VVV - Earnings call transcript Q4 2017

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Operator

Good morning. My name is Carol, and I will be your operator today. At this time, I would like to welcome everyone to the Valvoline Q4 2017 Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the call over to Jason Thompson, Vice President, Finance and Treasurer.

Jason Thompson

Thank you, Carol. to Quarter welcome Call XXXX and Webcast. and morning, Valvoline's Fiscal Fourth Conference Good for ended the at results released Valvoline quarter p.m. approximately September X:XX XXXX, XX, Eastern website a copy and which is this in X, our with of Time Investor on be Relations conjunction release, should investors.valvoline.com. viewed presentation earnings that available yesterday, November at remarks and results and Exchange Securities are with XX-K the preliminary These until Form we file our Commission. a release has been to Form A X-K. of in the news copy the furnished SEC today call and the With Valvoline's Financial Chief Mitchell; on me Sam Officer, are Mary Officer. Executive Chief Meixelsperger,

shown results will results forward-looking adjusted A reasonable use adjusted under on nonoperational nature. Slide a management's term achieved. restructuring of in basis. an and presentation be our earnings are of these discussion As remarks, in U.S. release. on was as defined based results which non-GAAP ongoing our on expectations X, are this understanding assumptions our In unusual, will this Adjusted but that include reported included key of is to be our believe discussing statements or of enhances statements in our our remarks cannot securities assure we We law. believe exclude such We and items such measures approach reconciliation business. that

income X, million, net periods, respectively. As operating and full-year income Reported XXXX. delivered for you million in reported $XXX the see $X.XX on million for fiscal Valvoline million QX and was can $XXX Slide EPS and and quarter of $X.XX and was $XXX $XXX

items separation driving related on comparisons. our earnings this differences As this are year-over-year calls a discussed we few year, have in our to

the year-end contribution related from be $X QX simply XXXX were XXXX, remeasurement call. mark-to-market primarily plans. costs. of million $XX which and We respectively, in were Valvoline to be was pension of this Valvoline's the income, of prior the represents with Ashland and Prior the which higher in the debt from to fourth associated is reported last September is Also expense our structure a of period million after only are this, Key until related and OPEB the than recurring our on which timing creation results, us to that expense; OPEB assumed year income capital year. of is based of First gave and primarily the gains In $X the interest it to transfer operating key primarily other EBITDA partial pension capital is pension-related a allocated of The quarter due of interest fiscal cost focusing excluded structure, our also the remeasurements which and North items plans in we operating plans. from believe XXXX. items, from segments, operating gains. our adjusted for million, of remainder also Full discussing investors, both EBITDA segments and remeasurement are due We'll million totaled totaled meaningful and our those X separation and after items segments tax, EBITDA key Quick gains of International. OPEB XXXX results that from Lubes our the portion from and tax pension Core year to so were year. totaled of to to did on total $XX we'll not participation this to after-tax and America, we

Sam let details over operating me our turn cover to Now in to the to of things segments. as Slide we X, move Sam? more results

Sam Mitchell

good and Jason, morning, everyone. Thanks,

North America, promises company. We volume the areas delivered want mix our strategic Core fourth results, our to year premium of volume on In we for growth a grew reduce quarter IPO branded same-store assumed investors. and as to accomplishments to acquisitions, since first an broad-based I review key Before of retail growth strong and to we closed I a the public business, and as the highlight cost our growth by stand-alone closing XXXX, in in base supplemented Lubes. the part key expansion risk we pension, Quick related separation. building the measures Lubes We which as of performance International significantly took Quick in the further the sales We exceptionally our presence.

results year, for very entire accomplishments Finally, in QX a I'm program I repurchase the $XX Valvoline. quarter we the and are in cash. we the another our the be more We with was proud quarter couldn't strong on team capital established the of started returned XXXX for to and a against priorities. dividend Valvoline a was X. practice shareholders. million strong summarized together us share of returning that of pleased which quarterly a getting began start are core today. of executing to where Slide And

hurricanes. line top operating And from EBITDA facing X%. up million, these the we while Solid of $XXX growth business recent some disruptions drove across from segments results the delivered

plans did our it counted minimizing contingency a our team to job when impact of implementing customers. great standard Our the most,

we inflation year. just Our strength of were despite than infrastructure. end the were came EBITDA the capabilities fiscal and our significant expected our higher build The came our Free range. we in of this segments XXXX operating adjusted our in year on for of results truly flow in record, raw full at and to model while we $X.XX business investing million, cost came as display facing the and strong cash expected new SG&A $XXX of a of company better from at public $XXX EPS These million. material team was

