XML 53 R17.htm IDEA: XBRL DOCUMENT
v3.25.3

Income Taxes | 12 Months Ended
--- | ---
Sep. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Components of income tax expense Income tax expense consisted of the following for the years ended September 30:
(In millions) |  | 2025 |  | 2024 |  | 2023
Current |  |  |  |  |  |
Federal |  | $ | 24.5 |  |  | $ | 34.7 |  |  | $ | 8.0 |
State |  | 11.7 |  |  | 8.3 |  |  | (5.5) |
Non-U.S. |  | 3.0 |  |  | 2.6 |  |  | 1.0 |
|  | 39.2 |  |  | 45.6 |  |  | 3.5 |
Deferred |  |  |  |  |  |
Federal |  | 31.5 |  |  | 20.8 |  |  | 36.8 |
State |  | 5.8 |  |  | 2.7 |  |  | (3.2) |
Non-U.S. |  | 1.0 |  |  | — |  |  | — |
|  | 38.3 |  |  | 23.5 |  |  | 33.6 |
Income tax expense |  | $ | 77.5 |  |  | $ | 69.1 |  |  | $ | 37.1 |
The following presents pre-tax income and the principal components of the reconciliation between the effective tax rate and the U.S. federal statutory income tax rate in effect for the years ended September 30:
(In millions) |  | 2025 |  | 2024 |  | 2023
Income before income taxes |  |  |  |  |  |
United States |  | $ | 281.4 |  |  | $ | 286.5 |  |  | $ | 242.7 |
Non-U.S. |  | 10.9 |  |  | (2.9) |  |  | (6.2) |
Total income before income taxes |  | $ | 292.3 |  |  | $ | 283.6 |  |  | $ | 236.5 |
U.S. statutory tax rate |  | 21 | % |  | 21 | % |  | 21 | %
Income taxes computed at U.S. statutory tax rate |  | $ | 61.4 |  |  | $ | 59.6 |  |  | $ | 49.7 |
(Decrease) increase in amount computed resulting from: |  |  |  |  |  |
Unrecognized tax benefits |  | — |  |  | 0.1 |  |  | 0.1 |
State taxes, net of federal benefit |  | 15.0 |  |  | 9.2 |  |  | 11.2 |
International rate differential |  | 0.7 |  |  | (0.1) |  |  | 0.1 |
Permanent items |  | 1.3 |  |  | 1.7 |  |  | 0.1 |
Remeasurement of net deferred taxes |  | — |  |  | (0.1) |  |  | (1.1) |
Return-to-provision adjustments |  | (0.1) |  |  | (0.7) |  |  | (0.9) |
Change in valuation allowances |  | 0.1 |  |  | (1.7) |  |  | (27.7) |
Tax Matters Agreement activity |  | (0.1) |  |  | — |  |  | 5.4 |
Other |  | (0.8) |  |  | 1.1 |  |  | 0.2 |
Income tax expense |  | $ | 77.5 |  |  | $ | 69.1 |  |  | $ | 37.1 |
Effective tax rate |  | 26.5 | % |  | 24.4 | % |  | 15.7 | %
The higher effective tax rate in fiscal 2025 primarily reflects decreases in the favorable impact of return to provision adjustments and valuation allowance activity. The higher effective tax rate in fiscal 2024 compared to fiscal 2023 reflects more normalized activity, as fiscal 2023 included a $29.0 million income tax benefit from releasing a valuation allowance under the amended tax matters agreement with Valvoline’s former parent company. Deferred taxes A summary of the deferred tax assets and liabilities included in the Consolidated Balance Sheets follows as of September 30:
(In millions) |  | 2025 |  | 2024
Deferred tax assets |  |  |  |
U.S. net operating loss carryforwards |  | $ | 3.2 |  |  | $ | — |
Non-U.S. net operating loss carryforwards (a) |  | 0.5 |  |  | 2.9 |
State net operating loss carryforwards (b) |  | 5.7 |  |  | 6.9 |
Employee benefit obligations |  | 37.6 |  |  | 33.9 |
Compensation accruals |  | 16.6 |  |  | 15.8 |
Credit carryforwards (c) |  | — |  |  | 0.3 |
Operating lease liabilities |  | 123.3 |  |  | 107.9 |
Other |  | 14.5 |  |  | 10.3 |
Valuation allowances (d) |  | (4.8) |  |  | (1.0) |
Net deferred tax assets |  | 196.6 |  |  | 177.0 |
Deferred tax liabilities |  |  |  |
Goodwill and other intangibles |  | 33.6 |  |  | 25.9 |
Property, plant and equipment |  | 196.0 |  |  | 154.1 |
Operating lease assets |  | 84.0 |  |  | 75.4 |
Other |  | — |  |  | 0.2 |
Total deferred tax liabilities |  | 313.6 |  |  | 255.6 |
Total net deferred tax liabilities (e) |  | $ | (117.0) |  |  | $ | (78.6) |
