Valvoline Inc. · NYSE:VVV
Valvoline — Q2 2017 Earnings Presentation
20 slides from Valvoline's earnings presentation, Apr 26, 2017
Slide 1: Valvoline Second Quarter Fiscal 2017 Earnings Presentation
Valvoline Second Quarter Fiscal 2017 Earnings Presentation Sam Mitchell, CEO Mary Meixelsperger, CFO Jason Thompson, VP Finance, Treasurer April 26, 2017
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, contained in th
Slide 3: Second Quarter Results
Notes on reporting and year-over-year (YoY) impacts Second Quarter Results Separation-related items – Interest expense added this year • Reported EPS of $0.35 up $0.02 YoY – Transfer of pension plans drives increase in YoY pension income • Operating income up 13% to $117 million Key items • Net inco
Slide 4: Adjusted Results for Q2
Q1 Fiscal 2017 Highlights Adjusted Results for Q2 Three Months Ended March 31, 2017 2016 Change EPS from Operating Segments $ 0.34 $ 0.34 $ - • Adjusted1 EPS of $0.37 up 6% Interest Expense $ (0.03) $ - $ (0.03) • Volume growth of 3% Pension & OPEB Income $ 0.06 $ 0.01 $ 0.05 • Sales up 7% 1 Adjuste
Slide 5: Core North America
Q1 Fiscal 2017 Highlights Core North America Core North America continues to be steady Volume and mix dynamics • Volume down 5% – Growing the mix of higher-margin premium branded volume • Sales up 2% – Overall branded volume flat YoY • Branded premium mix up 500 bps – Volume decline driven by declin
Slide 6: Packaging Innovation to Support Core North America Customers
Packaging Innovation to Support Core North America Customers Benefits to Customers ● Improves working capital & inventory control ● Eases space constraints ● Reduces product waste & increases speed of service 5 Gallon Box Benefits to Valvoline ● Increases volume & premium penetration ● Solidifies cu
Slide 7: Quick Lubes
Q1 Fiscal 2017 Highlights Quick Lubes Quick Lubes continues as a growth engine Good results in Q2 • Sales up 13% – Trend of continuing sales and profit growth • SSS up 3.9% – Adding stores through M&A and franchise additions • EBITDA1 up 9% – Q2 contributing to YTD SSS growth of 6.4% in line with fu
Slide 8: International
Q1 Fiscal 2017 Highlights International International continues to drive volume Broad-based volume growth, across emerging and mature markets • Volume up 13% – Mature markets growth driven by Europe • Sales up 12% – Key growth drivers are expanded distribution and brand building • Emerging markets u
Slide 9: Benefits of the Separation and Capital Allocation Priorities
Q1 Fiscal 2017 Highlights Benefits of the Separation Separation plans finalized Separation will drive the business forward • Speed, flexibility and focus – Focused as one, global team • Manage our own capital – Ability to move faster – Ability to reinvest to drive growth in Valvoline’s business Capi
Slide 10: Adjusted Results Fiscal Second Quarter
Adjusted1 Results ($ in millions) Fiscal Second Quarter Preliminary Three months ended Mar. 31, Results from Operating Segments 2017 2016 Change Lubricant gallons (in millions) 45.0 43.8 3 % Factors affecting year-over-year EBITDA Sales $ 514 $ 480 7 % from Operating Segments1 Gross profit 198 192 3
Slide 11: Fiscal 2017 Q2 Corporate Items & Guidance
Fiscal 2017 Q2 Corporate Items & Guidance • Effective tax rate of 34.9% for the quarter • YTD capital expenditures totaled $27 million • YTD free cash flow1 generation of $43 million • Total debt of $737 million – Net debt of $602 million • Net pension and OPEB obligations of ~$833 million • Recorde
Slide 12: Share Repurchase Program
Q1 Fiscal 2017 Highlights Share Repurchase Program Valvoline’s Board authorizes stock repurchase program – Opportunistic execution • Up to $150 million of VVV common – Demonstrates confidence in the strength of the business stock • Term extends through December 31, 2019 12
Slide 13: Q2 Fiscal 2017 Summary
Q2 Fiscal 2017 Summary Performance in Q2 exceeded our expectations On track to meet our full-year goals Positioned to drive shareholder value as a fully independent, standalone company 13
Slide 14: Appendix
Appendix WJ Valvoline
Slide 15: Key Items Affecting Income
Key Items Affecting Income ($ in millions, except per share data) Second Quarter Impact Preliminary Total Operating Earnings 2017 Income Pre-tax After-tax per Share Separation Costs $ (6) (6) (4) (0.02) 2016 Pension remeasurement $ (5) $ (5) $ (3) $ (0.02) Net Loss on acquisition and divestiture $ (
Slide 16: Core North America Fiscal Second Quarter
Core North America ($ in millions) Fiscal Second Quarter Factors affecting year-over-year EBITDA1 Preliminary Three months ended Mar. 31, 2017 2016 Change Lubricant gallons (in millions) 24.6 25.8 (5) % 1 0 0 Sales $ 253 $ 248 2 % (4) 0 Operating income $ 57 $ 59 (3) % 63 60 Depreciation and amortiz
Slide 17: Quick Lubes Fiscal Second Quarter
Quick Lubes ($ in millions) Fiscal Second Quarter Factors affecting year-over-year EBITDA Preliminary Three months ended Mar. 31, 2017 2016 Change Lubricant gallons (in millions) 5.5 4.8 15 % 2 1 1 0 Sales $ 128 $ 113 13 % (1) Operating income $ 31 $ 29 7 % 33 36 Depreciation and amortization 5 4 25
Slide 18: International Fiscal Second Quarter
International ($ in millions) Fiscal Second Quarter Preliminary Factors affecting year-over-year EBITDA Three months ended Mar. 31, 2017 2016 Change Lubricant gallons (in millions) 14.9 13.2 13 % 5 Sales $ 133 $ 119 12 % 0 (1) (3) Operating income $ 18 $ 17 6 % 0 (1) Depreciation and amortization 1
Slide 19: Fiscal 2017 Outlook: Current Expectations
Fiscal 2017 Outlook Current Expectations Outlook Operating Segments • Lubricant gallons 3‐5% • Sales 4‐7% • New stores • VIOC company‐owned 31‐33 28 acquired, 3‐5 new builds • VIOC franchised 15‐25 • VIOC same‐store sales 5‐7% • EBITDA from operating segments $440‐$455 million Corporate Items • Pens
Slide 20: Valvoline
WJ Valvoline