Delivers 17th year of consecutive system-wide
same-store sales growth and 8 percent increase to store
count
Full-year highlights
- Sales from continuing operations of $1.4
billion grew 17%, while system-wide same-store sales (SSS)
increased 11.9% -- the 17th consecutive year of system-wide SSS
growth
- Reported income from continuing operations of $199 million grew 82% and earnings per diluted
share (EPS) of $1.23 increased
102%
- Continuing operations adjusted EBITDA of $380 million increased 20% and adjusted EPS of
$1.18 increased 62%
- Returned $1.5 billion in cash to
shareholders via share repurchases
Fourth-quarter summary
- Sales from continuing operations of $390
million grew 16%, while system-wide SSS increased 10.0%
- Reported income from continuing operations of $75 million grew 505% and EPS of $0.53 increased 657%
- Continuing operations adjusted EBITDA of $109 million increased 25% and adjusted EPS of
$0.39 increased 86%
- Net store additions total 48 (26 franchised and 22
company-operated) bringing total system-wide additions for the year
to 137 and total store count to 1,852
LEXINGTON, Ky., Nov. 9, 2023
/PRNewswire/ -- Valvoline Inc. (NYSE: VVV), the quick, easy,
trusted leader in preventive automotive maintenance, today reported
financial results for its fourth fiscal quarter ended
September 30, 2023. All comparisons in this press release are
made to the same prior-year periods unless otherwise noted.
"Fiscal year 2023 was a transformational year for Valvoline as
it was our first year as a pure-play retail business," said
Lori Flees, President & CEO.
"Our system-wide store sales grew nearly 20% to $2.8 billion driven by an 11.9% increase in
system-wide same-store sales."
"On top of delivering strong top and bottom-line growth for the
year, we completed the sale of Global Products, returned
$1.5 billion to
shareholders through share repurchases and completed a leadership
transition," continued Flees. "With our transition to a pure-play
retail services provider complete, we believe we are well
positioned for long-term shareholder value creation by growing our
core business, adding to the network and expanding services for an
evolving car parc."
Continuing Operations - Operating Results
(In millions, except
store counts)
|
Q4 results
|
YoY growth
|
|
|
FY results
|
YoY growth
|
Net revenues
|
$
390.0
|
16 %
|
|
|
$
1,443.5
|
17 %
|
Operating
income
|
$
70.2
|
4 %
|
|
|
$
247.2
|
12 %
|
Income from continuing
operations (a)
|
$
75.0
|
505 %
|
|
|
$
199.4
|
82 %
|
EPS
(a)
|
$
0.53
|
657 %
|
|
|
$
1.23
|
102 %
|
Adjusted EPS
(b)
|
$
0.39
|
86 %
|
|
|
$
1.18
|
62 %
|
Adjusted EBITDA
(b)
|
$
109.2
|
25 %
|
|
|
$
380.0
|
20 %
|
System-wide store sales
(b)
|
$
738.3
|
15 %
|
|
|
$
2,761.8
|
17 %
|
|
Q4 results
|
Quarter
change
|
|
|
FY results
|
YoY
change
|
System-wide stores
(b)
|
1,852
|
+48
|
|
|
1,852
|
+137
|
Company-operated
stores
|
876
|
+22
|
|
|
876
|
+86
|
Franchised stores
(b)
|
976
|
+26
|
|
|
976
|
+51
|
|
Q4 - YoY
growth
|
|
|
FY - YoY
growth
|
System-wide SSS
(b)
|
10.0 %
|
|
|
11.9 %
|
|
|
(a)
|
Includes the effects of
certain unusual, infrequent or non-operational activity not
directly attributable to the underlying business, which management
believes impacts the comparability of operational results between
periods ("key items"). These key items are delineated within Table
6 - Non-GAAP Reconciliation - Income from Continuing Operations and
Diluted Earnings per Share.
|
(b)
|
Refer to Key Business
Measures, Use of Non-GAAP Measures, Table 4 - Retail Stores
Operating Information, Table 6 - Non-GAAP Reconciliation - Income
from Continuing Operations and Diluted Earnings per Share, and
Table 7 - Non-GAAP Reconciliation - Adjusted Net Revenues and
EBITDA from Continuing Operations for management's definitions of
the metrics presented above and reconciliation to the corresponding
GAAP measures, where applicable.
|
Balance Sheet and Cash Flow
- Cash, cash equivalents and short-term investments balance of
$757 million; total debt of
$1.6 billion
- Full-year operating cash flow from continuing operations of
$353 million and free cash flow of
$173 million
- Returned $1.5 billion in cash to
shareholders in fiscal 2023 via share repurchases with $212 million remaining on the existing share
repurchase authorization at year end
- Included in net interest expense is income of $11 million and $44
million earned during the quarter and fiscal year,
respectively, on invested net proceeds from the sale of Global
Products
Outlook
"I want to thank our talented team of over
10,000 and our strong franchise partners for the hard work that
delivered these results in fiscal 2023" said Flees. "We continue to
deliver best-in-class performance relative to high-growth retail
peers."