starting in the on Slide quarter a X. results year each take America Let's closer look the North at segment, with Core for and

the DIY just Within from a synthetic driving customers. the launched gains which significant of It quarterly is to segment decline mix where premium good product we've in cleaner, modest see, volume product for result area non-branded sales, is was this lower-margin how designed DIY branded year. value XX.X%. can by mix the reduction on of our most a Slide a showed in branded X% saw volume pour But offset growth gains leading in packaging overall. shown QX of new And Easy versus volume, to you we input our volume, record our adding As Branded Pour for prior volume new the brand with a -- and demonstrates innovation, our community. X. the The in Valvoline the and initiative bottle originated. this exactly provides directly was faster Bottle, is

we in the future Pour see also indicator grew Innovation is Easy new as from and installer in packaging premium X differentiation it products gains source the mix and for Pour motor in Bottle first channel. of key will out the branded launched will of help the products. the trade continue and we strong customers, Back confident year especially to brand support is Bay of XXXX. the in half on and you full to we're Easy innovate. we earlier premium volume in Valvoline's examples space drive volume DIY Given share share growing, fiscal this a in are of The DIY oil Box Bottle products full the design can strengthen Seeing how and Valvoline for for an in line healthy growth Advanced is growth. in our the the Slide of year. the our X, brand that roll branded

act quarter. same-store franchise years. on agreements favorable By the better are in contrast, more a the performance unit added X.X%. the store Core Lubes oil in than franchise the Instant that is the continues growth easy, base these transactions. system due more the XXXX to about sales a Oil to the fiscal crude We're the earlier, network, We In the unit consistent the quarter customers. on franchise across were QX, saw are every system-wide robust growth -- driven of in and agreements offering, that the X.X% dynamics. said XXX an oil. which primarily of differentiated prices. by are Same-store of the brand was And delivered new, you add define growth strength growth advertising launched and growth the margins trusted to this added in people segment differences stores also team the new expected trust" stores franchise system, to next environment, Change, the Valvoline material North X.X% oil our have base And Quick performance customer side. VIOC I inflation up Valvoline Most Quick recent company experience we development development increase the protect between with sales winning we see, growth to campaign service transactions upward Across same-store year saw gain our net to we our VIOC company-owned On deliver and remain strongest can new franchisees in The by base we to future in see excited definition the The organic in platforms. stores unit Lubes can quick, was trend we largest stores benefiting systems, last by promise increase America every raw team signing stores continuing we impressive VIOC geographic at past, with XXXX, the As put Despite margins. QX. year. XX environment clearly We to year-over-year. in more generating. connecting Slide by over of to maintained a We in experts growth. driven around our in can new unit several far in also our the modest are you up X inflationary as focus And a be sales marketing "service day. from new X, are of you in continue we

largest focus well-positioned Enterprises. our that locations current in our For agreement, retail these buy while that sales the area in and beyond. Ohio Northern Lube are year, helped acquired consecutive to us close stores Henley which development acquisition are the an Midwest, sales XX net impressive well Oil Northeast grew October as us to we the of new XX XX on through stores as focus track for X, an in Michigan from network same-store stores the growth the give California. accelerate like the pace of Valvoline franchise Change to will some franchisee, Time-It same-store confidence we and X.X% the allowing X closed by Henley, to expansion Instant agreements, of XXXX fiscal of our of VIOC record. example, of Franchise marking company-owned we and signed on years to The in also Results growth, XXXX. add

continues growth volume another X% volume including reported be up Our our quarter segment unconsolidated that shows joint -- ventures. QX. growth delivered Volume XX% was showed of good and X to in International up Slide year-over-year broad-based. our

volume delivering XX% up year strong is volume also volume We developed ventures our of in X% unit lag in The experienced joint year we executed fiscal helping of further most Full International India market impressive Our are and markets negative grew price Australia. segment growth business cost gains QX. key team is our and markets, or expect an heavy-duty of across emerging while effects component within JVs markets another outside our growth we margin Asia the China volumes has Within price increases, in Europe grew delivered lead year business. China included, and the improvements But a with QX. emerging in regions. growth. emerging International

of performance We exceptional engine of than venture, in results. China challenges implementation in let Cummins demonetization JV including with drive ventures. growth India macro over it to duty joint with pass a with results for GST, joint heavy which high was our to new volume for able the delivering of relationship financial for to more XX% detailed contributed The Cummins With Our volume review a that, overall year. oil in single-digit 'XX, Mary launched and our weather JV the helped International's growth. a new me that significant fiscal our

Mary Meixelsperger

Thanks, Sam.

