Valvoline Inc. · NYSE:VVV
Valvoline — Q2 2018 Earnings Presentation
19 slides from Valvoline's earnings presentation, May 3, 2018
Slide 1: Second-Quarter Fiscal 2018 Earnings
Second-Quarter Fiscal 2018 Earnings Sam Mitchell, CEO Mary Meixelsperger, CFO Sean Cornett, Director of Investor Relations May 3, 2018 http://investors.valvoline.com
Slide 2: Forward-Looking Statements
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 Notes on reporting and year-over-year (YoY) impacts Pension-related items (in millions, except per-share data) Q2 - Pension and OPEB income reclassified as non-operating; excluded from Operating income $100 adjusted1 results as a Key Item Net income $67 • Prior period
Slide 4: Second-Quarter Adjusted Results
Second-Quarter Adjusted1 Results Q2 Fiscal 2018 Overview (in millions, except per-share data) Q2 Adjusted1 EBITDA and EPS YoY growth of 6% Adjusted1 operating income $108 Adjusted1 EBITDA $122 Strong performance in Quick Lubes and International Adjusted1 EPS $0.34 Core North America profitabil
Slide 5: Core North America
Core North America Core North America temporary margin impacts Volume and Mix (YoY Change) Q2 - Branded volume declined modestly Total Volume flat - Strong premium mix improvement Sales up 2% - Non-branded volume growth improved 49.7%, Premium mix up 320 bps EBITDA $50 million, EBITDA1 - Short-term
Slide 6: Quick Lubes
Quick Lubes Quick Lubes SSS growth continues SSS Strength (YoY Change) Q2 - Combination of growth in transactions and average ticket SSS +9.6% - Transactions driven by customer acquisition and retention programs Sales +23% - Average ticket improvements from pricing and in-store execution EBITDA1 $46
Slide 7: VIOC – Current Footprint and Expected Second-half FY18 Expansion
VIOC – Current Footprint and Expected Second-half FY18 Expansion +9 +1 +5 +1 +1 +5 +6 +1 +1 +3 +1 +1 +4 +3 7
Slide 8: International
International International improved profitability Volume (YoY Change) Q2 - Modest volume growth on strong base of double-digit growth last year Volume +1% - Volume from unconsolidated JVs grew 5% Volume with JVs +3% - Expect volume growth to accelerate in second half; full-year growth in mid- Sales
Slide 9: Investment in International – New Plant in China
Investment in International – New Plant in China • ~$70 million investment over 3 years • $5 – 10 million in FY18 • Balance roughly evenly split between FY19 and FY20 • Strong ROIC expectations • Margin improvements • Accelerated volume growth • Strategically located in Zhangjiagang in Jiangsu Provi
Slide 10: Second-Quarter Financials
Second-Quarter Financials ($ in millions, except per-share data) Fiscal Second Quarter Preliminary and unaudited Three months ended March 31, Factors affecting year-over-year adjusted EBITDA1 P&L Results and Ratios 2018 2017 Change Lubricant gallons (in millions) 45.5 45.0 1 % Sales $ 569 $ 514 11 %
Slide 11: Corporate Items
Corporate Items • Effective tax rate of 28.7% in Q2; adjusted1 effective tax rate of 26.1%. • YTD cash flow from operating activities of $108 million - YoY increase due primarily to lower cash taxes • YTD Capital expenditures totaled $30 million • YTD Free cash flow2 generation of $78 million • Tota
Slide 12: Fiscal 2018 Guidance
Fiscal 2018 Guidance Updated Prior Narrowing ranges Outlook Outlook Operating Segments • Lubricant Gallons No change 3-4% • Raising SSS to 6.5-7.5% • Revenues No change 10-12% • Adjusted1 EBITDA to $480-$490 • VIOC Company Stores (excluding franchise No change 23-25 conversions) million • VIOC Franc
Slide 13: Summary and Outlook
Summary and Outlook Improvement in Core North America in second half Continued momentum in Quick Lubes and International Significant cash returns to shareholders in Q2 Raw material headwinds to extend into second half, but are manageable On track for solid full-year adjusted1 EBITDA and EP
Slide 14: Appendix
Click to edit Master title style Appendix 14
Slide 15: Key Items Affecting Income
Key Items1 Affecting Income ($ in millions, except per-share data) Second Quarter Impact Preliminary and unaudited Total Operating Earnings 2018 Income Pre-tax After-tax per Share Pension & OPEB income $ 10 10 7 0.03 Legacy and separation-related costs $ (8) (8) (6) (0.03) Tax Reform update $ - - (2
Slide 16: Core North America
Core North America ($ in millions) Fiscal Second Quarter Factors affecting year-over-year EBITDA1 Preliminary an unaudited Three months ended March 31, 2018 2017 Change 0 1 (2) Lubricant gallons (in millions) 24.6 24.6 - % (6) (3) Sales $ 258 $ 253 2 % 60 50 Operating income $ 46 $ 57 (19) % Depreci
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, 4 4 2018 2017 Change 5 2 Lubricant gallons (in millions) 5.9 5.5 7 % (5) Sales $ 158 $ 128 23 % 46 36 Operating income $ 38 $ 31 23 % Depreciation and amo
Slide 18: International
International ($ in millions) Fiscal Second Quarter Factors affecting year-over-year EBITDA1 Preliminary and unaudited Three months ended March 31, 4 2018 2017 Change 2 1 0 0 Lubricant gallons (in millions) 15.0 14.9 1 % Sales $ 153 $ 133 15 % 26 19 Operating income $ 24 $ 18 33 % Depreciation and a
Slide 19: Accelerating into the Future
ACCELERATING INTO THE FUTURE VALVOLINE 15M-30 za = FULL SYNTHETIC | eae | Valvoline. 19