Slide 1: Fourth Quarter Fiscal 2023 Earnings
Fourth Quarter Fiscal 2023 Earnings Lori Flees, President & CEO Mary Meixelsperger, CFO Elizabeth Russell, Investor Relations 11.09.2023 1
Slide 2: Safe Harbor
SAFE HARBOR Forward-Looking Statements Certain statements herein, other than statements of historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, benefits and synergi
Slide 3: Agenda
AGENDA Best-in-Class Retail Services Platform Proven Formula for Growth Results & Guidance Wrap Up/Q&A Quick, Easy, Trusted 11.09.23 || Fourth Quarter Fiscal 2023 Earnings 3
Slide 4: Quick, Easy, Trusted 11.09.23 || Fourth Quarter Fiscal 2023 Earnings
Quick, Easy, Trusted 11.09.23 || Fourth Quarter Fiscal 2023 Earnings 4
Slide 5: Focused High Growth Portfolio: Takeaways for Shareholders
FOCUSED HIGH GROWTH PORTFOLIO Takeaways for Shareholders New Valvoline is… Completed Sale of Global Products Business Pure-play automotive services company Return Proceeds to Shareholders $1.6B Share Repurchase Authorization with $212M Remaining Positioned for Long-term Growth HIGH GROWTH HIGH MARGI
Slide 6: Our Business at a Glance
OUR BUSINESS AT A GLANCE Best-in-Class Retail Service Provider Focused on Growth $2.8B 17 Years Of Positive Same 1,852 System-wide Stores System-wide Sales2 Store Sales2 (SSS) with Strong Annual Growth Ranked #1 31M Franchisor 53% Households In Category3 Franchised Stores $1.4B ~26% Adjusted1 EBITDA
Slide 7: Best-in-Class Value Proposition for Our Shareholders
VALVOLINE OFFERS A BEST-IN-CLASS VALUE PROPOSITION FOR OUR SHAREHOLDERS Leading Brand Awareness Trusted brand for over 150+ years Scaled Platform One of the largest auto services companies in U.S. and Canada with 1,852 stores Proven track record of revenue and EBITDA growth through new stores, same
Slide 8: Consistent Track Record of Financial Performance
CONSISTENT TRACK RECORD OF FINANCIAL PERFORMANCE Store Count1 System-Wide Same Store Sales1 Growth ’16 – ’23 CAGR: 8% 1,715 1,852 21% 1,594 1,385 1,462 1,127 1,242 876 1,068 719 790 14% 519 584 Average: 10% 12% 384 462 10% 342 8% 7% 8% 780 866 878 875 925 976 726 743 2% 2016 2017 2018 2019 2020 2021
Slide 9: Executed at a High Level in FY 2023
EXECUTED AT A HIGH LEVEL IN FY 2023 FY 2023 FY 2023 Long-Term Guidance1 Adjusted2 Results Guidance Sales Growth 14% - 18% 17% 14% - 16% Store Growth 7% - 9% 8% 7% - 10% Company 80-90 86 N/A Franchise 50-70 51 N/A SSS3 8% - 12% 11.9% 6% - 9% Company N/A 11.9% N/A Franchise N/A 11.9% N/A Adj.2 EBITDA
Slide 10: Proven Formula for Value Creation
PROVEN FORMULA FOR VALUE CREATION Quick, Easy, Trusted 11.09.23 || Fourth Quarter Fiscal 2023 Earnings 10
Slide 11: Long Runway for Delivering Value
LONG RUNWAY FOR DELIVERING VALUE Drive Full Potential in Existing Business Accelerate Network Growth Target Customer and Service Expansion OUR PROVEN FORMULA FOR GROWTH Same Store Sales High ROIC Stores Service Expansion Long-term Value Quick, Easy, Trusted 11.09.23 || Fourth Quarter Fiscal 2023 Ear
Slide 12: Driving Full Potential in Existing Business
DRIVING FULL POTENTIAL IN EXISTING BUSINESS System-wide Transactions Average System Ticket Mature Company Store1 (Millions) Net Sales & EBITDA $100.00 Per Store 25.0 $80.00 1.6M 20.0 $60.00 1.1M 15.0 $40.00 10.0 5.0 $20.00 — $0.00 FY19 FY23 FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 Net Sales
Slide 13: New Store Update
NEW STORE UPDATE Net1 New Store Additions 48 • Strong delivery to finish FY 2023 35 31 • Engaging with franchise partners in new ways 23 to support new store growth • Record year for new builds for both franchise and company systems Q1 Q2 Q3 Q4 2023 2023 2023 2023 Company Franchise 1. Net of 4 Franc
