cash Flows
Condensed Consolidating Statements of Cash Flows
 
 
 
 
 
 
For the nine months ended June 30, 2018
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Cash flow (used in) provided by operating activities
$
(28
)
 
$
287

 
$
(78
)
 
$

 
$
181

 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Additions to property, plant and equipment

 
(48
)
 
(3
)
 

 
(51
)
Acquisitions, net of cash required

 
(71
)
 

 

 
(71
)
Proceeds from sale of operations

 
5

 

 

 
5

Return of advance from subsidiary
263

 

 

 
(263
)
 

Total cash provided by (used in) investing activities
263

 
(114
)
 
(3
)
 
(263
)
 
(117
)
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Proceeds from borrowings, net of issuance costs
70

 

 
100

 

 
170

Repayments on borrowings
(38
)
 

 
(1
)
 

 
(39
)
Repurchases of common stock
(220
)
 

 

 

 
(220
)
Purchase of additional ownership in subsidiary

 

 
(15
)
 

 
(15
)
Cash dividends paid
(45
)
 

 

 

 
(45
)
Other financing activities
(2
)
 
(2
)
 
(2
)
 

 
(6
)
Other intercompany activity, net

 
(263
)
 

 
263

 

Total cash (used in) provided by financing activities
(235
)
 
(265
)
 
82

 
263

 
(155
)
Effect of currency exchange rate changes on cash and cash equivalents

 

 
(3
)
 

 
(3
)
Decrease in cash and cash equivalents

 
(92
)
 
(2
)
 

 
(94
)
Cash and cash equivalents - beginning of year

 
99

 
102

 

 
201

Cash and cash equivalents - end of period
$

 
$
7

 
$
100

 
$

 
$
107

 
 
 
 
 
 
 
 
 
 

Condensed Consolidating Statements of Cash Flows
 
 
 
 
 
 
For the nine months ended June 30, 2017
 
 
 
 
 
 
 
 
(In millions)
Valvoline Inc.
(Parent Issuer)
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Cash flows provided by (used in) operating activities
$
101

 
$
112

 
$
(56
)
 
$

 
$
157

 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Additions to property, plant and equipment

 
(42
)
 
(1
)
 

 
(43
)
Acquisitions, net of cash required

 
(66
)
 

 

 
(66
)
Advance from subsidiary
66

 

 

 
(66
)
 

Total cash provided by (used in) investing activities
66

 
(108
)
 
(1
)
 
(66
)
 
(109
)
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Net transfers from Ashland
5

 

 

 

 
5

Proceeds from borrowings

 

 
75

 

 
75

Repayments on borrowings
(87
)
 

 

 

 
(87
)
Repurchases of common stock
(50
)
 

 

 

 
(50
)
Cash dividends paid
(30
)
 

 

 

 
(30
)
Other intercompany activity, net
(5
)
 
(61
)
 

 
66

 

Total cash (used in) provided by financing activities
(167
)
 
(61
)
 
75

 
66

 
(87
)
Effect of currency exchange rate changes on cash and cash equivalents

 

 
(1
)
 

 
(1
)
(Decrease) increase in cash and cash equivalents

 
(57
)
 
17

 

 
(40
)
Cash and cash equivalents - beginning of year

 
93

 
79

 

