Valvoline Inc. · NYSE:VVV
Valvoline — Q1 2021 Earnings Presentation
28 slides from Valvoline's earnings presentation, Feb 4, 2021
Slide 1: First-Quarter Fiscal 2021 Earnings
First-Quarter Fiscal 2021 Earnings February 4, 2021 Sam Mitchell, CEO Mary Meixelsperger, CFO Sean Cornett, Investor Relations 1
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements Certain statements in this presentation, other than statements of historical fact, including estimates, projections and statements related to Valvoline’s business plans and operating results, are forward-looking statements within the meaning of the Private Secu
Slide 3: First-Quarter Results
First-Quarter Results Reported Results (in millions, except per-share data) Q1 Key items1 Operating income $124 • Non-service Pension and OPEB impact; $10M after-tax income Net income $87 Reported earnings per $0.47 YoY Performance diluted share (EPS) • Sales increased 8% YTD Cash flow from $79 • Re
Slide 4: First-Quarter Overview
First-Quarter Overview • Great start to fiscal 2021 - Q1 results continue to demonstrate resiliency of business model • Strong top- and bottom-line growth - Sales up 8%; adjusted1 EBITDA up 21% • Returned $81 million in cash to shareholders - Raised dividend by 11%; repurchased 2.5M shares 1 For rec
Slide 5: Segment Results Summary
Segment Results Summary Quick Lubes Core North America International Q1 Q1 Q1 (YoY change) (YoY change) (YoY change) Sales 17% Sales -5% Sales 16% SSS1 (system-wide) 6.0% Volume1 -1% Volume1 14% Store additions, 59.7%, Volume with JVs1 19% 71 Premium mix1 up 370 bps net1,2 (company + franchised) $36
Slide 6: Quick Lubes
Quick Lubes Sales and EBITDA1 (USD, Millions) • Strong sales and EBITDA1 growth - YoY sales up 17%, EBITDA up 21% +17% $250 • Solid Q1 SSS1 performance $200 - 6.0% growth system-wide $150 • 126 net new store units1 added since $100 1Q20, up 9% YoY +21% $50 - Recent acquisitions expected to make stro
Slide 7: Quick Lubes – Data-Driven Approach
Quick Lubes – Data-Driven Approach VIOC Company Same Store Active Customer Base1 and YoY Growth 3.8 7.0% Growing customer base Active Customers (millions) 6.0% 3.7 5.0% • Stronger retention of new customers 3.6 acquired during early-COVID period Growth 4.0% 3.5 3.0% • Continued share growth via cust
Slide 8: Quick Lubes – People, Process and Culture
Quick Lubes – People, Process and Culture Competitive advantages driving best-in-class in-store experience • Superior talent is foundational - Selective hiring protocols Key Drivers of Customer Satisfaction1 - Strong customer-service culture 1Q20 1Q21 83% 84% • Proprietary processes, technology and
Slide 9: Core North America
Core North America YoY Change in Retail and Installer/other Retail Channel Volume1 and Miles Driven • Continued progress in Q1 3% - Optimized promotions 1% - Effective marketing support - Consistent DIY share Installer Channel -7% • Ongoing COVID-19 impacts in Q1 -8% - Partially offset by new accoun
Slide 10: Core North America – Taking Decisive Action on Pricing
Core North America – Taking Decisive Action on Pricing Blend of Base Oil Posted Prices1 Indexed to Dec. 2019 120% • Experienced favorable price/cost lag in $0.50+/gallon fiscal 2020 • Expect unfavorable price/cost lag in fiscal 110% 100% 2021 • Implementing pricing actions, consistent 90% with broad
Slide 11: International
International Sales by Region Volume1 (USD, in millions) • YOY growth across all regions led by APAC 90 +19% 80 − Continued organic growth in China 70 • Robust recovery in India JV and LATAM 60 +9% − Driven by restocking and increased demand 50 40 +25% Adjusted1 EBITDA 30 • Improved margins 20 10 •
Slide 12: International – Growth Strategies
International – Growth Strategies Brand Building Build brand awareness & equity that supports premium positioning Service Platforms Profit Expand value to win new accounts and support premium margins Channel Development Optimize distributor & supply chain network Growth Established model driving gro
Slide 13: First-Quarter Financials
