valvoline inc. (vvv)

by:ILED     2019-12-20
Washington, D. C. Securities and Exchange CommissionC. 20549FORM 10-
Annual Report submitted under Section 13 or 15 (d)
Under section 13,15, the Securities Trading Act for the fiscal year ended 1934, September 30, 2018 (d)
The transition period of the securities trading Law of 1934 on the period from _ th to _ th Commission File No. 001-
VALVOLINE inc. 84Kentucky(
State or other jurisdiction registered or organized)30-0939371(I. R. S.
Employer identity number)
Telephone number: 100 Valvoline WayLexington, 40509, Kentucky859)357-
7777 securities registered under article 12 (b)
Part of the act: the title of each class name of each exchange registering common stock, with a face value of $0.
Every shareNew York stock exchange registered under section 12thg)
Key points of the act: if the registrant is healthy, it is not indicated by a check mark
Well-known experienced issuers as defined in Rule 405 of the Securities Act.
If the registrant does not need to submit a report under Section 13 or Section 15, it is not necessary to indicate by check mark (d)of the Act.
Indicate the registrant by check mark (1)
All reports requested by Article 13 or 15 have been submitted (d)
Securities Trading Act of 1934 within the first 12 months (
Or a short period of time required for the registrant to submit such reports), and (2)
This filing requirement has been bound for the last 90 days.
Whether or not a check mark is used to indicate whether the registrant has electronically submitted each Interactive Data File required to be submitted in accordance with Rule 405 of the S-regulations
12 months before T (
Or within a shorter period of time when the registrant is required to submit such documents).
If a default declarant is disclosed under S-regulation 405th, it is not indicated by a check mark
To the knowledge of the registrant, K is not included in the final proxy or information statement referenced in Part 3 of this Form 10 and will not be included in it
K or any amendments to this form 10K.
Indicate whether the registrant is a large accelerated filer, non-accelerated filer by checking the mark
Accelerate the reporting of companies, smaller reporting companies or emerging growth companies.
See the definition of \"large accelerated reporting companies\", \"Small reporting companies\" and \"emerging growth companies\" in rule 12b
2 of the Trading Act. (Check one)
: Large accelerated filer fil accelerated FileroNon-
Emerging growth companies, emerging growth companies, indicate by check mark whether the registrant chooses not to use the extended transition period to comply with any new or revised financial accounting standards provided under section 13 (a)
The Trading Act.
Indicate whether the registrant is a shell company by check mark (
Defined in Rule 12b-2 of the Act).
The total market value of The voting common stock is right and wrong.
As at March 31, 2018, the subsidiary was approximately $4. 4 billion.
As of November 16, 2018, 188,163,312 ordinary shares had been issued.
Documents contained in the reference section of the registrant\'s final proxy statement (
\"Proxy Statement \")
For the 2019 Annual Shareholders Meeting to be submitted within 120 days of the end of the registrant\'s fiscal year, incorporate it into Part 3 of this annual report Form 10 by reference --K.
Table for CONTENTSPagePART IItem 1. Business 1A.
Risk factor 1B.
Unresolved employee reviews 2.
Property item month.
Legal action 4.
The third part is the fifth mine safety disclosure.
Market for registrant common stock, related shareholder matters and issuer to purchase equity securities
Selected Financial Data Items 7.
Management Discussion and Analysis of the financial status and results of the operating project 7A.
Quantitative and qualitative disclosure of market risks
Financial statements and supplementary data items 9.
Changes and disagreements with accountants on accounting and financial disclosure project 9A.
Control and procedure 9B.
Section IIIItem 10 of other information.
Project 11. Director, executive officer and corporate governance.
Item 12 of administrative compensation.
Secured ownership of certain beneficial owners and management and related shareholders.
Certain relationships and related party transactions independent of directors 14.
Main accounting fees and services section IVItem 15.
Exhibits and Financial Statements
Certain statements in this Annual Report on Form 10
In addition to historical fact statements, statements including estimates, forecasts, statements related to the company\'s business plan and operational results are all forward --
Statement in the sense of the Private Securities Litigation Reform Act of 1995.
Valvoline has identified some of these strikers.
Looking for statements with words such as \"expectation\", \"belief\", \"expectation\", \"estimate\", \"possibility\", \"forecast\", \"project\", \"forecast, \"may\", \"will\", \"should\" and \"intended\" and the negation of these words or other similar terms. These forward-
Based on Valvoline\'s current expectations, it is estimated that forecasts and assumptions as of the date of publication of these statements are subject to risk and uncertainty, these risks and uncertainties may result in significant differences between the results and the results expressed or implied by the forward --
Look at the report.
Factors that may lead to this difference include, but are not limited to, the factors discussed under the heading \"Risk Factors\" in Part 1, Item 1A-in table 10-
K, \"Management\'s Discussion and Analysis of the financial position and results of operations\", Item 7, Part II, of this form-
Table 10 K and \"quantitative and qualitative disclosure of market risks\" in Part II, Item 7A\"K.
Valvoline is under no obligation to update or modify these forwarding
Even if there is new information in the future, look for statements for any reason. 3APART IITEM 1.
Business View Valvoline Inc.
A Kentucky company that is a global marketing and supplier of engine and car repair products and services.
The terms \"Valvoline\", \"company\", \"we\", \"management\" and \"ours\" used here refer to Valvoline Inc.
, Its predecessor and its consolidated subsidiaries, unless otherwise stated in the context.
On September 28, 2016, Valvoline completed its initial public offering (“IPO”)
Common stock and stock transactions on the New York Stock Exchange (“NYSE”)
Under the symbol \"VVV.
Valwallin™It is one of the most recognized and respected high-end consumer brands in the global automotive lubricant industry and is known for its innovative, high-quality products and excellent service level.
Valvoline, founded in 1866, has a history of more than 150 years and is the first oil industry in the United States. S.
Marks the oil brand and develops powerful name recognition functions across multiple product and service channels.
In addition to the iconic Valvoline-
Valvoline brand passenger car oil and other automotive lubricant products offer a wide range of lubricants for heavy equipment, as well as automotive chemicals and liquids designed to improve engine performance and longevity.