 
172

Cash and cash equivalents - end of period
$

 
$
36

 
$
96

 
$

 
$
132

v3.10.0.1
Basis of Presentation and Significant Accounting Policies (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Percentage of inventory valued using the LIFO method 70.00%   70.00%  
Reduction to operating income as a result of adopting new accounting guidance $ (102) $ (87) $ (290) $ (281)
Accounting Standards Update 2017-07        
Reduction to operating income as a result of adopting new accounting guidance   $ 17   $ 60
v3.10.0.1
Fair Value Measurements - Schedule of Assets and Liabilities at Fair Value (Details) - Fair Value, Measurements, Recurring - USD ($)
$ in Millions
Jun. 30, 2018
Sep. 30, 2017
Assets    
Cash equivalents $ 16 $ 46
Foreign currency derivatives 0 1
Non-qualified trust funds 28 30
Total assets at fair value 44 77
Liabilities    
Foreign currency derivatives 2 1
Total liabilities at fair value 2 1
Quoted prices in active markets for identical assets, Level 1    
Assets    
Cash equivalents 16 46
Foreign currency derivatives 0 1
Non-qualified trust funds 28 30
Total assets at fair value 44 77
Liabilities    
Foreign currency derivatives 2 1
Total liabilities at fair value 2 $ 1
Other Current Assets    
Assets    
Non-qualified trust funds $ 3  
v3.10.0.1
Fair Value Measurements - Narrative (Details) - USD ($)
Jun. 30, 2018
Sep. 30, 2017
Aug. 31, 2017
Jul. 31, 2016
Senior Notes | 2024 Notes        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Interest rate on senior unsecured notes       5.50%
Aggregate principal amount       $ 375,000,000
Senior Notes | 2025 Notes        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Interest rate on senior unsecured notes     4.375%  
Aggregate principal amount     $ 400,000,000  
Foreign Exchange Contract | Not Designated as Hedging Instrument        
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]        
Outstanding derivative contracts notional value $ 100,000,000 $ 47,000,000    
v3.10.0.1
Fair Value Measurements - Fair Value of Debt (Details) - USD ($)
$ in Millions
Jun. 30, 2018
Sep. 30, 2017
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Unamortized discount and issuance costs $ 12 $ 13
Level 2 | Fair Value    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 766 809
Level 2 | Fair Value | Senior Notes | 2024 Notes    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 380 401
Level 2 | Fair Value | Senior Notes | 2025 Notes    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 386 408
Level 2 | Carrying Value    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 765 764
Unamortized discount and issuance costs 10 11
Level 2 | Carrying Value | Senior Notes | 2024 Notes    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 370 370
Unamortized discount and issuance costs 5 5
Level 2 | Carrying Value | Senior Notes | 2025 Notes    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 395 394
Unamortized discount and issuance costs $ 5 $ 6
v3.10.0.1
Acquisitions and Dispositions - Additional Information (Details)
$ in Millions
1 Months Ended 3 Months Ended 9 Months Ended
Oct. 02, 2017
USD ($)
franchise
Dec. 31, 2017
USD ($)
Jun. 30, 2017
USD ($)
Jun. 30, 2018
USD ($)
service_center_store
franchise
Jun. 30, 2017
USD ($)
service_center_store
franchise
Nov. 30, 2017
Sep. 30, 2017
USD ($)
Business Acquisition [Line Items]              
Number of service center stores | service_center_store       63 42    
Consideration for acquisition       $ 71 $ 70    
Number of franchise locations acquired | franchise       60 14    
Goodwill acquired       $ 365     $ 330
Weighted average remaining term       7 years      
Proceeds from disposal       $ 5 $ 0    
Gain on sale       4 $ 0    
Henley Bluewater, LLC              
Business Acquisition [Line Items]              
Consideration for acquisition $ 60            
Number of franchise locations acquired | franchise 56            
Goodwill acquired       42      
Reacquired franchise rights       $ 26      
Purchase accounting adjustment, increase in finite lived intangible assets     $ (6)        
Thailand              
Business Acquisition [Line Items]              
Equity method ownership percentage           70.00%  
Additional ownership percentage of joint venture, purchased   30.00%          
Consideration paid to acquire additional interest in subsidiary   $ 16          
Quick Lubes              
Business Acquisition [Line Items]              
Number of service center stores | service_center_store       7      
Goodwill acquired       $ 236     $ 201
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Quick Lubes              
Business Acquisition [Line Items]              
Number of service center stores | service_center_store       2      
Proceeds from disposal       $ 5      
Gain on sale       $ 3      
v3.10.0.1
Acquisitions and Dispositions - Summary of Consideration Paid and Assets and Liabilities Acquired (Details) - Henley Bluewater, LLC - USD ($)
$ in Millions
Jun. 30, 2018
Mar. 31, 2017
Business Acquisition [Line Items]    
Inventory $ 1 $ 1
Property, plant and equipment 2 0
Intangible assets 68 66
Other noncurrent assets 0 3
Net assets acquired $ 71 $ 70
v3.10.0.1
Accounts Receivable - Summary of Accounts Receivable (Details) - USD ($)
$ in Millions
Jun. 30, 2018
Sep. 30, 2017
Receivables [Abstract]    
Trade and other accounts receivable $ 467 $ 390