Volume which year results few EBITDA, margin premium pension $XXX the are for the -- XX% operating roughly expense were were of along stores Our the was million. impact Quick Slide in year in pricing costs, sales. $XX the prior mix Full and due increased gains, from primarily X%. which public and shown quarter increased adjusted X% XX. key raw adjusted in higher non-service for EBITDA; Fiscal X%. International, adjusted operating year. can material the million pension, volume includes growth we $XX contributions OPEB versus results interest on for OPEB which of SG&A million EBITDA $X and of on up raw increases the through more million, new Adjusted from impact EBITDA of million. total of and sales Volume/mix was the main than Lubes, EBITDA Volume as growth includes our company shown the from cost segments Slide income progress drivers segments million, adjusted grew due X to was fund quarter made of material in further discuss million same-store was with incremental the to pension pricing XXXX a Sales new infrastructure income offsetting acquisitions higher in segments operating full increased up non-service was $XXX favorable in investments XX. planned increased the $X.XX prior $X increase see from $XXX the to Valvoline's you costs. passing summarized and impacted and rising I'll EBITDA drivers of by which Volume/mix and Valvoline's bridge. and with EPS year was fiscal in SG&A. planned, EBITDA minutes. category. million. on borrowing was $XXX QX are

we million we risk of notes. the expect on leverage-neutral. most PBGC voluntary separation and future Borrowing nearly from pension funded qualified The status obligations tax and result contributions a have premiums, to more and associated of significantly has volatility significant and that the this taken XX a present transaction. U.S. obligations will scenario, In for retiree do to QX, the also pension voluntary senior $XX not outlined a we QX, the We likely amount $XXX in we fund with obligation XX, than pension during net value-positive risk to lowers plan to a $XXX nearly costs. with contribution As reduces new annuity to qualified the contract. make Ashland. expected to have is the executed the In assumed Reducing year we reduce under XXXX. to a similar lower years. transferred Increasing to our the any purchase which retirement-related onetime volatility gross assets leading was Slide cash a party. contribution funded the made And $XXX new million, third next in pension of million plan the created and million in volatility planned benefit U.S. of fiscal cash administrative actions

reduced and is now Importantly, funded liability plan the XX% funded to a U.S. million -- status. unfunded qualified liabilities have at $XXX been

will As non-operating. adopt as to we discussed pension reclassify last quarter, income Valvoline intends our OPEB early new accounting guidelines that and

income be With XXXX. the beginning EPS in fiscal pension OPEB adjusted reclassification, non-operating and excluded our adjusted and from will EBITDA

and summary, and have amounts Valvoline's As strengthened excluding been $X.XX, on fiscal support to OPEB million pension XXXX $XXX taken a comparison, we've EBITDA actions would shown In growth are adjusted respectively. and well-positioned EPS, the this the slide, sheet plans. balance and adjusted our have we

discuss. I'd few to like corporate to XX; on components there Turning a are items Slide key

rate of of higher the was The mix profits the items. and the tax quarter effective rate tax by driven the primarily in impacts geographic Our XX.X%. key was

XX% pension Full XXXX. flow was year adjusted the year-over-year related of year rate Our contribution, the effective benefit which QX with roughly of was cash as related interest in the million well our Borrowing was of million Interest million generation, voluntary excludes pension on pension million in taxes and nearly free for XX.X%. borrowing interest to $XX and funding. fiscal QX $XX tax XXXX reduced incremental will a approximately add the cash to as our $XXX the and rate operating debt $X was expense flow. cash fund impacted full expense

our Slide fiscal expectations XX; for I'd gears and turning to switch talk XXXX. Now about like to

comparable segments our million expect between to EBITDA EBITDA from which to be $XXX XXXX. $XXX $XXX is million, adjusted to in We operating of million

inflation of through due a products. company EBITDA new well Part it EBITDA increased advertising normal also SG&A, high Part is investing be is further in investment expect growth investment, initiatives increase. in Lube We'll of to of and contains like and by Our our realizing full our acquisitions. the and digital guidance year where SG&A our public as innovation single-digit marketing driven growth, and costs. we a as Quick

between turn the We be includes roughly normalizing X% $XX be borrow-to-fund an we've back to million for anticipate I'll free We range incremental voluntary With cash would that, including expect to flow interest $X.XX EPS of range interest, incremental transaction. After $XXX incurred in $XXX EPS benefit tax to adjusted the $X.XX. adjusted of $X.XX contribution. This million, from Sam. from growth the and approximately XX%. the to cash over million in it the pension