Valvoline\'s high quality brand products have increased
Quality reputation and provide customers with solutions to various automotive and engine needs.
Valvoline has a strong international presence and products are sold to more than 140 countries.
In the United States and Canada, Valvoline\'s products and services are sold to retailers with more than 30,000 retail stores, to installation customers with more than 12,000 locations, and to company through1, 242
Owned and licensed stores.
Company background valvoline was registered as a subsidiary of Ashland Global Holdings Inc on May 2016. (
Here it is called \"Ashland\" with its predecessor and merger subsidiary \").
Prior to that, Valvoline operated as an unincorporated commercial unit in Ashland.
After a series of restructuring steps before the IPO, Valvoline\'s business was transferred from Ashland to Valvoline, making the Valvoline business essentially include all the historical Valvoline business reported by Ashland and certain other legacy Ashland assets and liabilities transferred from Ashland to Valvoline (
\"Contribution \").
There are 34 related to the IPO.
5 million shares of Valvoline common stock were sold to investors, and Ashland retained170 million shares accounted for 83% of the total outstanding shares of Valvoline common stock.
On May 12, 2017, Ashland allocated all of its remaining interests in Valvoline to Ashland shareholders (
\"Distribution \")
By a prorated dividend of Ashland common stock shares issued at the end of business on the date of record on May 5, 2017, this marks the completion of valwarin\'s separation from Ashland.
After the distribution becomes effective, Ashland no longer holds any shares of Valvoline\'s common stock and Valvoline is no longer a holding and merger subsidiary of Ashland.
Valvoline\'s portfolio is designed to provide high-quality product solutions to meet the needs of customers with a wide range of different needs.
Valvoline has a history of leading innovation
It has broken products such as all the climate oil and the first high mileage oil.
In addition to the iconic Valvoline-
Brand passenger car oil and other co-
Valvoline brand and private label automotive lubricant products offer a wide range of lubricants for heavy equipment, as well as automotive coolant and chemicals designed to improve engine performance and life.
Valvoline products are widely used in a wide range of vehicles and engines, including light vehiclesduty (
Passenger cars, light trucks and two-wheelers)
And heavy (
Heavy trucks, agriculture, mining and construction equipment)
And electric cars.
Premium branded products enhance Valvoline\'s high quality reputation and provide customers with solutions that meet a wide range of needs.
Valvoline\'s products are divided into the following categories: 4 Product categories % lubricantspasoft car/Light duty86 % for sales description 2018 meet the needs of passenger cars, motorcycles and other Light engines including motor oil, transmission fluid, grease and gear oil for a wide range of heavy duty applications heavy lubrication solutionroad (
Class 4-class 8 vehicles)to off-
Road construction, mining, agriculture and power generation equipment antifreeze/coolant s5 % antifreeze/coolant (“OEMs”);
All kinds of additive technology and chemical products can meet almost all lighting needs
Heavy and heavy engine applications and heat transfer requirements for batteries and fuel cells for electric vehicles chemical maintenance chemicals s3 % function and maintenance chemicals, from brake fluid and power steering fluid to specially designed chemicals to clean and maintain the best performance of fuel, cooling and driving train systems. Special coatings are designed for Rust and sound-absorbing light for automotive and industrial applications-
Heavy duty vehiclesOtherOther supporting products and royalties2 % wiper blades, bulbs, snake belts, drain plugs, franchisees royaltiesIndustry overviewValvoline to participate in the main global finished lubricant market.
It is estimated that a total of about 12 billion gallons of lubricating oil will be required worldwide each year.
It is estimated that the demand for passenger car oil and motorcycle oil accounts for about 24% of the global demand for lubricants, while the remaining 76% is estimated to come from commercial and industrial products.
Historically, the United States is the country with the most demand for lubricants, followed by China and India.
The lubricant market is affected by the following major drivers and trends: Global Lubricant Market demand is shifting to higher performance finished lubricants, driven primarily by advances in vehicle/equipment design and OEM requirements, to improve efficiency, reduce carbon footprint and optimize fuel consumption.
In North America and Europe in particular, there has been increasingly stringent regulation in order to reduce toxic emissions, which has led to an ongoing incentive for innovation in response to changes in lubricant specifications.
The trend dating back to 2006 indicates that the average annual sales volume of the North American transportation Lubu market is relatively stable due to the increase in oil exchange intervals, due to changes suggested by the OEM and advances in engine technology, offset by an increase in driving and mileage on the road.
The surge in the number of cars on the road has led to a rapid expansion in sales of passenger car lubricants in developing regions.
The reporting structure of the reportable segmentsValvoline consists of three reportable parts: core North America, rapid reporting, and international reporting.
In addition, in order to be consistent with the results of the merger, certain companies and other non-companies
Unassigned and other matters include business matters.
For a description of each market segment that can be reported, please refer to the following: 5 core North American sales Valvoline™As well as other brands and private label engine and car repair products in the United States and Canada for retailers to carry out their own car and engine repair for consumers, as well as installers who serve vehicles and equipment for consumers.
Selling Valvoline products to consumers for their own car and engine maintenance is called \"Do-It-
Sales of \"self\" or \"DIY\" consumers, as well as Valvoline products that provide vehicle and equipment services to consumers, are called \"Do-It-For-
\"I\" or \"DIFM\" consumers.
The sales of DIY consumers are mainly brand products sold through retail channels to customers such as retail auto parts stores and leading mass retailers and independent auto parts stores.
Sales of retail channels also include non-
Resell branded packaged goods to warehouse distributors who at the same time resell to installers of DIY consumers and DIFM consumers.
Sales of DIFM consumers are generally sold to car dealers, general repair shops and third through installation channels
Provide fast lubricants directly or through a network of about 200 dealers.
Valvoline also sells products to heavy fleet customers such as on-
The road fleet and construction company network through the installation of dealers.
Valvoline has a strategic relationship with Cummins(“Cummins”)
, A leading supplier of heavy engines
Build brand products for heavy consumers.
Other sales in core North America include OEM and professional consumers.
