VALVOLINE INC, 10-Q filed on 2/4/2020
Quarterly Report
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Cover Page - shares
3 Months Ended
Dec. 31, 2019
Jan. 31, 2020
Cover page.    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Dec. 31, 2019  
Document Transition Report false  
Entity File Number 001-37884  
Entity Registrant Name VALVOLINE INC.  
Entity Incorporation, State or Country Code KY  
Entity Tax Identification Number 30-0939371  
Entity Address, Address Line One 100 Valvoline Way  
Entity Address, City or Town Lexington  
Entity Address, State or Province KY  
Entity Address, Postal Zip Code 40509  
City Area Code 859  
Local Phone Number 357-7777  
Title of 12(b) Security Common stock, par value $0.01 per share  
Trading Symbol VVV  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Smaller Reporting Company false  
Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   188,448,171
Entity Central Index Key 0001674910  
Amendment Flag false  
Current Fiscal Year End Date --09-30  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
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Condensed Consolidated Statements of Comprehensive Income - USD ($)
shares in Millions, $ in Millions
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Net Income (Loss) Attributable to Parent [Abstract]    
Sales $ 607 $ 557
Cost of sales 396 374
Gross profit 211 183
Selling, general and administrative expenses 117 105
Legacy and separation related expenses,income, net (1) 0
Equity and other income, net (9) (9)
Operating income 104 87
Net pension and other postretirement plan income (9) (2)
Net interest and other financing expenses 16 17
Income before income taxes 97 72
Income tax expense 24 19
Net income $ 73 $ 53
NET INCOME PER SHARE    
Basic (usd per share) $ 0.39 $ 0.28
Diluted (usd per share) $ 0.39 $ 0.28
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING    
Basic (shares) 189 188
Diluted (shares) 189 189
COMPREHENSIVE INCOME    
Net income $ 73 $ 53
Other comprehensive income (loss), net of tax    
Currency translation adjustments 8 (4)
Amortization of pension and other postretirement plan prior service credit (2) (2)
Other comprehensive income (loss) 6 (6)
Comprehensive income $ 79 $ 47
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Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Dec. 31, 2019
Sep. 30, 2019
Assets, Current [Abstract]    
Cash and cash equivalents $ 162 $ 159
Accounts receivable, net 395 401
Inventories, net 194 194
Prepaid expenses and other current assets 43 43
Total current assets 794 797
Noncurrent assets    
Property, plant and equipment, net 479 498
Operating lease assets 253 0
Goodwill and intangibles, net 507 504
Equity method investments 39 34
Deferred income taxes 116 123
Other noncurrent assets 109 108
Total noncurrent assets 1,503 1,267
Total assets 2,297 2,064
Current liabilities    
Current portion of long-term debt 22 15
Trade and other payables 153 171
Accrued expenses and other liabilities 246 237
Total current liabilities 421 423
Noncurrent liabilities    
Long-term debt 1,320 1,327
Employee benefit obligations 376 387
Operating lease liabilities, noncurrent 224 0
Other noncurrent liabilities 152 185
Total noncurrent liabilities 2,072 1,899
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; 188 shares issued and outstanding at December 31, 2019 and September 30, 2019 2 2
Paid-in capital 16 13
Retained deficit (231) (284)
Accumulated other comprehensive income 17 11
Total stockholders’ deficit (196) (258)
Total liabilities and stockholders’ deficit $ 2,297 $ 2,064
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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2019
Sep. 30, 2019
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) 188,000,000 188,000,000
Common stock outstanding (shares) 188,000,000 188,000,000
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Condensed Consolidated Statements of Stockholders' Deficit - USD ($)
shares in Millions, $ in Millions
Total
Common stock
Paid-in capital
Retained deficit
Accumulated other comprehensive income
Common stock outstanding, at beginning of period (shares) at Sep. 30, 2018   188      
Balance at beginning of period at Sep. 30, 2018 $ (358) $ 2 $ 7 $ (399) $ 32
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) 53     53  
Dividends paid (20)     (20)  
Stock-based compensation 1   1    
Currency translation adjustments (4)       (4)
Amortization of pension and other postretirement prior service credits in income, net of tax (2)       (2)
Common stock outstanding, at end of period (shares) at Dec. 31, 2018   188      
Balance at end of period at Dec. 31, 2018 $ (343) $ 2 8 (379) 26
Common stock outstanding, at beginning of period (shares) at Sep. 30, 2019 188 188      
Balance at beginning of period at Sep. 30, 2019 $ (258) $ 2 13 (284) 11
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss) 73     73  
Dividends paid (21)     (21)  
Stock-based compensation 3   3    
Currency translation adjustments 8       8
Amortization of pension and other postretirement prior service credits in income, net of tax $ (2)       (2)
Common stock outstanding, at end of period (shares) at Dec. 31, 2019 188 188      
Balance at end of period at Dec. 31, 2019 $ (196) $ 2 $ 16 (231) $ 17
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Cumulative effect of adoption of new leasing standard, net of tax | ASU 2014-09       $ 1  
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Condensed Consolidated Statements of Stockholders' Deficit (Parenthetical) - $ / shares
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Statement of Stockholders' Equity [Abstract]    
Dividends paid per common share (usd per share) $ 0.113 $ 0.106
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Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Cash flows from operating activities    
Net income $ 73 $ 53
Adjustments to reconcile net income to cash flows from operating activities    
Depreciation and amortization 16 14
Equity income from unconsolidated affiliates, net of distributions (2) 0
Pension contributions (4) (2)
Stock-based compensation expense 4 3
Other, net 2 0
Change in assets and liabilities    
Accounts receivable 7 43
Inventories 4 (13)
Payables and accrued liabilities (47) (19)
Other assets and liabilities 6 6
Total cash provided by operating activities 59 85
Cash flows from investing activities    
Additions to property, plant and equipment (28) (27)
Acquisitions, net of cash acquired (6) (30)
Other investing activities, net (1) 1
Total cash used in investing activities (35) (56)
Cash flows from financing activities    
Proceeds from borrowings 0 100
Repayments on borrowings 0 (101)
Cash dividends paid (21) (20)
Other financing activities (2) (4)
Total cash used in financing activities (23) (25)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash 3 (1)
Increase (decrease) in cash, cash equivalents, and restricted cash 4 3
Cash, cash equivalents, and restricted cash - beginning of period 159 96
Cash, cash equivalents, and restricted cash - end of period $ 163 $ 99
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Basis of Presentation and Significant Accounting Policies
3 Months Ended
Dec. 31, 2019
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 of America (“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, 2019.

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 interim periods are not necessarily indicative of those to be expected for the entire year. Certain prior period amounts have been reclassified to conform to the current presentation.

Recent accounting pronouncements

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 February 2016, the Financial Accounting Standards Board ("FASB") issued accounting guidance, which outlined a comprehensive lease accounting model that requires lessees to recognize a right-of-use asset and a corresponding lease liability on the balance sheet and superseded previous lease accounting guidance. Valvoline adopted this new lease accounting guidance on October 1, 2019 using the optional transition approach. Under this approach, the new lease accounting guidance has been applied prospectively from the date of adoption, while prior period financial statements continue to be reported in accordance with the previous guidance. Lease expense is recognized similar to prior accounting guidance with operating leases resulting in straight-line expense and finance leases resulting in accelerated expense recognition similar to the prior accounting for capital leases. The accounting for lessor arrangements is not significantly changed by the new guidance.

Valvoline elected certain practical expedients permitted by the new guidance, including the package of practical expedients that allows for previous accounting conclusions regarding lease identification and classification to be carried forward for leases which commenced prior to adoption, as well as the practical expedient to not separate lease and non-lease components and account for them as a single lease component. The Company did not elect the hindsight or short-term lease practical expedients.

As a result of adoption, the Company recognized operating lease assets and liabilities inclusive of a reclassified build-to-suit arrangement, derecognized assets and liabilities related to the build-to-suit arrangement, and carried forward existing capital leases as finance lease assets and liabilities. This resulted in a material impact on the Condensed Consolidated Balance Sheet and the recognition of total incremental lease assets, inclusive of prepaid lease balances and deferred rent liabilities, of $219 million and incremental lease liabilities of $214 million, with an immaterial cumulative effect adjustment to reduce Retained deficit as a result of the build-to-suit lease transition requirements. The impact of adoption was not material to the Condensed Consolidated Statements of Comprehensive Income, Cash Flows, or Stockholders’ Deficit, and did not impact the Company's compliance with any of its existing debt covenants. Refer to Note 2 for additional information regarding Valvoline's adoption of this new guidance.
Issued but not yet adopted

In June 2016, the FASB issued updated guidance that introduces a forward-looking approach based on expected losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments including trade and other receivables. The new guidance will require entities to incorporate historical, current, and forecasted information into their estimates of expected credit losses. This guidance also includes expanded disclosure requirements and will become effective for Valvoline on October 1, 2020. The Company is evaluating the effect of adopting this new accounting guidance, including changes to its related processes, and does not currently expect adoption will have a material impact on its Condensed Consolidated Balance Sheet or Condensed Consolidated Statement of Comprehensive Income.

The FASB issued other accounting guidance during the period that is not currently applicable or expected to have a material impact on Valvoline’s condensed consolidated financial statements, and therefore, is not described above.
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Leasing
3 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Leasing LEASING
As described in Note 1, Valvoline adopted new lease accounting guidance effective October 1, 2019 and changed its policy for lease accounting prospectively for lease agreements entered into or reassessed from the date of adoption as described herein.

Lessee arrangements

Certain of the properties Valvoline utilizes, including quick-lube service center stores, offices, blending and warehouse facilities, in addition to certain equipment, are leased. Valvoline determines if an arrangement contains a lease at inception primarily based on whether or not the Company has the right to control the asset during the contract period. For all agreements where it is determined that a lease exists, including those with an initial term of 12 months or less, the related lease assets and liabilities are recognized on the Condensed Consolidated Balance Sheet as either operating or finance leases at the commencement date. The lease liability is measured at the present value of future lease payments over the lease term, and the right-of-use asset is measured at the lease liability amount, adjusted for prepaid lease payments, lease incentives and the lessee’s initial direct costs (e.g., commissions). The lease term includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

Fixed payments, including variable payments based on a rate or index, are included in the determination of the lease liability, while other variable payments are recognized in the the Condensed Consolidated Statements of Comprehensive Income in the period in which the obligation for those payments is incurred. Many leases contain lease components requiring rental payments and other components that require payment for taxes, insurance, operating expenses and maintenance. In instances where these other components are fixed, they are included in the measurement of the lease liability due to Valvoline's election to combine lease and non-lease components. Otherwise, these other components are expensed as incurred and comprise the majority of Valvoline's variable lease costs.

As most leases do not provide the rate implicit in the lease, the Company estimates its incremental borrowing rate to best approximate the rate of interest that Valvoline would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Valvoline applies the incremental borrowing rate to groups of leases with similar lease terms in determining the present value of future payments. In determining the incremental borrowing rate, the Company considers information available at commencement date, including lease term, interest rate yields for specific interest rate environments and the Company's credit spread.

The following table presents the Company's lease balances:
(In millions)Location in Condensed Consolidated Balance SheetDecember 31, 2019
Assets
   Operating lease assetsOperating lease assets$253  
   Finance lease assets Property, plant and equipment, net29  
   Amortization of finance lease assetsProperty, plant and equipment, net(7) 
Total leased assets$275  
Liabilities
Current:
   Operating lease liabilitiesAccrued expenses and other liabilities$30  
   Finance lease liabilitiesAccrued expenses and other liabilities 
Noncurrent:
   Operating lease liabilitiesOperating lease liabilities224  
   Finance lease liabilitiesOther noncurrent liabilities24  
Total lease liabilities$279  

The following table presents the components of total lease costs:

(In millions)Location in Condensed Consolidated Statement of Comprehensive IncomeThree months ended
December 31, 2019
Operating lease cost
Cost of sales and Selling, general and administrative expenses (a)
$11  
Finance lease costs
Amortization of lease assets
Cost of sales (a)
—  
Interest on lease liabilitiesNet interest and other financing expenses 
Variable lease cost
Cost of sales and Selling, general and administrative expenses (a)
 
Sublease incomeEquity and other income, net(1) 
Total lease cost$12  
(a) Supply chain and retail-related amounts are included in Cost of sales.
Other information related to the Company's leases follows:

(In millions)Three months ended
December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (a)
$10  
Operating cash flows from finance leases$ 
Financing cash flow from finance leases$—  
Lease assets obtained in exchange for lease obligations:
Operating leases$15  
Finance leases$—  
(a) Included within the change in Other assets and liabilities within the Condensed Consolidated Statement of Cash Flows offset by noncash operating lease asset amortization and liability accretion.

