Valvoline Inc. has reported financial results for its second fiscal quarter ended March 31, 2022. 

“Valvoline continues to generate outstanding top-line results, reflecting ongoing strong demand for our products and services,” said Sam Mitchell, CEO. “Our performance was driven by ongoing share gains, price increases to recover cost inflation and continued strong operational execution by our team.

“Sales increased 23% in Retail Services driven by 13% same-store sales growth and a 7% increase in units. Profitability was impacted by the current inflationary environment, increasing labor and product costs. We have executed appropriate pricing actions which will improve profitability in Q3 and Q4.

“Global Products sales increased by an impressive 29%, highlighting strong volume growth of 9% and continued success in price pass-through of raw material cost increases. The volume growth we are seeing is broad-based and an indicator of continued share gains and our ability to meet customer demand despite supply chain challenges. Our unit margins continue to improve sequentially, and we are confident that we will recover cost increases with price pass-through – as we have done in prior periods of inflation.”

Operating Segment Results 

(In millions)			YoY growth (decline)
Retail Services	Q2 results
Segment sales	$            350		23%
System-wide store sales (a)	$            557		19%
Operating income	$              77		(4)%
Adjusted EBITDA (a)	$              95		—%
	YoY growth
System-wide SSS (a) growth	13.1%
Global Products	Q2 results		YoY growth
Lubricant sales (gallons) (a)	43.3		9%
Segment sales	$            536		29%
Operating income	$              74		1%
Adjusted EBITDA (a)	$              81		1%
Discretionary free cash flow (a)	$              52		—%
(a)	Refer to Key Business Measures, Use of Non-GAAP Measures, and Tables 4 and 5, Information by Operating Segment, for a description of the metrics presented above.

Outlook

“We are reaffirming our full-year profitability guidance despite a challenging supply chain and raw material environment, highlighting superior execution, the quality of our business and strong pricing power,” said Mitchell. “Our adjusted EBITDA guidance represents high-single digit growth driven by share gains and pricing actions. Both segments remain healthy, and our separation process remains on track.”

Information regarding the Company’s outlook for fiscal 2022 is provided in the table below:

	Updated Outlook	Prior Outlook
Operating Items
Sales growth	22	—	24%	19	—	21%
Retail Services system-wide store additions	140	—	160	110	—	130
Retail Services system-wide SSS growth	12	—	14%	9	—	12%
Adjusted EBITDA	no		change	$675	—	$700 million
Corporate Items
Adjusted effective tax rate	no		change	24	—	25%
Adjusted EPS	no		change	$2.07	—	$2.20
Capital expenditures	no		change	$180	—	$200 million
Free cash flow (a)	$260	—	$280 million	$260	—	$300 million
(a)	Updated outlook for free cash flow excludes non-recurring cash outflows associated with the separation.