The fast lubrication segment is served through Valvoline\'s owned and operated fast Lubrication service center store for the fast lubrication market for passenger cars and light trucks in the United States and Canada, fast lubricant Service Center store and express delivery service licensed for independent operators™A store where independent operators provide Valvoline product services to vehicles.
The number of licensed ready-to-eat oil ChangeSM (“VIOC”)
With Canada\'s third-largest rapid lubricant service chain, Canadian oil has changed a lot.
Valvoline\'s fast lubricant Service Center store provides customers with a fast, easy and trustworthy way to maintain their vehicles and make the most of them
Trained technicians have access to the proprietary service process, which sets strict agreements for vehicle service and the steps that must be followed in interaction with customers.
Express service™The platform supports small operators that do not conform to the Valvoline franchise model and generally provides other services such as car repair and car wash in addition to rapid lubrication.
As of September 30, 2018, the rapid Lubes system consists of 462 companies
Owns and operates 780 franchise locations in 46 states of the United StatesS.
Five provinces in Canada
As of September 30, a total of 347 express delivery™Location.
International Valvoline International market sales Valvoline™Engine and car repair products of other brands
Affiliates, joint ventures, licensees and independent distributors owned in more than 140 countries outside the United States and Canada for the maintenance of consumer and commercial vehicles and equipment.
Major international regions include Europe, the Middle East and Africa (“EMEA”); Latin America (
Including Mexico, Central and South America);
Asia Pacific region (
Including Australia, India and China).
Valvoline is growing in some emerging markets, including China, India and Latin America.
International sales include light and heavy products.
Light products are mainly sold to installation customers through dealers.
Heavy products can be sold directly to key customers or through dealers.
Valvoline has 50/50 joint ventures with Cummins in India, China and Argentina, and has established joint ventures with other partners in Latin America.
Unassigned and other unassigned projects and other projects generally include certain corporate and non-corporate projects
Operations, including the company-
Extensive restructuring activities and adjustments related to legacy businesses that no longer belong to Valvoline.
The advantage of the business and growth strategy Valvoline business model is the ability to sell profits to the market through multiple channels, leverage the advantages of the Valvoline brand through effective marketing, innovative product technology and the ability of the Valvoline team.
Valvoline achieved strong profit and return on capital with a balanced result.
Today, Valvoline uses many of them.
Provide a solid profit margin, generate high free cash flow, and provide a channel model for considerable growth opportunities.
Valvoline\'s key business and growth strategies include: accelerating rapid growth in the lubricant sector through organic service center expansion and opportunity acquisition, while strengthening service center stores
Level performance;
Improve execution in key emerging markets with growing demand and continue to invest centrally;
6 strengthen and expand Valvoline\'s existing business by improving distribution channels and increasing the penetration rate of Valvoline\'s complete product portfolio;
Electric vehicles (“EV”)
By developing relationships with OEMs and leveraging innovation in the development of future electric vehicle products and light services directly and in neighbouring markets to improve capabilities;
Invest in talent and technology to develop Valvoline\'s global business
Expert ability and culture to drive customer speed and efficiencyFront and back-
Key office processes
In fiscal 2018, Valvoline acquired 136 service center stores, including 73 franchise service center stores, 60 former franchise service center stores, and 3 in a single
Shop deals.
These acquisitions include the company\'s first acquisition of the international express lubricants Service Center store and its expansion to Canada.
In fiscal 2017, the company acquired 43 service center stores, including 14 former franchised service center stores and multiple service center stores
Shop deals.
During fiscal 2016,104, service center stores were acquired, including 42 franchise service center stores, 9 former franchise service center stores and 53 in single and multi
Shop deals.
As of September 30, 2018, Valvoline operated 1,242 express lubricant service center stores directly or through its franchisees, up 115 from the previous year.
In addition to the 76 acquisition stores added to the above-mentioned Fast Lubes system, a consolidated 39 net new companies-
In fiscal 2018, the system added its own and franchised service center stores.
The Fast Lubes system consists of 462 companies
Owns and operates 780 franchise locations in 46 states of the United StatesS.
Five provinces in Canada
As of September 30, a total of 347 express delivery™Location.
VIOC delivery system-wide same-
Store Sales Growth 8.
Fiscal 3% 2018, 12 consecutive years system-wide same-
Store sales growth (
As determined by the fiscal year, the new store is excluded from the indicator before the first full fiscal year of operation is completed).
Fierce competition in the industry, Valvoline is facing competition in all product categories and sub-categories.
Competition is based on several key criteria, including brand recognition, product performance and quality, product price, product availability and supply safety, the ability to develop products in collaboration with customers and customer service, and the ability to market innovative products or services.
In the core North American market, Valvoline\'s main competitors are globally integrated oil brands, such as Shell, which produces pengri oil and Quaker;
Production of BP of harvest;
The month of production of eXom; as well as mid-
First-line and own-brand manufacturers.
Valvoline is currently ranked third in the number of passenger car oil brands in the DIY market.
Regarding installation customers in the US and Canada, Valvoline competes with these same major integrated oil brands, many of which have greater financial resources and a more diverse portfolio of products and services, greater operational and financial flexibility.
Fast Lubes segment competes with other major franchise brands
Key operation management systems such as Jiffy lubricants (owned by Shell)
Oil monkey, Take 5 oil change, express oil change, Sir
Lube, as well as national brand companies that offer professional signage projects, limited business model support, similar to Valvoline\'s express service network, and Super-
Lubricants and US lubricants that are not directly associated with major brands Fast.
Valvoline also competes to a certain extent with car dealers and service stations that offer fast lubricants and other preventive maintenance services.
Valvoline believes that there are currently more than 9,000 existing express lubricants stores operating in the United States. S. market.
Jiffy Lube is currently the company\'s largest competitor, and in the United States, the number of stores owned or operated by franchisees is only slightly higher than 1,900S.
Canada\'s Fast lubes market is also fragmented, with only a handful of large businesses accounting for about half of the market share, while the rest are made up of smaller local and regional competitors, car dealers and service stations.
The main competitors in Valvoline\'s international market vary from region to region.
