Valvoline Inc. · NYSE:VVV
Valvoline — Goldman Sachs 27th Annual Global Retailing Conference (September 2020)
21 slides from Valvoline's conference presentation, Sep 10, 2020
Slide 1: Goldman Sachs Global Retailing Conference
Goldman Sachs Global Retailing Conference September 10, 2020 Sam Mitchell, CEO Mary Meixelsperger, CFO Tony Puckett, SVP & President Quick Lubes 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: Valvoline Is…
Valvoline Is… • A high-return, resilient business model that performs across cycles • A world class retailer with a long runway for growth • Powering the shift to a services-oriented business model • Self-funding growth through strong cash flow generation Driving Shareholder Value 3
Slide 4: Roadmap to Drive Shareholder Value
Roadmap to Drive Shareholder Value 1 2 3 Grow Maintain Develop Quick Lubes Core North America International Win in Retail Services Strengthen foundation and Capture market share drive efficiency EBITDA Growth Target: EBITDA Growth Target: EBITDA Growth Target: Low Double Digits to Mid Teens Flat to
Slide 5: Deploying Cash Flows for Growth with Strong Returns
Deploying Cash Flows for Growth with Strong Returns Core North America Quick Lubes & Other Solid EBITDA Margins High-Return Strong Cash Flow Projects at ~2x Generation Low Maintenance Capital Cost of Capital Deploying cash flow from lubricants into higher growth, higher returns Quick Lubes Segment 5
Slide 6: Accelerated Growth in Quick Lubes since IPO
Accelerated Growth in Quick Lubes since IPO Total System Store Sales1 ($ Millions) 1,419 1,161 1,024 880 761 687 592 636 544 570 505 448 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 IPO Pre-IPO – cash flow generally used by former parent Since IPO – deploying cash for growth 1 Company
Slide 7: Where We Are Going
oo Where We Are Going
Slide 8: Revenue and Earnings Model for Quick Lubes
Revenue and Earnings Model for Quick Lubes Drivers of growth1 Quick Lubes Adjusted3 EBITDA ($ millions) 214 1. Same-store sales2 (SSS) 185 growth on existing units – [Operational excellence and 152 premiumization drives leverage] 134 111 2. Unit growth – Company and franchise 3. Acquired stores Low-
Slide 9: Best-in-Class Same Store Sales Performance
Best-in-Class Same Store Sales Performance System-wide SSS1 Growth by Fiscal Period 10.1% 7.7% 8.3% 8.3% HSD 7.5% 7.4% 0.7% -8.0% 2015 2016 2017 2018 2019 1Q20 2Q20 3Q20 4Q20E FY 2015 – 2019: average annual system-wide SSS growth of 8.2%; FY 2020: rapid recovery during COVID-19; expecting 14th strai
Slide 10: Quick Lubes - New Customer Acquisition
Quick Lubes - New Customer Acquisition Estimated U.S Annual Source of New DIFM Oil Changes Customers Q3³ DIY 15% Quick Lubes 27% Tire & Repair 34% Car Dealer 24% Large addressable market Sourcing new customers New media campaign from broader DIFM category highlighting competitive advantages 1. Compa
Slide 11: Targeting ~100 Store Additions Annually to Accelerate Growth
Targeting ~100 Store Additions Annually to Accelerate Growth Annual Store Growth ~1,700+ 1,385 1,242 1,127 1,068 942 FY15 FY16 FY17 FY18 FY19 FY22 Est. YoY Net New Stores 126 59 115 143 Company Franchise Targeting ~100 stores per year through company built, M&A, & franchise Franchisees committed to
Slide 12: Quick Lubes Growth from New Company Stores
Quick Lubes Growth from New Company Stores Cumulative EBITDA Contribution from Newly-constructed Company Stores1 ($ millions) 85 - 90 60 - 65 40 - 45 28 - 31 15 - 18 3-5 ~1 FY18 FY19 FY20E FY21E FY22E FY23E FY24E FY25E Stores Built 17 27 30-35 40-50 ~50+ ~50+ ~50+ ~50+ New company stores expected to
Slide 13: Quick Lubes Growth from Acquisitions
Quick Lubes Growth from Acquisitions U.S. Quick Lube Market Cumulative EBITDA Contribution from Acquisitions1 ($ millions) 47 ~9,000 Quick Lube Locations (65% Independent Operators) 33 ~1,500 VIOC Model Prospects 17 500+ 8 Potential Targets ~0 FY15 FY16 FY17 FY18 FY19 M&A opportunity in a fragmented
Slide 14: Summary of Quick Lubes’ Expected Growth Drivers
Summary of Quick Lubes’ Expected Growth Drivers 1. Continued strong system-wide SSS1 performance – Target of 6 – 8% 2. Unit growth – Newly-built company stores – Franchise store additions – Target of 5 – 7% 3. Acquisitions Combination of levers drives low-to-mid teens EBITDA growth 1 SSS is sales fo
Slide 15: Wrap up
Wrap up
Slide 16: Valvoline 2022 Vision: Service-driven Business with Captive Distribution
Valvoline 2022 Vision: Service-driven Business with Captive Distribution FY2016 EBITDA MIX1 FY2019 EBITDA MIX1 FY2022E EBITDA MIX1 18% 19% ~20% ~29% Int’l Int’l Core North 36% Int’l Core North America America Core North Quick America 52% Lubes Quick Lubes Quick Lubes 30% 45% ~51%+ 1. For reconciliat
Slide 17: Appendix
Click to edit Master title style Appendix 17
Slide 18: Reconciliation of Valvoline Historical EBITDA
Reconciliation of Valvoline Historical EBITDA For the years ended September 30 (in millions) 2015 2016 2017 2018 2019 Net Income $ 196 $ 273 $ 304 $ 166 $ 208 Income tax expense 101 148 186 166 57 Net interest and other financing expenses - 9 42 63 73 1 Depreciation and amortization 38 38 42 54 61 E
Slide 19: Reconciliation of Reportable Segments Non-GAAP Data
Reconciliation of Reportable Segments Non-GAAP Data For the years ended September 30 (in millions) 2015 2016 2017 2018 2019 Adjusted EBITDA - Quick Lubes Operating Income $ 95 $ 117 $ 130 $ 153 $ 178 Add: Depreciation and amorization 16 17 22 30 36 EBITDA 111 134 152 183 214 1 Key Items : Acquisitio
Slide 20: 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, non-GAAP basis. These non-GAAP measures are not defined within accounting principles generally accepted in the United States of Ameri
Slide 21: 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 l
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