Valvoline Inc. · NYSE:VVV
Valvoline — Q2 2021 Earnings Presentation
26 slides from Valvoline's earnings presentation, Apr 29, 2021
Slide 1: Second-Quarter Fiscal 2021 Earnings
Second-Quarter Fiscal 2021 Earnings April 29, 2021 Sam Mitchell, CEO Mary Meixelsperger, CFO Sean Cornett, Investor Relations 1
Slide 2: Safe Harbor
Safe Harbor 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 Secu
Slide 3: Second-Quarter Results
Second-Quarter Results Reported Results (in millions, except per-share data) Q2 Key items1 Operating income $131 • Debt extinguishment impact: (-) $27 million after-tax expense Net income $68 • Non-service Pension and OPEB impact; (+) $10M after-tax income • Business recovery impact: (+) $2 million
Slide 4: Second-Quarter Overview
Second-Quarter Overview • Exceptional performance - Q2 results exceeded our expectations - Quick Lubes represented more than half adjusted1 EBITDA for the first time • Strong top- and bottom-line growth - Sales up 21%; adjusted1 EBITDA up 13% - Excluding unfavorable, non-cash YoY variable compensati
Slide 5: Segment Results Summary
Segment Results Summary Quick Lubes Core North America International Q2 Q2 Q2 (YoY change) (YoY change) (YoY change) Sales 34% Sales 2% Sales 36% SSS1 (system-wide) 20.2% Volume1 7% Volume1 28% Store additions, 60.9%, 15 Premium mix1 up 320 bps Volume with JVs1 38% net1,2 $79 million, $42 million, d
Slide 6: Quick Lubes
Quick Lubes YoY Growth in Sales and adjusted1 EBITDA • Outstanding Q2 SSS1 performance - 20.2% growth system-wide 58% - Normalized2 SSS up more than 10% • Unit additions up 9% YoY - 129 net new store units1 added since 34% 2Q20 - 15 net new stores added in Q2 21% 17% • Strong sales and EBITDA1 growt
Slide 7: Quick Lubes is More Than Oil Changes
Quick Lubes is More Than Oil Changes Non-oil Change Revenue (NOCR)1 Components of NOCR (based on average ticket) $21.08 • Transmission fluid change, coolant flush, fuel system cleaning, batteries, bulbs, wiper $19.77 blades, belts, tire rotation, etc. • Cabin air filter services returning after $18.
Slide 8: Quick Lubes – Drivers of SSS Growth
Quick Lubes – Drivers of SSS Growth Oil Changes Per Day (OCPD)1 Drivers of SSS 48 • Transactions – share gains 46 - New customer acquisition - Current customer retention 44 • Average ticket 42 - Pricing power 40 - Premiumization - Non-oil change revenue 38 FY16 FY17 FY18 FY19 FY20 FY21YTD Confident
Slide 9: Core North America
Core North America Volume1 and Gross Profit2 vs. 2Q20 (gallons in millions; USD in millions) • Cash flow generation remains strong +1% $85 $86 • Volumes performing ahead of miles driven • Indexed and negotiated pricing +7% 20.9 22.3 increases continue • Excluding non-cash LIFO impacts, Gallons Gross
Slide 10: International
International YoY Growth in Sales by Region Volume1 • YOY growth across all regions led by APAC 52% − Continued organic growth in China and lapping COVID-19 impacts from prior year • Increased demand in LatAm, EMEA and India − Driven by ongoing recovery 25% 23% 23% 19% Adjusted1 EBITDA • Top- and bo
Slide 11: International – Brand Building with Mechanics’ Month
International – Brand Building with Mechanics’ Month Mechanics’ Month 2021 • 2nd annual global campaign in March • Activation in 50+ countries – Digital, PR and retail activation • Supported record volume month in March 11
Slide 12: Second-Quarter Financials
Second-Quarter Financials ($ in millions, except per-share data) Fiscal Second Quarter Preliminary and unaudited Three months ended Mar. 31, 1 Adjusted P&L Results and Ratios 2021 2020 Change 1 Factors affecting year-over-year adjusted1 EBITDA Lubricant gallons (in millions) 48.0 41.7 15 % Sales $ 7
Slide 13: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • Effective tax rate of 24.4% in Q2; adjusted1 effective tax rate of 24.5% • YTD cash flow from operating activities of $190 million • YTD capital expenditures totaled $74 million; free cash flow1 generation of $116 million - YTD discretionary cash generation (operating c