Valvoline often faces fierce competition from globally integrated oil brands, which have a particularly strong presence in Europe and Asia.
In some markets, Valvoline also competes with regional brands, including those produced by China\'s Sinopec and Indian oil companies.
Competitive factors in all of these markets include prices, innovation in solutions, brand awareness and loyalty, customer service, and sales and marketing.
Valvoline\'s core North America and International reportable segments also compete with retailers on the basis of shelf space and product packaging.
Marketing and sales valvoline attach great importance to sales and marketing and focus marketing efforts in areas with the highest expected returns.
Valvoline has a centralized marketing services group and dedicated marketing resources in each of the reportable segments that are highly qualified to reach the target customers.
Most of Valvoline\'s big customers are supported by direct sales reps, and some key customers have dedicated Valvoline teams.
In addition, Valvoline has multiple distributors in the core North American and international Report segments representing the company\'s products.
In the core North America region, Valvoline products are sold to consumers through more than 30,000 retail stores, to installation customers with more than 12,000 locations, and quickly through 242 companies
Owned and licensed stores and 347 express delivery companies™Location.
Valvoline provides services to its customer base through its sales team and technical support organizations, allowing to leverage the company\'s technology portfolio and customer relationships worldwide while meeting local customer needs.
Valvoline also uses its digital infrastructure and technology to interact more effectively with customers, driving customer engagement, achieving growth, customer retention, and acquisitions.
Valvoline uses a variety of marketing techniques to raise awareness of Valvoline products and services and create demand.
Valvoline advertises through social and digital media and traditional media such as television and radio.
Valvoline selectively sponsors the high-performance racing team, including the sponsorship of the Hendrick racing sport, including riders Chase Elliott, Jimmy Johnson, William Byron and Alex Bowman.
In addition, valwarin has sponsored other teams and players, including Manchester City Football Club and Memphis Grizzlies, as well as valwarin\'s joint venture sponsorship of the famous Indian cricketer Virat Corey.
Valvoline\'s innovation is at the heart of its business success.
Valvoline research and development focuses on developing new and innovative products to meet the current and future needs of customers.
These products were developed through Valvoline\'s \"hands-on expertise\" innovative approach, which starts with mathematical modeling of key product design elements and expands through field testing.
In addition, the Valvoline technology center in the Americas, EMEA and Asia Pacific region develops solutions for existing and emerging internal and externalroad equipment.
Valvoline\'s R & D team also leverages strong relationships with customers and suppliers to incorporate their feedback into the R & D process.
In addition to its own R & D plan, Valvoline has conducted limited testing of other entities that have accumulated their expertise and partially offset the cost of R & D.
Valvoline will continue to take on R & D spending in the future to develop innovation, high
Provide quality products and services to help maintain and enhance Valvoline\'s competitive position.
Valvoline, an intellectual property company, is constantly seeking to develop new technologies and upgrade existing technologies.
Valvoline has already released 36S.
It has 62 international patents and 26 US patents. S.
81 international patent applications are being applied for or published.
Valvoline also has more than 2,500 trademarks around the world. Valvoline believes that these trademarks are one of its most valuable assets. Valvoline has invested a lot of resources to protect them.
These trademarks include the Valvoline trademark registered in more than 150 countries and the famous \"V\" brand logo trademark.
In addition, Valvoline uses a variety of trademarks and service marks in its business, including valvolintm, Valvoline Instant Oil changes, etc. , including key products.
Valvoline also has a wide range of IP licensing agreements.
Valvoline has more than 700 domain names to promote Valvoline products and services and to provide information about the company.
The key raw materials used in the Valvoline business for raw material supply and pricing are base oil, additives, packaging materials (
High Density Polyethylene bottle, corrugated packaging, steel barrel)
And ethylene glycol.
Valvoline continuously monitors the global supply and cost trends of these key raw materials and obtains them from a diverse network of large global suppliers and regional suppliers.
Valvoline\'s procurement strategy is to ensure supply by contracting a diversified supply base, while leveraging market conditions to leverage spot opportunities when these conditions are available.
Valvoline leverages global spending to seek favourable contractual terms from global suppliers and uses regional suppliers to ensure the market competitive and reliability of their supply chains.
For materials that must be customized, Valvoline works with market leaders with a global footprint and a sound business continuity plan.
Valvoline also uses the company\'s R & D resources to develop alternative product formulations that provide flexibility when supply is interrupted.
Valvoline closely monitors the company\'s supply chain and conducts an annual supply risk assessment of its key suppliers to reduce risk.
Valvoline has a large manufacturing and distribution footprint in the United States, with 7 lubricant mixing and packaging plants and several packaging and warehouses.
There are other mixing and packaging plants in Australia, Canada and the Netherlands.
On May 2018, Valvoline announced plans to establish its first mixing and packaging plant in China, which is expected to have an annual capacity of more than 30 million gallons of lubricants upon completion.
Valvoline also uses a lot of third
Third-party fee manufacturers and warehouses are part of a joint venture operating hybrid and packaging facilities in India.
Valvoline seeks to actively manage supply costs, fluctuations in product sales prices and the time it takes to maintain profit margins.
The prices of many Valvoline products fluctuate according to the price of base oil, which is a large part of Valvoline\'s sales cost.
Given the high correlation between crude oil derivatives and the global oil market, underlying oil prices may fluctuate.
The fluctuation range is related to both world crude oil prices and global crude oil supply and demand balance.
The price of crude oil basically follows the price of crude oil, however, the lag time between the price change of crude oil and the price change of base oil is affected by the excess or shortage of base oil supply.
Valvoline strives to adjust the price of product sales to respond to changes in the cost of base oil and to protect profit margins.
As part of a strategy to mitigate the impact of base oil volatility, valvoline has negotiated a contract for the underlying oil supply, with terms reducing the impact of changes in the underlying oil market on Valvoline\'s financial results.
Valvoline has revised contracts for several of the company\'s sales channels to speed up the timing of sales price adjustments in response to changes in raw material prices.
Pricing adjustments for products sold to Valvoline\'s larger country or region installer customer account are often made under contract and are often based on changes in the published base oil index.