Sam Mitchell

Mary. Thanks,

in initiatives have to growth. the Our drive guidance in have the confidence we place business and our reflects model we

our are focused We will In North technology the value new products, initiatives packaging digital that continue development Quick from customers. to ground-up Lubes, we'll begin to and stores out. rolled we'll market pay e-commerce our clearly new for We'll as to products In lead company share off take innovations services efforts our acquisitions. capabilities our and as innovation gains. portal real steps in on America, are create add Core regional installer and also pursue and next

with As opportunities. our drive our volume further we to we'll committed franchisees new we In growth fully to same-store deliver are faster market sales plans. ongoing growth. are Equally our in to to to our store-level penetration Cummins confident look important, execution, leverage International, will shared, ability I've improve continue relationship efforts And execution and of continue unit growth. our capture to

up open we acceleration Jason beyond. earnings growth I'll are to and returns the Q&A. line that, hand capital shareholder and it Our total through committed in XXXX, returns With XXXX and begins over to growth for in driving to

Jason Thompson

you Carol, the open that, line. With Sam. can Thanks,

Operator

Merrill Tong of first today question Olivia America from from Bank Lynch. [Operator Instructions] Our comes

Christopher Carey

on is for This Olivia. Chris Carey

go-forward EBITDA QX expectations than throughout and you the in better a per outlook, light bit I here EBITDA does -- of QX. North America you profit in bit you year? but on Core International mentioned comment some came acceleration imply gross maybe bit expectation But and can fair have of our the expect on the a improvement especially worse. And outlook, in a Then follow-up. is a which context in our gallon. think is I Just a an

Sam Mitchell

us versus address actions, the QX QX. gives they're regions. of Yes, Sure. in regarding different that's confidence that as in me in improvement your let we implemented fiscal in still number effect improvement of a negative to A nice we QX, little going positive year here of question we're But yes, yes, QX across fact, the compared a then bit actually but took International there really 'XX see start pricing because pricing to prior in decent QX. a in And a new lag margins effect, QX a little 'XX. first was soft lag bit what year,

in have improve as But International premium distributor-driven margins than are improving where that's because are business, business opportunities our that been improves. typically our But we margins the of business. see there difference. and time partly pretty those it's the you balance lower to So grow nonetheless, stable as mix that They a historically the business. over

a timing a balance in modest we're bit with to to are and the profit factors that promotional QX, QX the hurricane Regarding the to EBITDA, improvement the that, with we versus see also lighter year. impact in QX; really we'll bit in the that different two fiscal starting QX QX. a growth terms impact we're but those going -- factors balance regard effect. particularly have going of in from couple of we're a of a soft the bit really being on for the year of biggest There's little see through of There's outlook a forecasting overall focus strong the

Christopher Carey

ability have I then helpful. single-digit range, a is, more get outlook drive just basis, I'm high can you benign an to base trying confidence from in M&A that's EBITDA the in sales and really as oil the assuming Okay, volumes? to guess the at various organic on on comment And growth whole, components contribution EBITDA more you maybe a whether environment. the what in from And the to lubricant

Sam Mitchell

our the combination Lube continued of business. to of Yes, going a for performance. drivers volume Right. 'XX the fiscal are really mix improvements, drive biggest the Quick performance That's and what's

growth fully we and each with operating so again drive profit strongest the of And Lubes profit the expect growth coming from the Quick to International both segments segment.

improve of forecast that M&A the what's the In in that are 'XX. were profit roughly acquisitions our one-fourth that the in that forecast that $XX forwards carry million range. around growth from terms million, fiscal 'XX, $X of roughly represents included helps or And made the in about

Mary Meixelsperger

Chris, of of of impact activity. to would And closed that acquisition to in at M&A also we recent that, I Quick that, Lube includes incremental the beginning year EBITDA terms Yes. the add Bluewater just the Henley the that related the the

Sam Mitchell

That's right.