The following table reconciles the undiscounted cash flows for the next five fiscal years ended September 30 and thereafter to the operating and finance lease liabilities recorded on the Condensed Consolidated Balance Sheet as of December 31, 2019:

(In millions) Operating leasesFinance leases
Remainder of 2020$30  $ 
202137   
202235   
202331   
202428   
Thereafter154  26  
Total future lease payments315  44  
Imputed interest61  19  
Present value of lease liabilities$254  $25  

As of December 31, 2019, Valvoline has additional leases primarily related to its quick lube service center stores that have not yet commenced with approximately $45 million in undiscounted future lease payments that are not included in the table above. These leases are expected to commence in fiscal 2020 and generally have lease terms of 15 years.

In accordance with the previous lease accounting guidance, Valvoline's lease arrangements were previously classified as either capital, operating, or financing obligations. Previously classified capital leases are now considered finance leases under the new lease accounting guidance, while previous financing obligations have been derecognized and reclassified as operating leases. The classification of operating leases remains substantially unchanged under the new lease accounting guidance.

The future minimum lease payments by fiscal year as determined prior to the adoption of the new lease accounting guidance under the previously designated capital, financing and operating leases as of the fiscal year ended September 30, 2019, were as follows:
(In millions)Operating leasesCapital leases and financing obligations
2020$36  $ 
202132   
202229   
202327   
202423   
Thereafter120  50  
Total future lease payments (a)
$267  84  
Imputed interest29  
Present value of lease liabilities$55  
(a) Future lease payments do not include fixed payments for executory costs, such as taxes, insurance, maintenance and operating expenses.


The following table presents the weighted average remaining lease term and interest rate as of December 31, 2019:

Weighted average remaining lease term (in years):
Operating leases10.0
Finance leases10.7
Weighted average discount rate:
Operating leases4.13 %
Finance leases11.57 %

Lessor arrangements
Valvoline is the lessor in arrangements to sublease and lease certain properties and equipment. Activity associated with these leases is not material.
Leasing LEASING
As described in Note 1, Valvoline adopted new lease accounting guidance effective October 1, 2019 and changed its policy for lease accounting prospectively for lease agreements entered into or reassessed from the date of adoption as described herein.

Lessee arrangements

Certain of the properties Valvoline utilizes, including quick-lube service center stores, offices, blending and warehouse facilities, in addition to certain equipment, are leased. Valvoline determines if an arrangement contains a lease at inception primarily based on whether or not the Company has the right to control the asset during the contract period. For all agreements where it is determined that a lease exists, including those with an initial term of 12 months or less, the related lease assets and liabilities are recognized on the Condensed Consolidated Balance Sheet as either operating or finance leases at the commencement date. The lease liability is measured at the present value of future lease payments over the lease term, and the right-of-use asset is measured at the lease liability amount, adjusted for prepaid lease payments, lease incentives and the lessee’s initial direct costs (e.g., commissions). The lease term includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

Fixed payments, including variable payments based on a rate or index, are included in the determination of the lease liability, while other variable payments are recognized in the the Condensed Consolidated Statements of Comprehensive Income in the period in which the obligation for those payments is incurred. Many leases contain lease components requiring rental payments and other components that require payment for taxes, insurance, operating expenses and maintenance. In instances where these other components are fixed, they are included in the measurement of the lease liability due to Valvoline's election to combine lease and non-lease components. Otherwise, these other components are expensed as incurred and comprise the majority of Valvoline's variable lease costs.

As most leases do not provide the rate implicit in the lease, the Company estimates its incremental borrowing rate to best approximate the rate of interest that Valvoline would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Valvoline applies the incremental borrowing rate to groups of leases with similar lease terms in determining the present value of future payments. In determining the incremental borrowing rate, the Company considers information available at commencement date, including lease term, interest rate yields for specific interest rate environments and the Company's credit spread.

The following table presents the Company's lease balances:
(In millions)Location in Condensed Consolidated Balance SheetDecember 31, 2019
Assets
   Operating lease assetsOperating lease assets$253  
   Finance lease assets Property, plant and equipment, net29  
   Amortization of finance lease assetsProperty, plant and equipment, net(7) 
Total leased assets$275  
Liabilities
Current:
   Operating lease liabilitiesAccrued expenses and other liabilities$30  
   Finance lease liabilitiesAccrued expenses and other liabilities 
Noncurrent:
   Operating lease liabilitiesOperating lease liabilities224  
   Finance lease liabilitiesOther noncurrent liabilities24  
Total lease liabilities$279  

The following table presents the components of total lease costs:

(In millions)Location in Condensed Consolidated Statement of Comprehensive IncomeThree months ended
December 31, 2019
Operating lease cost
Cost of sales and Selling, general and administrative expenses (a)
$11  
Finance lease costs
Amortization of lease assets
Cost of sales (a)
—  
Interest on lease liabilitiesNet interest and other financing expenses 
Variable lease cost
Cost of sales and Selling, general and administrative expenses (a)
 
Sublease incomeEquity and other income, net(1) 
Total lease cost$12  
(a) Supply chain and retail-related amounts are included in Cost of sales.
Other information related to the Company's leases follows:

(In millions)Three months ended
December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (a)
$10  
Operating cash flows from finance leases$ 
Financing cash flow from finance leases$—  
Lease assets obtained in exchange for lease obligations:
Operating leases$15  
Finance leases$—  
(a) Included within the change in Other assets and liabilities within the Condensed Consolidated Statement of Cash Flows offset by noncash operating lease asset amortization and liability accretion.

The following table reconciles the undiscounted cash flows for the next five fiscal years ended September 30 and thereafter to the operating and finance lease liabilities recorded on the Condensed Consolidated Balance Sheet as of December 31, 2019:

(In millions) Operating leasesFinance leases
Remainder of 2020$30  $ 
202137   
202235   
202331   
202428   
Thereafter154  26  
Total future lease payments315  44  
Imputed interest61  19  
Present value of lease liabilities$254  $25  

As of December 31, 2019, Valvoline has additional leases primarily related to its quick lube service center stores that have not yet commenced with approximately $45 million in undiscounted future lease payments that are not included in the table above. These leases are expected to commence in fiscal 2020 and generally have lease terms of 15 years.

In accordance with the previous lease accounting guidance, Valvoline's lease arrangements were previously classified as either capital, operating, or financing obligations. Previously classified capital leases are now considered finance leases under the new lease accounting guidance, while previous financing obligations have been derecognized and reclassified as operating leases. The classification of operating leases remains substantially unchanged under the new lease accounting guidance.

The future minimum lease payments by fiscal year as determined prior to the adoption of the new lease accounting guidance under the previously designated capital, financing and operating leases as of the fiscal year ended September 30, 2019, were as follows:
(In millions)Operating leasesCapital leases and financing obligations
2020$36  $ 
202132   
202229   
202327   
202423   
Thereafter120  50  
Total future lease payments (a)
$267  84  
Imputed interest29  
Present value of lease liabilities$55  
(a) Future lease payments do not include fixed payments for executory costs, such as taxes, insurance, maintenance and operating expenses.


The following table presents the weighted average remaining lease term and interest rate as of December 31, 2019:

Weighted average remaining lease term (in years):
Operating leases10.0
Finance leases10.7
Weighted average discount rate:
Operating leases4.13 %
Finance leases11.57 %

Lessor arrangements
Valvoline is the lessor in arrangements to sublease and lease certain properties and equipment. Activity associated with these leases is not material.
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Fair Value Measurements
3 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements FAIR VALUE MEASUREMENTS
The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair value hierarchy:

(In millions)Fair Value HierarchyDecember 31 2019September 30
2019
Cash and cash equivalents
Money market fundsLevel 1  $ $—  
Time depositsLevel 2  62  59  
Prepaid expenses and other current assets
Currency derivatives (a)
Level 2   —  
Other noncurrent assets
Non-qualified trust fundsLevel 1  20  20  
Total assets at fair value$84  $79  
Accrued expenses and other liabilities
Currency derivatives (a)
Level 2  $ $—  
Total liabilities at fair value$ $—  
(a) The Company had outstanding contracts with notional values of $128 million and $111 million as of December 31, 2019 and September 30, 2019, respectively.

There were no material gains or losses recognized in earnings during the three months ended December 31, 2019 or 2018 related to these assets and liabilities.

Long-term debt

The fair values of the Company’s outstanding fixed rate 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.
December 31, 2019September 30, 2019
(In millions)Fair valueCarrying valueUnamortized discount and
issuance costs
Fair valueCarrying valueUnamortized
discount and
issuance costs
2024 Notes$389  $371  $(4) $390  $371  $(4) 
2025 Notes416  396  (4) 407  395  (5) 
Total$805  $767  $(8) $797  $766  $(9) 

Refer to Note 7 for more information on Valvoline’s other debt instruments that have variable interest rates, and accordingly, their carrying amounts approximate fair value.
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Acquisitions and Divestitures
3 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Acquisitions and Divestitures ACQUISITIONS AND DIVESTITURES
Quick Lubes store acquisitions

During the three months ended December 31, 2019, the Company acquired nine service center stores in single and multi-store transactions, including two former franchise service center stores, for a total of $6 million. During the three months ended December 31, 2018, the Company acquired 35 service center stores for a total of $30 million.

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 three months ended December 31:
(In millions)20192018
Property, plant and equipment$—  $ 
Goodwill 21  
Intangible assets (a)
Reacquired franchise rights  
Customer relationships—   
Trademarks and trade names—   
Net assets acquired$ $30  
(a) Intangible assets acquired during the three months ended December 31, 2019 have a weighted average amortization period of 6 years.

The fair values above are preliminary for up to one year from the date of acquisition as they are subject to measurement period adjustments as new information is obtained about facts and circumstances that existed as of the acquisition date. The Company does not currently expect any material changes to the preliminary purchase price allocations for acquisitions completed during the last twelve months.

The incremental results of operations of the acquired stores, which were not material to the Company’s consolidated results, have been included in the condensed consolidated financial statements from the date of each acquisition, and accordingly, pro forma disclosure of financial information has not been presented.

Dispositions
During the first fiscal quarter of 2020, the Company sold six service center stores to a franchisee within the Quick Lubes reportable segment. Valvoline received proceeds of approximately $3 million, with no material gain or loss recognized.
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Goodwill and Other Intangibles
3 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangibles INTANGIBLE ASSETS
The following table summarizes the changes in the carrying amount of goodwill by reportable segment and in total during the three months ended December 31, 2019:
(In millions)Quick LubesCore North AmericaInternationalTotal
Balance at September 30, 2019$301  $89  $40  $430  
Acquisitions (a)
 —  —   
Currency translation —  —   
Dispositions (a)
(3) —  —  (3) 
Balance at December 31, 2019$304  $89  $40  $433  
(a) Refer to Note 4 for details regarding acquisitions and dispositions completed during the three months ended December 31, 2019.
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Restructuring Activities
3 Months Ended
Dec. 31, 2019
Restructuring and Related Activities [Abstract]  
Restructuring Activities RESTRUCTURING ACTIVITIES
During the second fiscal quarter of 2019, Valvoline outlined a broad-based restructuring and cost-savings program to reduce costs, simplify processes and focus the organization’s structure and resources on key growth initiatives. Part of this program includes employee separation actions, which were generally completed during 2019, with the associated termination benefits anticipated to be substantially paid by the end of 2020.

Since program inception, Valvoline has recognized cumulative costs of $13 million, including $1 million during the three months ended December 31, 2019. These costs are for employee termination benefits, which include severance and other benefits provided to employees pursuant to the restructuring program. These expenses were recognized in Selling, general and administrative expenses within the Condensed Consolidated Statement of Comprehensive Income. The Company does not expect to incur material remaining costs from these actions.