Flees continued, "As we enter fiscal 2024, we expect to deliver
results in line with our long-term growth algorithm, with top line
sales of $1.6 - $1.7 billion and adjusted EBITDA of $420 - $460
million. We anticipate system-wide same store sales growth
of 6-9%. In addition, we plan to add 140-170 stores to the network,
with 55-70 coming from franchisees."
Information regarding the Company's outlook for fiscal 2024 is
provided in the table below:
|
Outlook
|
System-wide SSS
growth
|
6
|
—
|
9 %
|
System-wide store
additions
|
140
|
—
|
170
|
Net revenues
|
$1.6
|
—
|
$1.7 billion
|
Adjusted
EBITDA
|
$420
|
—
|
$460 million
|
Capital
expenditures
|
$185
|
—
|
$215 million
|
Adjusted EPS
|
$1.40
|
—
|
$1.65
|
Valvoline's outlook for adjusted EBITDA and adjusted EPS are
non-GAAP financial measures that are expected to be impacted by
items affecting comparability. Valvoline is unable to reconcile
these forward-looking non-GAAP financial measures to the comparable
GAAP measures estimated for fiscal 2024 without unreasonable
efforts, as the Company is currently unable to predict with a
reasonable degree of certainty the type and extent of certain items
that would be expected to impact these GAAP measures in fiscal 2024
but would not impact non-GAAP adjusted results.
Conference Call Webcast
Valvoline will host a live
audio webcast of its fiscal fourth quarter 2023 conference call
today, November 9, 2023, at 9 a.m. ET. The webcast and
supporting materials will be accessible through Valvoline's website
at http://investors.valvoline.com. Following the live event, an
archived version of the webcast and supporting materials will be
available.
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 understanding Valvoline's
operating performance and should be considered as supplements to,
not substitutes for, Valvoline's net revenues and operating income,
as determined in accordance with U.S. GAAP.
Net revenues are influenced by the number of service center
stores and the business performance of those stores. Stores are
considered open upon acquisition or opening for business. Temporary
store closings remain in the respective store counts with only
permanent store closures reflected in the activity and end of
period store counts. SSS is defined as net revenues by U.S. stores
(company-operated, franchised and the combination of these for
system-wide SSS), with new stores, including franchised
conversions, excluded from the metric until the completion of their
first full fiscal year in operation as this period is generally
required for new store sales levels to begin to normalize.
Net revenues are limited to sales at company-operated stores, in
addition to royalties and other fees from independent franchised
and Express Care stores. Although Valvoline does not recognize
store-level sales from franchised stores as net revenues in its
Statements of Consolidated Income, management believes system-wide
and franchised SSS comparisons, store counts, and total system-wide
store sales are useful to assess market position relative to
competitors and overall store and operating performance.
Use of Non-GAAP Measures
The following non-GAAP
measures are included herein: Adjusted net revenues; EBITDA,
adjusted EBITDA, and adjusted EBITDA margin; adjusted net income
and adjusted diluted earnings per share; and free cash flow and
discretionary free cash flow. Refer to the tables herein for
management's definition of each non-GAAP measure and reconciliation
to the most comparable U.S. GAAP measure.
Non-GAAP measures include adjustments from results based on U.S.
GAAP that management believes enables comparison of certain
financial trends and results between periods and provides a useful
supplemental presentation of Valvoline's operating performance that
allows for transparency with respect to key metrics used by
management in operating the business and measuring performance.
These non-GAAP measures have limitations as analytical tools and
should not be considered in isolation from, an alternative to, or
more meaningful than, the financial results presented in accordance
with U.S. GAAP. The financial results presented in accordance with
U.S. GAAP and the reconciliations of non-GAAP measures should be
carefully evaluated. The manner used to compute the non-GAAP
information used by management may differ from the methods used by
other companies and may not be comparable.
Refer to the Appendix at the end of this release for
descriptions of the adjustments that depart from the computations
in accordance with U.S. GAAP.
About Valvoline Inc.
