Valvoline Inc. has reported financial results for the second fiscal quarter ended March 31, 2017.
The company said results were driven by growth in premium product mix, strong sales in VIOC and continued volume gains in international markets. Volume growth and favorable mix were partially offset by cost increases announced during the quarter, resulting in gross profit growth of 3 percent to $198 million. Valvoline announced price increases to offset the higher raw material costs. EBITDA from operating segments was flat with the prior year, as the growth in gross profit was offset by planned increases in SG&A.
Reported second-quarter EPS increased 2 cents to 35 cents as compared to the prior year period. Adjusted EPS of 37 cents also increased 2 cents, attributable to the new capital structure resulting from the planned separation from Ashland, with pension income increases partially offset by additional interest expense.
Adjusted second-quarter earnings excluded $6 million of pretax separation costs. Adjusted prior-year results excluded a pretax loss on pension and other postretirement plan remeasurements of $5 million and acquisition-related costs of $1 million.
“Our fiscal second quarter results represent another example of our teams delivering against our core priorities,” said CEO Sam Mitchell. “Core North America produced an impressive increase in premium product mix, demonstrating the strength of the Valvoline brand. Our VIOC business delivered another quarter of growth in same-store sales and added 56 units year-over-year as we continue to build out the industry’s best quick-lube service model. Volume gains in International were broad based across both developed and emerging markets, primarily driven by the success of our ongoing channel development efforts.”
Fiscal 2017 Outlook and Update on Separation from Ashland
As reported separately today, the board of directors of Ashland Global Holdings Inc. has finalized the details of the distribution of its remaining interest in Valvoline, including the approximate distribution ratio of 2.73 shares of Valvoline stock for each share of Ashland stock, and the record and distribution dates, of May 5 and May 12, 2017, respectively, for the final separation.
Based on performance through the first half of the fiscal year, Valvoline continues to expect that it will achieve its full-year results in line with previous expectations, including full-year cash flow of $130 million to $150 million and adjusted EPS of $1.36 to $1.43.