Valvoline Inc. · NYSE:VVV
Valvoline — Q2 2019 Earnings Presentation
20 slides from Valvoline's earnings presentation, May 2, 2019
Slide 1: Second-Quarter Fiscal 2019 Earnings
Second-Quarter Fiscal 2019 Earnings Sam Mitchell, CEO Mary Meixelsperger, CFO May 2, 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: Second-Quarter Reported Results
Second-Quarter Reported Results (in millions, except per-share data) Q2 Notes on reporting and year-over-year (YoY) Operating income $96 impacts Net income $63 Reported income per share $0.33 Revenue recognition YTD cash flow from $134 - Adopted new revenue recognition accounting standard for fiscal
Slide 4: Second-Quarter Adjusted Results Overview
Second-Quarter Adjusted1 Results Overview (in millions, except per-share data) Q2 • Sequential improvement in Core North America’s Adjusted1 operating income $108 results Adjusted1 EBITDA $122 Adjusted1 EPS $0.35 • Very strong SSS growth and store additions in Quick Lubes • FX negatively impacting p
Slide 5: Segment Results Summary
Segment Results Summary Quick Lubes Core North America International (YoY change) Q2 (YoY change) Q2 (YoY change) Q2 SSS (system-wide) 10.8% Total volume -9% Volume flat Sales 27% Sales -6% Volume with JVs 1% Net new stores 53.5%, (company, franchised) 26 Premium mix up 380 bps Sales -3% $53 million
Slide 6: Quick Lubes
Quick Lubes Strong performance continued Unit expansion helps drive sales and segment EBITDA growth System-wide SSS Growth • 186 stores added to the system YoY; 8 – 9% 26 added in Q2 (total units) 8.3% 7.5% 7.5% 7.4% ‐ 148 franchise stores added YoY; 14 in Q2 ‐ 38 company stores added YoY; 12 in Q2
Slide 7: Core North America
Core North America Sequential improvement in Volume softness YoY performance • Driven by stronger branded DIY • Overall YoY decline in segment volume in the retail channel volume driven by installer channel • EBITDA up 29% sequentially ‐ Timing of sales to distributors ‐ Transfer of Great Canadian O
Slide 8: International
International Volume flat versus prior year Sales and profitability impacted by FX • Volume up in EMEA • Unfavorable FX headwinds continue • Volume softness in certain Asia- Pacific and Latin America markets 8
Slide 9: Second-Quarter Financials
Second-Quarter Financials ($ in millions, except per-share data) Fiscal Second Quarter Preliminary and unaudited Three months ended March 31, 1 Factors affecting year-over-year adjusted1 EBITDA Adjusted P&L Results and Ratios 2019 2018 Change Lubricant gallons (in millions) 44.4 45.5 (2) % 6 4 1 Sal
Slide 10: Corporate Items
Corporate Items • Net interest and other financing expense of $19 million in Q2, up $3 million YoY • Effective tax rate of 21.3% in Q2; adjusted1 effective tax rate of 24.7%. • YTD cash flow from operating activities of $134 million • YTD capital expenditures of $48 million; free cash flow1 generati
Slide 11: Deer Park, Texas, Plant Temporarily Shut Down
Deer Park, Texas, Plant Temporarily Shut Down • Shutdown began March 18 due to fire and related fuel and chemical releases at nearby third-party petrochemical terminal • Plant has reopened and restarted operations • Production quickly and effectively shifted to other locations, causing little to no
Slide 12: Update on Restructuring and Cost-Savings Program
Update on Restructuring and Cost-Savings Program • Announced last quarter with objectives to: - Reduce costs - Simplify processes to create agility - Optimize organizational structure - Improve focus and clarity • Annualized operating expense savings of $40 million-$50 million by end of fiscal 2020
Slide 13: Fiscal 2019 Guidance Update
Fiscal 2019 Guidance Update Updated Prior • Raising SSS to 8-9% Outlook Outlook Operating Segments • Lowering Adjusted • Lubricant gallons growth (1)-1% 1-2% • Revenue growth 5-7% 6-8% EBITDA and EPS • New Quick Lube stores (excluding Valvoline acquired ranges due to rising stores and franchise conv
Slide 14: Summary
Summary • Sequential improvement in Core North America, with continued focus on stabilizing business • Making progress on our restructuring and cost savings program • Quick Lubes continues to deliver best-in-class results • Investor Day planned for May 16 in New York 14
Slide 15: Appendix
Click to edit Master title style Appendix 15
Slide 16: Key Items Affecting Income: Second-Quarter Impact
Key Items1 Affecting Income ($ in millions, except per-share data) Second-Quarter Impact Preliminary and unaudited Total Operating Earnings Fiscal 2019 Income Pre-tax After-tax per Share Restructuring and related expenses $ (8) $ (8) $ (7) $ (0.04) Business interruption expenses $ (1) (1) (1) - Lega
Slide 17: Quick Lubes
Quick Lubes ($ in millions) Fiscal Second Quarter Factors affecting year-over-year EBITDA1 Preliminary and unaudited Three months ended March 31, 2019 2018 Change 11 1 3 Lubricant gallons (in millions) 7.0 5.9 19 % (5) (3) Sales $ 200 $ 158 27 % 53 46 Operating income $ 44 $ 38 16 % Depreciation and
Slide 18: Core North America
Core North America Factors affecting year-over-year EBITDA1 ($ in millions) Fiscal Second Quarter Preliminary and unaudited Three months ended March 31, 7 2019 2018 Change (4) (2) (2) Lubricant gallons (in millions) 22.4 24.6 (9) % (4) Sales $ 243 $ 258 (6) % 50 45 1 Adjusted Operating income $ 41 $
Slide 19: International
International ($ in millions) Fiscal Second Quarter Factors affecting year-over-year EBITDA1 Preliminary and unaudited Three months ended March 31, 2 0 2019 2018 Change (1) Lubricant gallons (in millions) 15.0 15.0 - % (1) (2) Sales $ 148 $ 153 (3) % 26 24 Operating income $ 23 $ 24 (4) % Depreciati
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