Valvoline Inc. (NYSE: VVV), is
the quick, easy, trusted leader in automotive preventive
maintenance. Valvoline Inc. is creating shareholder value by
driving the full potential in our core business, accelerating
network growth and innovating to meet the needs of the evolving car
parc. With more than 1,850 service centers throughout North America, Valvoline Inc. and our
franchise partners keep customers moving with our 4.6 out of 5
star* rated service that includes 15-minute stay-in-your-car oil
changes; battery, bulb and wiper replacements; tire rotations; and
other manufacturer recommended maintenance services. In fiscal year
2023, Valvoline's network delivered approximately 27 million
services to generate $1.4 billion in
revenue from $2.8 billion in
system-wide store sales, marking 17 years of consecutive
system-wide same-store sales growth. At Valvoline Inc., it all
starts with our people, including our more than 10,000 team members
and strong, long-standing franchise partners. We are proud to be a
ten-time winner of the BEST Award
for training excellence and a top-rated franchisor in our
category by Entrepreneur and Franchise Times. To
learn more, or to find a service center near you, visit
vioc.com
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, benefits and synergies
of the sale of Global Products; future opportunities for the
remaining stand-alone retail business; and any other statements
regarding Valvoline's future operations, financial or operating
results, capital allocation, debt leverage ratio, anticipated
business levels, dividend policy, anticipated growth, market
opportunities, strategies, competition, and other expectations and
targets for future periods. Valvoline has identified some of these
forward-looking statements with words such as "anticipates,"
"believes," "expects," "estimates," "is likely," "predicts,"
"projects," "forecasts," "may," "will," "should," and "intends,"
and the negative of these words or other comparable terminology.
These forward-looking statements are based on Valvoline's current
expectations, estimates, projections, and assumptions as of the
date such statements are made and are subject to risks and
uncertainties that may cause results to differ materially from
those expressed or implied in the forward-looking statements.
Additional information regarding these risks and uncertainties are
described in the Company's filings with the Securities and Exchange
Commission (the "SEC"), including in the "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Quantitative and Qualitative
Disclosures about Market Risk" sections of Valvoline's most
recently filed periodic reports on Forms 10-K and 10-Q, which are
available on Valvoline's website at
http://investors.valvoline.com/sec-filings or on the SEC's
website at http://www.sec.gov. Valvoline assumes no obligation to
update or revise these forward-looking statements for any reason,
even if new information becomes available in the future, unless
required by law.
TM Trademark, Valvoline Inc., or its
subsidiaries, registered in various countries
SM Service mark, Valvoline Inc., or its subsidiaries,
registered in various countries
* Based on a survey of more than 900,000 Valvoline
Instant Oil Change℠ customers annually
FOR FURTHER INFORMATION
Investor Inquiries
Elizabeth B. Russell
+1 (859)
357-3155
IR@valvoline.com
Media
Inquiries
media@valvoline.com
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 1
|
Statements of
Consolidated Income
|
|
|
|
|
|
|
|
|
(In millions, except
per share amounts - preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30
|
|
Year ended
|
|
|
September 30
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net revenues
|
|
$ 390.0
|
|
$ 335.4
|
|
$
1,443.5
|
|
$
1,236.1
|
Cost of
sales
|
|
241.7
|
|
206.3
|
|
899.0
|
|
759.7
|
Gross
profit
|
|
148.3
|
|
129.1
|
|
544.5
|
|
476.4
|
Selling, general and
administrative expenses
|
|
70.3
|
|
62.1
|
|
264.5
|
|
244.7
|
Net legacy and
separation-related expenses
|
|
2.0
|
|
1.6
|
|
32.8
|
|
20.5
|
Other loss (income),
net
|
|
5.8
|
|
(1.8)
|
|
—
|
|
(9.1)
|
Operating
income
|
|
70.2
|
|
67.2
|
|
247.2
|
|