The results by segment, as disclosed in Note 12, do not include these restructuring expenses, which is consistent with the manner by which management assesses the performance and evaluates the results of each segment. Accordingly, these expenses are included in Unallocated and other.

The following table presents the expenses recognized related to employee termination benefits during the three months ended December 31, 2019 and the estimated remaining liability, which is included in the Condensed Consolidated Balance Sheet within Accrued expenses and other liabilities:

(In millions)Employee Termination Benefits
Balance at September 30, 2019$ 
Expenses recognized during the period 
Payments (2) 
Balance at December 31, 2019$ 
v3.19.3.a.u2
Debt
3 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Debt DEBT
The following table summarizes Valvoline’s total debt:

(In millions)December 31 2019September 30 2019
2025 Notes$400  $400  
2024 Notes375  375  
Term Loan575  575  
Other (a)
(8) (8) 
Total debt$1,342  $1,342  
Current portion of long-term debt22  15  
Long-term debt$1,320  $1,327  
 
(a) As of December 31, 2019 and September 30, 2019, other included debt issuance costs and discounts of $9 million and debt primarily acquired through acquisitions of $1 million.

Senior Notes

The Company’s outstanding fixed rate senior notes consist of 4.375% senior unsecured notes due 2025 with an aggregate principal amount of $400 million issued in August 2017 (the “2025 Notes”) and 5.500% senior unsecured notes due 2024 with an aggregate principal amount of $375 million issued in July 2016 (the “2024 Notes” and together with the 2025 Notes, the “Senior Notes”).

Senior Credit Agreement

As of December 31 and September 30, 2019, the term loan facility (“Term Loan”) under the senior credit agreement (“Senior Credit Agreement”) had an outstanding principal balance of $575 million.

As of December 31 and September 30, 2019, there were no amounts outstanding under the $475 million revolving credit facility (“Revolver”) under the Senior Credit Agreement. There was no net borrowing activity under the Revolver during the three months ended December 31, 2019. As of December 31, 2019, the total borrowing capacity remaining under the Revolver was $466 million due to a reduction of $9 million for letters of credit outstanding.

As of December 31, 2019, Valvoline was in compliance with all covenants under the Senior Credit Agreement.

Trade Receivables Facility

As of December 31 and September 30, 2019, there were no amounts outstanding under the $175 million trade receivables securitization facility (the “Trade Receivables Facility”). During the three months ended December 31, 2019, Valvoline had no net borrowing activity under the Trade Receivables Facility.

Based on the availability of eligible receivables, the total borrowing capacity of the Trade Receivables Facility as of December 31, 2019 was $130 million. The financing subsidiary owned $220 million and $259 million of outstanding accounts receivable as of December 31 and September 30, 2019, respectively, which are included in Accounts receivable, net in the Company’s Condensed Consolidated Balance Sheets.
v3.19.3.a.u2
Income Taxes
3 Months Ended
Dec. 31, 2019
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 discrete items related specifically to interim periods. The following summarizes income tax expense and the effective tax rate in each interim period:

Three months ended December 31
(In millions)20192018
Income tax expense$24  $19  
Effective tax rate percentage24.7 %26.4 %

The increase in income tax expense over the prior year was principally driven by higher pre-tax earnings, and the lower effective tax rate is attributed to the current year benefit from favorable discrete items compared to unfavorable discrete items in the prior year.
v3.19.3.a.u2
Employee Benefit Plans
3 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Employee Benefit Plans EMPLOYEE BENEFIT PLANS
The following table summarizes the components of pension and other postretirement benefit income:

Other postretirement benefits
Pension benefits
(In millions)2019201820192018
Three months ended December 31
Service cost$ $—  $—  $—  
Interest cost16  20  —   
Expected return on plan assets(22) (20) —  —  
Amortization of prior service credit—  —  (3) (3) 
Net periodic benefit income$(5) $—  $(3) $(2) 
v3.19.3.a.u2
Litigation, Claims and Contingencies
3 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Litigation, Claims and Contingencies LITIGATION, CLAIMS 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 not material 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. 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.
v3.19.3.a.u2
Earnings Per Share
3 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Earnings Per Share EARNINGS PER SHARE
The following table summarizes basic and diluted earnings per share:

Three months ended
December 31
(In millions, except per share data)20192018
Numerator
Net income $73  $53  
Denominator
Weighted average common shares outstanding189  188  
Effect of potentially dilutive securities (a)
—   
Weighted average diluted shares outstanding189  189  
 
Earnings per share
Basic$0.39  $0.28  
Diluted$0.39  $0.28  
(a) Approximately 1 million and 2 million outstanding securities, primarily stock appreciation rights, were not included in the computation of diluted earnings per share because their effect would have been antidilutive for the three months ended December 31, 2019 and 2018, respectively.
v3.19.3.a.u2
Reportable Segment Information
3 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Reportable Segment Information REPORTABLE SEGMENT INFORMATION
Valvoline manages and reports within the following three segments: 

Quick Lubes - services the passenger car and light truck quick lube market through company-owned and independent franchised retail quick lube service center stores and independent Express Care stores that service vehicles with Valvoline products, as well as through investment in a joint venture in China to pilot expansion of retail quick lube service center stores outside of North America.

Core North America - sells engine and automotive maintenance products in the United States and Canada to retailers, installers, and heavy-duty customers to service vehicles and equipment.

International - sells engine and automotive maintenance products in more than 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 U.S. GAAP measures evaluated in assessing each reportable segment’s financial performance. Operating income by segment includes the allocation of shared corporate costs, which are allocated consistently based on each segment’s proportional contribution to various financial measures. Intersegment sales are not material, and assets are not allocated and 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 restructuring and related expenses, as well as 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.
Segment financial results

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

Three months ended


(In millions)
December 31
20192018
Sales
Quick Lubes
$218  $189  
Core North America
248  232  
International
141  136  
Consolidated sales$607  $557  
Operating income
Quick Lubes
$38  $38  
Core North America
46  31  
International
20  18  
Total operating segments
104  87  
Unallocated and other (a)
—  —  
Consolidated operating income$104  $87  
(a) Unallocated and other includes net legacy and separation-related income and restructuring and related expenses.

Disaggregation of revenue

The following table summarizes sales by primary customer channel for the Company’s reportable segments:

Three months ended
December 31
(In millions)20192018
Quick Lubes
Company-owned operations$142  $124  
Non-company owned operations76  65  
Total Quick Lubes218  189  
Core North America
Retail137  116  
Installer and other111  116  
Total Core North America248  232  
International141  136  
Consolidated sales$607  $557  
Sales by reportable segment disaggregated by geographic market follows:

Three months ended December 31, 2019
(In millions)Quick LubesCore North AmericaInternationalTotals
North America (a)
$218  $248  $—  $466  
Europe, Middle East and Africa ("EMEA")—  —  47  47  
Asia Pacific—  —  70  70  
Latin America (a)
—  —  24  24  
Totals$218  $248  $141  $607  
Three months ended December 31, 2018  
(In millions)Quick LubesCore North AmericaInternationalTotals
North America (a)
$189  $232  $—  $421  
Europe, Middle East and Africa ("EMEA")—  —  4444  
Asia Pacific—  —  6767  
Latin America (a)
—  —  2525  
Totals$189  $232  $136  $557  
(a)Valvoline includes the United States and Canada in its North America region. Mexico is included within the Latin America region.
v3.19.3.a.u2
Supplemental Financial Information
3 Months Ended
Dec. 31, 2019
Supplemental Financial Information [Abstract]  
Supplemental Financial Information SUPPLEMENTAL FINANCIAL INFORMATION
Cash, cash equivalents and restricted cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the totals shown within the Condensed Consolidated Statements of Cash Flows:

(In millions)December 31
2019
September 30
2019
December 31
2018
Cash and cash equivalents$162  $159  $99  
Restricted cash (a)
 —  —  
Total cash, cash equivalents and restricted cash$163  $159  $99  
(a) Included in Prepaid expenses and other current assets within the Condensed Consolidated Balance Sheets.
Accounts receivable

The following table summarizes Valvoline’s accounts receivable in the Condensed Consolidated Balance Sheets:

(In millions)December 31
2019
September 30
2019
Trade$389  $392  
Other13  15  
Accounts receivable, gross402  407  
Allowance for doubtful accounts(7) (6) 
Total accounts receivable, net$395  $401  

During the three months ended December 31, 2019, Valvoline did not sell accounts receivable to a financial institution, while $28 million was sold during the three months ended December 31, 2018.
Inventories

Inventories are primarily carried at the lower of cost or net realizable value using the weighted average cost method. In addition, certain lubricants are valued at the lower of cost or market using the last-in, first-out ("LIFO") method.

The following table summarizes Valvoline’s inventories in the Condensed Consolidated Balance Sheets:

(In millions)December 31
2019
September 30
2019
Finished products$197  $203  
Raw materials, supplies and work in process37  32  
Reserve for LIFO cost valuation(40) (41) 
Total inventories, net$194  $194  

Revenue recognition

The following table disaggregates the Company’s sales by timing of revenue recognized:

Three months ended December 31
(In millions)20192018
Sales at a point in time$596  $547  
Franchised revenues transferred over time11  10  
Total consolidated sales$607  $557  
v3.19.3.a.u2
Guarantor Financial Information
3 Months Ended
Dec. 31, 2019
Condensed Financial Information Disclosure [Abstract]  
Guarantor Financial Information GUARANTOR FINANCIAL INFORMATION
The Senior Notes detailed in Note 7 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 wholly-owned “Guarantor Subsidiaries.” Other subsidiaries (the “Non-Guarantor Subsidiaries”) largely represent the international operations of the Company, which do not guarantee the Senior Notes.