Less: Allowance for doubtful accounts (6) (5)
Accounts receivable $ 461 $ 385
v3.10.0.1
Accounts Receivable - Narrative (Details) - USD ($)
$ in Millions
9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Receivables [Abstract]    
Accounts receivable sold to financial institutions $ 50 $ 40
v3.10.0.1
Inventories - Schedule of Inventory (Details) - USD ($)
$ in Millions
Jun. 30, 2018
Sep. 30, 2017
Inventory Disclosure [Abstract]    
Finished products $ 202 $ 180
Raw materials, supplies and work in process 34 31
LIFO reserves (37) (33)
Obsolete inventory reserves (3) (3)
Inventories $ 196 $ 175
v3.10.0.1
Goodwill and Other Intangibles - Summary of Goodwill by Segment (Details)
$ in Millions
9 Months Ended
Oct. 02, 2017
franchise
Jun. 30, 2018
USD ($)
service_center_store
franchise
Jun. 30, 2017
service_center_store
franchise
Goodwill [Roll Forward]      
Goodwill, beginning balance   $ 330  
Acquisitions   36  
Dispositions   (1)  
Goodwill, ending balance   $ 365  
Number of franchise locations acquired | franchise   60 14
Number of service center stores | service_center_store   63 42
Core North America      
Goodwill [Roll Forward]      
Goodwill, beginning balance   $ 89  
Acquisitions   0  
Dispositions   0  
Goodwill, ending balance   89  
Quick Lubes      
Goodwill [Roll Forward]      
Goodwill, beginning balance   201  
Acquisitions   36  
Dispositions   (1)  
Goodwill, ending balance   $ 236  
Number of service center stores | service_center_store   7  
International      
Goodwill [Roll Forward]      
Goodwill, beginning balance   $ 40  
Acquisitions   0  
Dispositions   0  
Goodwill, ending balance   40  
Henley Bluewater, LLC      
Goodwill [Roll Forward]      
Goodwill, ending balance   $ 42  
Number of franchise locations acquired | franchise 56    
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Quick Lubes      
Goodwill [Roll Forward]      
Number of service center stores | service_center_store   2  
v3.10.0.1
Goodwill and Other Intangibles - Additional Information (Details)
$ in Millions
3 Months Ended 9 Months Ended
Jun. 30, 2018
USD ($)
Jun. 30, 2018
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]    
Other intangible assets, net of accumulated amortization $ 40 $ 40
Accumulated amortization on intangible assets 7 7
Amortization expense on intangible assets $ 1 $ 3
v3.10.0.1
Goodwill and Other Intangibles - Future Amortization of Other Intangible Assets (Details)
$ in Millions
Jun. 30, 2018
USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]  
2018 $ 5
2019 5
2020 5
2021 5
2022 $ 4
v3.10.0.1
Debt Obligations - Schedule of Short-Term Borrowings and Long Term Debt (Details) - USD ($)
Jun. 30, 2018
Sep. 30, 2017
Debt Instrument [Line Items]    
Short-term debt $ 0 $ 75,000,000
Other (10,000,000) (11,000,000)
Total debt 1,257,000,000 1,124,000,000
Current portion of long-term debt 26,000,000 15,000,000
Long-term debt 1,231,000,000 1,034,000,000
Debt issuance cost discounts 12,000,000 13,000,000
Debt acquired through acquisitions 2,000,000 2,000,000
Line of Credit | Revolver    
Debt Instrument [Line Items]    
Long-term debt 44,000,000 0
2025 Notes | Senior Notes    
Debt Instrument [Line Items]    
Debt gross 400,000,000 400,000,000
2024 Notes | Senior Notes    
Debt Instrument [Line Items]    
Debt gross 375,000,000 375,000,000
Term Loans | Line of Credit | Secured Debt    
Debt Instrument [Line Items]    
Debt gross 274,000,000 285,000,000
Trade Receivables Facility | Line of Credit | Secured Debt    
Debt Instrument [Line Items]    
Long-term debt 174,000,000  
Line of Credit | Revolver    
Debt Instrument [Line Items]    
Long-term debt $ 44,000,000 0
Line of Credit | Trade Receivables Facility | Secured Debt    
Debt Instrument [Line Items]    
Short-term debt   $ 75,000,000
v3.10.0.1
Debt Obligations - Senior Notes (Details) - USD ($)
1 Months Ended 9 Months Ended
Aug. 31, 2017
Jul. 31, 2016
Jun. 30, 2018
Jun. 30, 2017
Debt Instrument [Line Items]        
Proceeds from borrowings     $ 170,000,000 $ 75,000,000
Senior Notes | 2025 Notes        
Debt Instrument [Line Items]        
Interest rate on senior unsecured notes 4.375%      
Aggregate principal amount $ 400,000,000      
Proceeds from borrowings $ 394,000,000      
Senior Notes | 2024 Notes        
Debt Instrument [Line Items]        
Interest rate on senior unsecured notes   5.50%    
Aggregate principal amount   $ 375,000,000    
Proceeds from borrowings   $ 370,000,000    
v3.10.0.1
Debt Obligations - Senior Credit Agreement (Details)
9 Months Ended
Jun. 30, 2018
USD ($)
Sep. 30, 2017
USD ($)
2016 Credit Facilities    
Debt Instrument [Line Items]    
Principal amount of line of credit $ 1,325,000,000  
2016 Credit Facilities | LIBOR | Minimum    
Debt Instrument [Line Items]    
Spread on variable rates 1.50%  
2016 Credit Facilities | LIBOR | Maximum    
Debt Instrument [Line Items]    
Spread on variable rates 2.50%  
2016 Credit Facilities | Base Rate | Minimum    
Debt Instrument [Line Items]    
Spread on variable rates 0.50%  
2016 Credit Facilities | Base Rate | Maximum    
Debt Instrument [Line Items]    
Spread on variable rates 1.50%  
Line of Credit | 2016 Credit Facilities    
Debt Instrument [Line Items]    
Maximum consolidated interest coverage ratio 4.5  
Minimum consolidated interest coverage ratio 3.0  
Secured Debt | Term Loans    
Debt Instrument [Line Items]    
