Valvoline Inc. · NYSE:VVV
Valvoline — Q1 2019 Earnings Presentation
21 slides from Valvoline's earnings presentation, Feb 7, 2019
Slide 1: First-Quarter Fiscal 2019 Earnings
First-Quarter Fiscal 2019 Earnings Sam Mitchell, CEO Mary Meixelsperger, CFO February 7, 2019 Sean Cornett, Investor Relations 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, statements related to Valvoline’s business plans and operating results are forward-looking statements within the meaning of the Private Securities Litigatio
Slide 3: First-Quarter Reported Results
First-Quarter Reported Results Notes on reporting and year-over-year (YoY) impacts (in millions, except per-share data) Q1 Revenue Recognition Operating income $87 - Adopted new revenue recognition accounting standard for fiscal 2019 Net income $53 - Primarily a reclassification of certain items wit
Slide 4: First-Quarter Adjusted Results Overview
First-Quarter Adjusted1 Results Overview Segment outcomes mixed; overall results below expectations (in millions, except per-share data) Q1 Exceptional SSS growth and strong store additions Adjusted1 operating income $87 Adjusted1 EBITDA $101 Branded volume in Core North America’s retail chann
Slide 5: Segment Results Summary
Segment Results Summary Quick Lubes Core North America International Q1 Q1 Q1 (YoY change) (YoY change) (YoY change) SSS (system-wide) 9.8% Total Volume -9% Volume -3% Sales 23% Sales -8% Volume with JVs -4% Net new stores 49.8%, (company, franchised) 162 Premium mix up 200 bps Sales -3% $46 million
Slide 6: Quick Lubes
Quick Lubes SSS performance – Exceptional start to Unit expansion – Impressive system- fiscal 2019 wide growth • Balanced contribution from transactions and • 162 stores added to the system YoY; 59 average ticket added in Q1 (total units) • Transactions driven by customer acquisition • 133 franchise
Slide 7: Quick Lubes – Oil Changers Inc.
Quick Lubes – Oil Changers Inc. • New Valvoline customer • Expands presence into Ontario • Strong volume performer Great Canadian Oil Change Oil Changers, Inc. Oil Changers Inc. • Founded in 1996; currently 31 franchise locations in southern Ontario • System performing well • Improves opportunity to
Slide 8: Core North America
Core North America Retail Channel – Evolving DIY Installer Channel – Stabilizing dynamics • Branded promoted prices crossed some • Volume in line YoY, excluding GCOC1 consumer sensitivity points transfer to Quick Lubes • More brands promoted simultaneously • Private label share continued to grow in
Slide 9: Core North America – Valvoline Implementing Actions
Core North America – Valvoline Implementing Actions 1. Working on implementing more aggressive promotional price points in the DIY retail channel 2. Strengthening consumer communication around the value of the Valvoline brand 3. Executing restructuring program to drive more stable results 9
Slide 10: International
International Volume – Slow start to fiscal 2019; Profitability – Good performance; FX improvements expected headwinds • Volume softness, especially in emerging • Flat EBITDA on lower volume and sales markets driven by lower operating expenses • Expect volume improvements going • FX headwinds expect
Slide 11: First-Quarter Financials
First-Quarter Financials ($ in millions, except per-share data) Fiscal First Quarter Preliminary and unaudited Three months ended Dec. 31, Factors affecting year-over-year adjusted1 EBITDA P&L Results and Ratios 2018 2017 Change Lubricant gallons (in millions) 42.0 43.8 (4) % Sales $ 557 $ 545 2 % 3
Slide 12: Corporate Items
Corporate Items • Net interest and other financing expense of $17 million in Q1, up $3 million YoY • Effective tax rate of 26.4% in Q1; adjusted1 effective tax rate of 27.1%. • Cash flow from operating activities of $85 million - YoY increase due primarily to favorable working capital • Capital expe
Slide 13: Restructuring Program Objectives
Restructuring Program Objectives Pre-tax annualized savings of $40 - $50 million • Reduce costs Expect full run-rate savings by end of fiscal 2020; modest • Simplify processes to create agility savings in fiscal 2019 • Optimize organizational structure Expect charge of $12 - $17 million • Improve fo
Slide 14: Fiscal 2019 Guidance Update
Fiscal 2019 Guidance Update Updated Prior Outlook Outlook Operating Segments • Adjusted1 EBITDA of $470-$485 • Lubricant gallons growth 1-2% 2.5-3.5% million • Revenue growth 6-8% 7-9% • Adjusted1 EPS of $1.31-$1.39 • New Quick Lube stores (excluding Valvoline acquired stores • Raising SSS to 7-8% a
Slide 15: Summary
Summary Implementing plans to help stabilize branded volume in Core North America’s retail channel Executing our restructuring program will drive further benefits in the future Continuing to invest in growing Quick Lubes business 15
Slide 16: Appendix
Click to edit Master title style Appendix 16
Slide 17: Key Items Affecting Income
Key Items1 Affecting Income ($ in millions, except per-share data) First-Quarter Impact Preliminary and unaudited Total Operating Earnings Fiscal 2019 Income Pre-tax After-tax per Share Pension & OPEB income $ - $ 2 $ 2 $ 0.01 Total $ - $ 2 $ 2 $ 0.01 Fiscal 2018 U.S. Tax Reform $ - $ - $ (75) $ (0.
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, 2018 2017 Change 2 6 2 0 Lubricant gallons (in millions) 6.5 5.7 14 % (5) Sales $ 189 $ 154 23 % 41 46 Operating income $ 38 $ 35 9 % Depreciation and amort
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, 2018 2017 Change 5 1 Lubricant gallons (in millions) 21.7 23.8 (9) % (15) (0) Sales $ 232 $ 251 (8) % 47 (3) 35 Operating income $ 31 $ 43 (28) % Dep
Slide 20: International
International ($ in millions) Fiscal First Quarter Factors affecting year-over-year EBITDA1 Preliminary and unaudited Three months ended Dec. 31, 2018 2017 Change 0 1 0 Lubricant gallons (in millions) 13.8 14.3 (3) % (1) (0) Sales $ 136 $ 140 (3) % 20 20 Operating income $ 18 $ 19 (5) % Depreciation
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