Christopher Carey

And just a good. Okay, from perspective? sales

Sam Mitchell

overall to regard sales growth? With

Christopher Carey

The contribution M&A, yes. of

Mary Meixelsperger

of say would is driving an don't specific growth that majority is benefit to M&A transactions. number related some the overall. segments. There Chris. are here, the the different growth the I right more I Yes, the from growth sales from factors the overall volume around that have But the at coming really growth sales my volume from fingertips coming

Operator

Our next Global Harrison from Securities. question from Mike Seaport comes

Unidentified Analyst

the Mike. of variations high little the Or based or move it spend EBITDA the in This us variation? factors the would factors going is in to are towards were Could it you low the SG&A for Jacob [ph] largely that is talking about you end XXXX on guidance? about? bit more talk that that maybe on a Is the other

Sam Mitchell

see all, of growth each it's an that segments. operating for does in have We and regarding again of confidence that appropriate first our that range the next the we've the range that laid year. we expect for out business in one we Well, reflect strength there. to It the profit think

growth Quick is in there business, on in of and the investment the of the our Lube talent accelerate focused range, too. adding But people that exactly of the SG&A a that that, -- in we're planned. organization, pull the part the noted, the come Also is the SG&A really, manageable both is -- some Regarding back from you International supporting or additions if does increased isn't part that we SG&A course, as business portion acquisitions on making, the can progressing that of of business. that part

we a flexibility place some initiatives, plan confidence lot in good gives like we've of got the But of we there. in that a marketing initiatives, spends our have benefiting So feel the very us in Change new noted Also Instant there. the example, advertising that Oil support from behind the DIY business. for the presentation I quite nicely is in supporting incremental Valvoline

that is accelerated a And customers in continuation spend of continue that so stores. the win to Quick our Lube to new business to

So that eye towards will guidance close one businesses. what outstanding push the on just is over inflationary us the environment the one that make do top really in right of course a of that that -- The we're in the execution sure we're to is -- thing year any the have of we is keeping our end each now.

effect have of confidence growth, the of But push end overall, appropriate the our raw we the as our protect lag provided the accelerate both that of business volume guidance. And pricing the some oils today's but strength forecast actions environment, margins earlier, as the the we lower in a our in really to us but us environment, base a actions, today. the we'll gives material mentioned overall some a lag that would I effect, we've guidance of towards in price fiscal you just take base we fiscal increases. 'XX, can introduced bit felt in 'XX. So could If oil have suppliers have like

Operator

Benjamin comes question Stephanie SunTrust. from from Our next

Stephanie Benjamin

the of I you take impact hurricanes and hoping need the any beyond your to frame was pricing during of cost going structure kind you took just had if of the really to quarter kind incremental quarter. impact the what could the ahead fourth forward,

Sam Mitchell

impact the the do their had needs pretty of ability modest products. work just necessary materials while meet -- our that making our to customers of to the with our the had that sure for was hurricane it and team lot and a Yes, good we

from the about to about was million little impact $X a QX terms In and a dollar million bit $X feel impact, million we're in roughly hurricanes, we'll QX. into $X of the talking

Stephanie Benjamin

for of you've America; the be last actually some kind Or as an in expectations decline 'XX trend of is business And any lap to Great. it going improve kind lastly, North in then quarters, non-branded ongoing volumes your for several to on seen that? going of forward? that we

Sam Mitchell

in business be in it of comps trend. looking shouldn't non-branded we that calls, of be business expecting an throughout But private-label to in we're had couple noted this non-branded a ongoing forward, stable. XXXX. lower-margin But accounts terms we and earlier as No, had lost overall relatively

strategically, declines. So us. importance company strategic we're with that attractive, it's accounts look really growth. significant to the of focus volume, stable not customers further and area we an have bring doesn't while to do real And but our when continue we value is think that us, the there. business business, business -- trying that with it to that long-term business, as long-term drive relationships good importance for projecting not the about branded accounts And Again, private-label we're it business with our we more have been for can

can in that focus Our side. drive and growth brand, on is innovations margins the the Valvoline that really really higher the

Mary Meixelsperger

And what to said. would add Sam just Stephanie, I

be some the see quarterly relatively we're do based While variations business timing in flat expecting non-branded to expect XXXX, of to on I promotional the events.

So being offsets to and you see I business think might QX, year. in down modestly the later in non-branded that the having

some see fluctuations. will you So quarter-to-quarter

Sam Mitchell

That's true.