Regularly adjust the price of products sold to Valvoline franchisees in accordance with the agreed Index (
Weighted combination of base oil index announced)
, The representative of Valvoline and Valvoline franchisees may update its composition and weight from time to time.
Pricing adjustments for products sold to retail customers, private label products in the United States, and products sold to smaller installation customer accounts are often market-driven, negotiate based on base oil costs and Valvoline\'s pricing strategy.
Although Valvoline may encounter availability restrictions for certain products from time to time, orders are usually completed within 30 days of receiving an order.
As a result, Valvoline usually has a product backlog of less than 30 days at any time, and the company does not believe that this is critical to its business.
In general, Valvoline\'s business is almost seasonal.
Valvoline\'s Fast Lubes business, to a lesser extent, tends to have slightly higher sales in the summer months due to increased summer and driving, as well as some time before the holiday.
Due to bad weather in parts of the United States and Canada, the two companies also tend to slow down a little from October to February.
Valvoline\'s international business is rarely seasonal due to its geographical diversity and high percentage of the commercial and industrial lubricant markets, which is less affected by the weather.
Environment and Regulation mattersValvoline is subject to many federal, state, local and non-U. S.
Environmental sanitation and safety (“EHS”)
Laws and regulations.
These laws and regulations stipulate matters such as safe working conditions;
Product management; air emissions;
Discharge to land and surface water;
The production, treatment, storage, transportation, treatment and disposal of hazardous substances and wastes;
And registration and evaluation of chemicals.
Valvoline maintains policies and procedures to control EHS risks and monitors compliance with applicable EHS laws and regulations.
These laws and regulations also require Valvoline to obtain and comply with licenses, registrations or other authorizations issued by government authorities.
These authorities may modify or revoke the company\'s license, registration or other authorization, and may enforce compliance through fines and bans.
Valvoline is expected to incur ongoing costs to comply with existing and future EHS requirements, including the cost of dedicated EHS resources responsible for ensuring that its business remains compliant with applicable laws and regulations.
Valvoline is also regulated by various US agencies. S.
Federal regulators and applicable regulators in the country where Valvoline products are manufactured and sold.
These regulations relate primarily to the composition, classification, labeling, manufacturing, packaging, transportation, advertising and marketing of Valvoline products.
In addition, the company is also subject to the Foreign Anti-Corruption Act and other national anti-corruption laws
Corruption and anti-corruptionBribery system.
While these matters are not currently important for Valvoline\'s operating results, financial position or cash flow, there is no guarantee that existing or future environmental laws and other regulations applicable to company operations or products will not have a significant adverse impact on Valvoline\'s operating results, financial position or cash flow.
In September 30, Valvoline had about 6,700 employees worldwide (
Contract employees are not included).
More information about Valvoline is available on the company\'s website, and Valvoline provides its annual report free of charge on Form 10
Quarterly Report on table 10
Q: Current Report of Form 8
K and any amendments to these reports, as well as any beneficial ownership reports of officers and directors submitted on forms 3, 4 and 5.
All of these reports are made available as soon as reasonably practicable after electronic submission to SEC or electronic provision to SEC.
Valvoline also provides its revised and Restated Articles of Association on its website free of charge by the following means
Laws applicable to Valvoline directors, executives and employees, guidelines for corporate governance, board of directors charter, independent standards for directors and standards for global business conduct.
These documents can also be printed to any shareholder who makes the request.
The information contained on the Valvoline website is not part of the form 10 annual report
K, not included in this document by reference.
A reference to the site address is provided only as an inactive text reference.
The SEC also maintains a website (
It contains reports, agency and information statements and other information about the issuer, including Valvoline, which the company submitted electronically to the SEC.
The following is the list of executive officers of Valvoline, which lists their age, position and experience over the last five years. SAMUEL J. MITCHELL, JR. (age 57)
He is president and director of Valvoline. Mr.
Mitchell was appointed director and chief executive officer in May 2016 and September 2016, respectively.
He served as senior vice president Ashland from 2011 to September 2016 and President valwarin from 2002 to September 2016. MARY E. MEIXELSPERGER (age 58)
He has served as chief financial officer of Valvoline since June 2016.
Before joining Valvoline, Ms.
Meixelsperger is senior vice president and chief financial officer of DSW.
From April 2014 to June 2016, served as chief financial officer, Chief Financial Officer and Treasurer at Shopko store, from 2006 to 2014. JULIE M. O’DANIEL (age 51)
He has served as Valvoline\'s senior vice president, chief legal officer and corporate secretary since January 2017. Ms.
O\'Daniel served as General Counsel and Corporate Secretary from September 2016 to January 2017.
She served as Valvoline\'s chief commercial lawyer from April 2014 to September 2016 and Valvoline\'s litigation lawyer from July 2007 to April 2014. THOMAS A. GERRALD II (age 54)
Since September 2016, he has served as senior vice president of Valvoline North America core.
He served as senior vice president of the United States. S.
From June 2012 to September 2016, the installation channel of Valvoline. FRANCES E. LOCKWOOD (age 68)
He has served as Valvoline\'s senior vice president and chief technology officer since September 2016.
From May 1994 to September 2016, she served as senior vice president of Valvoline. HEIDI J. MATHEYS (age 46)
He has served as Valvoline\'s senior vice president and chief marketing officer since September 2016. Ms.
Matheys served as senior vice president. It-
Your own channel, from August 2013 to September 2016 as Valvoline\'s channel, from September 2012 to August 2013 as Valvoline\'s vice president of global brands. CRAIG A. MOUGHLER (age 61)
Since September 2016, he has served as senior vice president of Valvoline International and product supply. Mr.
From October 2002 to September 2016, Moughler served as senior vice president of Valvoline International. BRAD A. PATRICK (age 54)
He has served as Valvoline\'s chief personnel and communications officer since January 2018.
Before joining Valvoline, Mr.
Patrick served from November 2015 to January 2018 as executive vice president and chief human resources officer of Hillel snacks and served as executive vice president and chief human resources officer at Tempur Sealy International, Inc.