220.3
|
Net pension and other
postretirement plan (income) expenses
|
|
(38.6)
|
|
34.6
|
|
(27.6)
|
|
6.9
|
Net interest and other
financing expenses
|
|
10.9
|
|
18.1
|
|
38.3
|
|
69.3
|
Income before income
taxes
|
|
97.9
|
|
14.5
|
|
236.5
|
|
144.1
|
Income tax
expense
|
|
22.9
|
|
2.1
|
|
37.1
|
|
34.7
|
Income from continuing
operations
|
|
75.0
|
|
12.4
|
|
199.4
|
|
109.4
|
(Loss) income from
discontinued operations, net of tax
|
|
(29.8)
|
|
145.3
|
|
1,216.6
|
|
314.9
|
Net
income
|
|
$ 45.2
|
|
$ 157.7
|
|
$
1,416.0
|
|
$ 424.3
|
|
|
|
|
|
|
|
|
|
|
Net earnings per
share
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ 0.54
|
|
$ 0.07
|
|
$ 1.23
|
|
$ 0.61
|
Discontinued
operations
|
|
(0.21)
|
|
0.82
|
|
7.53
|
|
1.76
|
Basic earnings per
share
|
|
$ 0.33
|
|
$ 0.89
|
|
$ 8.76
|
|
$ 2.37
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ 0.53
|
|
$ 0.07
|
|
$ 1.23
|
|
$ 0.61
|
Discontinued
operations
|
|
(0.21)
|
|
0.81
|
|
7.48
|
|
1.74
|
Diluted earnings per
share
|
|
$ 0.32
|
|
$ 0.88
|
|
$ 8.71
|
|
$ 2.35
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
Basic
|
|
138.2
|
|
177.4
|
|
161.6
|
|
179.1
|
Diluted
|
|
139.2
|
|
178.6
|
|
162.6
|
|
180.4
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
Table 2
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
September 30
|
|
2023
|
|
2022
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
409.1
|
|
$
23.4
|
|
|
Receivables,
net
|
|
81.3
|
|
66.1
|
|
|
Inventories,
net
|
|
33.3
|
|
29.4
|
|
|
Prepaid expenses and
other current assets
|
|
65.5
|
|
38.0
|
|
|
Short-term
investments
|
|
347.5
|
|
—
|
|
|
Current assets held for
sale
|
|
—
|
|
1,464.2
|
|
Total current
assets
|
|
936.7
|
|
1,621.1
|
|
|
|
|
|
|
|
|
|
Noncurrent
assets
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
818.3
|
|
668.6
|
|
|
Operating lease
assets
|
|
266.5
|
|
248.1
|
|
|
Goodwill and
intangibles, net
|
|
680.6
|
|
663.1
|
|
|
Other noncurrent
assets
|
|
187.8
|
|
215.9
|
|
Total
assets
|
|
$
2,889.9
|
|
$
3,416.8
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
23.8
|
|
$
162.5
|
|
|
Trade and other
payables
|
|
118.7
|
|
45.0
|
|
|
Accrued expenses and
other liabilities
|
|
215.9
|
|
172.6
|
|
|
Current liabilities
held for sale
|
|
3.9
|
|
539.3
|
|
Total current
liabilities
|
|
362.3
|
|
919.4
|
|
|
|
|
|
|
|
|
Noncurrent
liabilities
|
|
|
|
|
|
Long-term
debt
|
|
1,562.3
|
|
1,525.1
|
|
|
Employee benefit
obligations
|
|
168.0
|
|
199.4
|
|
|
Operating lease
liabilities
|
|
247.3
|
|
229.2
|
|
|
Other noncurrent
liabilities
|
|
350.5
|
|
237.1
|
|
Total noncurrent
liabilities
|
|
2,328.1
|
|
2,190.8
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
199.5
|
|
306.6
|
|
|
|
|
|
|
|
|
Total liabilities
and stockholders' equity
|
|
$
2,889.9
|
|
$
3,416.8
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
Table 3
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
September 30
|
|
2023
|
|
2022
|
Cash flows from
operating activities
|
|
|
|
|
|
Net income
|
|
$
1,416.0
|
|
$
424.3
|
|
Adjustments to
reconcile net income to cash flows from operating
activities:
|
|
|
|
|
|
|
Income from
discontinued operations
|
|
(1,216.6)
|
|
(314.9)
|
|
|
Depreciation and
amortization
|
|
88.8
|
|
71.4
|
|
|
Deferred income
taxes
|
|
33.6
|
|
18.0
|
|
|
(Gain) loss on pension
and other postretirement plan remeasurements
|
|
(41.6)
|
|
43.9
|
|
|
Stock-based
compensation expense
|
|
12.2
|
|
14.4
|
|
|
Other, net
|
|
11.9
|
|
4.2
|
|
Change in operating
assets and liabilities
|
|
48.7
|
|
(126.9)
|
|
Operating cash flows
from continuing operations
|
|
353.0
|
|
134.4
|
|
Operating cash flows
from discontinued operations
|
|
(393.8)
|
|
149.8
|
|
Total cash (used in)
provided by operating activities
|
|
(40.8)
|
|
284.2
|
Cash flows from
investing activities
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
(180.5)
|
|
(132.0)
|
|
Acquisitions of
businesses, net of cash acquired
|
|
(36.3)
|
|
(50.7)
|
|
Purchases of
investments
|
|
(440.4)
|
|
—
|
|
Proceeds from
maturities of short-term investments
|
|
80.0
|
|
—
|
|
Other investing
activities, net
|
|
—
|
|
11.8
|
|
Investing cash flows
from continuing operations