Operator

comes Morgan next Simeon Stanley. from Our question Gutman from

Simeon Gutman

refresh follow America that you just just on to to mentioned that? some a just can doing volume North you talk Core of expecting complexion Or volume; are any quick rebranding business, the to the suit? X% competitive lubricant the guidance, the to others packaging? Among about packaging, growth, implications. question of -- X% Just Are you you the

Sam Mitchell

a North is America, real Yes, that hitting versus and that have new we superior huge past. packaging in It also I'm bullish innovations our competitors are we've very the on. significant is market. upgrade far Core The to breakthrough the a some package important a in do what had

that research consumers, So premium focus done especially going us selling us is innovations, our arena growing based certainly that believe Core little share. on important about on bit momentum business the of too. support important, it, for and good the innovations, the help that our also within packaging some in the both DIY side trade the from have that, America, customers, have as we've that we with line that and reception mix too, on really we North in some high-mileage installer synthetic line. strengthen We've they that important talked the our product become a driving the helps too. but We've our continue to do And got

One interesting of engines, they engines new engines gasoline And fairly market emissions. in direct high-efficiency trends engines. automotive contribute economy, improvements is the drive deposit These or GDI the the the too. fuel they they and broader significant called formation also nice -- are today, can injection towards that's to while the in reduced impacting push aftermarket,

And so volume what North us improvements And on those the on customers Valvoline and key our an innovations has in kinds of engines. growth lineup installer we on these that it's again, really address side. product product side continue this differentiates the new the in help to innovations Core our further DIY to America. mix drive to offer and important think problems some been technology that of working hard that is and for we both And are area

businesses while significant of the and North North steady opportunities really the improvement continued key it a America growth for not that Core has the we performance. International Quick believe our part -- So growth business opportunity have Valvoline Lubes Core the and is in and quite have, America is doesn't

Operator

question from next Carolina comes from Our Gabelli. Jolly

Carolina Jolly

talk line? rising million cost about brief just you of impact the base that does on include One hurricane. Can the oil that mentioned prices? the is follow-up, top from you the Or $X --

Sam Mitchell

has relationships margin, and were a there's just higher -- but shipping the could costs been at of And that too; really higher so the disruptions. raw the hurricane customers. to on the impacting our different has minor more costs, a on suppliers we line, had of the of in gross that less the primarily fairly base continue some some so to things, this in have our structure. we too, purchasing during That with supply Yes, top cost is top to did during profit our impact base we slightly prices broader of suppliers move been period, was impact number line our involved combination impact, as material X cost. focus significant oil mitigate Because some impacts also higher with to oils, our our but

Carolina Jolly

it's what seems did XXX you you forward? like guess, in you for offsetting quarter. expecting points what million then projection, Can talk the you million I you're know this basis it EBITDA to of second one, Great, And great I those $XXX include a a premium can talk costs. lot job about the $XXX about about expansion? the going

Mary Meixelsperger

continued Carolina, point We that saw it's expect do improvement. to basis don't it's in Yes, And significant we improvement -- really QX. a to in XXX -- premiumization X% But expect I improvements. we the mean, was X% a probably range.

Sam Mitchell

right. That's

Operator

Alwy Our comes from Faiza Deutsche from Bank. question next

Faiza Alwy

this stay year? So a on at quick prices. decline? base current question base you level a assume expecting that just oil Or are a guidance oil your prices Does

Sam Mitchell

Yes. particularly that developments moving impacting Based oil is recent and base on the market. crude the higher,

'XX. our inflationary in we fiscal in. do that a factor does expect guidance And So environment modest

Faiza Alwy

Okay.

So -- should take should we the just to through Or into follow that 'XX? is from and you to current then -- incremental pricing there here? be pricing going have

Sam Mitchell

announced expected, will based I had be actions increases, X that think pricing on important. I believe X the Yes, that that been and are

process channels. in communicating we're price so of And to across increases customers the our today

Faiza Alwy

Okay.

pricing -- mean, So like in rest is Is the I bit up Or will going through oil and you you those don't expect inflation? actions lag a might like to that of do be effect do a expect there base right? think with be lag of a essentially? -- quarter you line the first you'll the then is be like catch in what a year. you're sounds saying pricing it

Sam Mitchell

Yes, -- the take oil happen oils increases is be going the looks too not will will way QX. hold. impact to like QX in it base it much, this base Truly primarily

cost improvement see lag margins during relatively should unit half oils the in offset we actually of structure. actions QX our taken will our our the in back faced of in base we've because increases summer year that the to months effect in So cost the that the be small.

base that. get to the the 'XX really offset the improvement. to should as small oil And be actions we QX impact we're impacts that expecting the lag that have So based into and on appropriate announced taking show increases been

much range. So I it's feel very a manageable in

Mary Meixelsperger

Okay, good we We've continue price seen announced weeks. industry. of competitors major increase see to would Faiza, the I add that in last discipline our most of from over the couple

kind is that and competitive think environment compete to to we're real of continue. continuing expect So expectation in I that that rational our a