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 December 31, 2019
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Sales$—  $480  $140  $(13) $607  
Cost of sales—  309  100  (13) 396  
Gross profit—  171  40  —  211  
Selling, general and administrative expenses 88  25  —  117  
Net legacy and separation-related income(1) —  —  —  (1) 
Equity and other (income) expenses, net—  (13)  —  (9) 
Operating (loss) income(3) 96  11  —  104  
Net pension and other postretirement plan income—  (9) —  —  (9) 
Net interest and other financing expenses15   —  —  16  
(Loss) income before income taxes(18) 104  11  —  97  
Income tax (benefit) expense (6) 27   —  24  
Equity in net income of subsidiaries(85) (8) —  93  —  
Net income$73  $85  $ $(93) $73  
Total comprehensive income$79  $89  $15  $(104) $79  
Condensed Consolidating Statements of Comprehensive Income
For the three months ended December 31, 2018
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Sales$—  $440  $132  $(15) $557  
Cost of sales—  293  96  (15) 374  
Gross profit—  147  36  —  183  
Selling, general and administrative expenses 81  21  —  105  
Equity and other (income) expenses, net—  (13)  —  (9) 
Operating (loss) income(3) 79  11  —  87  
Net pension and other postretirement plan income—  (2) —  —  (2) 
Net interest and other financing expenses15    —  17  
(Loss) income before income taxes(18) 80  10  —  72  
Income tax (benefit) expense(5) 20   —  19  
Equity in net income of subsidiaries(66) (6) —  72  —  
Net income$53  $66  $ $(72) $53  
Total comprehensive income$47  $60  $ $(62) $47  
Condensed Consolidating Balance Sheets
As of December 31, 2019
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Assets
Current assets
Cash and cash equivalents$—  $62  $100  $—  $162  
Accounts receivable, net—  245  300  (150) 395  
Inventories, net—  108  86  —  194  
Prepaid expenses and other current assets 32  10  —  43  
Total current assets 447  496  (150) 794  
Noncurrent assets
Property, plant and equipment, net—  407  72  —  479  
Operating lease assets—  211  42  —  253  
Goodwill and intangibles, net—  425  82  —  507  
Equity method investments—  39  —  —  39  
Investment in subsidiaries1,247  523  —  (1,770) —  
Deferred income taxes55  47  14  —  116  
Other noncurrent assets 97   —  109  
Total noncurrent assets1,305  1,749  219  (1,770) 1,503  
Total assets$1,306  $2,196  $715  $(1,920) $2,297  
Liabilities and Stockholders’ Deficit
Current liabilities
Current portion of long-term debt$22  $—  $—  $—  $22  
Trade and other payables109  96  98  (150) 153  
Accrued expenses and other liabilities18  182  46  —  246  
Total current liabilities149  278  144  (150) 421  
Noncurrent liabilities
Long-term debt1,319   —  —  1,320  
Employee benefit obligations—  359  17  —  376  
Operating lease liabilities—  195  29  —  224  
Other noncurrent liabilities34  116   —  152  
Total noncurrent liabilities1,353  671  48  —  2,072  
Commitments and contingencies
Stockholders’ (deficit) equity(196) 1,247  523  (1,770) (196) 
Total liabilities and stockholders’ deficit / equity$1,306  $2,196  $715  $(1,920) $2,297  
Condensed Consolidating Balance Sheets
As of September 30, 2019
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Assets
Current assets
Cash and cash equivalents$—  $59  $100  $—  $159  
Accounts receivable, net—  181  338  (118) 401  
Inventories, net—  110  84  —  194  
Prepaid expenses and other current assets—  35   —  43  
Total current assets—  385  530  (118) 797  
Noncurrent assets
Property, plant and equipment, net—  431  67  —  498  
Goodwill and intangibles, net—  423  81  —  504  
Equity method investments—  34  —  —  34  
Investment in subsidiaries1,157  546  —  (1,703) —  
Deferred income taxes48  61  14  —  123  
Other noncurrent assets 96   —  108  
Total noncurrent assets1,208  1,591  171  (1,703) 1,267  
Total assets$1,208  $1,976  $701  $(1,821) $2,064  
Liabilities and Stockholders’ Deficit
Current liabilities
Current portion of long-term debt$15  $—  $—  $—  $15  
Trade and other payables80  127  82  (118) 171  
Accrued expenses and other liabilities 175  53  —  237  
Total current liabilities104  302  135  (118) 423  
Noncurrent liabilities
Long-term debt1,326   —  —  1,327  
Employee benefit obligations—  369  18  —  387  
Other noncurrent liabilities36  147   —  185  
Total noncurrent liabilities1,362  517  20  —  1,899  
Commitments and contingencies
Stockholders’ (deficit) equity(258) 1,157  546  (1,703) (258) 
Total liabilities and stockholders’ deficit / equity$1,208  $1,976  $701  $(1,821) $2,064  
Condensed Consolidating Statements of Cash Flows
For the three months ended December 31, 2019
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Cash flows provided by operating activities$23  $31  $ $—  $59  
Cash flows from investing activities
Additions to property, plant and equipment—  (21) (7) —  (28) 
Acquisitions, net of cash acquired—  (6) —  —  (6) 
Other investing activities, net—  (1) —  —  (1) 
Cash flows used in investing activities—  (28) (7) —  (35) 
Cash flows from financing activities
Cash dividends paid(21) —  —  —  (21) 
Other financing activities(2) —  —  —  (2) 
Cash flows used in financing activities(23) —  —  —  (23) 
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash—  —   —   
Increase in cash, cash equivalents, and restricted cash—    —   
Cash, cash equivalents, and restricted cash - beginning of year—  59  100  —  159  
Cash, cash equivalents, and restricted cash - end of period$—  $62  $101  $—  $163  
Condensed Consolidating Statements of Cash Flows
For the three months ended December 31, 2018
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Cash flows provided by operating activities$13  $29  $43  $—  $85  
Cash flows from investing activities
Additions to property, plant and equipment—  (20) (7) —  (27) 
Acquisitions, net of cash acquired—  (8) (22) —  (30) 
Other investing activities, net—   —  —   
Cash flows used in investing activities—  (27) (29) —  (56) 
Cash flows from financing activities
Proceeds from borrowings, net of issuance costs57  —  43  —  100  
Repayments on borrowings(48) —  (53) —  (101) 
Cash dividends paid(20) —  —  —  (20) 
Other financing activities(2) (1) (1) —  (4) 
Cash flows used in financing activities(13) (1) (11) —  (25) 
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash—  —  (1) —  (1) 
Increase in cash, cash equivalents, and restricted cash—    —   
Cash, cash equivalents, and restricted cash - beginning of year—  20  76  —  96  
Cash, cash equivalents, and restricted cash - end of period$—  $21  $78  $—  $99  
v3.19.3.a.u2
Subsequent Events
3 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events SUBSEQUENT EVENTS
Trade Receivables Facility

On January 31, 2020, the Company amended the Trade Receivables Facility to extend the maturity date to November 19, 2021. The capacity available and other relevant terms and conditions of Trade Receivables Facility were substantially unchanged under the amended facility.

Dividend declared

On January 29, 2020, the Board of Directors of Valvoline declared a quarterly cash dividend of $0.113 per share of Valvoline common stock. The dividend is payable on March 16, 2020 to shareholders of record on February 28, 2020.
v3.19.3.a.u2
Basis of Presentation and Significant Accounting Policies (Policies)
3 Months Ended
Dec. 31, 2019
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 of America (“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, 2019.

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 interim periods are not necessarily indicative of those to be expected for the entire year. Certain prior period amounts have been reclassified to conform to the current presentation.
Recent accounting pronouncements
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 February 2016, the Financial Accounting Standards Board ("FASB") issued accounting guidance, which outlined a comprehensive lease accounting model that requires lessees to recognize a right-of-use asset and a corresponding lease liability on the balance sheet and superseded previous lease accounting guidance. Valvoline adopted this new lease accounting guidance on October 1, 2019 using the optional transition approach. Under this approach, the new lease accounting guidance has been applied prospectively from the date of adoption, while prior period financial statements continue to be reported in accordance with the previous guidance. Lease expense is recognized similar to prior accounting guidance with operating leases resulting in straight-line expense and finance leases resulting in accelerated expense recognition similar to the prior accounting for capital leases. The accounting for lessor arrangements is not significantly changed by the new guidance.

Valvoline elected certain practical expedients permitted by the new guidance, including the package of practical expedients that allows for previous accounting conclusions regarding lease identification and classification to be carried forward for leases which commenced prior to adoption, as well as the practical expedient to not separate lease and non-lease components and account for them as a single lease component. The Company did not elect the hindsight or short-term lease practical expedients.

As a result of adoption, the Company recognized operating lease assets and liabilities inclusive of a reclassified build-to-suit arrangement, derecognized assets and liabilities related to the build-to-suit arrangement, and carried forward existing capital leases as finance lease assets and liabilities. This resulted in a material impact on the Condensed Consolidated Balance Sheet and the recognition of total incremental lease assets, inclusive of prepaid lease balances and deferred rent liabilities, of $219 million and incremental lease liabilities of $214 million, with an immaterial cumulative effect adjustment to reduce Retained deficit as a result of the build-to-suit lease transition requirements. The impact of adoption was not material to the Condensed Consolidated Statements of Comprehensive Income, Cash Flows, or Stockholders’ Deficit, and did not impact the Company's compliance with any of its existing debt covenants. Refer to Note 2 for additional information regarding Valvoline's adoption of this new guidance.
Issued but not yet adopted

In June 2016, the FASB issued updated guidance that introduces a forward-looking approach based on expected losses, rather than incurred losses, to estimate credit losses on certain types of financial instruments including trade and other receivables. The new guidance will require entities to incorporate historical, current, and forecasted information into their estimates of expected credit losses. This guidance also includes expanded disclosure requirements and will become effective for Valvoline on October 1, 2020. The Company is evaluating the effect of adopting this new accounting guidance, including changes to its related processes, and does not currently expect adoption will have a material impact on its Condensed Consolidated Balance Sheet or Condensed Consolidated Statement of Comprehensive Income.

The FASB issued other accounting guidance during the period that is not currently applicable or expected to have a material impact on Valvoline’s condensed consolidated financial statements, and therefore, is not described above.
v3.19.3.a.u2
Leases, Codification Topic 842 (Policies)
3 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Lessee, Leases
Lessee arrangements

Certain of the properties Valvoline utilizes, including quick-lube service center stores, offices, blending and warehouse facilities, in addition to certain equipment, are leased. Valvoline determines if an arrangement contains a lease at inception primarily based on whether or not the Company has the right to control the asset during the contract period. For all agreements where it is determined that a lease exists, including those with an initial term of 12 months or less, the related lease assets and liabilities are recognized on the Condensed Consolidated Balance Sheet as either operating or finance leases at the commencement date. The lease liability is measured at the present value of future lease payments over the lease term, and the right-of-use asset is measured at the lease liability amount, adjusted for prepaid lease payments, lease incentives and the lessee’s initial direct costs (e.g., commissions). The lease term includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised.

Fixed payments, including variable payments based on a rate or index, are included in the determination of the lease liability, while other variable payments are recognized in the the Condensed Consolidated Statements of Comprehensive Income in the period in which the obligation for those payments is incurred. Many leases contain lease components requiring rental payments and other components that require payment for taxes, insurance, operating expenses and maintenance. In instances where these other components are fixed, they are included in the measurement of the lease liability due to Valvoline's election to combine lease and non-lease components. Otherwise, these other components are expensed as incurred and comprise the majority of Valvoline's variable lease costs.
As most leases do not provide the rate implicit in the lease, the Company estimates its incremental borrowing rate to best approximate the rate of interest that Valvoline would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Valvoline applies the incremental borrowing rate to groups of leases with similar lease terms in determining the present value of future payments. In determining the incremental borrowing rate, the Company considers information available at commencement date, including lease term, interest rate yields for specific interest rate environments and the Company's credit spread.
v3.19.3.a.u2
Leasing (Tables)
3 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Schedule of Lease Balances on the Balance Sheet The following table presents the Company's lease balances:
(In millions)Location in Condensed Consolidated Balance SheetDecember 31, 2019
Assets
   Operating lease assetsOperating lease assets$253  
   Finance lease assets Property, plant and equipment, net29  
   Amortization of finance lease assetsProperty, plant and equipment, net(7) 
Total leased assets$275  
Liabilities
Current:
   Operating lease liabilitiesAccrued expenses and other liabilities$30  
   Finance lease liabilitiesAccrued expenses and other liabilities 
Noncurrent:
   Operating lease liabilitiesOperating lease liabilities224  
   Finance lease liabilitiesOther noncurrent liabilities24  
Total lease liabilities$279  
Schedule of Lease Costs and Other Information
The following table presents the components of total lease costs:

(In millions)Location in Condensed Consolidated Statement of Comprehensive IncomeThree months ended
December 31, 2019
Operating lease cost
Cost of sales and Selling, general and administrative expenses (a)
$11  
Finance lease costs
Amortization of lease assets
Cost of sales (a)
—  
Interest on lease liabilitiesNet interest and other financing expenses 
Variable lease cost
Cost of sales and Selling, general and administrative expenses (a)
 
Sublease incomeEquity and other income, net(1) 
Total lease cost$12  
(a) Supply chain and retail-related amounts are included in Cost of sales.
Other information related to the Company's leases follows:

(In millions)Three months ended
December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (a)
$10  
Operating cash flows from finance leases$ 
Financing cash flow from finance leases$—  
Lease assets obtained in exchange for lease obligations:
Operating leases$15  
Finance leases$—  
(a) Included within the change in Other assets and liabilities within the Condensed Consolidated Statement of Cash Flows offset by noncash operating lease asset amortization and liability accretion.
The following table presents the weighted average remaining lease term and interest rate as of December 31, 2019:

Weighted average remaining lease term (in years):
Operating leases10.0
Finance leases10.7
Weighted average discount rate:
Operating leases4.13 %
Finance leases11.57 %
Schedule of Future Lease Payments under Finance Leases After Adoption
The following table reconciles the undiscounted cash flows for the next five fiscal years ended September 30 and thereafter to the operating and finance lease liabilities recorded on the Condensed Consolidated Balance Sheet as of December 31, 2019:

(In millions) Operating leasesFinance leases
Remainder of 2020$30  $ 
202137   
202235   
202331   
202428   
Thereafter154  26  
Total future lease payments315  44  
Imputed interest61  19  
Present value of lease liabilities$254  $25  
Schedule of Future Lease Payments under Operating Leases After Adoption
The following table reconciles the undiscounted cash flows for the next five fiscal years ended September 30 and thereafter to the operating and finance lease liabilities recorded on the Condensed Consolidated Balance Sheet as of December 31, 2019:

(In millions) Operating leasesFinance leases
Remainder of 2020$30  $ 
202137   
202235   
202331   
202428   
Thereafter154  26  
Total future lease payments315  44  
Imputed interest61  19  
Present value of lease liabilities$254  $25  
Schedule of Future Minimum Rental Payments for Operating Leases The future minimum lease payments by fiscal year as determined prior to the adoption of the new lease accounting guidance under the previously designated capital, financing and operating leases as of the fiscal year ended September 30, 2019, were as follows:
(In millions)Operating leasesCapital leases and financing obligations
2020$36  $ 
202132   
202229   
202327   
202423   
Thereafter120  50  
Total future lease payments (a)
$267  84  
Imputed interest29  
Present value of lease liabilities$55  
(a) Future lease payments do not include fixed payments for executory costs, such as taxes, insurance, maintenance and operating expenses.
Schedule of Future Minimum Lease Payments for Operating, Capital and Other Financing Obligations The future minimum lease payments by fiscal year as determined prior to the adoption of the new lease accounting guidance under the previously designated capital, financing and operating leases as of the fiscal year ended September 30, 2019, were as follows:
(In millions)Operating leasesCapital leases and financing obligations
2020$36  $ 
202132   
202229   
202327   
202423   
Thereafter120  50  
Total future lease payments (a)
$267  84  
Imputed interest29  
Present value of lease liabilities$55  
(a) Future lease payments do not include fixed payments for executory costs, such as taxes, insurance, maintenance and operating expenses.
v3.19.3.a.u2
Fair Value Measurements (Tables)
3 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Schedule of Assets and Liabilities at Fair Value
The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair value hierarchy:

(In millions)Fair Value HierarchyDecember 31 2019September 30
2019
Cash and cash equivalents
Money market fundsLevel 1  $ $—  
Time depositsLevel 2  62  59  
Prepaid expenses and other current assets
Currency derivatives (a)
Level 2   —  
Other noncurrent assets
Non-qualified trust fundsLevel 1  20  20  
Total assets at fair value$84  $79  
Accrued expenses and other liabilities
Currency derivatives (a)
Level 2  $ $—  
Total liabilities at fair value$ $—  
(a) The Company had outstanding contracts with notional values of $128 million and $111 million as of December 31, 2019 and September 30, 2019, respectively.
Summary of Fair Value of Debt Carrying values shown in the following table are net of unamortized discounts and issuance costs.
December 31, 2019September 30, 2019
(In millions)Fair valueCarrying valueUnamortized discount and
issuance costs
Fair valueCarrying valueUnamortized
discount and
issuance costs
2024 Notes$389  $371  $(4) $390  $371  $(4) 
2025 Notes416  396  (4) 407  395  (5) 
Total$805  $767  $(8) $797  $766  $(9) 
v3.19.3.a.u2
Acquisitions and Divestitures (Tables)
3 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Summary of Consideration Paid and Assets and Liabilities Acquired :
(In millions)20192018
Property, plant and equipment$—  $ 
Goodwill 21  
Intangible assets (a)
Reacquired franchise rights  
Customer relationships—   
Trademarks and trade names—   
Net assets acquired$ $30  
v3.19.3.a.u2
Goodwill and Other Intangibles (Tables)
3 Months Ended
Dec. 31, 2019
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 three months ended December 31, 2019:
(In millions)Quick LubesCore North AmericaInternationalTotal
Balance at September 30, 2019$301  $89  $40  $430  
Acquisitions (a)
 —  —   
Currency translation —  —   
Dispositions (a)
(3) —  —  (3) 
Balance at December 31, 2019$304  $89  $40  $433  
(a) Refer to Note 4 for details regarding acquisitions and dispositions completed during the three months ended December 31, 2019.
v3.19.3.a.u2
Restructuring Activities (Tables)
3 Months Ended
Dec. 31, 2019
Restructuring and Related Activities [Abstract]  
Schedule of Restructuring Related Liability
(In millions)Employee Termination Benefits
Balance at September 30, 2019$ 
Expenses recognized during the period 
Payments (2) 
Balance at December 31, 2019$ 
v3.19.3.a.u2
Debt (Tables)
3 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Schedule of Total Debt
The following table summarizes Valvoline’s total debt:

(In millions)December 31 2019September 30 2019
2025 Notes$400  $400  
2024 Notes375  375  
Term Loan575  575  
Other (a)
(8) (8) 
Total debt$1,342  $1,342  
Current portion of long-term debt22  15  
Long-term debt$1,320  $1,327  
 
(a) As of December 31, 2019 and September 30, 2019, other included debt issuance costs and discounts of $9 million and debt primarily acquired through acquisitions of $1 million.
v3.19.3.a.u2
Income Taxes (Tables)
3 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Schedule of Income Tax Expense and Effective Tax Rate The following summarizes income tax expense and the effective tax rate in each interim period:
Three months ended December 31
(In millions)20192018
Income tax expense$24  $19  
Effective tax rate percentage24.7 %26.4 %
v3.19.3.a.u2
Employee Benefit Plans (Tables)
3 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Components of Pension and Other Postretirement Benefit Income
The following table summarizes the components of pension and other postretirement benefit income:

Other postretirement benefits
Pension benefits
(In millions)2019201820192018
Three months ended December 31
Service cost$ $—  $—  $—  
Interest cost16  20  —   
Expected return on plan assets(22) (20) —  —  
Amortization of prior service credit—  —  (3) (3) 
Net periodic benefit income$(5) $—  $(3) $(2) 
v3.19.3.a.u2
Earnings Per Share (Tables)
3 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Schedule of Earnings Per Share, Basic and Diluted
The following table summarizes basic and diluted earnings per share:

Three months ended
December 31
(In millions, except per share data)20192018
Numerator
Net income $73  $53  
Denominator
Weighted average common shares outstanding189  188  
Effect of potentially dilutive securities (a)
—   
Weighted average diluted shares outstanding189  189  
 
Earnings per share
Basic$0.39  $0.28  
Diluted$0.39  $0.28  
(a) Approximately 1 million and 2 million outstanding securities, primarily stock appreciation rights, were not included in the computation of diluted earnings per share because their effect would have been antidilutive for the three months ended December 31, 2019 and 2018, respectively.
v3.19.3.a.u2
Reportable Segment Information (Tables)
3 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information
The following table presents sales and operating income for each reportable segment:

Three months ended


(In millions)
December 31
20192018
Sales
Quick Lubes
$218  $189  
Core North America
248  232  
International
141  136  
Consolidated sales$607  $557  
Operating income
Quick Lubes
$38  $38  
Core North America
46  31  
International
20  18  
Total operating segments
104  87  
Unallocated and other (a)
—  —  
Consolidated operating income$104  $87  
(a) Unallocated and other includes net legacy and separation-related income and restructuring and related expenses.
Schedule of Sales Disaggregated by Segment and Geographical Area
The following table summarizes sales by primary customer channel for the Company’s reportable segments:

Three months ended
December 31
(In millions)20192018
Quick Lubes
Company-owned operations$142  $124  
Non-company owned operations76  65  
Total Quick Lubes218  189  
Core North America
Retail137  116  
Installer and other111  116  
Total Core North America248  232  
International141  136  
Consolidated sales$607  $557  
Sales by reportable segment disaggregated by geographic market follows:

Three months ended December 31, 2019
(In millions)Quick LubesCore North AmericaInternationalTotals
North America (a)
$218  $248  $—  $466  
Europe, Middle East and Africa ("EMEA")—  —  47  47  
Asia Pacific—  —  70  70  
Latin America (a)
—  —  24  24  
Totals$218  $248  $141  $607  
Three months ended December 31, 2018  
(In millions)Quick LubesCore North AmericaInternationalTotals
North America (a)
$189  $232  $—  $421  
Europe, Middle East and Africa ("EMEA")—  —  4444  
Asia Pacific—  —  6767  
Latin America (a)
—  —  2525  
Totals$189  $232  $136  $557  
(a)Valvoline includes the United States and Canada in its North America region. Mexico is included within the Latin America region.
v3.19.3.a.u2
Supplemental Financial Information (Tables)
3 Months Ended
Dec. 31, 2019
Supplemental Financial Information [Abstract]  
Schedule of Cash and Cash Equivalents
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the totals shown within the Condensed Consolidated Statements of Cash Flows:

(In millions)December 31
2019
September 30
2019
December 31
2018
Cash and cash equivalents$162  $159  $99  
Restricted cash (a)
 —  —  
Total cash, cash equivalents and restricted cash$163  $159  $99  
(a) Included in Prepaid expenses and other current assets within the Condensed Consolidated Balance Sheets.
Summary of Accounts Receivable
The following table summarizes Valvoline’s accounts receivable in the Condensed Consolidated Balance Sheets:

(In millions)December 31
2019
September 30
2019
Trade$389  $392  
Other13  15  
Accounts receivable, gross402  407  
Allowance for doubtful accounts(7) (6) 
Total accounts receivable, net$395  $401  
Summary of Inventory
The following table summarizes Valvoline’s inventories in the Condensed Consolidated Balance Sheets:

(In millions)December 31
2019
September 30
2019
Finished products$197  $203  
Raw materials, supplies and work in process37  32  
Reserve for LIFO cost valuation(40) (41) 
Total inventories, net$194  $194  
Disaggregaton of Revenue by Timing of Revenue Table Text Block
The following table disaggregates the Company’s sales by timing of revenue recognized:

Three months ended December 31
(In millions)20192018
Sales at a point in time$596  $547  
Franchised revenues transferred over time11  10  
Total consolidated sales$607  $557  
v3.19.3.a.u2
Guarantor Financial Information (Tables)
3 Months Ended
Dec. 31, 2019
Condensed Financial Information Disclosure [Abstract]  
Condensed Consolidating Statements of Comprehensive Income
Condensed Consolidating Statements of Comprehensive Income
For the three months ended December 31, 2019
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Sales$—  $480  $140  $(13) $607  
Cost of sales—  309  100  (13) 396  
Gross profit—  171  40  —  211  
Selling, general and administrative expenses 88  25  —  117  
Net legacy and separation-related income(1) —  —  —  (1) 
Equity and other (income) expenses, net—  (13)  —  (9) 
Operating (loss) income(3) 96  11  —  104  
Net pension and other postretirement plan income—  (9) —  —  (9) 
Net interest and other financing expenses15   —  —  16  
(Loss) income before income taxes(18) 104  11  —  97  
Income tax (benefit) expense (6) 27   —  24  
Equity in net income of subsidiaries(85) (8) —  93  —  
Net income$73  $85  $ $(93) $73  
Total comprehensive income$79  $89  $15  $(104) $79  
Condensed Consolidating Statements of Comprehensive Income
For the three months ended December 31, 2018
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Sales$—  $440  $132  $(15) $557  
Cost of sales—  293  96  (15) 374  
Gross profit—  147  36  —  183  
Selling, general and administrative expenses 81  21  —  105  
Equity and other (income) expenses, net—  (13)  —  (9) 
Operating (loss) income(3) 79  11  —  87  
Net pension and other postretirement plan income—  (2) —  —  (2) 
Net interest and other financing expenses15    —  17  
(Loss) income before income taxes(18) 80  10  —  72  
Income tax (benefit) expense(5) 20   —  19  
Equity in net income of subsidiaries(66) (6) —  72  —  
Net income$53  $66  $ $(72) $53  
Total comprehensive income$47  $60  $ $(62) $47  
Condensed Income Statement
Condensed Consolidating Statements of Comprehensive Income
For the three months ended December 31, 2019
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Sales$—  $480  $140  $(13) $607  
Cost of sales—  309  100  (13) 396  
Gross profit—  171  40  —  211  
Selling, general and administrative expenses 88  25  —  117  
Net legacy and separation-related income(1) —  —  —  (1) 
Equity and other (income) expenses, net—  (13)  —  (9) 
Operating (loss) income(3) 96  11  —  104  
Net pension and other postretirement plan income—  (9) —  —  (9) 
Net interest and other financing expenses15   —  —  16  
(Loss) income before income taxes(18) 104  11  —  97  
Income tax (benefit) expense (6) 27   —  24  
Equity in net income of subsidiaries(85) (8) —  93  —  
Net income$73  $85  $ $(93) $73  
Total comprehensive income$79  $89  $15  $(104) $79  
Condensed Consolidating Statements of Comprehensive Income
For the three months ended December 31, 2018
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Sales$—  $440  $132  $(15) $557  
Cost of sales—  293  96  (15) 374  
Gross profit—  147  36  —  183  
Selling, general and administrative expenses 81  21  —  105  
Equity and other (income) expenses, net—  (13)  —  (9) 
Operating (loss) income(3) 79  11  —  87  
Net pension and other postretirement plan income—  (2) —  —  (2) 
Net interest and other financing expenses15    —  17  
(Loss) income before income taxes(18) 80  10  —  72  
Income tax (benefit) expense(5) 20   —  19  
Equity in net income of subsidiaries(66) (6) —  72  —  
Net income$53  $66  $ $(72) $53  
Total comprehensive income$47  $60  $ $(62) $47  
Condensed Consolidating Balance Sheets
Condensed Consolidating Balance Sheets
As of December 31, 2019
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Assets
Current assets
Cash and cash equivalents$—  $62  $100  $—  $162  
Accounts receivable, net—  245  300  (150) 395  
Inventories, net—  108  86  —  194  
Prepaid expenses and other current assets 32  10  —  43  
Total current assets 447  496  (150) 794  
Noncurrent assets
Property, plant and equipment, net—  407  72  —  479  
Operating lease assets—  211  42  —  253  
Goodwill and intangibles, net—  425  82  —  507  
Equity method investments—  39  —  —  39  
Investment in subsidiaries1,247  523  —  (1,770) —  
Deferred income taxes55  47  14  —  116  
Other noncurrent assets 97   —  109  
Total noncurrent assets1,305  1,749  219  (1,770) 1,503  
Total assets$1,306  $2,196  $715  $(1,920) $2,297  
Liabilities and Stockholders’ Deficit
Current liabilities
Current portion of long-term debt$22  $—  $—  $—  $22  
Trade and other payables109  96  98  (150) 153  
Accrued expenses and other liabilities18  182  46  —  246  
Total current liabilities149  278  144  (150) 421  
Noncurrent liabilities
Long-term debt1,319   —  —  1,320  
Employee benefit obligations—  359  17  —  376  
Operating lease liabilities—  195  29  —  224  
Other noncurrent liabilities34  116   —  152  
Total noncurrent liabilities1,353  671  48  —  2,072  
Commitments and contingencies
Stockholders’ (deficit) equity(196) 1,247  523  (1,770) (196) 
Total liabilities and stockholders’ deficit / equity$1,306  $2,196  $715  $(1,920) $2,297  
Condensed Consolidating Balance Sheets
As of September 30, 2019
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Assets
Current assets
Cash and cash equivalents$—  $59  $100  $—  $159  
Accounts receivable, net—  181  338  (118) 401  
Inventories, net—  110  84  —  194  
Prepaid expenses and other current assets—  35   —  43  
Total current assets—  385  530  (118) 797  
Noncurrent assets
Property, plant and equipment, net—  431  67  —  498  
Goodwill and intangibles, net—  423  81  —  504  
Equity method investments—  34  —  —  34  
Investment in subsidiaries1,157  546  —  (1,703) —  
Deferred income taxes48  61  14  —  123  
Other noncurrent assets 96   —  108  
Total noncurrent assets1,208  1,591  171  (1,703) 1,267  
Total assets$1,208  $1,976  $701  $(1,821) $2,064  
Liabilities and Stockholders’ Deficit
Current liabilities
Current portion of long-term debt$15  $—  $—  $—  $15  
Trade and other payables80  127  82  (118) 171  
Accrued expenses and other liabilities 175  53  —  237  
Total current liabilities104  302  135  (118) 423  
Noncurrent liabilities
Long-term debt1,326   —  —  1,327  
Employee benefit obligations—  369  18  —  387  
Other noncurrent liabilities36  147   —  185  
Total noncurrent liabilities1,362  517  20  —  1,899  
Commitments and contingencies
Stockholders’ (deficit) equity(258) 1,157  546  (1,703) (258) 
Total liabilities and stockholders’ deficit / equity$1,208  $1,976  $701  $(1,821) $2,064  
Condensed Consolidating Statements of Cash Flows
Condensed Consolidating Statements of Cash Flows
For the three months ended December 31, 2019
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Cash flows provided by operating activities$23  $31  $ $—  $59  
Cash flows from investing activities
Additions to property, plant and equipment—  (21) (7) —  (28) 
Acquisitions, net of cash acquired—  (6) —  —  (6) 
Other investing activities, net—  (1) —  —  (1) 
Cash flows used in investing activities—  (28) (7) —  (35) 
Cash flows from financing activities
Cash dividends paid(21) —  —  —  (21) 
Other financing activities(2) —  —  —  (2) 
Cash flows used in financing activities(23) —  —  —  (23) 
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash—  —   —   
Increase in cash, cash equivalents, and restricted cash—    —   
Cash, cash equivalents, and restricted cash - beginning of year—  59  100  —  159  
Cash, cash equivalents, and restricted cash - end of period$—  $62  $101  $—  $163  
Condensed Consolidating Statements of Cash Flows
For the three months ended December 31, 2018
(In millions)Valvoline Inc.
(Parent Issuer)
Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Cash flows provided by operating activities$13  $29  $43  $—  $85  
Cash flows from investing activities
Additions to property, plant and equipment—  (20) (7) —  (27) 
Acquisitions, net of cash acquired—  (8) (22) —  (30) 
Other investing activities, net—   —  —   
Cash flows used in investing activities—  (27) (29) —  (56) 
Cash flows from financing activities
Proceeds from borrowings, net of issuance costs57  —  43  —  100  
Repayments on borrowings(48) —  (53) —  (101) 
Cash dividends paid(20) —  —  —  (20) 
Other financing activities(2) (1) (1) —  (4) 
Cash flows used in financing activities(13) (1) (11) —  (25) 
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash—  —  (1) —  (1) 
Increase in cash, cash equivalents, and restricted cash—    —   
Cash, cash equivalents, and restricted cash - beginning of year—  20  76  —  96  
Cash, cash equivalents, and restricted cash - end of period$—  $21  $78  $—  $99  
v3.19.3.a.u2
Basis of Presentation and Significant Accounting Policies (Details) - ASU 2016-02
$ in Millions
Oct. 01, 2019
USD ($)
Incremental Lease Assets $ 219
Incremental Lease Liabilities $ 214
v3.19.3.a.u2
Leasing - Schedule of Lease Balances on the Balance Sheet (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Sep. 30, 2019
Leases [Abstract]    
Operating lease assets $ 253 $ 0
Finance lease assets 29  
Amortization of finance lease assets 7  
Total leased assets 275  
Operating lease liabilities, current 30  
Finance lease liabilities, current 1  
Operating lease liabilities, noncurrent 224 $ 0
Finance lease liabilities, noncurrent 24  
Total lease liabilities $ 279  
v3.19.3.a.u2
Leasing - Schedule of Lease Costs (Details)
$ in Millions
3 Months Ended
Dec. 31, 2019
USD ($)
Leases [Abstract]  
Operating lease cost $ 11
Finance lease costs  
Amortization of lease assets 0
Interest on lease liabilities 1
Variable lease cost 1
Sublease income (1)
Total lease cost $ 12
v3.19.3.a.u2
Leasing - Schedule of Other Information Related to Leases (Details)
$ in Millions
3 Months Ended
Dec. 31, 2019
USD ($)
Leases [Abstract]  
Operating cash flows from operating leases (a) $ 10
Operating cash flows from finance leases 1
Financing cash flow from finance leases 0
Leased assets obtained in exchange for operating leases 15
Leased assets obtained in exchange for finance leases $ 0
v3.19.3.a.u2
Leasing - Schedule of Future Lease Payments for Operating and Finance Leases After Adoption (Details)
$ in Millions
Dec. 31, 2019
USD ($)
Operating leases  
2020 $ 30
2021 37
2022 35
2023 31
2024 28
Thereafter 154
Total future lease payments 315
Imputed interest 61
Present value of lease liabilities 254
Finance leases  
2020 3
2021 4
2022 3
2023 4
2024 4
Thereafter 26
Total future lease payments 44
Imputed interest 19
Present value of lease liabilities 25
Undiscounted future lease payments for leases not yet commenced $ 45
Term for leases that have not yet commenced 15 years
v3.19.3.a.u2
Leasing - Schedule of Weighted Average Remaining Lease Term and Interest Rates (Details)
Dec. 31, 2019
Leases [Abstract]  
Weighted average remaining lease term, operating leases 10 years
Weighted average remaining lease term, finance leases 10 years 8 months 12 days
Weighted average discount rate, operating leases 4.13%
Weighted average discount rate, finance leases 11.57%
v3.19.3.a.u2
Leasing - Future Minimum Rental Payments Before Adoption (Details)
$ in Millions
Sep. 30, 2019
USD ($)
Operating Leases  
2020 $ 36
2021 32
2022 29
2023 27
2024 23
Thereafter 120
Total future lease payments (a) 267
Capital Leases and Financing Obligations  
2020 6
2021 7
2022 7
2023 7
2024 7
Thereafter 50
Total future lease payments 84
Imputed interest 29
Present value of lease liabilities $ 55
v3.19.3.a.u2
Fair Value Measurements - Schedule of Assets and Liabilities at Fair Value (Details) - Fair Value, Measurements, Recurring - USD ($)
$ in Millions
Dec. 31, 2019
Sep. 30, 2019
Other noncurrent assets    
Total assets at fair value $ 84 $ 79
Accrued expenses and other liabilities    
Total liabilities at fair value 1 0
Level 1    
Other noncurrent assets    
Non-qualified trust funds 20 20
Level 1 | Money market funds    
Cash and cash equivalents    
Cash and cash equivalents 1 0
Level 2    
Prepaid expenses and other current assets    
Currency derivatives 1 0
Accrued expenses and other liabilities    
Currency derivatives 1 0
Level 2 | Time deposits    
Cash and cash equivalents    
Cash and cash equivalents $ 62 $ 59
v3.19.3.a.u2
Fair Value Measurements - Narrative (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Sep. 30, 2019
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 $ 128 $ 111
v3.19.3.a.u2
Fair Value Measurements - Fair Value of Debt (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Sep. 30, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Unamortized discount and issuance costs $ 9 $ 9
Level 2 | Fair value    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 805 797
Level 2 | Fair value | Senior Notes | 2024 Notes    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 389 390
