Valvoline Inc. · NYSE:VVV
Valvoline — Q3 2018 Earnings Presentation
18 slides from Valvoline's earnings presentation, Aug 2, 2018
Slide 1: Third-Quarter Fiscal 2018 Earnings
Third-Quarter Fiscal 2018 Earnings Sam Mitchell, CEO Mary Meixelsperger, CFO Sean Cornett, Director of Investor Relations August 2, 2018 http://investors.valvoline.com
Slide 2: Forward-Looking Statements
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: Third-Quarter Reported Results
Third-Quarter Reported Results Notes on reporting and year-over-year (YoY) impacts Pension-related items (in millions, except per-share data) Q3 - Non-service pension and OPEB income reclassified as non-operating; Operating income $102 excluded from adjusted1 results as a Key Item Net income $64 • P
Slide 4: Third-Quarter Adjusted Results Overview
Third-Quarter Adjusted1 Results Overview Adjusted1 EBITDA growth of 3% YoY; adjusted1 EPS growth of 10% (in millions, except per-share data) Q3 Continued strong performance in Quick Lubes Adjusted1 operating income $101 Modest International volume growth, including unconsolidated joint Adjuste
Slide 5: Core North America
Core North America Volume and Mix (YoY Change) Q3 - Volume growth of 2% in DIY but below our expectations Total Volume -1% - Soft DIFM installer volumes Sales +2% - Continued strong premium mix improvement 49.7%, Premium mix up 470 bps EBITDA $46 million, - Lower overall volume EBITDA1 down $6 milli
Slide 6: Quick Lubes
Quick Lubes SSS Strength - Combination of growth in transactions and average ticket (YoY Change) Q3 - Transactions driven by customer acquisition and retention programs SSS (system-wide) +7.9% - Average ticket improvements from pricing and premium mix Sales +20% Adjusted EBITDA1 $47 million, Store g
Slide 7: Great Canadian Oil Change
Great Canadian Oil Change Company Overview • Founded in Saskatoon, Saskatchewan in 1978 Footprint here • 73 franchised locations • Third largest quick lube system in Canada • Long-time customer of Valvoline Strategic Rationale • Immediate scale for entry into Canada • Creates opportunity for company
Slide 8: International
International Volume (YoY Change) Q3 - Solid volume gains in fast-growing markets of China and India Volume -2% • Combined, including unconsolidated JVs, volume growth of 9% Volume with JVs +1% - Volume in other regions impacted by transitory items Sales +7% $22 million, EBITDA EBITDA1 up $2 million
Slide 9: Third-Quarter Financials
Third-Quarter Financials ($ in millions, except per-share data) Fiscal Third Quarter Preliminary and unaudited Three months ended June 30, Factors affecting year-over-year adjusted EBITDA1 P&L Results and Ratios 2018 2017 Change Lubricant gallons (in millions) 46.0 46.0 - % Sales $ 577 $ 534 8 % 3 2
Slide 10: Corporate Items
Corporate Items • Net interest and other financing expense of $15 million in Q3, up $5 million YoY - YoY increase due primarily to pension funding transaction • Effective tax rate of 34.0% in Q3; adjusted1 effective tax rate of 27.9%. • YTD cash flow from operating activities of $181 million - YoY i
Slide 11: Fiscal 2018 Guidance
Fiscal 2018 Guidance Updated Prior Updating guidance Outlook Outlook Operating Segments • Lubricant Gallons 1-2% 3-4% • Raising SSS to 7.0-7.5% • Revenues 9-11% 10-12% • Adjusted1 EBITDA to $465-$470 • VIOC Company Stores (excluding franchise No change 23-25 conversions) million • VIOC Franchised St
Slide 12: Summary and Outlook
Summary and Outlook Q3 performance below expectations Taking actions expected to protect unit margins in Core North America Anticipate continued momentum in Quick Lubes and targeted gains in International Strong, cash-generative business enabling balanced approach to creating value Expect
Slide 13: Appendix
Click to edit Master title style Appendix 13
Slide 14: Key Items Affecting Income
Key Items1 Affecting Income ($ in millions, except per-share data) Third Quarter Impact Preliminary and unaudited Total Operating Earnings 2018 Income Pre-tax After-tax per Share Pension & OPEB income $ - 10 7 0.04 2 Legacy and separation-related costs $ 3 3 (3) (0.02) 3 Acquisition-related foreign
Slide 15: Core North America
Core North America ($ in millions) Fiscal Third Quarter Factors affecting year-over-year EBITDA1 Preliminary an unaudited Three months ended June 30, 2018 2017 Change 2 0 0 (1) Lubricant gallons (in millions) 25.5 25.8 (1) % (7) Sales $ 264 $ 258 2 % 52 46 Operating income $ 41 $ 48 (15) % Depreciat
Slide 16: Quick Lubes
Quick Lubes ($ in millions) Fiscal Third Quarter Factors affecting year-over-year Adjusted EBITDA1 Preliminary and unaudited Three months ended June 30, 3 2018 2017 Change 6 2 1 Lubricant gallons (in millions) 6.2 5.6 11 % (5) Sales $ 167 $ 139 20 % 47 40 Operating income $ 38 $ 34 12 % Depreciation
Slide 17: International
International ($ in millions) Fiscal Third Quarter Factors affecting year-over-year EBITDA1 Preliminary and unaudited Three months ended June 30, 3 2 2018 2017 Change 0 Lubricant gallons (in millions) 14.3 14.6 (2) % (1) (2) Sales $ 146 $ 137 7 % 20 22 Operating income $ 20 $ 18 11 % Depreciation an
Slide 18: Accelerating into the Future
ACCELERATING INTO THE FUTURE VALVOLINE 15M-30 za = FULL SYNTHETIC | eae | Valvoline. 18