Slide 1: Second Quarter Fiscal 2024 Earnings
Second Quarter Fiscal 2024 Earnings Lori Flees, CEO & President Mary Meixelsperger, CFO Elizabeth Russell, Investor Relations 05.08.2024 1
Slide 2: Safe Harbor: Forward-Looking Statements
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, executing on its gro
Slide 3: 2Q 2024 Key Highlights
2Q 2024 KEY HIGHLIGHTS1,3 Delivered Strong Deploying Capital to Financial Results Drive Shareholder Value $746.1M 7.7% +38 Net Stores 1,928 8.3% 13.1% +14 Franchise System locations System-wide Store Sales2 System-wide Same Store Sales2 Growth +24 Company 12.8% $388.7M Net Sales $38.3M Growth Capex
Slide 4: Long Runway For Delivering Shareholder Value
Long Runway For Delivering Shareholder Value Strategic Imperatives • Drive Full Potential in Existing Business • Accelerate Network Growth • Target Customer and Service Expansion TALENT & CULTURE TECHNOLOGY OUR PROVEN FORMULA FOR GROWTH Long-term Same Store Sales New Stores Service Expansion Shareho
Slide 5: 2Q 2024 Topline Performance
2Q 2024 TOPLINE PERFORMANCE Adj. Net Sales1 Growth ($, Millions) 388.7 344.5 +13% Highlights 147 net stores YoY 2Q 2Q Strong SSS continues 2023 2024 SSS deceleration from PY driven by lapping System-wide SSS2 Growth +21.2% inflationary price increases 13.5% 2-year Stack 7.7% 2Q 2Q 2023 2024 1. For a
Slide 6: 2Q 2024 Financial Drivers
2Q 2024 FINANCIAL DRIVERS1 Gross Margin SG&A Expense Adjusted EBITDA as a % of Net Sales as a % of Net Sales as a % of Net Sales +80 bps Expansion YoY -20 bps Decrease YoY +170 bps Expansion YoY 36.8% 36.1% 37.6% 29.3% 28.0% 19.2% 25.3% 27.0% 24.2% 18% 17.8% 2Q 1Q 2Q 2Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q 2023 202
Slide 7: 2Q 2024 Profitability
2Q 2024 PROFITABILITY1 Adjusted Net Income Adjusted EPS ($, Millions) +60.9% Increase $0.37 +20.1% Increase 48.3 40.2 $0.23 2Q 2Q 2Q 2Q 2023 2024 2023 2024 • Operating income +19.6% versus prior year • Returned $1.6B to shareholders since 2Q 2023 • $3.1M lower net interest expense driven by through
Slide 8: 2Q 2024 Reporting Highlights
2Q 2024 REPORTING HIGHLIGHTS Balance Sheet Highlights • Continue to target net leverage ratio1 of 2.5x – 3.5x (Millions) 2Q24 Cash & Cash Equivalents $494.5 • Completed tender offer to repurchase the $600M of 2030 Total Debt $1,575.1 Senior Notes in April 2024 Cash Flow Highlights • Year-over-year c
Slide 9: FY24 Guidance - Updated
FY24 GUIDANCE- UPDATED Updated Outlook Original Outlook Same Store Sales Growth1 % 6% - 8% 6% - 9% System-Wide Store Additions1 No change 140 – 170 Net Revenues $1.6B – $1.65B $1.6B – $1.7B Adjusted2 EBITDA $430M – $455M $420M – $460M Adjusted2 EPS $1.45 – $1.65 $1.40 – $1.65 Capital Expenditures No
Slide 10: Summary
SUMMARY Delivered strong profit growth for the quarter Added 38 net new stores including 14 franchise stores Completed $1.6B share repurchase authorization 05.08.24 || Second Quarter Fiscal 2024 Earnings 10
Slide 11: 05.08.24 || Second Quarter Fiscal 2024 Earnings
05.08.24 || Second Quarter Fiscal 2024 Earnings 11
Slide 12: Retail Services – Q2 System Results
RETAIL SERVICES – Q2 SYSTEM RESULTS Three months ended Six months ended March 31 March 31 2024 2023 2024 2023 Sales information System-wide store sales - in millions (a) $ 746.1 $ 659.9 $ 1,469.0 $ 1,303.9 Year-over-year growth (a) 13.1 % 18.5 % 12.7 % 17.7 % Same-store sales growth (b) Company-oper
Slide 13: Retail Services – Store Information
RETAIL SERVICES – STORE INFORMATION Company-operated Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter 2024 2024 2023 2023 2023 Beginning of period 895 876 854 832 813 Opened 14 14 14 12 13 Acquired 10 5 8 8 6 Net conversions between company-operated and franchised — — — 2 — C
Slide 14: Reconciliation of Non-GAAP Data – Income and Diluted EPS
RECONCILIATION OF NON-GAAP DATA – INCOME FROM CONTINUING OPERATIONS & DILUTED EARNINGS PER SHARE Three months ended Six months ended March 31 March 31 2024 2023 2024 2023 Reported income from continuing operations $ 43.3 $ 32.9 $ 77.2 $ 59.9 Adjustments: Net pension and other postretirement plan exp
Slide 15: Reconciliation of Non-GAAP Data – Q2 Adjusted EBITDA
RECONCILIATION OF NON-GAAP DATA – Q2 ADJUSTED EBITDA Three months ended Six months ended March 31 March 31 2024 2023 2024 2023 Reported net revenues $ 388.7 $ 344.5 $ 762.1 $ 677.3 Key items: Suspended operations — — — (0.2) Adjusted net revenues (a) (b) $ 388.7 $ 344.5 $ 762.1 $ 677.1 Income from c
Slide 16: Reconciliation of Non-GAAP Data – Adjusted Net Revenues & Operating Income
RECONCILIATION OF NON-GAAP DATA – ADJUSTED NET REVENUES & OPERATING INCOME Three months ended March 31 Net revenues Operating income In millions - preliminary and unaudited 2024 2023 2024 2023 As reported $ 388.7 $ 344.5 $ 76.4 $ 61.2 Key items: Net legacy and separation-related expenses — — — 3.8 I
Slide 17: Reconciliation of Non-GAAP Data – Free Cash Flows
RECONCILIATION OF NON-GAAP DATA – FREE CASH FLOWS Six months ended March 31 Free cash flow (a) 2024 2023 Operating cash flows from continuing operations $ 92.1 $ 173.5 Adjustments: Additions to property, plant and equipment from continuing operations (87.2) (79.4) Free cash flow from continuing oper
Slide 18: GAAP Results – Total Company
GAAP RESULTS – TOTAL COMPANY Three months ended Six months ended March 31 March 31 2024 2023 2024 2023 Net revenues $ 388.7 $ 344.5 $ 762.1 $ 677.3 Cost of sales 242.5 217.8 481.1 431.8 Gross profit 146.2 126.7 281.0 245.5 Selling, general and administrative expenses 72.3 62.6 146.8 128.6 Net legacy
Slide 19: 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 20: 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 expenses: Includes several elements impacted by changes in plan assets and
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-operated and franchised store counts and SSS; and system-wide store sales. Management believes these measures are useful to evaluating and understandin