|
|
(577.2)
|
|
(170.9)
|
|
Investing cash flows
from discontinued operations
|
|
2,620.9
|
|
(36.7)
|
|
Total cash provided by
(used in) investing activities
|
|
2,043.7
|
|
(207.6)
|
Cash flows from
financing activities
|
|
|
|
|
|
Proceeds from
borrowings, net of issuance costs
|
|
921.0
|
|
23.0
|
|
Repayments on
borrowings
|
|
(920.9)
|
|
(38.1)
|
|
Repurchases of common
stock
|
|
(1,524.8)
|
|
(142.6)
|
|
Cash dividends
paid
|
|
(21.8)
|
|
(89.2)
|
|
Other financing
activities
|
|
(19.0)
|
|
(16.0)
|
|
Financing cash flows
from continuing operations
|
|
(1,565.5)
|
|
(262.9)
|
|
Financing cash flows
from discontinued operations
|
|
(108.1)
|
|
44.0
|
|
Total cash used in
financing activities
|
|
(1,673.6)
|
|
(218.9)
|
|
Effect of currency
exchange rate changes on cash, cash equivalents and restricted
cash
|
|
(0.1)
|
|
(5.2)
|
Increase (decrease)
in cash, cash equivalents and restricted cash
|
|
329.2
|
|
(147.5)
|
Cash, cash equivalents
and restricted cash - beginning of period
|
|
83.9
|
|
231.4
|
Cash, cash
equivalents and restricted cash - end of period
|
|
$
413.1
|
|
$
83.9
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 4
|
Retail Stores
Operating Information
|
|
|
|
|
|
|
|
|
(Preliminary and
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30
|
|
Year ended
|
|
|
September 30
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Sales
information
|
|
|
|
|
|
|
|
|
|
System-wide store sales
- in millions (a)
|
|
$
738.3
|
|
$
641.9
|
|
$ 2,761.8
|
|
$ 2,360.2
|
Year-over-year
growth (a)
|
|
15.0 %
|
|
15.7 %
|
|
17.0 %
|
|
19.8 %
|
|
|
|
|
|
|
|
|
|
|
Same-store sales
growth (b)
|
|
|
|
|
|
|
|
|
Company-operated
|
|
9.1 %
|
|
8.5 %
|
|
11.9 %
|
|
11.4 %
|
Franchised
(a)
|
|
10.8 %
|
|
9.8 %
|
|
11.9 %
|
|
15.5 %
|
System-wide
(a)
|
|
10.0 %
|
|
9.2 %
|
|
11.9 %
|
|
13.7 %
|
|
|
|
Number of stores at end
of period
|
|
|
|
Fourth
Quarter
2023
|
|
Third
Quarter
2023
|
|
Second
Quarter
2023
|
|
First
Quarter
2023
|
|
Fourth
Quarter
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated
|
|
876
|
|
854
|
|
832
|
|
813
|
|
790
|
|
Franchised
(a)
|
|
976
|
|
950
|
|
949
|
|
933
|
|
925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30
|
2023
|
|
2022
|
System-wide store count
(a)
|
|
|
|
|
|
|
|
1,852
|
|
1,715
|
|
Year-over-year
growth (a)
|
|
|
|
|
|
|
|
8.0 %
|
|
7.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Measures include
Valvoline franchisees, which are independent legal entities.
Valvoline does not consolidate the results of operations of its
franchisees.
|
(b)
|
Valvoline determines
SSS growth as sales by U.S. stores, with new stores, including
franchised conversions, excluded from the metric until the
completion of their first full fiscal year in operation.
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 5
|
System-wide Retail
Stores
|
|
|
|
|
|
|
|
|
|
(Preliminary and
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated
|
|
|
|
Fourth
Quarter
2023
|
|
Third
Quarter
2023
|
|
Second
Quarter
2023
|
|
First
Quarter
2023
|
|
Fourth
Quarter
2022
|
Beginning of
period
|
|
854
|
|
832
|
|
813
|
|
790
|
|
772
|
|
Opened
|
|
14
|
|
12
|
|
13
|
|
17
|
|
12
|
|
Acquired
|
|
8
|
|
8
|
|
6
|
|
5
|
|
3
|
|
Net conversions between
company-operated and franchised
|
|
—
|
|
2
|
|
—
|
|
2
|
|
3
|
|
Closed
|
|
—
|
|
—
|
|
—
|
|
(1)
|
|
—
|
End of
period
|
|
876
|
|
854
|
|
832
|
|
813
|
|
790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchised
(a)
|
|
|
|
Fourth
Quarter
2023
|
|
Third
Quarter
2023
|
|
Second
Quarter
2023
|
|
First
Quarter
2023
|
|
Fourth
Quarter
2022
|
Beginning of
period
|
|
950
|
|
949
|
|
933
|
|
925
|
|
918
|
|
Opened
|
|
26
|
|
3
|
|
16
|
|
11
|
|
10
|
|
Acquired
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net conversions between
company-operated and franchised
|
|
—
|
|
(2)
|
|
—
|
|
(2)
|
|
(3)
|
|
Closed
|
|
—
|
|
—
|
|
—
|
|
(1)
|
|
—
|
End of
period
|
|
976
|
|
950
|
|
949
|
|
933
|
|
925
|
|
|
|
|
|
|
|
|
|
|
|
|
Total system-wide
stores (a)
|
|
1,852
|
|
1,804
|
|
1,781
|
|
1,746
|
|
1,715
|
|
|
|
(a)
|
Measures include
Valvoline franchisees, which are independent legal entities.