Principal amount of line of credit $ 875,000,000  
Secured Debt | Line of Credit | Term Loans    
Debt Instrument [Line Items]    
Term of debt 5 years  
Outstanding principal balance of debt $ 274,000,000 $ 285,000,000
Quarterly installments due in fiscal 2018 4,000,000  
Quarterly installments due in fiscal 2019 8,000,000  
Quarterly installments due in fiscal 2020 8,000,000  
Quarterly installments due in fiscal 2021 15,000,000  
Revolver    
Debt Instrument [Line Items]    
Principal amount of line of credit 450,000,000  
Borrowings from revolving credit facility 70,000,000  
Repayments of revolving credit facility 26,000,000  
Total borrowing capacity remaining $ 395,000,000  
Revolver | Line of Credit    
Debt Instrument [Line Items]    
Term of debt 5 years  
Long-term debt outstanding amount $ 44,000,000 0
Letter of Credit    
Debt Instrument [Line Items]    
Principal amount of line of credit 100,000,000  
Line of Credit | Revolver    
Debt Instrument [Line Items]    
Long-term debt outstanding amount $ 44,000,000 $ 0
v3.10.0.1
Debt Obligations - Trade Receivables Facility (Details) - USD ($)
3 Months Ended 9 Months Ended
Nov. 29, 2016
Jun. 30, 2018
Jun. 30, 2017
Dec. 31, 2016
Jun. 30, 2018
Jun. 30, 2017
Nov. 20, 2017
Sep. 30, 2017
Debt Instrument [Line Items]                
Proceeds from borrowings         $ 170,000,000 $ 75,000,000    
Repayments of long-term debt         39,000,000 $ 87,000,000    
Short-term debt outstanding amount   $ 0     0     $ 75,000,000
Secured Debt | Trade Receivables Facility                
Debt Instrument [Line Items]                
Maximum borrowing capacity under the Revolover $ 125,000,000           $ 175,000,000  
Secured Debt | Line of Credit | Trade Receivables Facility                
Debt Instrument [Line Items]                
Proceeds from borrowings         100,000,000      
Repayments of long-term debt         1,000,000      
Long-term debt outstanding amount   174,000,000     174,000,000      
Total borrowing capacity remaining (less than)   $ 1,000,000     $ 1,000,000      
Weighted average interest rates   2.90% 1.80%   2.60% 1.70%    
Line of Credit | Secured Debt | Trade Receivables Facility                
Debt Instrument [Line Items]                
Term of debt 1 year              
Proceeds from borrowings       $ 75,000,000        
Short-term debt outstanding amount               75,000,000
Financing Subsidiary | Secured Debt | Line of Credit | Trade Receivables Facility                
Debt Instrument [Line Items]                
Accounts receivable pledged as collateral   $ 282,000,000     $ 282,000,000     $ 247,000,000
v3.10.0.1
Income Taxes - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended 12 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Income Tax Contingency [Line Items]            
Income tax expense $ 33 $ 38 $ 154 $ 114    
Effective tax rate 34.00% 40.40% 56.00% 36.40%    
Tax cuts and jobs act of 2017, income tax expense (benefit)     $ 76      
Increase in income tax resulting from U.S. tax reform legislation     69      
Repatriation tax on unremitted non-U.S. earnings     4      
Estimated incremental withholding taxes $ 2   2      
Net deferred tax assets           $ 281
Gross liability 23   23      
Foreign tax credits     19      
Liability for uncertain income tax positions 11   11      
Tax Matters Agreement | Ashland            
Income Tax Contingency [Line Items]            
Due to (from) related party 78   78     74
Tax Matters Agreement | Ashland | Accrued expenses and other liabilities            
Income Tax Contingency [Line Items]            
Due to (from) related party 3   3     2
Ashland | Tax Matters Agreement | Ashland            
Income Tax Contingency [Line Items]            
Tax cuts and jobs act of 2017, income tax expense (benefit)     (3)      
Increase (decrease) in due to affiliates recognized in selling, general and administrative expense     7      
Due to (from) related party 65   65     62
Ashland | Tax Matters Agreement | Ashland | Accrued expenses and other liabilities            
Income Tax Contingency [Line Items]            
Due to (from) related party 3   3     $ 1
Scenario, Forecast            
Income Tax Contingency [Line Items]            
US corporate federal blended income tax rate         24.50%  
Uncertain tax positions from decreases in positions taken in the next twelve months         $ 3  
Legacy and Separation-related Expenses, net | Ashland | Tax Matters Agreement | Ashland            
Income Tax Contingency [Line Items]            
Increase (decrease) in due to affiliates recognized in selling, general and administrative expense (3) $ 2 5 $ 2    
Domestic Tax Authority            
Income Tax Contingency [Line Items]            
Increase in income tax resulting from U.S. tax reform legislation     66      
KENTUCKY            
Income Tax Contingency [Line Items]            
Income tax expense 3   3      
State income tax expense, related to change in state corporate tax rate 7          
KENTUCKY | Ashland | Tax Matters Agreement | Ashland            
Income Tax Contingency [Line Items]            
Income tax expense 4   4      
Increase (decrease) in due to affiliates recognized in selling, general and administrative expense 4   4      
KENTUCKY | Legacy and Separation-related Expenses, net | Ashland | Tax Matters Agreement | Ashland            