Operator

from Crespi. comes question from Monness, next Shaw Chris Our

Christopher Shaw

side, -- something the question, it sales. the that the quarter on maybe Lubes, decent Core weaker. a being, X% talking about comment just American. on you a think was was I activity I know same-store year, And in think And I promotional First just first you a I think Because North there some definitely little sales was year-over-year? last Quick had were

Or the comment as first does something that it more in is quarter So just so well? year-over-year? slowing

Sam Mitchell

The in Yes. in is strong about concerned performance business our was not exceptionally QX The of No, type Quick very to we're expect off we stable. that. slowdown any business. strong, And build of last Lube of year. very

into are we fully see QX. in for business. momentum I sales that course, And year business of forecasting, same-store growth good Quick the for continued to So Lube mid-single-digit expect the

timing really So couple it in impact. a a across QX the -- America, a of little on Core bit that hurricane little got business. dollars expect We've We bit some that's North growth million promotional to a see the of our -- about within just factors A about talked have factor. bit we margin. with good to there. The do too, feel

Mary Meixelsperger

was complete on of we lowest going QX infrastructure last not but expenses. there have last we all company is building public as of our with year that year SG&A thing our other were in The quarter

see growth And in so SG&A of little compare. a going are higher bit we to QX that year-over-year because

Christopher Shaw

could sales much is in I not promotional timing; is negative you're in sense more you this in it second Or first If the this see you're having promotional see quarter? a won't year? that spending you'll the year, up the quarter so more that wasn't the I it from the just some following. that as activity sales follow and on this --

Sam Mitchell

latter. more Yes, the it's

retailers we're promotions prior you you fairly primarily the is those see meaningful don't and in shifts you volume quarter can in the large when year. or a some -- of yes, business month the land DIY same always some the timing have -- as So where because number see of same the

seeing to But with promotional for and shift merchandising year the what good we're we're accounts. of So just key our our a bit in the about feel we committed XXXX schedule promotional a timing.

Christopher Shaw

oil. from That to could as as the with oil was capacity done I question, out in additional that have think me that your or had doesn't crude there in as itself hedge through we it because at base try seem thought. base Brings just to that and I sense all think the much oil oil? make exposure to oil a does coming the much If suspicion follow-up base question of crude oil to some there -- know I base maybe out hedge maybe -- divorce I past, crude following sort some there's was would on

Sam Mitchell

base make that. to Yes, There's it try doesn't sense perfect no oil way hedge to do market. the to

is general, benefited a the a on and to commodity. to comments it market. of that, base will from is timing continue oils from course, follow because And somewhat the relative vary that base can time to input. long is oil is just quick is move oil of the oil -- crude primary the base couple Valvoline of time. crude In will base dynamics, benefit a Just It's

turnarounds So a market tightness oil refineries given we good And was base that the the in between higher did the create what's in that have because what crude total oil. that cost at of number than a expected, of would base bit happened dynamic and of bit happened is in or position. in market the otherwise XXXX a in short-term resulted

entering balanced period we that disrupted a more this hurricanes. So that a into as expected was result course, by fall of would in we're market, the

the so we expected. see didn't any we have decreases of that might And

we moved yet Now with manage those pushing that important oil to this and is about and business Valvoline short by to that perspective, is solid pricing great consider June, model that XXXX growth a January seeing base crude up, how that keep between and that manage in pricing fashion, drive that we performance and our to Valvoline prices and to over good, in the moving making long when delivered impact. sure base so you a back we're and look results And and it's that window. costs these all passing by All up, in has moves, we're oil mitigate our we manage doing at for through impact got our the the prices and term how business through up XX% do term. the both things the timely in costs,

this So rising manage important investors crude. falling our markets, it's of to both just oil I model ability for understand think to base the the and through strength business business or

growing this executing products our what's in a unit And And our the really in going through us improving profit is plans them we're different mix to and make environments. approach lot year-over-year. for protecting help strong our those us experience We of the margins, have businesses. fundamental deliver sure is, over in time by growth

Operator

English And comes question Instructions] next Sachs. Goldman from our [Operator from Jason

