Valvoline Inc. · NYSE:VVV
Valvoline — Q1 2020 Earnings Presentation
20 slides from Valvoline's earnings presentation, Feb 4, 2020
Slide 1: First-Quarter Fiscal 2020 Earnings
First-Quarter Fiscal 2020 Earnings February 4, 2020 Sam Mitchell, CEO Mary Meixelsperger, CFO 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 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: First-Quarter Reported Results
First-Quarter Reported Results Notes on reporting and year-over-year (YoY) impacts (in millions, except per-share data) Q1 Operating income $104 Lease Accounting Net income $73 - Adopted new lease accounting standard for fiscal 2020 $0.39 - Primarily results in addition of assets and liabilities to
Slide 4: First-Quarter Adjusted Results Overview
First-Quarter Adjusted1 Results Overview Strong start to fiscal 2020 (in millions, except per-share data) Q1 Adjusted1 operating income $104 Solid SSS growth and store additions in Quick Lubes Adjusted1 EBITDA $120 Adjusted1 EPS $0.35 Substantial improvement in Core North America’s EBITDA driven
Slide 5: Segment Results Summary
Segment Results Summary Quick Lubes Core North America International Q1 Q1 Q1 (YoY change) (YoY change) (YoY change) SSS1 (system-wide) 8.3% Total Volume -1% Volume 7% Sales 15% Sales 7% Volume with JVs1 5% Net new stores2 56%, (company + franchised) 22 Premium mix up 620 bps Sales 4% $48 million, $
Slide 6: Quick Lubes
Quick Lubes SSS1 performance–solid start to FY20 Short-term moderation in EBITDA 1 System-wide SSS Growth (%) growth 10.1 • Higher allocation of shared SG&A 8.3 8.3 • Newly built stores still in ramp-up phase 7.5 7.4 • Temporary labor de-leveraging • Expect FY20 segment EBITDA growth of low- to mid-
Slide 7: Quick Lubes – New Stores Impact
Quick Lubes – New Stores Impact EBITDA contribution from newly- constructed company stores1 • New unit economics expected to drive ($ millions) $29M - $32M strong future earnings - New company-owned stores generally have a three-year ramp to maturity • Short-term deleveraging impact from $14M - $17M
Slide 8: Core NA – Q1 Unit Margin Performance and FY20 Outlook
Core NA – Q1 Unit Margin Performance and FY20 Outlook 0.17 $4.21 0.20 0.45 $3.75 - $3.85 (0.17) ~(0.09) $3.39 ~(0.16) Operating True-up of True-up of Price / Cost Mix and Other FY 2020 Expense Trade and Trade and Impact from Normalized Mix Q1 2019 Margin Q1 2020 Estimated Reduction Promotion Promoti
Slide 9: Core NA – DIY Category Update
Core NA – DIY Category Update • Overall macro demand relatively flat over the past year • Shift to synthetic continues - Now nearly 50% share of category volume • Continued focus on private label by retailers - Price gap expansion • Auto part retailers raised promotional prices on branded products,
Slide 10: International
International Volume – Solid start to FY20 Profitability – Good performance Q1 Volume (millions of gallons) 14.7 • EBITDA1 growth driven by increased 14.3 volume and margin improvement 13.8 • Solid unconsolidated JV contributions FY18 FY19 FY20 • Volume growth in line with full-year guidance of 6-8%
Slide 11: First-Quarter Financials
First-Quarter Financials ($ in millions, except per-share data) Fiscal First Quarter Prelim inary and unaudited Three months ended Dec. 31, 1 Adjusted P&L Results and Ratios 2019 2018 Change Factors affecting year-over-year adjusted1 EBITDA Lubricant gallons (in millions) 43.4 42.0 3 % Sales $ 607 $
Slide 12: Corporate Items
Corporate Items • Net interest and other financing expense of $16 million in Q1, down $1 million YoY • Effective tax rate of 24.7% in Q1; adjusted1 effective tax rate of 25.0% • Cash flow from operating activities of $59 million - YoY decline due to increased working capital • Capital expenditures t
Slide 13: Fiscal 2020 Guidance Update
Fiscal 2020 Guidance Update Raising guidance for adjusted EBITDA1 and Updated Prior Outlook Outlook EPS1 Operating Segments • Lubricant gallons growth No change 2-3% • Improved outlook for Core North America • Revenue growth No change 4-6% • Managing raw material cost • New Quick Lube stores (exclud
Slide 14: Service-Driven, Products-Fueled, Technology-Enabled
Service-Driven, Products-Fueled, Technology-Enabled Strong start to fiscal 2020 Segments on track or ahead of full-year expectations Raising full-year guidance 14
Slide 15: Appendix
Click to edit Master title style Appendix 15
Slide 16: Key Items Affecting Income
Key Items1 Affecting Income ($ in millions, except per-share data) First-Quarter Impact Preliminary and unaudited Total Operating Earnings Fiscal 2020 Income Pre-tax After-tax per Share Pension & OPEB income $ - $ 9 $ 7 $ 0.04 Net legacy and separation-related income $ 1 $ 1 $ 1 $ - Restructuring an
Slide 17: Quick Lubes
Quick Lubes ($ in millions) Fiscal First Quarter Factors affecting year-over-year EBITDA1 Preliminary and unaudited Three months ended Dec. 31, 13 2019 2018 Change 0 0 (2) Lubricant gallons (in millions) 7.3 6.5 12 % (9) Sales $ 218 $ 189 15 % 46 48 Operating income $ 38 $ 38 - % Depreciation and am
Slide 18: 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, 11 2019 2018 Change 5 (0) (0) (1) Lubricant gallons (in millions) 21.4 21.7 (1) % Sales $ 248 $ 232 7 % 50 35 Operating income $ 46 $ 31 48 % Depreci
Slide 19: International
International ($ in millions) Fiscal First Quarter Factors affecting year-over-year EBITDA1 Preliminary and unaudited Three months ended Dec. 31, 2 2019 2018 Change 2 0 0 Lubricant gallons (in millions) 14.7 13.8 7 % (2) Sales $ 141 $ 136 4 % 22 20 Operating income $ 20 $ 18 11 % Depreciation and am
Slide 20: Valvoline
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