Income Tax Contingency [Line Items]            
Increase (decrease) in due to affiliates recognized in selling, general and administrative expense $ 4   $ 1      
v3.10.0.1
Employee Benefit Plans - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Apr. 30, 2018
Defined Benefit Plan Disclosure [Line Items]          
Pension and other postretirement benefit expense (income) $ (10) $ (16) $ (29) $ (58)  
Gain (loss) from actuarial remeasurements     0 8  
Estimated partial withdrawal liability         $ 30
Pension benefits          
Defined Benefit Plan Disclosure [Line Items]          
Pension and other postretirement benefit expense (income) (7) $ (13) (21) $ (42)  
Pension plan contributions     13    
Expected pension contributions for the remainder of fiscal 2018 5   5    
Total expected pension contributions for fiscal 2018 $ 18   $ 18    
v3.10.0.1
Employee Benefit Plans - Components of Pension and Other Postretirement Benefit Income (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Defined Benefit Plan Disclosure [Line Items]        
Net periodic benefit income $ (10) $ (16) $ (29) $ (58)
Pension benefits        
Defined Benefit Plan Disclosure [Line Items]        
Service cost 0 1 1 2
Interest cost 19 22 56 65
Expected return on plan assets (26) (36) (78) (109)
Amortization of prior service credit 0 0 0 0
Actuarial gain     0 0
Net periodic benefit income (7) (13) (21) (42)
Other postretirement benefits        
Defined Benefit Plan Disclosure [Line Items]        
Service cost 0 0 0 0
Interest cost 0 0 1 1
Expected return on plan assets 0 0 0 0
Amortization of prior service credit (3) (3) (9) (9)
Actuarial gain     0 (8)
Net periodic benefit income $ (3) $ (3) $ (8) $ (16)
v3.10.0.1
Earnings Per Share (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended 9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Numerator        
Net income $ 64 $ 56 $ 121 $ 199
Denominator        
Weighted-average shares used to compute basic EPS (shares) 195 204 199 204
Dilutive effect of share-based awards (shares) 1 0 1 0
Weighted-average shares used to compute diluted EPS (shares) 196 204 200 204
Earnings per share        
Basic (usd per share) $ 0.33 $ 0.27 $ 0.61 $ 0.97
Diluted (usd per share) $ 0.33 $ 0.27 $ 0.61 $ 0.97
Stock Compensation Plan        
Earnings per share        
Shares excluded from diluted earnings per share calculation due to anti-dilutive effect (shares)   0   0
v3.10.0.1
Stockholders' Deficit - Schedule of Changes in Stockholders' Deficit (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended 9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Balance as of September 30, 2017     $ (117)  
Net income $ 64 $ 56 121 $ 199
Repurchases of common stock     (224)  
Stock-based compensation plans     7  
Dividends paid, $0.2235 per common share     (45)  
Purchase of remaining ownership interest in subsidiary     (14)  
Accumulated other comprehensive loss, net of tax:        
Unrealized currency translation loss (13) 6 (9) 3
Amortization of pension and other postretirement prior service credits in income (3) $ (2) (7) $ (6)
Balance as of June 30, 2018 $ (288)   $ (288)  
Dividend per share (usd per share)     $ 0.2235  
Repurchase of common stock (shares)     10,000,000  
v3.10.0.1
Related Party Transactions - Narrative (Details) - Tax Matters Agreement - Ashland - USD ($)
$ in Millions
Jun. 30, 2018
Sep. 30, 2017
Related Party Transaction [Line Items]    
Due to (from) related party $ 78 $ 74
Accrued expenses and other liabilities    
Related Party Transaction [Line Items]    
Due to (from) related party $ 3 $ 2
v3.10.0.1
Reportable Segment Information - Narrative (Details)
9 Months Ended
Jun. 30, 2018
country
segment
Segment Reporting Information [Line Items]  
Number of reportable segments | segment 3
International  
Segment Reporting Information [Line Items]  
Number of countries where our products are sold | country 140
v3.10.0.1
Reportable Segment Information - Sales and Operating Income by Reportable Segment (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Segment Reporting Information [Line Items]        
Sales $ 577 $ 534 $ 1,691 $ 1,537
Operating income (loss) 102 87 290 281
Operating Segments        
Segment Reporting Information [Line Items]        
Operating income (loss) 99 100 304 306
Operating Segments | Core North America        
Segment Reporting Information [Line Items]        
Sales 264 258 773 748
Operating income (loss) 41 48 130 156
Operating Segments | Quick Lubes        
Segment Reporting Information [Line Items]        
Sales 167 139 479 394
Operating income (loss) 38 34 111 94
Operating Segments | International        
Segment Reporting Information [Line Items]        
Sales 146 137 439 395
Operating income (loss) 20 18 63 56
Unallocated and Other        
Segment Reporting Information [Line Items]        
Operating income (loss) $ 3 $ (13) $ (14) $ (25)
v3.10.0.1
Guarantor Financial Information - Condensed Consolidating Statements of Comprehensive Income (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Net Income (Loss) Attributable to Parent [Abstract]        
Sales $ 577 $ 534 $ 1,691 $ 1,537
Cost of sales 376 337 1,088 957
Gross profit 201 197 603 580
Selling, general and administrative expenses 110 102 328 294
Legacy and separation-related expenses, net (3) 13 14 25
Equity and other (income) expenses (8) (5) (29) (20)
