Valvoline Reports First-Quarter Results

Valvoline Reports First-Quarter Results

Sale of the Global Products business remains on track with closing expected in early calendar year 2023 with $1.6 billion of the net cash proceeds expected to be returned via share repurchases in the 18 months following close.

Valvoline has reported financial results for its first fiscal quarter ended Dec. 31, 2022. 

“Valvoline’s opportunity to drive long-term value to shareholders by growing system-wide store sales, increasing units through both company-operated and franchised additions, and focusing on incremental services remains strong,” said Sam Mitchell, CEO. “As demonstrated by 17% growth in system-wide store sales, we continue to see significant strength and resiliency in our preventive maintenance service model.”

“As expected, we saw robust same store sales growth across our system driven primarily by ticket and aided by continued gains in vehicles served,” said Lori Flees, president, Retail Services. “The strength of top-line growth, along with meaningful increases in non-oil change revenue give us continued confidence in our sales outlook for the year.”

“The first quarter saw lower year-over-year EBITDA margins due to cost inflation and a higher relative weighting of company operations. Given actions have been taken to mitigate the cost inflation, the full year outlook remains on track,” continued Flees. “Our store team members did an outstanding job of delivering on our customer promise despite challenging weather in December across the system. The pipeline for unit development remains healthy for the upcoming quarters with planned franchise openings anticipated to accelerate.”

(In millions)Q1 resultsYoY growth
(decline)
Net revenues$          332.815.8 %
Operating income$           29.3(43.7) %
Adjusted EBITDA (a)$           73.31.2 %
System-wide stores (a)1,7466.8 %
Company-operated stores81310.2 %
Franchised stores9334.0 %
System-wide store sales (a)$          644.016.9 %
YoY growth
System-wide SSS (a)11.9 %
(a)Refer to Key Business Measures, Use of Non-GAAP Measures, Table 4 – Retail Stores Operating Information, and Table 7 – Non-GAAP Reconciliation – Adjusted EBITDA from Continuing Operations for management’s definitions of the metrics presented above and reconciliation to the corresponding GAAP measures, where applicable.

Outlook

“Although the first quarter brought comparisons to a very strong first quarter of 2022, we anticipate accelerated earnings growth in the balance of fiscal 2023,” said Mitchell. “With the combination of same-store sales and unit increases, we continue to expect 14% to 18% top line growth and to deliver adjusted EBITDA of $370 million to $390 million for fiscal 2023.

“With the anticipated closing of the sale of the Global Products business, we are excited to focus on driving growth and increasing value of the new Valvoline,” continued Mitchell. “The long-term model of increasing same-store sales; expanding our store network, including an increased focus on accelerating franchise growth; and developing new services for an evolving car parc will allow us to grow, while consistently returning value to shareholders through an enhanced capital structure.” 

The company’s outlook for fiscal 2023 is unchanged.  

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