Slide 14: On Track with Large Whitespace Opportunity
ON TRACK WITH LARGE WHITESPACE OPPORTUNITY Net1 New Store Additions • Added 137 units (+8%) in 2023 in line with plan 250 to deliver long-term target • Multiple levers to fuel new store growth, 140 - 170 150 including: 137 • Partnering with existing franchisees 55 - 70 • New franchise partners 51 •
Slide 15: Target Customer and Service Expansion – Fleet & NOCR Highlight
TARGET CUSTOMER AND SERVICE EXPANSION – FLEET & NOCR HIGHLIGHT Fleet business remains a source of Additional services expected to support strength and opportunity long-term ticket growth Fleet Accounts System Non-Oil Change Revenue 25,000 $25.00 20,000 $20.00 15,000 $15.00 10,000 $10.00 5,000 $5.00
Slide 16: Results and Guidance
RESULTS AND GUIDANCE 16
Slide 17: Revenue Performance
REVENUE PERFORMANCE 4th Quarter FY 2023 Net Sales Growth Net Sales Growth ($, Millions) ($, Millions) 1,443 +16.3% 390 +16.8% 1,236 335 4Q 4Q FY22 FY23 2022 2023 System-Wide SSS1 Growth System-Wide SSS1 Growth +19.2% +25.6% 13.7% 2-Year Stack 2-Year Stack 10.0% 11.9% 9.2% 4Q 4Q FY22 FY23 2022 2023 1
Slide 18: Adjusted EBITDA Margin Performance
ADJUSTED EBITDA MARGIN1 PERFORMANCE 4Q - YOY 4Q - Sequential Full Year - YOY +190bps Increase -130bps Decrease +50bps Increase 28.0% 29.3% 26.1% 28.0% 25.8% 26.3% 4Q 4Q 3Q 4Q FY22 FY23 2022 2023 2023 2023 • Waste oil headwinds offset by • Sequential decline from seasonally • Full year improvement la
Slide 19: Financial Results - Adjusted
FINANICAL RESULTS - ADJUSTED1 (Millions) 4Q23 YoY (Millions) FY23 YoY Net revenues $390.0 16.3% Net revenues $1,443.3 18% Operating income $81.1 18.9% Operating income $291.2 12% Operating margin 20.8% 50 bps Operating margin 20.2% 20 bps Income from continuing Income from continuing $191.3 45% oper
Slide 20: 4Q23 Reporting Highlights
4Q23 REPORTING HIGHLIGHTS Balance Sheet Highlights • Continue to target net leverage ratio1 of 2.5x – 3.5x; timing impacted by anticipated share repurchases, tax payments (Millions) FY23 and debt repayment Cash & Cash Equivalents $409.1 Short Term Investments $347.5 • Expect to make an offer to repu
Slide 21: FY2024 Guidance
FY2024 GUIDANCE Outlook Same Store Sales Growth1 % 6% - 9% System-Wide Store Additions1 140 – 170 Net Revenues $1.6B – $1.7B Adjusted2 EBITDA $420M – $460M Adjusted2 EPS $1.40 – $1.65 Capital Expenditures $185M - $215M Delivering on long-term growth algorithm and growth consistent with best-in-class
Slide 22: Summary
SUMMARY FY2023 was a strong year. 17% Net Sales Growth, 20% Adj.1 EBITDA Growth, and 62% Adj. 1 EPS Growth Delivering best-in-class results for high-growth retail. We will continue to focus on delivering long-term growth algorithm. 1. For reconciliation of adjusted amounts for the continuing operati
Slide 23: Appendix
Alex APPENDIX
Slide 24: EBITDA Bridge - Sequential & Y/Y
EBITDA BRIDGE- SEQUENTIAL & Y/Y 1. For a reconciliation of adjusted amounts to amounts reported under GAAP, please refer to the Appendix. Quick, Easy, Trusted 11.09.23 || Fourth Quarter Fiscal 2023 Earnings 24
Slide 25: Seasonality Slide
SEASONALITY SLIDE 3-Year Average Quarterly Performance1 • Retail Services performance tracks with seasonal driving patterns • Anticipate stronger volume and profit in back half of fiscal year through operating leverage • Generally, annual EBITDA contribution is 40% - 45% in first half and 55 – 60% i
