Valvoline Inc. · NYSE:VVV
Valvoline — Q3 2019 Earnings Presentation
19 slides from Valvoline's earnings presentation, Aug 1, 2019
Slide 1: Third-Quarter Fiscal 2019 Earnings
Third-Quarter Fiscal 2019 Earnings Sam Mitchell, CEO August 1, 2019 Mary Meixelsperger, CFO http://investors.valvoline.com
Slide 2: Forward-Looking Statements; Regulation G: Adjusted Results
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 Securities Litig
Slide 3: Third-Quarter Reported Results
Third-Quarter Reported Results (in millions, except per-share data) Q3 Notes on reporting and year-over-year (YoY) Operating income $102 impacts Net income $65 Reported income per share $0.34 Revenue recognition YTD cash flow from $214 - Adopted new revenue recognition accounting standard in fiscal
Slide 4: Third-Quarter Adjusted Results Overview
Third-Quarter Adjusted1 Results Overview (in millions, except per-share data) Q3 • Continued strong growth in Quick Lubes Adjusted1 operating income $111 Adjusted1 EBITDA $126 • Better performance in Core North America Adjusted1 EPS $0.37 • Continued volume softness and FX headwinds in International
Slide 5: Segment Results Summary
Segment Results Summary Quick Lubes Core North America International (YoY change) Q3 (YoY change) Q3 (YoY change) Q3 SSS (system-wide) 9.7% Total volume -5% Volume Flat Sales 26% Sales -2% Volume with JVs 2% Net new stores 53.1%, (company, franchised) 25 Premium mix up 340 bps Sales -3% $57 million,
Slide 6: Quick Lubes
Quick Lubes Strong performance continued Unit expansion helps drive sales and segment EBITDA growth System-wide SSS Growth 9 – 10% • 198 stores added to the system YoY; 8.3% 7.7% 25 added in Q3 (total units) 7.5% 7.4% ‐ 148 franchise stores added YoY; 7 in Q3 ‐ 50 company stores added YoY; 18 in Q3
Slide 7: Quick Lubes - Winning With Customers
Quick Lubes - Winning With Customers Consumer App App & Customer Retention1 +1,100 bps Non Users App Users 1 2019 Company Store App Pilot 7
Slide 8: Core North America
Core North America Improvement in YoY performance Volume declines slow • Adjusted EBITDA flat • Drivers of YoY decline • Would have grown excluding revenue ‐ Branded volume in the retail channel recognition impacts and transfer of GCOC product sales to Quick Lubes1 ‐ Flat on a sequential basis • Sal
Slide 9: International
International Volume flat versus prior year Sales and profitability impacted by FX • Volume up in EMEA, primarily Europe • Adjusted1 EBITDA up $1 million • Volume softness in certain Asia- • Unfavorable FX headwinds continue Pacific and Latin America markets • Volume with unconsolidated JVs up 2% 1
Slide 10: Third-Quarter Financials
Third-Quarter Financials ($ in millions, except per-share data) Fiscal Third Quarter Preliminary and unaudited Three months ended June 30, 1 Factors affecting year-over-year adjusted1 EBITDA Adjusted P&L Results and Ratios 2019 2018 Change Lubricant gallons (in millions) 45.6 46.0 (1) % 10 5 2 1 Sal
Slide 11: Corporate Items
Corporate Items • Net interest and other financing expense of $19 million in Q3, up $4 million YoY • Effective tax rate of 23.5% in Q3; adjusted1 effective tax rate of 23.9% • YTD cash flow from operating activities of $214 million • YTD capital expenditures of $73 million; free cash flow2 generatio
Slide 12: Fiscal 2019 Guidance Update
Fiscal 2019 Guidance Update Updated Prior • Narrowing Adjusted Outlook Outlook EBITDA to high end of Operating Segments • Lubricant gallons growth (2)%-flat (1)-1% previous range • Revenue growth 4-6% 5-7% • New Quick Lube stores (excluding Valvoline acquired • Raising SSS to 9-10% stores and franch
Slide 13: Summary
Summary • Quick Lubes best-in-class performance continues • Core North America delivers better results, focus remains on stabilization • International making solid contributions, focused on reigniting growth • Q3 results align to longer-term shareholder value strategy: 1. Grow – Quick Lubes 2. Maint
Slide 14: Appendix
Click to edit Master title style Appendix 14
Slide 15: Key Items Affecting Income
Key Items1 Affecting Income ($ in millions, except per-share data) Third-Quarter Impact Preliminary and unaudited Total Operating Earnings Fiscal 2019 Income Pre-tax After-tax per Share Restructuring and related expenses $ (4) $ (4) $ (3) $ (0.02) Business interruption expenses $ (5) (5) (4) (0.02)
Slide 16: Quick Lubes
Quick Lubes ($ in millions) Fiscal Third Quarter Factors affecting year-over-year adjusted1 EBITDA Preliminary and unaudited Three months ended June 30, 2019 2018 Change 10 1 3 2 Lubricant gallons (in millions) 7.2 6.2 16 % (6) Sales $ 211 $ 167 26 % 57 47 Operating income $ 48 $ 38 26 % Key Items -
Slide 17: Core North America
Core North America ($ in millions) Fiscal Third Quarter Factors affecting year-over-year adjusted1 EBITDA Preliminary and unaudited Three months ended June 30, 1 2019 2018 Change 3 Lubricant gallons (in millions) 24.1 25.5 (5) % 0 (1) (3) Sales $ 260 $ 264 (2) % 46 46 Operating income $ 38 $ 41 (7)
Slide 18: International
International ($ in millions) Fiscal Third Quarter Factors affecting year-over-year adjusted1 EBITDA Preliminary and unaudited Three months ended June 30, 0 1 2 0 2019 2018 Change (2) Lubricant gallons (in millions) 14.3 14.3 - % Sales $ 142 $ 146 (3) % 22 23 Operating income $ 20 $ 20 - % Key Items
Slide 19: 19
19