From December 2010 to November 2015. ANTHONY R. PUCKETT (age 56)
He has served as Valvoline\'s senior vice president and president since September 2016.
From August 2007 to September 2016, he served as president of Valvoline Instant Oil Change. DAVID J. SCHEVE (age 43)
He has served as chief accountant and chief financial officer of Valvoline since October 2016.
Before joining Valvoline, Mr.
Scheve served as chief financial officer and vice president of finance for southern graphics systems from March 2014 to October 2016 and as chief financial officer for its global company from June 2007 to March 2014. 11ITEM 1A.
Risk factors the following \"risk factors\" may have a significant adverse effect on Valvoline\'s business, operations, financial position or future financial performance.
In reading the rest of the Annual Report on Form 10, this information should be considered
Including discussion and analysis by management and consolidated financial statements and related notes.
These factors may lead to different future results from future results.
In terms of historical trends.
Risks associated with Valvoline\'s business the competitive nature of Valvoline\'s market or other factors may delay or prevent its passage --
By increasing the cost of raw materials for customers.
In addition, certain suppliers of Valvoline may not be able to deliver the product or raw materials or may withdraw from the contractual arrangements.
Both events can have an adverse effect on the outcome of Valvoline\'s surgery.
The rise and fluctuation of raw material prices, especially the prices of base oil and lubricating oil additives, will have a negative impact on Valvoline\'s costs in the past and in the future, operating results and inventory valuation.
Valvoline may not always be able to raise prices in response to an increase in raw material costs, or may experience a lag in delivery --
Through this cost increase, because the cost delivery capacity of this price increase depends largely on market conditions.
Similarly, the reduction in Valvoline\'s inventory valuation may not be recoverable due to market fluctuations and may result in losses.
Valvoline usually purchases certain products and raw materials from suppliers under a written supply contract.
If these suppliers are unable to meet Valvoline\'s orders in a timely manner, or choose to terminate or otherwise avoid contractual arrangements, valvoline may not be able to make alternative supply arrangements or may face increased costs from alternative suppliers.
For base oils, Valvoline\'s suppliers are primarily large oil producers, many of which operate the production and sales of lubricants as part of the business.
There are inherent risks in obtaining important raw materials from actual or potential competitors, including the applicable antitrust laws that may not be sufficient to mitigate the risks that Valvoline faces these risks.
Valvoline purchased all of its lubricant additives from the following four suppliers: Afton Chemical, Chevron Oronite, Infineum Group and Lubrizol.
Since the industry is characterized by a limited number of suppliers of lubricating oil additives, in the event of an interruption of Valvoline\'s existing supply relationship, the number of alternative suppliers traded with is limited;
For example, supplier operations are disrupted due to natural disasters, bad weather conditions, climate change or major changes in trade regulations.
Valvoline\'s suppliers are unable to meet their supply needs and may also have a significant adverse impact on their business.
In addition, domestic and global government regulations related to the manufacture or transportation of certain raw materials may hinder Valvoline\'s ability to obtain these raw materials in commercially reasonable terms.
If Valvoline is unable to obtain and retain qualified suppliers under commercially acceptable conditions, its ability to manufacture and deliver products in a timely, competitive and profitable manner or to successfully develop the business may be subject
Valvoline faces huge competition from other companies that put downward pressure on prices and profit margins and may adversely affect Valvoline\'s business and operational results.
Valvoline operates in a highly competitive market and competes with many domestic and international companies.
Competition is based on several key criteria, including brand recognition, product performance and quality, product price, product availability and supply safety, the ability to develop products in collaboration with customers and customer service, and the ability to market innovative products or services.
Some of the major competitors, including Shell oil, BP, Castrol and Exxon oil, are much larger than valwalin, with more financial resources and greater operational and financial flexibility.
As a result, these competitors may be able to better withstand adverse changes in conditions, raw materials and energy prices or general economic conditions within the relevant industry.
In addition, competitor pricing decisions may force Valvoline to cut prices, which may have a negative impact on Valvoline\'s profit margin and profitability.
Other competition in the market for Valvoline services, such as the addition of new private label competitors, may adversely affect profit margins and profitability and may lead to a decline in market share.
In addition, Valvoline also competes in certain markets where prices are flat with the United States. S.
Passenger car oil market.
If Valvoline\'s strategy in dealing with declining markets and taking advantage of market opportunities is unsuccessful, its operating results may be negatively affected.
Demand for Valvoline products and services may be adversely affected by consumer spending trends, declining economic conditions, industry trends and a number of other factors, all of which are beyond its control
The demand for Valvoline products and services may be affected by a number of factors beyond its control, including the number and age of vehicles in current services, regulations and legislation, technological advances in the automotive industry and changes in engine technology, including adoption rates for electric or other alternative engine technologies, replacement of longer recommended intervals between automotive OEM specifications and replacement of oil.
In addition, consumers may delay vehicle repairs during a period of declining economic conditions.
Similarly, an increase in energy prices or other factors may lead to a decrease in mileage, resulting in fewer vehicle wear and lower maintenance requirements, which may lead to a delay in the purchase of Valvoline\'s products and services by consumers.
All of these factors affect indicators such as drainage intervals and daily oil changes, which may lead to a decline in demand for Valvoline products and services and adversely affect their sales, cash flow and overall financial position.
Valvoline has set positive growth targets for its business, including increasing sales, cash flow, market share, profit margins and the number of fast-selling stores to achieve its long-term goals
Strategic objectives.
The implementation of Valvoline\'s growth strategy and business plan to facilitate this growth involves many risks.
Valvoline has set positive growth targets for its business to meet its long-term
Achieve long-term strategic goals and enhance shareholder value.
Valvoline\'s failure to achieve one or more of these goals, which may have a negative impact on its business, is one of the most important risks facing Valvoline.
Among other things, all aspects of this risk include changes in the economic environment, changes in the competitive environment, including changes related to car maintenance advice and consumer preferences, entry of new competitors, attraction and retention of skilled employees, potential failure of product innovation programs, failure to comply with existing or new regulatory requirements, failure to maintain a competitive cost structure, and other risks outlined in more detail in this \"Risk Factors\" section.