Slide 26: Retail Services – Q4 System Results
RETAIL SERVICES – Q4 SYSTEM RESULTS Three months ended Twelve months ended September 30 September 30 2023 2022 2023 2022 Sales information System-wide store sales - in millions (a) $ 738.3 $ 641.9 $ 2,761.8 $ 2,360.2 Year-over-year growth (a) 15.0 % 15.7 % 17.0 % 19.8 % Same-store sales growth (b) C
Slide 27: Retail Services – Store Information
RETAIL SERVICES – STORE INFORMATION Company-operated Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter 2023 2023 2023 2023 2022 Beginning of period 854 832 813 790 772 Opened 14 12 13 17 12 Acquired 8 8 6 5 3 Net conversions between company-operated and franchised — 2 — 2 3 Cl
Slide 28: Reconciliation of Non-GAAP Data – Income from Continuing Operations & Diluted EPS
RECONCILIATION OF NON-GAAP DATA – INCOME FROM CONTINUING OPERATIONS & DILUTED EARNINGS PER SHARE Three months ended Twelve months ended September 30 September 30 2023 2022 2023 2022 Reported income from continuing operations $ 75.0 $ 12.4 $ 199.4 $ 109.4 Adjustments: Net pension and other postretire
Slide 29: Reconciliation of Non-GAAP Data – Q4 Adjusted EBITDA
RECONCILIATION OF NON-GAAP DATA – Q4 ADJUSTED EBITDA Three months ended Twelve months ended September 30 September 30 2023 2022 2023 2022 Reported net revenues $ 390.0 $ 335.4 $ 1,443.5 $ 1236.1 Key items: Suspended operations — (0.2) (0.2) (11.6) Adjusted net revenues (a) (b) $ 390.0 $ 335.2 $ 1,44
Slide 30: Reconciliation of Non-GAAP Data – Adjusted Net Revenues & Operating Income
RECONCILIATION OF NON-GAAP DATA – ADJUSTED NET REVENUES & OPERATING INCOME Three months ended September 30 Net revenues Operating income In millions - preliminary and unaudited 2023 2022 2023 2022 As reported $ 390.0 $ 335.4 $ 70.2 $ 67.2 Key items: Net legacy and separation-related expenses — — 2.0
Slide 31: Reconciliation of Non-GAAP Data – Free Cash Flows
RECONCILIATION OF NON-GAAP DATA – FREE CASH FLOWS Year ended September 30 Free cash flow (a) 2023 2022 Total cash flows provided by operating activities from continuing operations $ 353.0 $ 134.4 Adjustments: Additions to property, plant and equipment from continuing operations (180.5) (132.0) Free
Slide 32: GAAP Results – Total Company
GAAP RESULTS – TOTAL COMPANY Three months ended Twelve months ended September 30 September 30 2023 2022 2023 2022 Net revenues $ 390.0 $ 335.4 $ 1,443.5 $ 1,236.1 Cost of sales 241.7 206.3 899.0 759.7 Gross profit 148.3 129.1 544.5 476.4 Selling, general and administrative expenses 70.3 62.1 264.5 2
Slide 33: Use of Non-GAAP Measures
USE OF NON-GAAP MEASURES This presentation includes the following non-GAAP measures: Adjusted operating income and adjusted operating margin; Adjusted net revenues; EBITDA, adjusted EBITDA, and adjusted EBITDA margin; adjusted net income and adjusted diluted earnings per share; and free cash flow an
Slide 34: Use of Non-GAAP Measures, Continued
USE OF NON-GAAP MEASURES, CONTINUED Refer to the below for descriptions of the key items that comprise the adjustments which depart from the computations in accordance with U.S. GAAP: Net pension and other postretirement plan (income) expense: Includes several elements impacted by changes in plan as
Slide 35: Key Business Measures
KEY BUSINESS MEASURES Valvoline tracks its operating performance and manages its business using certain key measures, including system-wide, company-operated and franchised store counts and SSS; and system-wide store sales. Management believes these measures are useful to evaluating and understandin