Level 2 | Fair value | Senior Notes | 2025 Notes    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 416 407
Level 2 | Carrying value    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 767 766
Unamortized discount and issuance costs (8) (9)
Level 2 | Carrying value | Senior Notes | 2024 Notes    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 371 371
Unamortized discount and issuance costs (4) (4)
Level 2 | Carrying value | Senior Notes | 2025 Notes    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt, fair value 396 395
Unamortized discount and issuance costs $ (4) $ (5)
v3.19.3.a.u2
Acquisitions and Divestitures - Narrative (Details)
$ in Millions
3 Months Ended
Dec. 31, 2019
USD ($)
service_center_store
Dec. 31, 2018
USD ($)
service_center_store
Business Acquisition [Line Items]    
Number of service center stores acquired | service_center_store 9 35
Consideration for acquisition | $ $ 6 $ 30
Finite-Lived Intangible Assets [Line Items]    
Gain on sale | $ $ 0  
Acquired Finite-Lived Intangible Assets [Line Items]    
Business Disposition, Number of Service Centers Sold | service_center_store 6  
v3.19.3.a.u2
Acquisitions and Divestitures - Summary of Consideration Paid and Assets and Liabilities Acquired (Details) - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Business Acquisition [Line Items]    
Property, plant and equipment $ 0 $ 1
Goodwill 5 21
Net assets acquired $ 6 30
Weighted average amortization period 6 years  
Acquired Finite-Lived Intangible Assets [Line Items]    
Proceeds from sale of operations $ 3  
Reacquired franchise rights    
Business Acquisition [Line Items]    
Intangible assets 0 3
Customer relationships    
Business Acquisition [Line Items]    
Intangible assets 0 1
Trademarks and trade names    
Business Acquisition [Line Items]    
Intangible assets $ 1 $ 4
v3.19.3.a.u2
Goodwill and Other Intangibles - Summary of Goodwill by Segment (Details)
$ in Millions
3 Months Ended
Dec. 31, 2019
USD ($)
Goodwill [Roll Forward]  
Goodwill, beginning balance $ 430
Acquisitions 5
Goodwill, ending balance 433
Currency translation 1
Goodwill, Written off Related to Sale of Business Unit 3
Quick Lubes  
Goodwill [Roll Forward]  
Goodwill, beginning balance 301
Acquisitions 5
Goodwill, ending balance 304
Currency translation 1
Goodwill, Written off Related to Sale of Business Unit 3
Core North America  
Goodwill [Roll Forward]  
Goodwill, beginning balance 89
Acquisitions 0
Goodwill, ending balance 89
Currency translation 0
Goodwill, Written off Related to Sale of Business Unit 0
International  
Goodwill [Roll Forward]  
Goodwill, beginning balance 40
Acquisitions 0
Goodwill, ending balance 40
Currency translation 0
Goodwill, Written off Related to Sale of Business Unit $ 0
v3.19.3.a.u2
Restructuring Activities - Narrative (Details)
$ in Millions
3 Months Ended
Dec. 31, 2019
USD ($)
Restructuring Cost and Reserve [Line Items]  
Cumulative Restructuring Charges $ 13
Employee Termination Benefits  
Restructuring Cost and Reserve [Line Items]  
Expenses recognized during the period $ 1
v3.19.3.a.u2
Restructuring Activities - Schedule of Restructuring Activity (Details) - Employee Termination Benefits
$ in Millions
3 Months Ended
Dec. 31, 2019
USD ($)
Restructuring Reserve [Roll Forward]  
Balance at September 30, 2019 $ 9
Expenses recognized during the period 1
Payments (2)
Balance at December 31, 2019 $ 8
v3.19.3.a.u2
Debt - Schedule of Short-Term Borrowings and Long Term Debt (Details) - USD ($)
Dec. 31, 2019
Sep. 30, 2019
Debt Instrument [Line Items]    
Other $ (8,000,000) $ (8,000,000)
Total debt 1,342,000,000 1,342,000,000
Current portion of long-term debt 22,000,000 15,000,000
Long-term debt 1,320,000,000 1,327,000,000
Debt issuance cost discounts 9,000,000 9,000,000
Debt acquired through acquisitions 1,000,000 1,000,000
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 Loan | Line of Credit | Secured Debt    
Debt Instrument [Line Items]    
Debt gross 575,000,000 575,000,000
Trade Receivables Facility | Line of Credit | Secured Debt    
Debt Instrument [Line Items]    
Long-term debt 0 0
Original principal amount of debt   $ 175,000,000
Total borrowing capacity remaining $ 130,000,000  
v3.19.3.a.u2
Debt - Senior Notes (Details) - Senior Notes - USD ($)
Aug. 31, 2017
Jul. 31, 2016
2025 Notes    
Debt Instrument [Line Items]    
Interest rate on senior unsecured notes 4.375%  
Aggregate principal amount $ 400,000,000  
2024 Notes    
Debt Instrument [Line Items]    
Interest rate on senior unsecured notes   5.50%
Aggregate principal amount   $ 375,000,000
v3.19.3.a.u2
Debt - Senior Credit Agreement (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Sep. 30, 2019
Apr. 12, 2019
2019 Revolver        
Debt Instrument [Line Items]        
Letters of credit outstanding $ 9,000,000      
Secured Debt | 2019 Term Loans | Line of Credit        
Debt Instrument [Line Items]        
Original principal amount of debt       $ 575,000,000
Secured Debt | Trade Receivables Facility | Line of Credit        
Debt Instrument [Line Items]        
Original principal amount of debt     $ 175,000,000  
Revolvers | 2019 Revolver | Line of Credit        
Debt Instrument [Line Items]        
Original principal amount of debt       $ 475,000,000
Borrowings from revolving credit facility 0      
Repayments of long-term debt 0 $ 0    
Total borrowing capacity remaining $ 466,000,000      
v3.19.3.a.u2
Debt - Trade Receivables Facility (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Sep. 30, 2019
Debt Instrument [Line Items]      
Proceeds from borrowings $ 0 $ 100,000,000  
Repayments of long-term debt   $ 101,000,000  
Line of Credit | Trade Receivables Facility | Secured Debt      
Debt Instrument [Line Items]      
Original principal amount of debt     $ 175,000,000
Long-term debt outstanding amount 0   0
Line of Credit | Trade Receivables Facility | Secured Debt | Financing Subsidiary      
Debt Instrument [Line Items]      
Accounts receivable pledged as collateral $ 220,000,000   $ 259,000,000
v3.19.3.a.u2
Income Taxes - Schedule of Income Tax Expense and Effective Tax Rate (Details) - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Income Tax Disclosure [Abstract]    
Income tax expense $ 24 $ 19
Effective tax rate percentage 24.70% 26.40%
v3.19.3.a.u2
Employee Benefit Plans - Components of Pension and Other Postretirement Benefit Income (Details) - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Pension benefits    
Defined Benefit Plan Disclosure [Line Items]    
Service cost $ 1 $ 0
Interest cost 16 20
Expected return on plan assets (22) (20)
Amortization of prior service credit 0 0
Net periodic benefit income (5) 0
Other postretirement benefits    
Defined Benefit Plan Disclosure [Line Items]    
Service cost 0 0
Interest cost 0 1
Expected return on plan assets 0 0
Amortization of prior service credit (3) (3)
Net periodic benefit income $ (3) $ (2)
v3.19.3.a.u2
Earnings Per Share (Details) - USD ($)
$ / shares in Units, shares in Millions, $ in Millions
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Numerator    
Net income $ 73 $ 53
Denominator    
Weighted-average common shares outstanding (shares) 189 188
Effect of potentially dilutive securities (shares) 0 1
Weighted average diluted shares outstanding (shares) 189 189
Earnings per share    
Basic (usd per share) $ 0.39 $ 0.28
Diluted (usd per share) $ 0.39 $ 0.28
Shares excluded from diluted earnings per share calculation due to anti-dilutive effect (shares) 1 2
v3.19.3.a.u2
Reportable Segment Information - Narrative (Details)
Dec. 31, 2019
numberOfCountries
Non-US  
Segment Reporting Information [Line Items]  
Number of countries where our products are sold 140
v3.19.3.a.u2
Reportable Segment Information - Sales and Operating Income by Reportable Segment (Details)
$ in Millions
3 Months Ended
Dec. 31, 2019
USD ($)
numberOfCountries
numberOfSegments
Dec. 31, 2018
USD ($)
Segment Reporting Information [Line Items]    
Sales $ 607 $ 557
Number of reportable segments | numberOfSegments 3  
Operating income $ 104 87
Non-US    
Segment Reporting Information [Line Items]    
Number of countries where our products are sold | numberOfCountries 140  
Quick Lubes | North America    
Segment Reporting Information [Line Items]    
Sales $ 218 189
Quick Lubes | EMEA [Member]    
Segment Reporting Information [Line Items]    
Sales 0 0
Quick Lubes | Asia Pacific [Member]    
Segment Reporting Information [Line Items]    
Sales 0 0
Quick Lubes | Latin America    
Segment Reporting Information [Line Items]    
Sales 0 0
Core North America    
Segment Reporting Information [Line Items]    
Sales 248 232
Core North America | EMEA [Member]    
Segment Reporting Information [Line Items]    
Sales 0 0
Core North America | Asia Pacific [Member]    
Segment Reporting Information [Line Items]    
Sales 0 0
Core North America | Latin America    
Segment Reporting Information [Line Items]    
Sales 0 0
International    
Segment Reporting Information [Line Items]    
Sales 141 136
International | North America    
Segment Reporting Information [Line Items]    
Sales 0 0
North America    
Segment Reporting Information [Line Items]    
Sales 466 421
Latin America    
Segment Reporting Information [Line Items]    
Sales 24 25
Asia Pacific [Member]    
Segment Reporting Information [Line Items]    
Sales 70 67
EMEA [Member]    
Segment Reporting Information [Line Items]    
Sales 47 44
Operating Segments    
Segment Reporting Information [Line Items]    
Operating income 104 87
Operating Segments | Quick Lubes    
Segment Reporting Information [Line Items]    
Sales 218 189
Operating income 38 38
Operating Segments | Core North America    
Segment Reporting Information [Line Items]    
Sales 248 232
Operating income 46 31
Operating Segments | International    
Segment Reporting Information [Line Items]    
Sales 141 136
Operating income 20 18
Unallocated and Other    
Segment Reporting Information [Line Items]    
Operating income 0 0
Company-Owned [Member] | Quick Lubes    
Segment Reporting Information [Line Items]    
Sales 142 124
Non-Company Owned [Member] | Quick Lubes    
Segment Reporting Information [Line Items]    
Sales 76 65
Retail [Member] | Core North America    
Segment Reporting Information [Line Items]    
Sales 137 116
Installer And Other [Member] | Core North America    
Segment Reporting Information [Line Items]    
Sales $ 111 $ 116
v3.19.3.a.u2
Supplemental Financial Information - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Sep. 30, 2019
Dec. 31, 2018
Sep. 30, 2018
Supplemental Financial Information [Abstract]        
Restricted cash $ 1 $ 0 $ 0  
Cash and cash equivalents 162 159 99  
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents $ 163 $ 159 $ 99 $ 96
v3.19.3.a.u2
Supplemental Financial Information - Summary of Accounts Receivable (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Sep. 30, 2019
Supplemental Financial Information [Abstract]      
Trade $ 389,000,000   $ 392,000,000
Other 13,000,000   15,000,000
Trade 402,000,000   407,000,000
Accounts Receivable, Allowance for Credit Loss, Current 7,000,000   6,000,000
Accounts receivable, net 395,000,000   $ 401,000,000
Accounts receivable sold to financial institutions $ 0 $ 28,000,000  
v3.19.3.a.u2
Supplemental Financial Information - Narrative (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Supplemental Financial Information [Abstract]    
Accounts receivable sold to financial institutions $ 0 $ 28,000,000
v3.19.3.a.u2
Supplemental Financial Information - Inventory (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Sep. 30, 2019
Supplemental Financial Information [Abstract]    
Finished products $ 197 $ 203
Raw materials, supplies and work in process 37 32
Inventory, LIFO Reserve 40 41
Inventories, net $ 194 $ 194
v3.19.3.a.u2
Supplemental Financial Information - Revenue Recognition and Deferred Revenue (Details) - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Disaggregation of Revenue [Line Items]    
Sales $ 607 $ 557
Sales at a point in time    
Disaggregation of Revenue [Line Items]    
Sales 596 547
Franchised revenues transferred over time    
Disaggregation of Revenue [Line Items]    
Sales $ 11 $ 10
v3.19.3.a.u2
Guarantor Financial Information - Condensed Consolidating Statements of Comprehensive Income (Details) - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Net Income (Loss) Attributable to Parent [Abstract]    
Sales $ 607 $ 557
Cost of sales 396 374
Gross profit 211 183
Selling, general and administrative expenses 117 105
Net legacy and separation-related income (1)  
Equity and other (income) expenses, net (9) (9)
Operating income 104 87
Net pension and other postretirement plan income (9) (2)
Net interest and other financing expenses 16 17
Income before income taxes 97 72
Income tax (benefit) expense 24 19
Equity in net income of subsidiaries 0 0
Net income 73 53
Comprehensive income 79 47