Valvoline does not consolidate the results of operations of its
franchisees.
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 6
|
|
Non-GAAP
Reconciliation - Income from Continuing Operations and Diluted
Earnings per Share
|
(In millions, except
per share amounts - preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30
|
|
Year ended
|
|
|
|
|
|
September 30
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
Reported income from
continuing operations
|
|
$ 75.0
|
|
$ 12.4
|
|
$ 199.4
|
|
$ 109.4
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Net pension and other
postretirement plan (income) expense (a)
|
|
(38.6)
|
|
34.6
|
|
(27.6)
|
|
6.9
|
|
|
Net legacy and
separation-related expenses
|
|
2.0
|
|
1.6
|
|
32.8
|
|
20.5
|
|
|
Information technology
transition costs
|
|
1.2
|
|
—
|
|
3.0
|
|
2.6
|
|
|
Suspended
operations
|
|
7.6
|
|
(0.6)
|
|
7.1
|
|
0.9
|
|
|
Investment and
divestiture-related costs
|
|
0.1
|
|
—
|
|
1.1
|
|
—
|
|
|
Debt extinguishment and
modification costs
|
|
0.1
|
|
—
|
|
1.1
|
|
—
|
|
|
Total adjustments,
pre-tax
|
|
(27.6)
|
|
35.6
|
|
17.5
|
|
30.9
|
|
|
Income tax expense
(benefit) of adjustments
|
|
6.2
|
|
(10.3)
|
|
(25.6)
|
|
(8.5)
|
|
|
Total adjustments,
after tax
|
|
(21.4)
|
|
25.3
|
|
(8.1)
|
|
22.4
|
|
Adjusted income from
continuing operations (b)(c)
|
|
$ 53.6
|
|
$ 37.7
|
|
$ 191.3
|
|
$ 131.8
|
|
|
|
|
|
|
|
|
|
|
|
Reported diluted
earnings per share from continuing operations
|
|
$ 0.53
|
|
$ 0.07
|
|
$ 1.23
|
|
$ 0.61
|
|
Adjusted diluted
earnings per share from continuing operations
(c)(d)
|
|
$ 0.39
|
|
$ 0.21
|
|
$ 1.18
|
|
$ 0.73
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares outstanding
|
|
139.2
|
|
178.6
|
|
162.6
|
|
180.4
|
|
|
|
|
(a)
|
Includes remeasurement
adjustments recorded in the fourth quarter, which resulted in a
gain of $41.6 million and a loss of $43.9 million in fiscal 2023
and 2022, respectively.
|
(b)
|
Adjusted income from
continuing operations is defined as income from continuing
operations adjusted for the effects of key items.
|
(c)
|
Represents a non-GAAP
measure. Refer to "Use of Non-GAAP Measures" and the Appendix for
additional details.
|
(d)
|
Adjusted diluted
earnings per share from continuing operations is defined as diluted
earnings per share calculated using adjusted income from continuing
operations.
