• Strengthening and expanding Valvoline’s existing business by improving distribution channels and increasing penetration of Valvoline’s full product portfolio;

• Broadening electric vehicle (“EV”) capabilities by developing relationships with OEMs and leveraging innovation in the development of future EV products and light services in direct and adjacent markets; and

• Investing in talent and technology to develop Valvoline’s global hands-on expert capabilities and culture to drive and efficiency in both customer-facing and back-office critical processes.

Quick Lubes store development

During fiscal 2018, Valvoline acquired 136 service center stores, which included 73 franchise service center stores, 60 former franchise service center stores, and 3 service center stores acquired in single and multi-store transactions. These acquisitions included the Company’s first international quick lube service center store acquisition and expansion into Canada. During fiscal 2017, the Company acquired 43 service center stores that included 14 former franchise service center stores and 29 service center stores acquired in single and multi-store transactions. During fiscal 2016, 104 service center stores were acquired that included 42 franchise service center stores, 9 former franchise service center stores and 53 service center stores acquired in single and multi-store transactions.

As of September 30, 2018, Valvoline operated, either directly or through its franchisees, 1,242 quick lube service center stores, an increase of 115 over the prior year. In addition to the 76 acquired stores added to the Quick Lubes system described above, a combined 39 net new company-owned and franchised service center stores were added to the system during fiscal 2018. The Quick Lubes system consisted of 462 company-owned and 780 franchised locations and operated in 46 states in the U.S. and five provinces in Canada. As of September 30, 2018, there were 347 Express Care™ locations.

VIOC delivered system-wide same-store sales growth of 8.3% in fiscal 2018, the 12th consecutive year of system-wide same-store sales growth (determined on a fiscal year basis, with new stores excluded from the metric until the completion of their first full fiscal year in operation).

Competition

The industry is highly competitive and Valvoline faces competition in all product categories and subcategories. Competition is based on several key criteria, including brand recognition, product performance and quality, product price, product availability and security of supply, ability to develop products in cooperation with customers and customer service, as well as the ability to bring innovative products or services to the marketplace.

In the Core North America segment, Valvoline’s principal competitors for retail customers are global integrated oil brands, such as Shell, which produces and Quaker State; BP, which produces Castrol; Exxon Mobil, which produces Mobil 1; as well as mid- tier brands and private label producers. Valvoline currently ranks as the number three passenger car motor oil brand in the DIY market by volume. With respect to installer customers in the and Canada, Valvoline competes with these same major integrated oil brands, many of which have significantly greater financial resources and more diverse portfolios of products and services, leading to greater operating and financial flexibility.

The Quick Lubes segment competes with other major franchised brands that offer a turn-key operations management system, such as (owned by Shell), Grease Monkey, Take 5 Oil Change, Express Oil Change and Mr. Lube, as well as national branded companies that offer a professional signage program with limited business model support, similar to Valvoline’s Express Care network, as well as regional players such as Super-Lube and American Lube Fast that are not directly affiliated with a major brand. Valvoline also competes to some degree with automotive dealerships and service stations, which provide quick lube and other preventative maintenance services. Valvoline believes there are over 9,000 existing quick lube stores currently operating in the U.S. market. Jiffy Lube is currently the Company’s largest competitor by number of stores with just over 1,900 stores owned or operated by franchisees in the U.S. The Canadian quick lubes market is similarly fragmented with a small number of large players that comprise roughly half of the market, while the remainder is made up of smaller local and regional competitors, automotive dealerships and service stations.

Major competitors of Valvoline’s International segment vary by region. Valvoline generally faces strong competition from global integrated oil brands, as these companies have a particularly strong presence in Europe and Asia. In certain markets, Valvoline also competes with regional brands, including brands produced by national oil companies, such as Sinopec in China and Indian Oil in India.

7