Eliminations    
Net Income (Loss) Attributable to Parent [Abstract]    
Sales (13) (15)
Cost of sales (13) (15)
Gross profit 0 0
Selling, general and administrative expenses 0 0
Net legacy and separation-related income 0  
Equity and other (income) expenses, net 0 0
Operating income 0 0
Net pension and other postretirement plan income 0 0
Net interest and other financing expenses 0 0
Income before income taxes 0 0
Income tax (benefit) expense 0 0
Equity in net income of subsidiaries 93 72
Net income (93) (72)
Comprehensive income (104) (62)
Valvoline Inc. (Parent Issuer) | Reportable Legal Entities    
Net Income (Loss) Attributable to Parent [Abstract]    
Sales 0 0
Cost of sales 0 0
Gross profit 0 0
Selling, general and administrative expenses 4 3
Net legacy and separation-related income (1)  
Equity and other (income) expenses, net 0 0
Operating income (3) (3)
Net pension and other postretirement plan income 0 0
Net interest and other financing expenses 15 15
Income before income taxes (18) (18)
Income tax (benefit) expense (6) (5)
Equity in net income of subsidiaries (85) (66)
Net income 73 53
Comprehensive income 79 47
Guarantor Subsidiaries | Reportable Legal Entities    
Net Income (Loss) Attributable to Parent [Abstract]    
Sales 480 440
Cost of sales 309 293
Gross profit 171 147
Selling, general and administrative expenses 88 81
Net legacy and separation-related income 0  
Equity and other (income) expenses, net (13) (13)
Operating income 96 79
Net pension and other postretirement plan income (9) (2)
Net interest and other financing expenses 1 1
Income before income taxes 104 80
Income tax (benefit) expense 27 20
Equity in net income of subsidiaries (8) (6)
Net income 85 66
Comprehensive income 89 60
Non-Guarantor Subsidiaries | Reportable Legal Entities    
Net Income (Loss) Attributable to Parent [Abstract]    
Sales 140 132
Cost of sales 100 96
Gross profit 40 36
Selling, general and administrative expenses 25 21
Net legacy and separation-related income 0  
Equity and other (income) expenses, net 4 4
Operating income 11 11
Net pension and other postretirement plan income 0 0
Net interest and other financing expenses 0 1
Income before income taxes 11 10
Income tax (benefit) expense 3 4
Equity in net income of subsidiaries 0 0
Net income 8 6
Comprehensive income $ 15 $ 2
v3.19.3.a.u2
Guarantor Financial Information - Condensed Consolidating Balance Sheets (Details) - USD ($)
$ in Millions
Dec. 31, 2019
Sep. 30, 2019
Dec. 31, 2018
Sep. 30, 2018
Assets, Current [Abstract]        
Cash and cash equivalents $ 162 $ 159 $ 99  
Accounts receivable, net 395 401    
Inventories, net 194 194    
Prepaid expenses and other current assets 43 43    
Total current assets 794 797    
Noncurrent assets        
Property, plant and equipment, net 479 498    
Operating lease assets 253 0    
Goodwill and intangibles, net 507 504    
Equity method investments 39 34    
Investment in subsidiaries 0 0    
Deferred income taxes 116 123    
Other noncurrent assets 109 108    
Total noncurrent assets 1,503 1,267    
Total assets 2,297 2,064    
Current liabilities        
Current portion of long-term debt 22 15    
Trade and other payables 153 171    
Accrued expenses and other liabilities 246 237    
Total current liabilities 421 423    
Noncurrent liabilities        
Long-term debt 1,320 1,327    
Employee benefit obligations 376 387    
Operating lease liabilities, noncurrent 224 0    
Other noncurrent liabilities 152 185    
Total noncurrent liabilities 2,072 1,899    
Commitments and contingencies    
Stockholders’ (deficit) equity (196) (258) $ (343) $ (358)
Total liabilities and stockholders’ deficit 2,297 2,064    
Present value of lease liabilities 254      
Eliminations        
Assets, Current [Abstract]        
Cash and cash equivalents 0 0    
Accounts receivable, net (150) (118)    
Inventories, net 0 0    
Prepaid expenses and other current assets 0 0    
Total current assets (150) (118)    
Noncurrent assets        
Property, plant and equipment, net 0 0    
Operating lease assets 0      
Goodwill and intangibles, net 0 0    
Equity method investments 0 0    
Investment in subsidiaries (1,770) (1,703)    
Deferred income taxes 0 0    
Other noncurrent assets 0 0    
Total noncurrent assets (1,770) (1,703)    
Total assets (1,920) (1,821)    
Current liabilities        
Current portion of long-term debt 0 0    
Trade and other payables (150) (118)    
Accrued expenses and other liabilities 0 0    
Total current liabilities (150) (118)    
Noncurrent liabilities        
Long-term debt 0 0    
Employee benefit obligations 0 0    
Operating lease liabilities, noncurrent 0      
Other noncurrent liabilities 0 0    
Total noncurrent liabilities 0 0    
Stockholders’ (deficit) equity (1,770) (1,703)    
Total liabilities and stockholders’ deficit (1,920) (1,821)    
Valvoline Inc. (Parent Issuer) | Reportable Legal Entities        
Assets, Current [Abstract]        
Cash and cash equivalents 0 0    
Accounts receivable, net 0 0    
Inventories, net 0 0    
Prepaid expenses and other current assets 1 0    
Total current assets 1 0    
Noncurrent assets        
Property, plant and equipment, net 0 0    
Operating lease assets 0      
Goodwill and intangibles, net 0 0    
Equity method investments 0 0    
Investment in subsidiaries 1,247 1,157    
Deferred income taxes 55 48    
Other noncurrent assets 3 3    
Total noncurrent assets 1,305 1,208    
Total assets 1,306 1,208    
Current liabilities        
Current portion of long-term debt 22 15    
Trade and other payables 109 80    
Accrued expenses and other liabilities 18 9    
Total current liabilities 149 104    
Noncurrent liabilities        
Long-term debt 1,319 1,326    
Employee benefit obligations 0 0    
Operating lease liabilities, noncurrent 0      
Other noncurrent liabilities 34 36    
Total noncurrent liabilities 1,353 1,362    
Stockholders’ (deficit) equity (196) (258)    
Total liabilities and stockholders’ deficit 1,306 1,208    
Guarantor Subsidiaries | Reportable Legal Entities        
Assets, Current [Abstract]        
Cash and cash equivalents 62 59    
Accounts receivable, net 245 181    
Inventories, net 108 110    
Prepaid expenses and other current assets 32 35    
Total current assets 447 385    
Noncurrent assets        
Property, plant and equipment, net 407 431    
Operating lease assets 211      
Goodwill and intangibles, net 425 423    
Equity method investments 39      
Investment in subsidiaries 523 546    
Deferred income taxes 47 61    
Other noncurrent assets 97 96    
Total noncurrent assets 1,749 1,591    
Total assets 2,196 1,976    
Current liabilities        
Current portion of long-term debt 0 0    
Trade and other payables 96 127    
Accrued expenses and other liabilities 182 175    
Total current liabilities 278 302    
Noncurrent liabilities        
Long-term debt 1 1    
Employee benefit obligations 359 369    
Operating lease liabilities, noncurrent 195      
Other noncurrent liabilities 116 147    
Total noncurrent liabilities 671 517    
Stockholders’ (deficit) equity 1,247 1,157    
Total liabilities and stockholders’ deficit 2,196 1,976    
Non-Guarantor Subsidiaries | Reportable Legal Entities        
Assets, Current [Abstract]        
Cash and cash equivalents 100 100    
Accounts receivable, net 300 338    
Inventories, net 86 84    
Prepaid expenses and other current assets 10 8    
Total current assets 496 530    
Noncurrent assets        
Property, plant and equipment, net 72 67    
Operating lease assets 42      
Goodwill and intangibles, net 82 81    
Equity method investments 0 0    
Investment in subsidiaries 0 0    
Deferred income taxes 14 14    
Other noncurrent assets 9 9    
Total noncurrent assets 219 171    
Total assets 715 701    
Current liabilities        
Current portion of long-term debt 0 0    
Trade and other payables 98 82    
Accrued expenses and other liabilities 46 53    
Total current liabilities 144 135    
Noncurrent liabilities        
Long-term debt 0 0    
Employee benefit obligations 17 18    
Operating lease liabilities, noncurrent 29      
Other noncurrent liabilities 2 2    
Total noncurrent liabilities 48 20    
Stockholders’ (deficit) equity 523 546    
Total liabilities and stockholders’ deficit $ 715 $ 701    
v3.19.3.a.u2
Guarantor Financial Information - Condensed Consolidating Statements of Cash Flows (Details) - USD ($)
$ in Millions
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flows provided by operating activities $ 59 $ 85
Cash flows from investing activities    
Additions to property, plant and equipment (28) (27)
Acquisitions, net of cash acquired (6) (30)
Other investing activities, net (1) 1
Total cash used in investing activities (35) (56)
Cash flows from financing activities    
Proceeds from borrowings, net of issuance costs 0 100
Repayments on borrowings   (101)
Cash dividends paid (21) (20)
Other financing activities (2) (4)
Total cash used in financing activities (23) (25)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash 3 (1)
Increase (decrease) in cash, cash equivalents, and restricted cash 4 3
Cash, cash equivalents, and restricted cash - beginning of period 159 96
Cash, cash equivalents, and restricted cash - end of period 163 99
Reportable Legal Entities | Valvoline Inc. (Parent Issuer)    
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flows provided by operating activities 23 13
Cash flows from investing activities    
Additions to property, plant and equipment 0 0
Acquisitions, net of cash acquired 0 0
Other investing activities, net 0 0
Total cash used in investing activities 0 0
Cash flows from financing activities    
Proceeds from borrowings, net of issuance costs   57
Repayments on borrowings   (48)
Cash dividends paid (21) (20)
Other financing activities (2) (2)
Total cash used in financing activities (23) (13)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash 0 0
Increase (decrease) in cash, cash equivalents, and restricted cash 0 0
Cash, cash equivalents, and restricted cash - beginning of period 0 0
Cash, cash equivalents, and restricted cash - end of period 0 0
Reportable Legal Entities | Guarantor Subsidiaries    
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flows provided by operating activities 31 29
Cash flows from investing activities    
Additions to property, plant and equipment (21) (20)
Acquisitions, net of cash acquired (6) (8)
Other investing activities, net (1) 1
Total cash used in investing activities (28) (27)
Cash flows from financing activities    
Proceeds from borrowings, net of issuance costs   0
Repayments on borrowings   0
Cash dividends paid 0 0
Other financing activities 0 (1)
Total cash used in financing activities 0 (1)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash 0 0
Increase (decrease) in cash, cash equivalents, and restricted cash 3 1
Cash, cash equivalents, and restricted cash - beginning of period 59 20
Cash, cash equivalents, and restricted cash - end of period 62 21
Reportable Legal Entities | Non-Guarantor Subsidiaries    
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flows provided by operating activities 5 43
Cash flows from investing activities    
Additions to property, plant and equipment (7) (7)
Acquisitions, net of cash acquired 0 (22)
Other investing activities, net 0 0
Total cash used in investing activities (7) (29)
Cash flows from financing activities    
Proceeds from borrowings, net of issuance costs   43
Repayments on borrowings   (53)
Cash dividends paid 0 0
Other financing activities 0 (1)
Total cash used in financing activities 0 (11)
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash 3 (1)
Increase (decrease) in cash, cash equivalents, and restricted cash 1 2
Cash, cash equivalents, and restricted cash - beginning of period 100 76
Cash, cash equivalents, and restricted cash - end of period 101 78
Eliminations    
Condensed Cash Flow Statements, Captions [Line Items]    
Cash flows provided by operating activities 0 0
Cash flows from investing activities    
Additions to property, plant and equipment 0 0
Acquisitions, net of cash acquired 0 0
Other investing activities, net 0 0
Total cash used in investing activities 0 0
Cash flows from financing activities    
Proceeds from borrowings, net of issuance costs   0
Repayments on borrowings   0
Cash dividends paid 0 0
Other financing activities 0 0
Total cash used in financing activities 0 0
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash 0 0
Increase (decrease) in cash, cash equivalents, and restricted cash 0 0
Cash, cash equivalents, and restricted cash - beginning of period 0 0
Cash, cash equivalents, and restricted cash - end of period $ 0 $ 0
v3.19.3.a.u2
Subsequent Events (Details)
Jan. 29, 2020
$ / shares
Subsequent Events [Abstract]  
Dividend per share (usd per share) $ 0.113
v3.19.3.a.u2
Label Element Value
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ (13,000,000)