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 7
|
Non-GAAP
Reconciliation - Adjusted Net Revenues and EBITDA from Continuing
Operations
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30
|
|
Year ended
|
|
|
September 30
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Reported net
revenues
|
$
390.0
|
|
$
335.4
|
|
$ 1,443.5
|
|
$ 1,236.1
|
Key
items:
|
|
|
|
|
|
|
|
|
Suspended
operations
|
|
—
|
|
(0.2)
|
|
(0.2)
|
|
(11.6)
|
Adjusted net
revenues (a) (b)
|
$
390.0
|
|
$
335.2
|
|
$ 1,443.3
|
|
$ 1,224.5
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations
|
|
$
75.0
|
|
$
12.4
|
|
$
199.4
|
|
$
109.4
|
Add:
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
22.9
|
|
2.1
|
|
37.1
|
|
34.7
|
Net interest and other
financing expenses
|
|
10.9
|
|
18.1
|
|
38.3
|
|
69.3
|
Depreciation and
amortization
|
|
28.1
|
|
19.3
|
|
88.8
|
|
71.4
|
EBITDA from
continuing operations (b) (c)
|
|
136.9
|
|
51.9
|
|
363.6
|
|
284.8
|
Key items:
|
|
|
|
|
|
|
|
|
Net pension and other
postretirement plan (income) expense
|
|
(38.6)
|
|
34.6
|
|
(27.6)
|
|
6.9
|
Net legacy and
separation-related expenses
|
|
2.0
|
|
1.6
|
|
32.8
|
|
20.5
|
Information technology
transition costs
|
|
1.2
|
|
—
|
|
3.0
|
|
2.6
|
Suspended
operations
|
|
7.6
|
|
(0.6)
|
|
7.1
|
|
0.9
|
Investment and
divestiture-related costs
|
|
0.1
|
|
—
|
|
1.1
|
|
—
|
Key items -
subtotal
|
|
(27.7)
|
|
35.6
|
|
16.4
|
|
30.9
|
Adjusted EBITDA from
continuing operations (b) (c)
|
|
$
109.2
|
|
$
87.5
|
|
$
380.0
|
|
$
315.7
|
|
|
|
|
|
|
|
|
|
Net profit
margin (d)
|
19.2 %
|
|
3.7 %
|
|
13.8 %
|
|
8.9 %
|
Adjusted EBITDA
margin (b) (e)
|
28.0 %
|
|
26.1 %
|
|
26.3 %
|
|
25.8 %
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Adjusted net revenues
are reported net revenues adjusted for key items.
|
(b)
|
Represents a non-GAAP
measure. Refer to "Use of Non-GAAP Measures" and the Appendix for
additional details.
|
(c)
|
EBITDA from continuing
operations is defined as income from continuing operations, plus
income tax expense, net interest and other financing expenses, and
depreciation and amortization attributable to continuing
operations. Adjusted EBITDA from continuing operations is EBITDA
adjusted for key items attributable to continuing
operations.
|
(d)
|
Net profit margin is
defined as reported income from continuing operations divided by
reported net revenues.
|
(e)
|
Adjusted EBITDA margin
is defined as Adjusted EBITDA from continuing operations divided by
adjusted net revenues.
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
Table 8
|
Non-GAAP
Reconciliation - Free Cash Flows from Continuing
Operations
|
|
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
Free cash flow
(a)
|
|
Year ended
|
|
September 30
|
|
2023
|
|
2022
|
Total cash flows
provided by operating activities from continuing
operations
|
|
$
353.0
|
|
$
134.4
|
Adjustments:
|
|
|
|
|
Additions to property,
plant and equipment from continuing operations
|
|
(180.5)
|
|
(132.0)
|
Free cash flow from
continuing operations (b)
|
|
$
172.5
|
|
$
2.4
|
|
|
|
|
|
Discretionary free cash
flow (c)
|
|
Year ended
|
|
September 30
|
|
2023
|
|
2022
|
Total cash flows
provided by operating activities from continuing
operations
|
|
$
353.0
|
|
$
134.4
|
Adjustments:
|
|
|
|
|
Maintenance additions
to property, plant and equipment from continuing
operations
|
|
(29.5)
|
|
(19.3)
|
Discretionary free
cash flow from continuing operations (b)
|
|
$
323.5
|
|
$
115.1
|
|
|
|
|
|
|
|
(a)
|
Free cash flow from
continuing operations is defined as operating cash flows from
continuing operations less capital expenditures of the continuing
operations and certain other adjustments attributable to continuing
operations, as applicable.
|
(b)
|
Represents a non-GAAP
measure. Refer to "Use of Non-GAAP Measures" and the Appendix for
additional details.
|
(c)
|
Discretionary free cash
flow from continuing operations is defined as operating cash flows
from continuing operations less maintenance capital expenditures of
the continuing operations and certain other adjustments
attributable to continuing operations, as applicable.
|
Valvoline Inc. and Consolidated
Subsidiaries
Appendix - Description of Non-GAAP Measures
and Adjustments
EBITDA Measures
Management believes EBITDA measures
provide a meaningful supplemental presentation of Valvoline's
operating performance between periods on a comparable basis due to
the depreciable assets associated with the nature of the Company's
operations, as well as income tax and interest costs related to
Valvoline's tax and capital structures, respectively.
Free Cash Flow and Discretionary Free Cash
Flow
Management uses free cash flow and discretionary free
cash flow as additional non-GAAP metrics of cash flow generation.