First-Quarter Financials ($ in millions, except per-share data) Fiscal First Quarter Preliminary and unaudited Three months ended Dec. 31, 1 Adjusted P&L Results and Ratios 2020 2019 Change Factors affecting year-over-year adjusted1 EBITDA Lubricant gallons (in millions)1 45.7 43.4 5 % Sales $ 653 $
Slide 14: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • Effective tax rate of 25.6% in Q1; adjusted1 effective tax rate of 26.0% • Cash flow from operating activities of $79 million • Capital expenditures totaled $35 million; free cash flow1 generation of $44 million • Net interest and other financing expense of $20 million
Slide 15: Outlook
Outlook 2021 On track for full-year Outlook expectations – Operating Segments Reaffirming guidance • Sales growth 14 – 16% • New Quick Lube stores1 (includes company-owned, franchise and 140 – 160 acquisitions) • Quick Lubes system-wide SSS1 growth 12 – 14% • Normalized2 system-wide SSS growth 6 – 8
Slide 16: Summary
Summary Outstanding start to the Fiscal Year Continued strong growth in Quick Lubes; renewed momentum in International Accelerated shift to a service-driven business 16
Slide 17: Appendix
Click to edit Master title style Appendix 17
Slide 18: Quick Lubes
Quick Lubes ($ in millions) Fiscal First Quarter Factors affecting year-over-year EBITDA1 Preliminary and unaudited Three months ended Dec. 31, 2020 2019 Change 8 1 1 1 1 Lubricant gallons (in millions) 7.7 7.3 5 % (1) Sales $ 254 $ 218 17 % 58 48 Operating income $ 43 $ 38 13 % Depreciation and amo
Slide 19: Core North America
Core North America ($ in millions) Fiscal First Quarter Factors affecting year-over-year EBITDA1 Preliminary and unaudited Three months ended Dec. 31, 2020 2019 Change 0 2 0 0 1 Lubricant gallons (in millions) 21.2 21.4 (1) % (1) Sales $ 235 $ 248 (5) % 50 51 Operating income $ 47 $ 46 2 % Depreciat
Slide 20: International
International ($ in millions) Fiscal First Quarter Preliminary and unaudited Three months ended Dec. 31, Factors affecting year-over-year EBITDA1 2020 2019 Change 4 2 1 0 Lubricant gallons1 (in millions) 16.8 14.7 14 % 7 Sales $ 164 $ 141 16 % 36 Operating income $ 34 $ 20 70 % 22 Depreciation and a
Slide 21: Key Items Affecting Income
Key Items1 Affecting Income ($ in millions, except per-share data) First-Quarter Impact Preliminary and unaudited Total Operating Earnings Fiscal 2021 Income Pre-tax After-tax per Share Pension & OPEB income $ - $ 13 $ 10 $ 0.05 Net legacy and separation-related expenses $ (1) $ (1) $ (1) $ - Busine
Slide 22: Reconciliation of Non-GAAP Data – Net Earnings and P&L
Reconciliation of Non-GAAP Data – Net Earnings and P&L 22
Slide 23: Reconciliation of Non-GAAP Data - Adjusted EBITDA
Reconciliation of Non-GAAP Data - Adjusted EBITDA (a) Key items were recorded in Unallocated and other and none were recognized in operating segment results. The table above reconciles Unallocated and other operating income and relevant other items reported below operating income to EBITDA and Adjus
Slide 24: Reconciliation of Non-GAAP Data – Free Cash Flow
Reconciliation of Non-GAAP Data – Free Cash Flow (a) Free cash flow is defined as cash flows from operating activities less capital expenditures and certain other adjustments as applicable. 24
Slide 25: Liquidity and Net Debt – January 31, 2021
Liquidity and Net Debt – January 31, 2021 At January 31, Liquidity 2021 Cash $ 205 Available revolver 1 and A/R facility capacity2 506 Liquidity $ 711 Interest At January 31, Debt Expiration Rate 2021 3.625% senior notes, 06/2031 3.625% $ 535 par $535 million 4.25% senior notes, 02/2030 4.250% 600 p
Slide 26: Use of Non-GAAP Measures
Use of Non-GAAP Measures To aid in the understanding of Valvoline’s ongoing business performance, certain items within this presentation are presented on an adjusted basis. These non-GAAP measures, presented on both a consolidated and operating segment basis, which are not defined within U.S. GAAP a
Slide 27: Key Business Measures
Key Business Measures Valvoline tracks its operating performance and manages its business using certain key measures, including system-wide, company-owned and franchised store counts and same-store sales; Express Care store counts; lubricant volumes sold by unconsolidated joint ventures and total lu
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