Operating income 102 87 290 281
Net pension and other postretirement plan non-service income and remeasurement adjustments (10) (17) (30) (60)
Net interest and other financing expenses 15 10 45 28
(Loss) income before income taxes 97 94 275 313
Income tax expense 33 38 154 114
Equity in net income of subsidiaries 0 0 0 0
Net income 64 56 121 199
Comprehensive income 48 60 105 196
Eliminations        
Net Income (Loss) Attributable to Parent [Abstract]        
Sales (16) (15) (41) (42)
Cost of sales (16) (15) (41) (42)
Gross profit 0 0 0 0
Selling, general and administrative expenses 0 0 0 0
Legacy and separation-related expenses, net 0 0 0 0
Equity and other (income) expenses 0 0 0 0
Operating income 0 0 0 0
Net pension and other postretirement plan non-service income and remeasurement adjustments 0 0 0 0
Net interest and other financing expenses 0 0 0 0
(Loss) income before income taxes 0 0 0 0
Income tax expense 0 0 0 0
Equity in net income of subsidiaries 83 72 215 238
Net income (83) (72) (215) (238)
Comprehensive income (56) (86) (191) (243)
Valvoline Inc. (Parent Issuer) | Reportable Legal Entities        
Net Income (Loss) Attributable to Parent [Abstract]        
Sales 0 0 0 0
Cost of sales 0 0 0 0
Gross profit 0 0 0 0
Selling, general and administrative expenses 3 3 10 7
Legacy and separation-related expenses, net (3) (2) 4 (2)
Equity and other (income) expenses 0 0 0 0
Operating income 0 (1) (14) (5)
Net pension and other postretirement plan non-service income and remeasurement adjustments 0 0 0 0
Net interest and other financing expenses 14 8 39 25
(Loss) income before income taxes (14) (9) (53) (30)
Income tax expense (1) (2) 16 (10)
Equity in net income of subsidiaries (77) (63) (190) (219)
Net income 64 56 121 199
Comprehensive income 48 60 105 196
Guarantor Subsidiaries | Reportable Legal Entities        
Net Income (Loss) Attributable to Parent [Abstract]        
Sales 456 418 1,319 1,197
Cost of sales 294 259 832 724
Gross profit 162 159 487 473
Selling, general and administrative expenses 81 77 247 218
Legacy and separation-related expenses, net 0 15 10 27
Equity and other (income) expenses (11) (8) (37) (29)
Operating income 92 75 267 257
Net pension and other postretirement plan non-service income and remeasurement adjustments (10) (17) (30) (60)
Net interest and other financing expenses 1 1 4 2
(Loss) income before income taxes 101 91 293 315
Income tax expense 30 37 128 115
Equity in net income of subsidiaries (6) (9) (25) (19)
Net income 77 63 190 219
Comprehensive income 61 67 174 216
Non-Guarantor Subsidiaries | Reportable Legal Entities        
Net Income (Loss) Attributable to Parent [Abstract]        
Sales 137 131 413 382
Cost of sales 98 93 297 275
Gross profit 39 38 116 107
Selling, general and administrative expenses 26 22 71 69
Legacy and separation-related expenses, net 0 0 0 0
Equity and other (income) expenses 3 3 8 9
Operating income 10 13 37 29
Net pension and other postretirement plan non-service income and remeasurement adjustments 0 0 0 0
Net interest and other financing expenses 0 1 2 1
(Loss) income before income taxes 10 12 35 28
Income tax expense 4 3 10 9
Equity in net income of subsidiaries 0 0 0 0
Net income 6 9 25 19
Comprehensive income $ (5) $ 19 $ 17 $ 27
v3.10.0.1
Guarantor Financial Information - Condensed Consolidating Balance Sheets (Details) - USD ($)
$ in Millions
Jun. 30, 2018
Sep. 30, 2017
Jun. 30, 2017
Sep. 30, 2016
Current assets        
Cash and cash equivalents $ 107 $ 201 $ 132 $ 172
Accounts receivable, net 461 385    
Inventories, net 196 175    
Other current assets 26 29    
Total current assets 790 790    
Noncurrent assets        
Property, plant and equipment, net 399 391    
Goodwill and intangibles, net 398 335    
Equity method investments 33 30    
Investment in subsidiaries 0 0    
Deferred income taxes 147 281    
Other noncurrent assets 82 88    
Total noncurrent assets 1,059 1,125    
Total assets 1,849 1,915    
Current liabilities        
Short-term debt 0 75    
Current portion of long-term debt 26 15    
Trade and other payables 176 192    
Accrued expenses and other liabilities 223 196    
Total current liabilities 425 478    
Noncurrent liabilities        
Long-term debt 1,231 1,034    
Employee benefit obligations 303 342    
Other noncurrent liabilities 178 178    
Total noncurrent liabilities 1,712 1,554    
Commitments and contingencies    
Stockholders’ (deficit) equity (288) (117)    
Total liabilities and stockholders’ deficit 1,849 1,915    
Eliminations        
Current assets        
Cash and cash equivalents 0 0 0 0
Accounts receivable, net (155) (61)    
Inventories, net 0 0    
Other current assets 0 0    
Total current assets (155) (61)    
Noncurrent assets        
Property, plant and equipment, net 0 0    
Goodwill and intangibles, net 0 0    
Equity method investments 0 0    
Investment in subsidiaries (1,239) (1,053)    
Deferred income taxes 0 0    
Other noncurrent assets (49) (312)    
Total noncurrent assets (1,288) (1,365)    
Total assets (1,443) (1,426)    
Current liabilities        
Short-term debt   0    
Current portion of long-term debt 0 0    
Trade and other payables (155) (61)    
Accrued expenses and other liabilities 0 0    
Total current liabilities (155) (61)    
Noncurrent liabilities        
Long-term debt 0 0    
Employee benefit obligations 0 0    