By including capital expenditures and certain other adjustments, as
applicable, management is able to provide an indication of the
ongoing cash being generated that is ultimately available for both
debt and equity holders as well as other investment opportunities.
Free cash flow includes the impact of capital expenditures,
providing a supplemental view of cash generation. Discretionary
free cash flow includes maintenance capital expenditures, which are
routine uses of cash that are necessary to maintain the Company's
operations and provides a supplemental view of cash flow generation
to maintain operations before discretionary investments in growth.
Free cash flow and discretionary free cash flow have certain
limitations, including that they do not reflect adjustments for
certain non-discretionary cash flows, such as mandatory debt
repayments.
Adjusted Net Revenue and Profitability
Measures
Adjusted net revenue and profitability measures
(i.e., adjusted net income, diluted earnings per share and EBITDA)
enable the comparison of financial trends and results between
periods where certain items may not be reflective of the Company's
underlying and ongoing operational performance or vary independent
of business performance.
Key Items
The non-GAAP measures used by management
exclude the impact of certain unusual, infrequent or
non-operational activity not directly attributable to the
underlying business, which management believes impacts the
comparability of operational results between periods ("key items").
Key items are often related to legacy matters or market-driven
events considered by management to not be reflective of the ongoing
operating performance. Key items may consist of adjustments related
to: legacy businesses, including the separation from Valvoline's
former parent company, the former Global Products reportable
segment, and associated impacts of related activity and
indemnities; non-service pension and other postretirement plan
activity; restructuring-related matters, including organizational
restructuring plans, the separation of Valvoline's businesses,
significant acquisitions or divestitures, debt extinguishment and
modification, and tax reform legislation; in addition to other
matters that management considers non-operational, infrequent or
unusual in nature.
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 (income)
expense: Includes several elements impacted by changes in plan
assets and obligations that are primarily driven by the debt and
equity markets, including remeasurement gains and losses, when
applicable; and recurring non-service pension and other
postretirement net periodic activity, which consists of interest
cost, expected return on plan assets and amortization of prior
service credits. Management considers that these elements are more
reflective of changes in current conditions in global markets (in
particular, interest rates), outside the operational performance of
the business, and are also legacy amounts that are not directly
related to the underlying business and do not have an impact on the
compensation and benefits provided to eligible employees
for current service.
The Company recognized remeasurement adjustments in the fourth
quarter of each fiscal year, which resulted in a gain of
$41.6 million and a loss of
$43.9 million in fiscal 2023 and
2022, respectively.
Net legacy and separation-related expenses: Activity
associated with legacy businesses and the separation from
Valvoline's former parent company and its former Global Products
reportable segment. This activity includes the recognition of and
adjustments to indemnity obligations to its former parent company;
certain legal, financial, professional advisory and consulting
fees; and other expenses incurred by the continuing operations in
connection with and directly related to these separation
transactions and legacy matters. This incremental activity directly
attributable to legacy matters and separation transactions is not
considered reflective of the underlying operating performance of
the Company's continuing operations.
Of specific note, the Company recognized $25.7 million of pre-tax expense during the
twelve months ended September 30,
2023, to reflect its increased estimated indemnity
obligation, which also resulted in an income tax benefit of
$29.0 million to reflect the
release of valuation allowances in connection with the amendment of
the Tax Matters Agreement with Valvoline's former parent
company.
Information technology transition costs: Consists of
redundant expenses incurred from duplicative technology platforms
required while implementing the Company's stand-alone enterprise
resource planning software system during fiscal 2023 and
transitioning its data centers during fiscal 2022. These expenses
are reflective of incremental costs directly associated with
technology transitions and are not considered to be reflective of
the ongoing expenses of operating the Company's technology
platforms.
Suspended operations: Represents the results of a former
Global Products business where operations were suspended during
fiscal 2022 that were not sold with the Global Products business.
These results included an impairment loss of $8.1 million recognized in the fourth quarter of
fiscal 2023 upon classifying the suspended operations as held for
sale. These results are not indicative of the operating performance
of the Company's ongoing continuing operations.
Investment and divestiture-related costs: Expense
recognized to reduce the carrying value of an investment interest
determined to be impaired. This cost is not considered to be
reflective of the underlying performance of the Company's ongoing
continuing operations.
Debt extinguishment and modification costs: Relates to
the modification of the Senior Credit Agreement and includes the
accelerated amortization of previously capitalized debt issuance
costs, as well as third-party fees expensed in connection with the
execution of the amended Senior Credit Agreement. These expenses
are not considered to be indicative of the future servicing costs
of the Company's ongoing debt facilities.
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SOURCE Valvoline Inc.