Valvoline Inc. · NYSE:VVV
Valvoline — Goldman Sachs Global Retailing Conference 2022
30 slides from Valvoline's conference presentation, Sep 7, 2022
Slide 1: Goldman Sachs Global Retailing Conference
Goldman Sachs Global Retailing Conference September 7, 2022 1
Slide 2: Safe Harbor: Forward-Looking Statements
SAFE HARBOR Forward-Looking Statements Certain statements in this presentation, 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, statem
Slide 3: Valvoline
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Slide 4: Separation Drives Increased Focus
SEPARATION DRIVES INCREASED FOCUS Agreement to sell Global Products for $2.65 Billion Retail Services Global Products Fast Growth, High Margin, High ROIC Strong FCF, High ROIC, Low Cap Intensity Takeaways for Shareholders Accelerated Focused Capital Enhanced Capital Growth Allocation Structure 4
Slide 5: Transition to Service Drives Next Level of Performance
TRANSITION TO SERVICE DRIVES NEXT LEVEL OF PERFORMANCE 34% 46% Post 20172 2021 54% Separation 66% 100% Reduced margin Reduced raw Owning the Shift to service volatility material exposure customer 1. EBITDA contribution as a percentage of total business segment Adjusted EBITDA. For a reconciliation o
Slide 6: Sale of Global Products – Transaction Summary
SALE OF GLOBAL PRODUCTS – TRANSACTION SUMMARY • Purchase price of $2.65B in cash • Expected use of proceeds: majority for shareholder returns, remainder for debt reduction, Structure and including 2030 bonds, and reinvestment Consideration • Aramco obtains global rights to Valvoline brand related to
Slide 7: Use of Proceeds to Drive Shareholder Value
USE OF PROCEEDS TO DRIVE SHAREHOLDER VALUE • Retail Services expected to receive ~$2.25B of net proceeds from the sale of Global Products • Expect to return majority of net proceeds to shareholders via share repurchases to right-size capital structure • Expect to repay certain debt including 2030 Se
Slide 8: Compelling Strategic Transaction
COMPELLING STRATEGIC TRANSACTION 1 Monetizes Global Products at attractive valuation that will facilitate a substantial capital return to shareholders 2 Creates a pure-play retail auto service provider with expected low-teens topline growth and 20%+ EPS growth 3 Long runway for reinvestment opportun
Slide 9: Retail Services Overview
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Slide 10: Our Business: Preventive Maintenance
OUR BUSINESS: PREVENTIVE MAINTENANCE Fluid Exchange Parts Replacement • Motor oil • 12V Battery • Transmission fluid • Filters (oil, cabin air, etc.) • Differential fluid • Wiper blades • Coolant • Belts Safety • Tire inflation • Tire rotation • Safety check • Bulbs ~90+% of revenues1 from individua
Slide 11: Trends Supporting Preventive Maintenance Growth
TRENDS SUPPORTING PREVENTIVE MAINTENANCE GROWTH 12+ yrs. Vehicle Complexity and Longevity Demand for Convenience Mechanic Shortage Tremendous Growth Opportunity for Valvoline 11
Slide 12: Track Record of Growth and Strong Outlook
TRACK RECORD OF GROWTH AND STRONG OUTLOOK Retail Services Historical Results Revenue Adjusted1 EBITDA (Millions) (Millions) $411 $1,432 $382 $1,221 $822 $883 $239 $247 $660 $202 2018 2019 2020 2021 2022 LTM 2018 2019 2020 2021 2022 LTM Demonstrated track record of industry-leading financial and oper
Slide 13: Growth Algorithm
GROWTH ALGORITHM System-Wide SSS1 Growth System-Wide Store1 System-Wide Store Sales1 Additions (Millions) $2,200 – CAGR: 9.1% $2,400 1,734 – 1,754 CAGR: 17.8% Average SSS: 10.0% 1,594 $1,970 21.2% 1,462 1,385 1,242 $1,520 1,127 $1,419 $1,161 12 – 14% $1,024 10.1% 8.7% 7.7% 2.3% 2017 2018 2019 2020 2
Slide 14: Valvoline's Retail Competitive Advantages
VALVOLINE’S RETAIL COMPETITIVE ADVANTAGES VALVOLINE’S DIFFERENTIATION BENEFITS Efficient customer acquisition & success Trusted brand of 150+ years in growing non-oil change revenue Increase household penetration2 from 1,690 retail locations1 current reach of less than 15% Access to growth with more
Slide 15: Superior Customer Experience
