Valvoline Inc. · NYSE:VVV
Valvoline — Q1 2018 Earnings Presentation
22 slides from Valvoline's earnings presentation, Feb 8, 2018
Slide 1: First Quarter Fiscal 2018 Earnings
First Quarter Fiscal 2018 Earnings Sam Mitchell, CEO Mary Meixelsperger, CFO Sean Cornett, Director of Investor Relations February 8, 2018 http://investors.valvoline.com
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements Certain statements in this presentation, other than statements of historical fact, including estimates, projections, statements related to our 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 Q1 Pension-related items (in millions, except per-share data) - Pension income reclassified as non-operating; excluded from adjusted1 Operating Income $88 results as a Key Item Net Loss $10 • Prior periods revised to
Slide 4: First-Quarter Adjusted Results
First-Quarter Adjusted1 Results Q1 Fiscal 2018 Overview Adjusted1 EBITDA consistent with expectations Q1 (in millions, except per-share data) Adjusted1 Operating Income $97 Adjusted1 EBITDA $108 Sequential unit margin improvements Adjusted1 EPS $0.29 Excellent performance in Quick Lubes; premi
Slide 5: Core North America
Core North America Core North America steady progress on unit margins Q1 (YoY Change) Volume and Mix Total Volume (1)% - Continued gains in premium mix Branded volume Up slightly - Branded volume up slightly Sales +6% - Non-branded volume declined due to promotional timing 47.8%, Premium mix up 400
Slide 6: Innovation in Packaging and Products
Innovation in Packaging and Products New Easy Pour Bottle New Products for Today’s Engines EasyGDITM product line Modern Engine synthetic Faster. Cleaner. Proven.TM for DIFM channels motor oil for DIY Designed to fight carbon buildup in vehicles Now available in 18k+ DIY locations 2012 and newer 6
Slide 7: Quick Lubes
Quick Lubes Quick Lubes driving SSS growth from a strong base Q1 (YoY Change) SSS Strength SSS +7.9% - Excellent SSS growth on top of outstanding performance last year Sales +21% • Transactions and average ticket contributing EBITDA1 $41 million, - Transactions driven by customer acquisition program
Slide 8: International
International International volume growth continues Q1 Volume (YoY Change) Volume +4% - Strong volume growth in Europe and Latin America Volume with JVs +9% - Volume in JVs with Cummins grew 16% to new record Sales +12% $20 million, EBITDA1 down $1 million EBITDA - Planned increases in SG&A impactin
Slide 9: Capital Allocation Framework
Capital Allocation Framework New share repurchase authorization • $300 million through fiscal 2020 • Begins after current $150 million authorization is complete Balanced approach to capital allocation – growth and shareholder returns 1. Organic growth 2. Inorganic growth, primarily bolt-on quick lub
Slide 10: Hands-on Highlights
Hands-on Highlights CCW issu AUTOPARTS =” 2017 Entrepreneur RE FRANCHISE ST Xo km : ®) 500 AWARD _“ aa 2018 WINNER Franchise Times MW AutoZone TOP200+ W valvoline 10
Slide 11: First-Quarter Financials
First-Quarter Financials ($ in millions, except per-share data) Fiscal First Quarter Preliminary Three months ended Dec 31, Factors affecting year-over-year adjusted EBITDA1 P&L Results and Ratios 2017 2016 Change Lubricant gallons (in millions) 43.8 43.1 2 % Sales $ 545 $ 489 11 % Gross profit as a
Slide 12: Tax Reform
Tax Reform Valvoline is a net beneficiary of tax reform $400 million voluntary contribution to U.S. pension plan • 2-cent benefit to adjusted EPS in Q1 Lower effective tax rates • Lower cash taxes beginning in 2019 – Fiscal 2018 consolidated adjusted1 effective tax rate of 27-28% – Adjusted1 effecti
Slide 13: First-Quarter Corporate Items
First-Quarter Corporate Items • Cash flow from operating activities of $20 million - YoY decline due primarily to the timing of settlements for working capital • Capital expenditures totaled $14 million • Free cash flow1 generation of $6 million • Total debt of ~$1.2 billion and net debt of ~$1.1 bi
Slide 14: Fiscal 2018 Guidance
Fiscal 2018 Guidance Updated Prior Outlook Outlook Operating Segments • Lubricant Gallons No change 3-4% • Adjusted1 EPS increasing to $1.30 - • Revenues 10-12% 7-9% $1.38 reflecting tax reform benefits • VIOC Company Stores (excluding franchise No change 23-25 conversions) • Revenue and same-store
Slide 15: First-Quarter Summary
First-Quarter Summary On track to meet our fiscal 2018 goals Executing against our core priorities to accelerate growth Good start to the year Excellent performance in Quick Lubes; raising SSS guidance Committed to returning capital to shareholders 15
Slide 16: Appendix
Click to edit Master title style Appendix 16
Slide 17: Key Items Affecting Income
Key Items1 Affecting Income ($ in millions, except per-share data) First Quarter Impact Preliminary Total Operating Earnings 2018 Income Pre-tax After-tax per Share Tax Reform: remeasurements and deemed repatriation $ - - (71) (0.35) Tax Reform: Tax Matters Agreement $ (7) (7) (4) (0.02) Separation
Slide 18: Core North America
Core North America ($ in millions) Fiscal First Quarter Factors affecting year-over-year EBITDA1 Preliminary Three months ended Dec. 31, 1 0 2017 2016 Change (4) (3) (1) Lubricant gallons (in millions) 23.8 24.1 (1) % Sales $ 251 $ 237 6 % 54 47 Operating income $ 43 $ 51 (16) % Depreciation and amo
Slide 19: Quick Lubes
Quick Lubes ($ in millions) Fiscal First Quarter Factors affecting year-over-year EBITDA1 Preliminary Three months ended Dec. 31, 5 1 0 2017 2016 Change 5 (4) Lubricant gallons (in millions) 5.7 5.3 8 % Sales $ 154 $ 127 21 % 34 41 Operating income $ 35 $ 29 21 % Depreciation and amortization 6 5 20
Slide 20: International
International ($ in millions) Fiscal First Quarter Factors affecting year-over-year EBITDA1 Preliminary Three months ended Dec. 31, 2 1 2017 2016 Change (2) 0 (2) Lubricant gallons (in millions) 14.3 13.7 4 % Sales $ 140 $ 125 12 % 21 20 Operating income $ 19 $ 20 (5) % Depreciation and amortization
Slide 21: Fiscal 2018 Presentation of Fiscal 2017 Adjusted Results
Fiscal 2018 Presentation of Fiscal 2017 Adjusted Results Results for fiscal 2017 below reflect adjustments for Key Items as previously reported but now includes the addition of Pension and other post-retirement plan non-service income, which is treated as a Key Item beginning in fiscal 2018 Quarters
Slide 22: Accelerating Into the Future
ACCELERATING INTO THE FUTURE VALVOLINE 15M-30 za = FULL SYNTHETIC | eae | Valvoline. 22