Valvoline (VVV) risk factors, FY2024 10-K

Risks related to the industries in which Valvoline operates

1. 01Valvoline faces significant competition from other companies, which places downward pressure on prices and margins and may adversely affect Valvoline’s business and results of operations
2. 02Rising and volatile supply costs and supply chain constraints or disruptions could adversely affect Valvoline’s results of operations
3. 03Demand for Valvoline’s services could be adversely affected by spending trends, declining economic conditions, industry trends and a number of other factors, all of which are beyond its control
4. 04Failure to develop and market new services and technologies could impact Valvoline’s competitive position and have an adverse effect on its business and results of operations
5. 05Damage to Valvoline’s brand and reputation could have an adverse effect on its business

Risks related to executing Valvoline’s strategy

1. 06Valvoline has set aggressive growth goals for its business, including increasing sales, cash flow, market share, margins and number of service center stores, to achieve its long-term strategic objectives. Execution of Valvoline’s growth strategies and business plans to facilitate that growth involves a number of risks
2. 07Valvoline may be unable to execute its growth strategy, and acquisitions, investments and strategic partnerships could result in operating difficulties, dilution and other harmful consequences that may adversely impact Valvoline’s business and results of operations
3. 08The business model for Valvoline is affected by the financial results of its franchisees

Risks related to operating Valvoline's business

1. 09The Company’s recently implemented enterprise resource planning (“ERP”) system has adversely impacted Valvoline’s internal controls and could continue to negatively impact the business if remedial efforts are not timely and effective
2. 10possible continued disruptions. This includes the loss of information, unauthorized access and systematic changes, disruption to normal operations, and risks associated with integrations with other applications and processes
3. 11Changes in economic conditions that impact customer spending could harm Valvoline’s business
4. 12If Valvoline does not attract, train and retain quality employees in appropriate numbers, including key employees and management, performance could be adversely affected
5. 13Valvoline uses information technology systems to conduct business, and a cybersecurity threat, data breach, security incident, failure of a key information technology system, or inability to enhance its capabilities could adversely affect Valvoline’s business and reputation
6. 14Pandemics, epidemics or disease outbreaks may disrupt Valvoline’s business and operations, which could materially affect Valvoline’s financial condition, results of operations and forward-looking expectations
7. 15The limited diversification of Valvoline’s operations subjects it to risks

Regulatory, legal, and financial risks

1. 16Data protection requirements could increase operating costs and requirements and a breach in information privacy or other related risks could negatively impact operations
2. 17The impact of changing laws or regulations or the manner of interpretation or enforcement of existing laws or regulations could adversely impact Valvoline’s financial performance and restrict its ability to operate its business or execute its strategies
3. 18Valvoline’s substantial indebtedness may adversely affect its business, results of operations and financial condition
4. 19credit facility. Valvoline may incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other general corporate purposes
5. 20Adverse developments and instability in financial institutions and markets may adversely impact Valvoline’s business and financial condition
6. 21Valvoline’s pension and other postretirement benefit plan obligations are currently underfunded, and Valvoline may have to make significant cash payments to some or all of these plans, which would reduce the cash available for its business
7. 22Valvoline may fail to adequately protect its intellectual property rights or may be accused of infringing the intellectual property rights of third parties
8. 23Valvoline has incurred, and will continue to incur, costs as a result of Environmental Health and Safety (“EHS”) compliance requirements, which could adversely impact Valvoline’s cash flow, results of operations or financial condition
9. 24disposal, notwithstanding that the original treatment or disposal activity accorded with all applicable regulatory requirements

Risks related to the sale of the Global Products business

1. 25Valvoline may be unable to achieve some or all of the strategic and financial benefits that it expects to achieve from the Transaction

Risks related to Valvoline’s separation from Ashland

1. 26Ashland has agreed to indemnify Valvoline for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure Valvoline against the full amount of such liabilities, or that Ashland’s ability to satisfy its indemnification obligation will not be impaired in the future