Other noncurrent liabilities (49) (312)    
Total noncurrent liabilities (49) (312)    
Commitments and contingencies    
Stockholders’ (deficit) equity (1,239) (1,053)    
Total liabilities and stockholders’ deficit (1,443) (1,426)    
Valvoline Inc. (Parent Issuer) | Reportable Legal Entities        
Current assets        
Cash and cash equivalents 0 0 0 0
Accounts receivable, net 1 0    
Inventories, net 0 0    
Other current assets 0 0    
Total current assets 1 0    
Noncurrent assets        
Property, plant and equipment, net 0 0    
Goodwill and intangibles, net 0 0    
Equity method investments 0 0    
Investment in subsidiaries 762 606    
Deferred income taxes 60 145    
Other noncurrent assets 51 314    
Total noncurrent assets 873 1,065    
Total assets 874 1,065    
Current liabilities        
Short-term debt   0    
Current portion of long-term debt 26 15    
Trade and other payables 0 2    
Accrued expenses and other liabilities 50 103    
Total current liabilities 76 120    
Noncurrent liabilities        
Long-term debt 1,055 1,032    
Employee benefit obligations 0 0    
Other noncurrent liabilities 31 30    
Total noncurrent liabilities 1,086 1,062    
Commitments and contingencies    
Stockholders’ (deficit) equity (288) (117)    
Total liabilities and stockholders’ deficit 874 1,065    
Guarantor Subsidiaries | Reportable Legal Entities        
Current assets        
Cash and cash equivalents 7 99 36 93
Accounts receivable, net 98 57    
Inventories, net 112 94    
Other current assets 23 25    
Total current assets 240 275    
Noncurrent assets        
Property, plant and equipment, net 363 353    
Goodwill and intangibles, net 397 333    
Equity method investments 33 30    
Investment in subsidiaries 477 447    
Deferred income taxes 73 122    
Other noncurrent assets 75 80    
Total noncurrent assets 1,418 1,365    
Total assets 1,658 1,640    
Current liabilities        
Short-term debt   0    
Current portion of long-term debt 0 0    
Trade and other payables 280 198    
Accrued expenses and other liabilities 135 60    
Total current liabilities 415 258    
Noncurrent liabilities        
Long-term debt 2 2    
Employee benefit obligations 285 321    
Other noncurrent liabilities 194 453    
Total noncurrent liabilities 481 776    
Commitments and contingencies    
Stockholders’ (deficit) equity 762 606    
Total liabilities and stockholders’ deficit 1,658 1,640    
Non-Guarantor Subsidiaries | Reportable Legal Entities        
Current assets        
Cash and cash equivalents 100 102 $ 96 $ 79
Accounts receivable, net 517 389    
Inventories, net 84 81    
Other current assets 3 4    
Total current assets 704 576    
Noncurrent assets        
Property, plant and equipment, net 36 38    
Goodwill and intangibles, net 1 2    
Equity method investments 0 0    
Investment in subsidiaries 0 0    
Deferred income taxes 14 14    
Other noncurrent assets 5 6    
Total noncurrent assets 56 60    
Total assets 760 636    
Current liabilities        
Short-term debt   75    
Current portion of long-term debt 0 0    
Trade and other payables 51 53    
Accrued expenses and other liabilities 38 33    
Total current liabilities 89 161    
Noncurrent liabilities        
Long-term debt 174 0    
Employee benefit obligations 18 21    
Other noncurrent liabilities 2 7    
Total noncurrent liabilities 194 28    
Commitments and contingencies    
Stockholders’ (deficit) equity 477 447    
Total liabilities and stockholders’ deficit $ 760 $ 636    
v3.10.0.1
Guarantor Financial Information - Condensed Consolidating Statements of Cash Flows (Details) - USD ($)
$ in Millions
9 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flow (used in) provided by operating activities $ 181 $ 157
Cash flows from investing activities    
Additions to property, plant and equipment (51) (43)
Acquisitions, net of cash required (71) (66)
Proceeds from sale of operations 5 0
Return of advance from subsidiary 0  
Advance from subsidiary   0
Total cash used in investing activities (117) (109)
Cash flows from financing activities    
Net transfers from Ashland 0 5
Proceeds from borrowings, net of issuance costs 170 75
Repayments on borrowings (39) (87)
Repurchases of common stock (220) (50)
Purchase of additional ownership in subsidiary (15)  
Cash dividends paid (45) (30)
Other financing activities (6) 0
Other intercompany activity, net 0 0
Total cash used in financing activities (155) (87)
Effect of currency exchange rate changes on cash and cash equivalents (3) (1)
Decrease in cash and cash equivalents (94) (40)
Cash and cash equivalents - beginning of period 201 172
Cash and cash equivalents - end of period 107 132
Reportable Legal Entities | Valvoline Inc. (Parent Issuer)    
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flow (used in) provided by operating activities (28) 101
Cash flows from investing activities    
Additions to property, plant and equipment 0 0
Acquisitions, net of cash required 0 0
Proceeds from sale of operations 0  
Return of advance from subsidiary 263  
Advance from subsidiary   66
Total cash used in investing activities 263 66
Cash flows from financing activities    
Net transfers from Ashland   5
Proceeds from borrowings, net of issuance costs 70 0
Repayments on borrowings (38) (87)
Repurchases of common stock (220) (50)
Purchase of additional ownership in subsidiary 0  