(a)Gross non-U.S. net operating loss carryforwards of $1.7 million expire in fiscal years 2043 to 2044. (b)Apportioned gross state net operating loss carryforwards of $108.1 million expire in fiscal year s 2029 to 2045. (c)Credit carryforwards consist primarily of state tax credits that generally expire in fiscal years 2025 through 2032. (d)Valuation allowances at September 30, 2025 primarily relate t o nondeductible executive compensation and net operating loss carryforwards that are not expected to be realized or realizable. (e)Balances are presented in the Consolidated Balance Sheets based on the net position of each tax jurisdiction. Prepaid income taxes of $22.3 million and $25.1 million are included in Prepaid expenses and other current assets within the Consolidated Balance Sheets as of September 30, 2025 and 2024, respectively. Tax indemnities In connection with Valvoline’s separation from Ashland Global Holdings Inc. (“Ashland”) in fiscal 2017, the Company entered into an agreement (the “Tax Matters Agreement”) with Ashland in September 2016, which provided that Valvoline indemnify Ashland for certain tax matters. Similarly, in connection with the sale of VGO in fiscal 2023, the purchase agreement provided for certain indemnities between Valvoline and VGO. Adjustments to these net indemnities are recorded within Net legacy and separation-related expenses (income), with any resulting impacts to Valvoline's stand-alone income tax provision recorded in Income tax expense within the Consolidated Statements of Comprehensive Income. During fiscal 2023, Valvoline recognized an income tax benefit of $29.0 million in connection with releasing its valuation allowance and $25.7 million of pre-tax expense within Net legacy and separation-related expenses in the Consolidated Statement of Comprehensive Income, reflecting its increased estimated indemnity obligation under the terms of the amended Tax Matters Agreement to Ashland. Unrecognized tax benefits The aggregate changes in the balance of gross unrecognized tax benefits were as follows for the years ended September 30:
(In millions) |  | 2025 |  | 2024 |  | 2023
Gross unrecognized tax benefits as of October 1 |  | $ | 33.1 |  |  | $ | 35.7 |  |  | $ | 8.2 |
Increases related to tax positions from prior years |  | — |  |  | 0.1 |  |  | 0.6 |
Decreases related to tax positions from prior years |  | — |  |  | (2.1) |  |  | (0.6) |
Increases related to tax positions taken during the current year |  | — |  |  | — |  |  | 27.7 |
Lapses of statutes of limitation |  | (0.3) |  |  | (0.6) |  |  | (0.2) |
Gross unrecognized tax benefits as of September 30 (a) |  | $ | 32.8 |  |  | $ | 33.1 |  |  | $ | 35.7 |
(a)These unrecognized tax benefits would favorably impact the effective income tax rate, primarily for discontinued operations, if recognized. Accruals for interest and penalties were $6.5 million and $1.8 million as of September 30, 2025 and 2024, respectively. The Company's U.S. federal income tax returns remain open to examination from fisca l 2019 f orward and Canada from fiscal 2021 and forward. Fiscal years including and after 2019 remain open to examination by certain U.S. state jurisdictions. Because Valvoline is routinely under examination by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during fiscal 2026. Due to the complexity and number of open years, it is not practical to estimate the amount or range of such change at this time. Based on current information available, management does not expect a material change to the Company's gross unrecognized tax benefits within fiscal 2026.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477617/942-740-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480738/235-10-S50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478822/944-740-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 5: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 17: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration