Valvoline Inc. · NYSE:VVV
Valvoline — Q1 2024 Earnings Presentation
20 slides from Valvoline's earnings presentation, Feb 6, 2024
Slide 1: First Quarter Fiscal 2024 Earnings
First Quarter Fiscal 2024 Earnings Lori Flees, CEO & President Mary Meixelsperger, CFO Elizabeth Russell, Investor Relations 02.06.2024 1
Slide 2: Safe Harbor: Forward-Looking Statements
SAFE HARBOR Forward-Looking Statements Certain statements herein, other than statements of historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, executing on its gro
Slide 3: 1Q24 Key Highlights
1Q24 KEY HIGHLIGHTS1 Delivered Strong Deploying Capital to Financial Results Drive Shareholder Value $722.9M 7.1% 1,890 8.2% 12.3% System locations System-wide Store Sales2 System-wide Same Store Sales2 Growth QoQ +19 Franchise Stores QoQ +19 Company Stores 12.2% $373.4M Net Sales $35.3M Growth Cape
Slide 4: Long Runway For Delivering Shareholder Value
Long Runway For Delivering Shareholder Value Strategic Imperatives • Drive Full Potential in Existing Business • Accelerate Network Growth • Target Customer and Service Expansion TALENT & CULTURE TECHNOLOGY OUR PROVEN FORMULA FOR GROWTH Long-term Same Store Sales New Stores Service Expansion Shareho
Slide 5: 1Q 2024 Topline Performance
1Q 2024 Topline Performance Adj. Net Sales1 Growth ($, Millions) +12.3% 373.4 Highlights 332.6 144 stores YoY 1Q 1Q Strong SSS continues 2023 2024 SSS deceleration from PY driven by lapping System-wide SSS2 Growth inflationary price increases +19.0% 11.9% 2-Year Stack 7.1% 1Q 1Q 2023 2024 1. For a r
Slide 6: 1Q 2024 Financial Drivers
1Q 2024 Financial Drivers1 Gross Margin SG&A Expense Adjusted EBITDA as a % of Net Sales as a % of Net Sales as a % of Net Sales +40 bps Expansion YoY -60 bps Decrease YoY +220 bps Expansion YoY 19.8% 19.2% 38.0% 29.3% 28.0% 35.7% 36.1% 17.8% 25.3% 22.0% 24.2% 1Q 4Q 1Q 1Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q 2023 2
Slide 7: 1Q 2024 Profitability
1Q 2024 Profitability1 Adjusted Net Income Adjusted EPS +35.6% Increase +81.3% Increase 38.5M $0.29 28.4M $0.16 1Q 1Q 1Q 1Q 2023 2024 2023 2024 • Operating income +19.7% versus prior year • Returned $1.6B to shareholders since 1Q 2023 through share repurchases2 • $5.1M lower net interest expense dri
Slide 8: 1Q24 Reporting Highlights
1Q24 REPORTING HIGHLIGHTS Balance Sheet Highlights (Millions) 1QFY24 • Continue to target net leverage ratio1 of 2.5x – 3.5x Cash & Cash Equivalents $420.7 • Expect to make an offer to repurchase all of the 2030 Short Term Investments $119.7 Senior Notes during 2QFY24, subject to market conditions T
Slide 9: Summary
SUMMARY Delivered profitability consistent with our expectations Added 38 new stores including 19 franchise stores Continued focus on expanding services and customer base 02.06.24 || First Quarter Fiscal 2024 Earnings 9
Slide 10: Appendix
02.06.24 || First Quarter Fiscal 2024 Earnings 10
Slide 11: Retail Services – Q1 System Results
RETAIL SERVICES – Q1 SYSTEM RESULTS Three months ended December 31 2023 2022 Sales information System-wide store sales - in millions (a) $ 722.9 $ 644.0 Year-over-year growth (a) 12.3 % 16.9 % Same-store sales growth (b) Company-operated 6.1 % 12.7 % Franchised (a) 8.0 % 11.2 % System-wide (a) 7.1 %
Slide 12: Retail Services – Store Information
RETAIL SERVICES – STORE INFORMATION Company-operated First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter 2024 2023 2023 2023 2023 Beginning of period 876 854 832 813 790 Opened 14 14 12 13 17 Acquired 5 8 8 6 5 Net conversions between company-operated and franchised — — 2 — 2 Clo
Slide 13: Reconciliation of Non-GAAP Data – Income from Continuing Operations & Diluted EPS
RECONCILIATION OF NON-GAAP DATA – INCOME FROM CONTINUING OPERATIONS & DILUTED EARNINGS PER SHARE Three months ended December 31 2023 2022 Reported income from continuing operations $ 33.9 $ 27.0 Adjustments: Net pension and other postretirement plan expense 3.4 3.7 Net legacy and separation-related
Slide 14: Reconciliation of Non-GAAP Data – Q1 Adjusted EBITDA
RECONCILIATION OF NON-GAAP DATA – Q1 ADJUSTED EBITDA Three months ended December 31 2023 2022 Reported net revenues $ 373.4 $ 332.8 Key items: Suspended operations — (0.2) Adjusted net revenues (a) (b) $ 373.4 $ 332.6 Income from continuing operations $ 33.9 $ 27.0 Add: Income tax expense (benefit)
Slide 15: Reconciliation of Non-GAAP Data – Adjusted Net Revenues & Operating Income
RECONCILIATION OF NON-GAAP DATA – ADJUSTED NET REVENUES & OPERATING INCOME Three months ended December 31 Net revenues Operating income In millions - preliminary and unaudited 2023 2022 2023 2022 As reported $ 373.4 $ 332.8 $ 62.8 $ 29.3 Key items: Net legacy and separation-related expenses — — 0.1
Slide 16: Reconciliation of Non-GAAP Data – Free Cash Flows
RECONCILIATION OF NON-GAAP DATA – FREE CASH FLOWS Three months ended December 31 Free cash flow (a) 2023 2022 Total cash flows provided by operating activities from continuing operations $ 21.9 $ 48.5 Adjustments: Additions to property, plant and equipment from continuing operations (42.3) (39.9) Fr
Slide 17: GAAP Results – Total Company
GAAP RESULTS – TOTAL COMPANY Three months ended December 31 2023 2022 Net revenues $ 373.4 $ 332.8 Cost of sales 238.6 214.0 Gross profit 134.8 118.8 Selling, general and administrative expenses 74.5 66.0 Net legacy and separation-related expenses 0.1 25.4 Other income, net (2.6) (1.9) Operating inc
Slide 18: Use of Non-GAAP Measures
USE OF NON-GAAP MEASURES This presentation includes the following non-GAAP measures: Adjusted operating income and adjusted operating margin; Adjusted net revenues; EBITDA, adjusted EBITDA, and adjusted EBITDA margin; adjusted net income and adjusted diluted earnings per share; and free cash flow an
Slide 19: Use of Non-GAAP Measures, Continued
USE OF NON-GAAP MEASURES, CONTINUED Refer to the below for descriptions of the key items that comprise the adjustments which depart from the computations in accordance with U.S. GAAP: Net pension and other postretirement plan expense: Includes several elements impacted by changes in plan assets and
Slide 20: Key Business Measures
KEY BUSINESS MEASURES Valvoline tracks its operating performance and manages its business using certain key measures, including system-wide, company-operated and franchised store counts and SSS; and system-wide store sales. Management believes these measures are useful to evaluating and understandin