Cash dividends paid (45) (30)
Other financing activities (2)  
Other intercompany activity, net 0 (5)
Total cash used in financing activities (235) (167)
Effect of currency exchange rate changes on cash and cash equivalents 0 0
Decrease in cash and cash equivalents 0 0
Cash and cash equivalents - beginning of period 0 0
Cash and cash equivalents - end of period 0 0
Reportable Legal Entities | Guarantor Subsidiaries    
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flow (used in) provided by operating activities 287 112
Cash flows from investing activities    
Additions to property, plant and equipment (48) (42)
Acquisitions, net of cash required (71) (66)
Proceeds from sale of operations 5  
Return of advance from subsidiary 0  
Advance from subsidiary   0
Total cash used in investing activities (114) (108)
Cash flows from financing activities    
Net transfers from Ashland   0
Proceeds from borrowings, net of issuance costs 0 0
Repayments on borrowings 0 0
Repurchases of common stock 0 0
Purchase of additional ownership in subsidiary 0  
Cash dividends paid 0 0
Other financing activities (2)  
Other intercompany activity, net (263) (61)
Total cash used in financing activities (265) (61)
Effect of currency exchange rate changes on cash and cash equivalents 0 0
Decrease in cash and cash equivalents (92) (57)
Cash and cash equivalents - beginning of period 99 93
Cash and cash equivalents - end of period 7 36
Reportable Legal Entities | Non-Guarantor Subsidiaries    
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flow (used in) provided by operating activities (78) (56)
Cash flows from investing activities    
Additions to property, plant and equipment (3) (1)
Acquisitions, net of cash required 0 0
Proceeds from sale of operations 0  
Return of advance from subsidiary 0  
Advance from subsidiary   0
Total cash used in investing activities (3) (1)
Cash flows from financing activities    
Net transfers from Ashland   0
Proceeds from borrowings, net of issuance costs 100 75
Repayments on borrowings (1) 0
Repurchases of common stock 0 0
Purchase of additional ownership in subsidiary (15)  
Cash dividends paid 0 0
Other financing activities (2)  
Other intercompany activity, net 0 0
Total cash used in financing activities 82 75
Effect of currency exchange rate changes on cash and cash equivalents (3) (1)
Decrease in cash and cash equivalents (2) 17
Cash and cash equivalents - beginning of period 102 79
Cash and cash equivalents - end of period 100 96
Eliminations    
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flow (used in) provided by operating activities 0 0
Cash flows from investing activities    
Additions to property, plant and equipment 0 0
Acquisitions, net of cash required 0 0
Proceeds from sale of operations 0  
Return of advance from subsidiary (263)  
Advance from subsidiary   (66)
Total cash used in investing activities (263) (66)
Cash flows from financing activities    
Net transfers from Ashland   0
Proceeds from borrowings, net of issuance costs 0 0
Repayments on borrowings 0 0
Repurchases of common stock 0 0
Purchase of additional ownership in subsidiary 0  
Cash dividends paid 0 0
Other financing activities 0  
Other intercompany activity, net 263 66
Total cash used in financing activities 263 66
Effect of currency exchange rate changes on cash and cash equivalents 0 0
Decrease in cash and cash equivalents 0 0
Cash and cash equivalents - beginning of period 0 0
Cash and cash equivalents - end of period $ 0 $ 0
v3.10.0.1
Subsequent Events (Details)
1 Months Ended 9 Months Ended
Jul. 24, 2018
$ / shares
Jul. 13, 2018
USD ($)
service_center_store
company-owned_and_franchised_locations
Jul. 31, 2018
USD ($)
shares
Jun. 30, 2018
USD ($)
service_center_store
$ / shares
shares
Jun. 30, 2017
USD ($)
service_center_store
Aug. 02, 2018
USD ($)
Jan. 31, 2018
USD ($)
Subsequent Event [Line Items]              
Number of service center stores acquired | service_center_store       63 42    
Consideration for acquisition       $ 71,000,000 $ 70,000,000    
Dividend per share (usd per share) | $ / shares       $ 0.2235      
Repurchase of common stock (shares) | shares       10,000,000      
Repurchase of common stock       $ 224,000,000      
Authorized shares for repurchase (up to)             $ 300,000,000
Subsequent Event              
Subsequent Event [Line Items]              
Dividend per share (usd per share) | $ / shares $ 0.0745            
Repurchase of common stock (shares) | shares     2,000,000        
Repurchase of common stock     $ 42,000,000        
Remaining authorized repurchase amount     134,000,000        
Great Canadian Oil Change | Subsequent Event              
Subsequent Event [Line Items]              
Number of service center stores acquired | service_center_store   73          
Consideration for acquisition   $ 53,000,000          
Total number of company-owned and franchised locations after acquisition (more than) | company-owned_and_franchised_locations   1,200          
Letter of Credit | Subsequent Event              
Subsequent Event [Line Items]              
Letters of credit outstanding           $ 11,000,000  
Line of Credit | Revolver | Subsequent Event              
Subsequent Event [Line Items]              
Borrowings under the Revolver     $ 86,000,000        
Remaining borrowing capacity under the Revolover           $ 309,000,000