Valvoline Inc. · NYSE:VVV
Valvoline — Gabelli Automotive Aftermarket Symposium 2020
23 slides from Valvoline's conference presentation, Nov 3, 2020
Slide 1: Gabelli Automotive Aftermarket Symposium
Gabelli Automotive Aftermarket Symposium November 3, 2020 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: 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: Company Overview
Company Overview ≥ 20% Adjusted EBITDA ~$2.4B in Sales 20+% ROIC Margin In fiscal 2020 In each of the last five years In each of the last five years Top 3 Premium Motor Nearly 1500 Stores2 Over 140 Countries2 Oil Brand3 Company-owned & Franchise In U.S. DIY With Valvoline Sales Adjusted1 EBITDA and
Slide 5: Multiple Channels to Market
Multiple Channels to Market 5
Slide 6: Valvoline Compares Favorably to Auto Aftermarket Peers
Valvoline Compares Favorably to Auto Aftermarket Peers Valvoline1 Auto Aftermarket1,2 Latest Fiscal Quarter Same- Store Sales Growth3 8.3% 6.6% Calendar year 2019 – 2021E Revenue Growth 4.8% 1.6% Calendar year 2019 – 2021E EBITDA Growth 8.2% 4.7% Calendar year 2021E EBITDA Margin 21.7% 15.8% Calenda
Slide 7: Roadmap to Drive Shareholder Value
Roadmap to Drive Shareholder Value 1 2 3 Grow Maintain Develop Quick Lubes Core North America International Win in Retail Services Strengthen foundation and Capture market share drive efficiency Powering the shift to services 7
Slide 8: Deploying Cash Flows for Growth with Strong Returns
Deploying Cash Flows for Growth with Strong Returns Core North America Quick Lubes & Other Solid EBITDA Margins High-Return Strong Cash Flow Projects at ~2x Generation Low Maintenance Capital Cost of Capital Deploying cash flow from lubricants into higher growth, higher returns Quick Lubes Segment 8
Slide 9: Accelerated Growth in Quick Lubes since IPO
Accelerated Growth in Quick Lubes since IPO Total System Store Sales1 ($ Millions) 1,520 1,419 1,161 1,024 880 761 687 636 570 592 505 544 448 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 IPO Pre-IPO – cash flow generally used by former parent Since IPO – deploying cash for growt
Slide 10: Fiscal 2020 Year-end Earnings Review
Fiscal 2020 Year-end Earnings Review
Slide 11: Strong FY20; Momentum into FY21
Strong FY20; Momentum into FY21 • Fiscal 2020 – YoY growth in profitability, despite COVID-19 impacts (in millions, except per- share data) Q1 Q2 Q3 Q4 FY20 FY20 YoY Revenue $607 $578 $516 $652 $2,353 (2%) Adjusted1 $120 $134 $106 $150 $510 7% EBITDA Adjusted1 EPS $0.35 $0.39 $0.28 $0.46 $1.48 6% •
Slide 12: Earnings Overview
Earnings Overview Resilient business model Results exceeded expectations FY20 results & FY21 Outlook • Substantial sequential • Adjusted EBITDA • Portfolio drove growth in FY20, improvements in profitability despite COVID-19 challenges − Q4 up 16%; FY20 up 7% across all segments in Q4 • Positioned f
Slide 13: Quick Lubes Growth Levers for FY21 and Beyond
Quick Lubes Growth Levers for FY21 and Beyond Multiple levers for long-term growth Projected Drivers of YoY Adjusted EBITDA Growth • System-wide SSS1 growth • New stores – company and franchise • Acquisitions • FY21 total unit additions: 140 – 160, ~10% growth FY 2020 SSS3 New Stores4 Acquisitions F
Slide 14: Segment Results Summary
Segment Results Summary Quick Lubes Core North America International Q4 FY20 Q4 FY20 Q4 FY20 (YoY change) (YoY change) (YoY change) SSS1 (system-wide) 8.3% 2.3% Total Volume -3% -8% Volume -2% -6% Sales +14% +7% Sales -3% -5% Volume with JVs1 -1% -7% Net new stores2 58.9%, 58.0%, 30 77 Premium mix u
Slide 15: Wrap up
Wrap up
Slide 16: Strong Cash Flow Generation to Reinvest & Return to Shareholders
Strong Cash Flow Generation to Reinvest & Return to Shareholders Operating Cash Flow ~$340M • Discretionary cash flow to invest ~$300M+ Annual – Operating cash flow less maintenance capex Maintenance Capital • Fiscal 2021 Quick Lubes’ unit-growth capital1 $30M - $40M ~70+% of total capex • Remaining
Slide 17: Summary – FY21 and Beyond
Summary – FY21 and Beyond Expect FY21 to be an inflection point Adjusted1 EBITDA ($ millions) 600 560 - 580 • Quick Lubes becomes 50+% of total 550 510 adjusted EBITDA mix 500 478 450 • Core NA fundamentals strengthening 400 350 2019 2020 2021E2 • International returns to growth FY16 Adjusted1 FY21E
Slide 18: Appendix
Click to edit Master title style Appendix 18
Slide 19: Reconciliation of Valvoline Historical EBITDA
Reconciliation of Valvoline Historical EBITDA 19
Slide 20: Reconciliation of Non-GAAP Data – Net Income and EPS
Reconciliation of Non-GAAP Data – Net Income and EPS (a) Business interruption expenses incurred in fiscal 2019 and $5 million of the compensated absences policy change adjustment in fiscal 2020 were included in Cost of sales within the Statements of Consolidated Income. Reported and adjusted consol
Slide 21: Reconciliation of Non-GAAP Data - Adjusted EBITDA FY20
Reconciliation of Non-GAAP Data - Adjusted EBITDA FY20 (a) Key items were recorded in operating segment results and Unallocated and other. The tables above reconcile consolidated reported net income to EBITDA and adjusted EBITDA, as well as operating segment reported operating income to adjusted ope
Slide 22: 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 press release 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
Slide 23: 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
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