Jason English

got on over just that up I last forum follow to here. because predominantly want question, multitasking the in I distracted

some created So some I base know could some we touch we get potentially some is the your other through, ongoing if this. hope, went. for you potential inflation, of oil Or and in some that, I haven't on, I of right I slack year. of now. base the that heard upward does And But think any easing that degree of expecting? crude was on in relief? and already crude still when why anticipation, some we in is it seen words, anticipated markets outlook relief there pressure give understand that? tension, regardless to for does of of a terms what exist? you're In that any consideration conservatism of there get this it touched disruption expectation the midway sat here And answered that there apologize through midway the tightness was I would idea kind the But transitory on, you question last oil that the where

Sam Mitchell

big impact hurricane. the the was Yes,

So long-term was to we that supply. we the fall, we oil that base And went hurricanes base could and spot that based care prices. to we oil while while noted, The between possible oil our impact thought did relationship this make crude base customers. a a suppliers and in to market of push kept the took short went relatively as costs sure as decrease there see started the other really of up market we our on

the suppliers market now so increases. are the up, with And crude seen crude the towards in as announcing oil -- we've moved shift that base the shift has

cards. plan I so is -- a the And decrease that in for see don't oil any base

So factor to in making to adjusting prices oil take in we're higher action base prices. sure we've appropriate got

factor fall. should XXXX that oil secondly base we've disruption to is in from be a base happen being part into turnaround an might obviously the hurricanes certainly was in -- we'll oil eye and the that first of in crude disconnected on as what's and But in prices. So what to be XXXX as certainly, the and our guidance provided market we the happening in. crude a keeping that the tied all, XXXX, that get this as indication in factoring in -- not And as close was to

Mary Meixelsperger

we in of Also a offset Jason, mentioned executing moment out the inflation a another increases. remarks. price that round then cost already increases And guidance modest ago, that we've begun these the to as as just prepared indicated we keep mind assumes of in Sam put amount already anticipated

position So 'XX. we pretty we fiscal start a good feel like we're in as out

Jason English

transitory totally sounded fade. had sounds issues, we those like you're fade followed transitory it I saying, And one No, it like another expect to don't transitory got issue things by and but that. issues just

Quick real the Lube and The let growth mean, you congratulations on X is obvious, there is mentioned engines. I me so -- momentum quick, success. business, core And pivot its which

looks industrial business, consumer International of some more see you build consumer-facing far? the where business progressed was other efforts out to have so and today in International; like what The on you of consumer, growth, business, try growth terms substantial particularly engine of versus can that how mix to contextualize and your

Sam Mitchell

good industry trucking, both includes internationally business mining, more heavy-duty gen, supporting strengths for When markets, equipment have we duty Sure. too. both and The lubricants passenger is heavy that between power We in but certain fleet really look huge China in the a car example. balanced both our in North some market, America. side also on we where And start joint in and venture expect significant consumer on China. I'd to to the only second see business a light-duty through heavy-duty is at have we with side Cummins. developing growth, lubricants with stationary

on innovation markets on we a closely the competitors. the major versus is performance but significant more success noted, also relationship, in both And to growth basis. and with that a based player is really OEMs. heavy-duty heavy-duty Cummins which product continued global a have innovation the the saw importantly that side products the financial, advantages develop us on technical I really key And As on gains side. across is product the to regions, working enables

the we these a seeing so fast to puts in of same in to distributor our our developing have the front. that lot garages to and And right having is the great in really markets build And making player installers as business good us got passenger we of Valvoline market. we're in heavy-duty our But build develop relatively the we've network, the a we markets. In developing on progress strong position distribution in distribution U.S. some partners as that, we service a markets. and product a the that developing the tools the emerging in as bring we're success today small car, lineup, And a distribution. network growing leverage

bring approach, profitability that have how And installer the help to be successful. same enables that shops tools we of Valvoline approach improve that that an of can hands-on we so their

is business the is brand, So our developing component Southeast consumer a in in China, brand and primarily become India in marketing important, strong today more too, more Overtime, our efforts important. like India. will Asia, developing markets in to that. two-wheeler of growing Valvoline is India, cars we as grow it. market, a advantage but the very market passenger for But market, be first to to heavy-duty take well-positioned call begin we have going

opportunities chain hard in and and America the is across Latin So been where Asia, some all teams our Valvoline's are very recently. in supply markets significant really working made even regions. the improvements capabilities key Europe, International our we've really answer We've developing like nice

Operator

thank concludes we attending this may queue time We'd like And disconnect. to for this And you to questions today. now you and further no conference, at time. today's have take in

Sam Mitchell

All right. Thanks, everyone.

Jason Thompson

Thanks, everybody. Bye, bye.

Valvoline (VVV) 10 Nov 172017 Q4 Earnings call transcript