SUPERIOR CUSTOMER EXPERIENCE Strong talent & Culture Super-ProTM Process 270+ hours of training Technology & data Quick, Easy, Trusted approach drives high overall customer satisfaction score of 4.6 out of 5 stars* * Based on Service Management Group post-visit consumer surveys from Oct. 1, 2021 – J
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Slide 17: Business Objective and Strategy
BUSINESS OBJECTIVE AND STRATEGY 1. Drive continued high levels of market share gains and non-oil change revenue growth in existing stores 2. Expand our retail footprint as a growth-oriented, retail company with increased emphasis on franchisee growth 3. Continue to invest in capabilities for fleets
Slide 18: Strategy 1: Drive Market Share Gains and NOCR
STRATEGY 1: DRIVE MARKET SHARE GAINS AND NOCR Sources of New Customers1 Non-oil Change Revenue2 (Year-to-date FY22) (based on average ticket) $21.63 $20.94 DIY $19.77 Quick $18.17 14% $17.59 Lubes 24% Tire & Repair 32% Car Dealer 30% FY18 FY19 FY20 FY21 FY22YTD Superior in-store experience and digit
Slide 19: Strategy 2: Expand Our Retail Footprint
STRATEGY 2: EXPAND OUR RETAIL FOOTPRINT Strong Base of Stores1 Large Addressable Market2 ~450M
Slide 20: Strategy 3: Invest in Capabilities and Services
STRATEGY 3: INVEST IN CAPABILITIES AND SERVICES PASSENGER CAR & HYBRID LIGHT-DUTY ICE ELECTRIC VEHICLES VEHICLES BATTERY MEDIUM- & ELECTRIC HEAVY-DUTY VEHICLES FLEET VEHICLES Non-oil change revenue Higher penetration rate of Expanding fleet business Piloting battery electric growth in ICE vehicle hy
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Slide 22: Long-Term Targets
LONG-TERM TARGETS Long-term Adjusted EBITDA1 Margin Targets Long-term Targets 30% - 32% 27% - 29% Sales Growth 12 – 14% ~3% EBITDA1 Margin 23 – 26% 23% - 26% 3% - 4% Tax Rate 25 – 27% Leverage Ratio 2.5 – 3.5x EPS Growth3 ~20%+ 50% Allocation of Standalone Retail Services Retail Services Valvoline P
Slide 23: Services, Brand-Oriented Public Comparables
SERVICES, BRAND-ORIENTED PUBLIC COMPARABLES Sales 2022 2022 Sales 2022 2022 Auto Aftermarket Service High-growth Retail Peers CAGR EBITDA EV/EBITDA CAGR EBITDA EV/EBITDA Peers (’21 – ’24) Margin Multiple (’21 – ’24) Margins Multiple ~20% 29% 40.4x ~19% 25% 16.7x ~21% 13% 18.3x ~12% 31% 18.1x ~18% 26
Slide 24: Roadmap to Unlock Value
ROADMAP TO UNLOCK VALUE Invest in Growth Financial flexibility to drive growth via organic capex, unit additions, M&A and Drive Focus service expansion Optimize talent and resource allocation and align incentives with growth and strong returns Expand Retail Network Add stores in key markets with inc
Slide 25: Valvoline
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Slide 26: Reconciliation of Historical Adjusted EBITDA
RECONCILIATION OF HISTORICAL ADJUSTED EBITDA (a) As reported prior to segment realignment and related changes in fiscal 2021. (b) EBITDA is defined as net income, plus income tax expense, net interest and other financing expenses, and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted
Slide 27: Reconciliation of Historical Retail Services Adjusted EBITDA
RECONCILIATION OF HISTORICAL RETAIL SERVICES ADJUSTED EBITDA a) Refer to Use of Non-GAAP measures in this Appendix for management’s definition of key items. b) Segment adjusted operating income is segment operating income adjusted for key items impacting comparability. Segment adjusted operating inc
Slide 28: Use of Non-GAAP Measures
USE OF NON-GAAP MEASURES To supplement the financial measures prepared in accordance with U.S. GAAP, certain items within this presentation are presented on an adjusted basis. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation from, or as an altern
Slide 29: Key Business Measures
KEY BUSINESS MEASURES Valvoline tracks its operating performance and manages its business using certain key measures, including system-wide store counts, same-store sales (SSS), and system-wide store sales. Management believes these measures are useful to evaluating and understanding Valvoline’s ope
Slide 30: Valvoline
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