Slide 14: Outlook
Outlook 2021 2021 Raising guidance Outlook Prior Outlook Operating Segments • Sales growth 23 – 25% 14 – 16% • New Quick Lube stores1 (includes company-owned, No change 140 – 160 franchise and acquisitions) • Quick Lubes system-wide SSS1 growth 18 – 20% 12 – 14% Guidance is based on current • Normal
Slide 15: Outlook Summary – FY21 Is an Inflection Point
Outlook Summary – FY21 Is an Inflection Point Adjusted1 EBITDA ($ millions) • Quick Lubes becomes 50+% of total adjusted 650 EBITDA mix 600 590 - 610 550 510 • Core NA continuing to deliver stable cash 500 478 flow 450 400 350 • International growth continues 2019 2020 2021E2 FY16 Adjusted1 FY21E Ad
Slide 16: Appendix
Click to edit Master title style Appendix 16
Slide 17: Quick Lubes
Quick Lubes ($ in millions) Fiscal Second Quarter Preliminary and unaudited Factors affecting year-over-year EBITDA1 Three months ended Mar. 31, 2021 2020 Change 13 4 0 23 (2) 1 Lubricant gallons (in millions) 8.1 7.1 14 % (9) Sales $ 285 $ 212 34 % 79 50 Operating income $ 63 $ 40 58 % Depreciation
Slide 18: Core North America
Core North America ($ in millions) Fiscal Second Quarter Preliminary and unaudited Factors affecting year-over-year EBITDA1 Three months ended Mar. 31, 2021 2020 Change 3 1 0 0 Lubricant gallons (in millions) 22.3 20.9 7 % (3) (7) (2) Sales $ 242 $ 238 2 % 51 42 Operating income $ 38 $ 47 (19) % Dep
Slide 19: International
International ($ in millions) Fiscal Second Quarter Preliminary and unaudited Three months ended Mar. 31, Factors affecting year-over-year EBITDA1 2021 2020 Change 12 5 1 0 Lubricant gallons (in millions) 17.6 13.7 28 % (1) (4) Sales $ 174 $ 128 36 % 31 Operating income $ 28 $ 18 56 % 19 Depreciatio
Slide 20: Key Items Affecting Income
Key Items1 Affecting Income ($ in millions, except per-share data) Second-Quarter Impact Preliminary and unaudited Total Operating Earnings Fiscal 2021 Income Pre-tax After-tax per Share Pension & OPEB income $ - $ 14 $ 10 $ 0.05 Debt extinguishments and mod costs $ (36) $ (36) $ (27) $ (0.15) Busin
Slide 21: Reconciliation of Non-GAAP Data – Net Earnings and P&L
Reconciliation of Non-GAAP Data – Net Earnings and P&L (a) Income tax adjustments relate to the discrete impacts associated with tax legislation changes in India. 21
Slide 22: Reconciliation of Non-GAAP Data - Adjusted EBITDA
Reconciliation of Non-GAAP Data - Adjusted EBITDA (a) Key items were recorded in Unallocated and other and none were recognized in the operating segment results. The table above reconciles Unallocated and other operating income and relevant other items reported below operating income to EBITDA and A
Slide 23: Reconciliation of Non-GAAP Data – Free Cash Flow
Reconciliation of Non-GAAP Data – Free Cash Flow (a) Free cash flow is defined as cash flows from operating activities less capital expenditures and certain other adjustments as applicable. (b) Discretionary free cash flow is defined as cash flows from operating activities less maintenance capital e
Slide 24: Use of Non-GAAP Measures
Use of Non-GAAP Measures To aid in the understanding of Valvoline’s ongoing business performance, certain items within this presentation are presented on an adjusted basis. These non-GAAP measures, presented on both a consolidated and operating segment basis, which are not defined within U.S. GAAP a
Slide 25: Key Business Measures
Key Business Measures Valvoline tracks its operating performance and manages its business using certain key measures, including system-wide, company-owned and franchised store counts and same-store sales; Express Care store counts; lubricant volumes sold by unconsolidated joint ventures and total lu
Slide 26: Slide 26