Damage to Valvoline\'s brand and reputation may adversely affect its business.
Maintaining Valvoline\'s good reputation among consumers and customers is a key component of its business.
Complaints or recalls of products or services, their inability to transport, sell or transport affected products and government investigations may harm their reputation among consumers and customers, this may result in significant reductions in sales and increased costs for its business operations.
Valvoline produces and sells a wide range of products, such as automotive and industrial lubricants and antifreeze, and provides car repair services.
If it is alleged that some of Valvoline\'s products do not meet the expectations of the consumer or customer, or have caused damage or harm to the individual or property, or Valvoline\'s services are not delivered in a way that meets its vision and values, and the public may have a negative impression of Valvoline and its brand.
In addition, if Valvoline\'s franchisee or courier service operator fails to successfully operate its rapid lubricant service center in accordance with Valvoline\'s standards, its brand, image and reputation may be compromised, this, in turn, may have a negative impact on its business and operational results.
In addition, if any party with a sponsorship relationship with Valvoline generates adverse publicity, the brand image of Valvoline may be compromised.
The public\'s negative view of the Valvoline brand, whether reasonable or not, could damage its reputation, involve it in litigation, damage its brand assets and have a significant adverse impact on its business.
In addition, damage to the reputation of Valvoline\'s competitors or others in the industry may have a negative impact on Valvoline\'s reputation and business.
Valvoline uses information technology systems to carry out business, and network security threats, privacy/data breaches or failures of key information technology systems may adversely affect Valvoline\'s business and reputation.
Valvoline relies on its information technology systems, including those managed or provided by third parties
Service providers, business.
Although Valvoline has taken some measures to alleviate or eliminate these problems, the network
Security threats to its information technology systems are growing and more advanced, and errors or misconduct by hackers, our employees, contractors or third parties may lead to violations
Third-party service providers.
Leakage or failure of Valvoline information technology systems may result in the loss and destruction of trade secrets, confidential information, proprietary data, intellectual property rights, customer and supplier data, and personal information of employees, could disrupt business operations, thereby adversely affecting Valvoline\'s relationship with business partners, damaging its brand, reputation and financial results.
Customer data for Valvoline may include information such as name, address, phone number, email address, and payment account information.
Depending on the nature of the customer data that has been compromised, Valvoline may also be obliged to notify the user, law enforcement or payment company of the incident and may need to provide some form of remedy, for example, refund for individuals affected by the event.
Valvoline may also face fines and penalties if it fails to fully notify the affected parties in accordance with the new and evolving privacy laws of the different jurisdictions in which it operates.
Valvoline\'s important business globally puts it at risk, which may adversely affect its business, financial position and operational results.
Sales in the international business unit accounted for 26% of Valvoline\'s sales in fiscal 2018.
Valvoline expects sales in the international market to continue to grow and to account for a larger share of its sales in the future.
In addition, a large part of Valvoline\'s manufacturing capabilities are located outside the United States.
As a result, its business is subject to risks associated with different legal, political, cultural, social and regulatory requirements and economic conditions in many jurisdictions.
The globalized nature of Valvoline\'s operations has created difficulties in the recruitment and maintenance of labor in certain countries.
Exchange rate fluctuations may affect product demand and may adversely affect profitability in the USS.
Products and services provided in other countries.
In addition, other countries may impose additional withholding taxes or other taxes on Valvoline\'s income, or other restrictions on trade or investment, including currency exchange controls.
The imposition of new or additional duties or other significant changes to trade regulations also has the potential to impair Valvoline\'s financial performance.
For example, the United States, China and the European Union (“EU”)
The recent imposition or indication of new or additional tariffs on foreign goods may be imposed.
If Valvoline is subject to new or additional tariffs, such as in China, where Valvoline products are subject to additional tariffs in fiscal 2018, operating costs may increase and Valvoline may not be able to recover those costs.
In addition, if Valvoline is unable to successfully develop its brand globally, it may not be able to achieve its international growth plan, which may have a negative impact on sales, profitability and cash flow.
Valvoline companies operating worldwide also have legal and political risks.
For example, it may be more difficult for Valvoline to enforce its agreements or collect receivables through other legal systems.
There is a risk thatU. S.
The government can nationalize private enterprises in certain countries operated by Valvoline.
Terrorist activities and reactions to them may threaten the operation of valwarin.
Social and cultural norms in certain countries may not support compliance with Valvoline\'s corporate policies, including those requiring compliance with substantive laws and regulations.
In addition, changes in the general economic and political conditions of the countries operated by Valvoline pose risks to Valvoline\'s financial performance and future growth.
In addition, in the implementation of its global growth strategy, Valvoline has established several important strategic relationships with joint venture partners such as Cummins, non-affiliated distributors, and toll makers.
There is a need to identify strong partners in finance and business to fill these roles that will comply with high manufacturing and legal compliance standards required by Valvoline, which is for Valvoline\'s financial performance
As Valvoline continues to operate its business globally, its success depends to a certain extent on its ability to anticipate and effectively manage these and other related risks.
There is no guarantee that the consequences of these and other factors related to Valvoline\'s global operations will not adversely affect their business, financial position or operational results.
Adverse developments in the global or regional economy and potential disruption in financial markets may have a negative impact on Valvoline\'s customers and suppliers, thus negatively affecting their operational results.
A global or regional recession may reduce customer demand or inhibit Valvoline\'s ability to produce and sell products.
Valvoline\'s business and operating results are sensitive to factors such as the global and regional economic downturn, tight credit markets, declining consumer and business confidence, commodity price fluctuations, exchange rate fluctuations, interest rate changes, etc, sovereign debt defaults and other challenges, including sanctions and acts of aggression related to international sanctions and acts of aggression that may affect the global economy or threaten aggression.
In fiscal 74%, 2018 of Valvoline\'s sales came from North America, so Valvoline was particularly sensitive to the risk of a slowdown or recession in the region.
In the event of adverse developments or stagnation in the economy or financial markets, Valvoline\'s customers may experience deterioration in their business, reduced demand for products, shortage of cash flows and difficulties in financing.
Therefore, existing or potential customers may delay or cancel the plan to purchase the product and may not be able to meet their obligations to Valvoline in a timely manner.
In addition, suppliers may encounter similar situations, which may affect their ability to meet their obligations to Valvoline.
The weakness or reversal of the global economy or a large part of it may have a negative impact on Valvoline\'s business, operational results, financial position and growth capabilities.
Because Valvoline\'s sales are concentrated on a small number of retailers, where orders are lost for one or more retailers, or where orders are significantly reduced, its top retail customers may adversely affect their financial results, the loss of its dealer relationship may also have adverse effects.
In fiscal 45%, Valvoline\'s core North American market accounted for about 2018 of Valvoline\'s total sales.
NAPA Auto Parts, Auto area, premium auto parts, as of September 30, 2018, O\'Reilly Auto Parts and another large national retailer collectively accounted for 47% of core fiscal 2018 sales in North America, accounts accounted for 52% of North America\'s core trade receivables.
NAPA Auto Parts accounted for more than 17% of North America\'s core sales in fiscal 2018.
Valvoline\'s sales volume to these customers fluctuates and will be affected by many factors, including product pricing, purchase patterns and promotions.
The loss or substantial reduction of orders by one of Valvoline\'s top five retail customers or any other important customers may have a significant adverse impact on their business, financial position, results of operations or cash flows, as well as customer disputes about shipment, cost, condition of goods or related matters.
Valvoline is unable to collect accounts receivable from its main customers, or a significant deterioration in the financial position of one of them, including bankruptcy applications or liquidation, it may also have a significant adverse effect on Valvoline\'s financial position, operating results or cash flow.
Valvoline also relies on independent dealers to sell and deliver products.
The integration of distributors, the loss of relations with distributors, and major differences with distributors, or a significant deterioration in the dealer\'s financial position may also have a significant adverse impact on Valvoline\'s financial position, operating results or cash flow.
Valvoline\'s marketing campaign may not be successful.
In order to maintain and enhance brand image and product awareness, Valvoline has invested a lot of resources in advertising, consumer promotions and other marketing activities.
Valvoline\'s name and brand image are an integral part of its business growth and expansion into new markets.
Failure to fully market and differentiate its products and services from competitive products and services may adversely affect Valvoline\'s business.
There is no guarantee that Valvoline\'s marketing strategy is effective or that its investment in advertising activities will lead to a corresponding increase in sales of its products.
If Valvoline\'s marketing plan is not successful, it will cost a lot if there is no higher sales of the product.
Failure to develop and sell new products and production technologies may affect Valvoline\'s competitive position and adversely affect its business and operational results.
Regular technical changes and product improvements in the lubricant industry.
In order to remain profitable and competitive, Valvoline must successfully develop and introduce new products or improvements that attract customers and ultimately attract consumers around the world.
Changes in additive technology, essential oil production technology and sources, and demand from OEMs and consumers for improved performance, put special pressure on Valvoline to continue to improve its products.
Valvoline strives to respond to changes in consumer demand in a timely and cost manner
Effective ways to drive growth may be adversely affected by difficulties or delays in product development and service innovation, including the inability to identify viable new products, successful completion of R & D, regulatory approval, gain intellectual property protection or gain market recognition for new products or service technologies.
Due to the long development process, technical challenges and fierce competition, there is no guarantee that any product that Valvoline is currently developing or may develop in the future will achieve great commercial success.
The time and cost of investing in product development may not lead to commercial products or provide revenue.
Can ask Valvoline to write-
Investment related to new products is not commercially viable.
In addition, due to high start-up, Valvoline may experience operational losses after the launch and commercialisation of new products
Rising costs, unexpected manufacturing costs or problems, or insufficient demand.
Valvoline may not be able to execute its growth strategy, acquisitions, joint ventures, strategic alliances and investments may lead to operational difficulties, dilution and other harmful consequences that may adversely affect Valvoline\'s business and operational results.
Acquisition is an important part of Valvoline\'s overall growth strategy, especially for fast-growing business units.
In addition, the establishment of strategic alliances for distribution and manufacturing, especially in international markets, including through joint venture partnerships, product distribution and fee-based manufacturing arrangements, is an important part of Valvoline\'s overall growth strategy.
Valvoline is expected to continue to evaluate and discuss a variety of potential strategic transactions and continue to organically develop its fast-moving lubbles business through acquisitions.
Failure to implement these plans may have a significant adverse effect on Valvoline\'s financial position and operational results.
In addition, the process of integrating the acquired company, business or product may result in unforeseen operational difficulties or expenses.
Areas where Valvoline is at risk include: due to the lack of ideal real estate premises, regulatory or municipal barriers, the inability to fully implement the plan to add stores to Valvoline\'s rapid Lubes business, lack of viable acquisition targets or other factors;
Shift management time and attention from operating Valvoline\'s business to acquisition integration challenges;
Failure to successfully expand the acquired business or product line;
Failure to implement appropriate controls, procedures and policies in the acquired company;
Integrate the accounting, human resources and other management systems of the acquired company, and coordinate the functions of products, engineering, sales, marketing, etc;
Transfer operations, users and customers to the existing platform of Valvoline;
Relying on Valvoline strategic partners expertise in market development, sales, local regulatory compliance and other operational matters;
Failure to obtain the expected synergies from the acquisition or to achieve the expected financial or strategic benefits;
If the required approval is not obtained from the government authorities in a timely manner, or if there are no conditions for approval under the competition law and the anti-monopoly law, among other things, to postpone or prevent Valvoline from completing the transaction, or otherwise limit its ability to achieve the expected financial or strategic objectives of the acquisition;
In the case of nonU. S.
Acquisition, the need to integrate business in different cultures and languages and address economic, monetary, political and regulatory risks associated with a specific country;
Cultural challenges related to the integration of employees of the acquired company into Valvoline\'s organization and the retention of employees of Valvoline\'s acquired company;
Liability or reputation damage to the acquired company or Valvoline strategic partner activities prior to acquisition;
15 litigation or other claims relating to the acquired company, including claims from terminated employees, customers, former securities holders or other third parties.
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