VVV - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Valvoline, Inc. 2Q 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Sean Cornett. you. Thank sir. ahead, go Please

Sean Cornett

X:XX file Christy. available viewed Good fiscal results Valvoline's release Officer. we Form These quarter release, of A and at SEC results welcome Mitchell; furnished With the are XX. copy yesterday, And the a today Mary this our conjunction morning, the X-K. conference Relations call with and and presentation XX-Q to approximately Chief XXXX, me Form XXXX Investor at Securities XX, call Sam until with released should ended and Meixelsperger, are to website Eastern and Time investors.valvoline.com. quarter April on be copy preliminary of second remarks has March the our Thanks, Exchange Chief is Commission. p.m. Valvoline's Officer, in webcast. for on Financial a earnings the on press which Valvoline been that Executive

X, remarks A adjusted may presentation information amounts use assumption understanding of are as nonoperational statements. certain date any are a on to in not current approach These discussion the on believe As restructuring forward-looking ongoing shown this We results other presentation based of be measures of key forward-looking are are similar cause The used business. on today be statements. not discussing to to required our in results to and will by this by adjusted of exclude companies. of of items, provided actual that non-GAAP GAAP Appendix. which materially from an fact In non-GAAP measures differ this our such included our of subject management unless used Slide statements law. historical by statements or and comparable and reported reconciliation that are under management's risks uncertainties any forward-looking is and our in is Valvoline we remarks, the results unusual, may obligation otherwise no unless basis, Adjusted the assumes results our noted. enhances to update of our statements nature. presentation, and

If review our the let's for quarter. you Slide turn financial to X, results

second income of $XX $XX related to business were a delivered debt operating after-tax quarter million income OPEB the pension and of senior XXXX Nonservice The reported million. fiscal $X in activities $X.XX. million. insurance of and of million net the flow Year-to-date from million, EPS $XXX Valvoline quarter, income of expenses retiring of key For and was $XXX items operating recovery issuance notes, new after-tax $XX million our and interruption cash

Excluding million. $XXX for EPS $XXX included key results free adjusted of of and Year-to-date adjusted cash items, $X.XX. million EBITDA flow quarter the was

results as to to our detail. we turn X, let call over discuss Now operations me more Sam in the to turn Slide and

Sam Mitchell

Sean. Thanks,

QX in adjusted and exceeding large of results Sales expectations the accounting. were year. and in increased excluding Our and quarter, LIFO of grew variable first half unfavorable inventory our the and in the part outstanding, XX% XX%, compensation performance changes an by EBITDA exceptional fiscal

that Lubes generation decisions broader improved of macro our more hold, economic an including by growth. from model the We're where QX service-driven supported the than products quarter, first and cash a to to business reopening. shifting business. contributed benefiting we've from to We as takes strong our strategy Quick also environment, of our made stimulus of benefit continue EBITDA adjusted half drive total more was

at flow representing $XXX confidence our now free year midpoint and top outperformance to $XXX million. roughly high-teens strong the us to to far so $XXX million and EBITDA We the guidance. and gives expect Our adjusted cash XXXX growth raise to line million, bottom growth this be be

growth inventory sales had LIFO accounting Quick America in excluding QX. top-line growth next Core EBITDA growth impact. slide. and each the range solid XX%. in X% had adjusted adjusted the and improved Lubes North mid-XX% across lag, all to in to segments the price/cost a and decline top-line The of saw Turning EBITDA International roughly due

Let's an outstanding had more a growth average discuss on slide. in more was the detail Quick contribution XX% Lubes from next Quick balanced sales quarter. ticket. Lubes transactions Same-store and than with

Some of of in COVID-XX to is this second related of growth the half the March. impact onset last

adjusted maintenance growth, more normalized X%, drove model. with performance strong grew unit marketing combined overall increase driven growth has increase revenue. digital model, produced safety-focused, service our XX% of Throughout an impressive Same-store margins Quick Top-line our by generated results impressive excellent execution pandemic, in same-store performance EBITDA, a XX% and truly a a performance. our due in-store sales our improved stay-in-your our car the sales exceptional by However, nearly of and than team. to convenient, growth preventive business XX% in Lubes our

include rotations, like same-store array slide how particular maintenance and wiper filters broader cabinet exceptionally system ancillary offerings. services Let's cleaning, services, component It driving blades. that discuss preventive and turn to tend services to carry fuel strong our OEM ticket note from to margin drive non-oil or sales important these aspect of battery ticket. items These wider to service our is that is of scheduled contribution. to changes, we tire change Key growth NOCR next the One of menu is store sales. pay attention of maintenance revenue

We growing NOCR. continue ways on to of focus

our batteries chain and store year, of our right a use to our for expanding right relaunched stores. in company at the process customers. of we matching last battery time. a for to our We sure franchisees. in the the to are in the result rollout We first our across lineup near supplier we at December also make inventory and understanding have stores to place the the the been As the branded branding supply This battery different capabilities penetration example, that service battery testing invested has change change access health The gave program. completed employees in in better year. equipment product an of in as our moved doubling and Valvoline, us we improve We

XXXX. of we a result, to expect in growth be an As this important service NOCR driver

services precaution, and cabin safety the year. continues in early a air We've of grow of revenue filter of COVID-XX. suspended nearly a up reintroducing average currently second Non-oil stages in change expect ticket we steadily half to As to over XX% ticket. solid the them makes contribution begun and the time

customer We to important expand expanding rates have tremendous growth to these base. while drive penetration opportunity and of a NOCR services our increase ticket

give attract same-store the current next data ones. and revenue. Both long-term look our other customers and had our guests we and service synthetics focus their have a combined retain advantages at a history shift with our the in through to of same-store and OEM us on in educating vehicles the years. strength grown and drivers capture day, services strong, our of over ticket we sales We to oil our builds to per approach, customers on recommendations. success In power, on the transactions, and trust changes and, last the allows Let's change marketing the leverage same-store of non-oil grow mix the several We've our sustainability average share. multiple gaining that model, what confidence on at slide. contrast vehicle the This traffic that CAGR an sales The growth. sales. transactions we've drive measure need pricing to digital same-store the levers us of based with our new premium drive healthy competitive reflects analytics upsell have to customer growing This X%

North in on North America's next results review Core Progress the Let's America slide. in QX. Core continued

have accounts. We through passed cost increases material raw our to index-based

phase the have call. to accounts. earnings completed increased since successfully material Raw We have negotiated of our also first pricing significantly QX costs

and accounting. also lag impact short-term from While caused the the was price pressure lag. will inventory Unfavorable of segment A margin we a significant QX, price cost in decrease execute increases the price/cost in of decline LIFO component expect EBITDA. we QX

progress shelf traditional good in stores, Excluding from Growth C-stores, coming profit distribution, retail year-over-year DIY modestly. driven. was online. We pricing We're and pressure. both up significant and and more gross hardware is DIY historically. cost in slightly, underpenetrated been saw was space adjusted growth outlets Overall and to up channels. making year-over-year pass-through channel outpace farm EBITDA down we've new from the continued miles volume continues progress was impacts, gaining despite where in X% in volume LIFO

Our merchandise our and focus to in Innovation, strategy. the brand. DIY category partners is on is in market working our a with synthetics, of particularly retail that part key

example, we introduced For recently gear for synthetic our oil. FlexFill packaging

are and demand FlexFill than received and sales is strong. in further Valvoline gear DIFM and consumers and feedback In recovering the early transmission oil, strengthens brand number results fluids our is DIY. the in position. one space, slowly have We great more from customers

customers installer our helping on remains drive focus value. Our

long-term renewed customers. demonstrated agreements key many by fact the Our have success we of that or extended our installer with is

continue business, to also to outpace miles volumes continue new driven. We win our and

to are recovers. well We see positioned market benefits the the as

market on The International China, XX% our year. driven share new of results largest Let's the the to the slide. quarter by led and delivered another growth up in which mid-to-high particularly distribution, growth by and Top-line Pacific gains. led all volume range, had volume impact Asia last COVID-XX Sales which in QX regions review were QX. across impressive marketing was International next and in segment programs

We're conditions -- expanding add closely in restocking growth growth Raw both India we and new and the and expected rising by other Adjusted JVs. COVID-XX in impacted increases cases to all In continue and of market parts across coverage. continue affiliates volume COVID building channels improving in QX EBITDA XX% distributor of market regions, driven Asia. all general, We cost impacts. to of regions. impacts and distributors strong monitoring saw was material are some

term to increase margin expect in to work pressure near pass-through we these increases. as the We

one countries, global training in programs, Canada platforms, programs A supported channel our March. take professional element key international including development next volume brand building our marketing and place brand of proudly quarter. XX our and our building U.S. drive program, a across building pillar strong took the variety the of growth the look at service On those efforts awareness essential as let's shops. with helping is focused In Valvoline more our growth elements a the than brand in is closer and all promotional mechanics slide, that Along helped focused to a manages going. mechanic and channels in the visits, across materials in help done history. and work our The Their signage workers multiple through the direct our engagement mechanics were need and recognizing moving with of customer model. has key month recognizing world in have program month mechanics including which of a event significant deliver end, mechanics record volume of campaign on the as COVID-XX. keep as March. kept saw XXXX throughout to international driving in critical activations well efforts service The economies retail on with

Now our let to financials. over review to it me Mary turn

Mary Meixelsperger

Sam. Thanks,

along half Quick for Our Acquisitions and and was up are EBITDA and impacts. cost year-over-year underlying XX% joint increase primarily comparability. adjusted better variable pandemic. Most the result a comparable year growth acquisitions, gross LIFO results This ventures, driven business $XXX a by The declining resulted in contribution for result million. XXX In by reduced by was just year Slide marketing increases first in better on basis impact changes driven basis adjusted in inventory primarily to with sales primarily foreign the Quick noncash comp We exchange have was year, to accruals time. this million and for approach. segment increase from decline from XX a important in margin exchange related of accounting variable understand the point material favorable peers QX changes, is use favorable the was performance and and mix, year-over-year last a SG&A The EBITDA inflation, remaining pandemic, $XX to shown accounting which global of QX International growth. as unconsolidated impacts increase significantly FIFO Lubes. the points compensation sales of risen higher Year-over-year due added of believe to over adjusted were XX% The the year-over-year in changes excluding in in foreign LIFO raw SG&A the led change. our in in growth QX, we advertising last and in top-line driving Lubes made to XX.

adjusted XX% variable LIFO compensation XX%. unusual and EBITDA the Excluding adjusted grew grew and changes, EPS impact

XX to and cash sheet to the Let's Slide balance move flow. discuss

activities operating We CapEx continue year-to-date with cash to of cash from generate strong to flow flow totaled free million, leading million. of $XXX cash $XXX flow $XX million.

focus repurchases. while priority to were lower expense. costs issuing in and of of the defined in and debt capital QX, business expenditures and QX allow returning calling cash-generative for the been investments, growth-related $XXX costs the $XX to year with and our well. allocating interest million these flow, interest In our $XX quarter, its needs would returned our new in longer-term we in nature cash less Interest discretionary to as notes, as to Our million We self-fund which last CapEx, is including bond refinancing leverage expense transactions, related senior our of shareholders. cash dividends was part had excluding of operating share the redemption expense, million capital. million maintenance cash notes maintenance of have highest $XX costs gross Net each form quarter. associated $XX reduce XXXX efforts also million. growth on was our and year-to-date XX% us capital-light The

slide move to next the updated review our Let's outlook. to

guidance. to combined on and ongoing of same-store performance in to store million. is both performance, of $XXX profitability generate to adjusted to growth XX% expected and our million and half of XX% $XXX our strong outstanding free sales the to the the growth and to EBITDA expected anticipated expect strength improved of first results QX, low same-store range. $XXX raising with increase projected EPS and top-line $XXX drive to higher in $X.XX, earnings, taxes to to International, growth year-over-year cash XX%. XX% are lower-than-anticipated of cash in to normalized metrics Strong sales conversion growth in to $X.XX million of flow for anticipated flow-through mid Based sales mid-teens now The XX% We translate additions in This increases range. adjusted would we overall which cash generate million is are X% to

let Sam over back Now up. to me turn wrap to things

Sam Mitchell

gave remain be convinced Based anticipated first investments deliver our progress fiscal growth. of our inflection year point continue that improved far on Quick expectation. we of updated to operations an we or store should we our adjusted and our as our XXXX, in so and for benefits. make half up When outlook Lubes for this guidance, more EBITDA to growth

the and Importantly, high-growth And North to drive At the becomes cash businesses flow capabilities the for across open brand in our generate and to This the as profile biggest in it company. Quick continues well same to deliver confidence it functions over Q&A. incredibly segment growth ahead. generating Valvoline innovative team strong enhancements turn in us supply in International. we customers. the the in high-margin, building Core growth well. America Lubes' the investments solutions and we to gives to time, to growth bring as working are With that, chain that continue have Sean I'll years and The right line high-return back is plans

Sean Cornett

Thanks, Sam. [Operator line. with that, Instructions]. please open And Christy, the

Operator

comes of question with Jefferies. first Your from the Alexander Laurence line

Laurence Alexander

more and then. caught And business ones quick core you be two of -- it of little in down business crosses difficult would if talk the a at a known longer-term you international up of tech point? the rate the pass-throughs the revenue bit see guess for material secondly, in of little a I your does heads? morning. the raw both on perspective layer Can Where the And you become change give run fully target EBITDA on current it services? then slowing do Or CAGR for mix pass-throughs? a can sort give certain Good sense JVs? you additional the after per non-oil bit to

Sam Mitchell

Yes.

of four quite I months. the noted, cost with increases, the have had oil to First, base over been five significant. last cost We've regard each they particularly to as increases Laurence,

progress we price series be fiscal a And so we of we'll to in the through that taking is year accounts, as both negotiated International. increases the the what and see U.S.

the will And period. got promotions more so fill summer recover spring throughout the lag to costs price business, we where expect impact scheduled in retail those we particular, we've and in while time, the a DIY in over channel,

the So protecting are that we momentum on in a volume those timing to which we right between now. price push hard those with we DIY price, have of the how promotions, to important continuing have have increases balance

we impact. our forecasted be do pressure So and we nonetheless, the America, feel in year. when International, some we North look in in fiscal pretty good QX, some QX shape expect a Core take will lag But margins we'll see at unit but to as start we certainly new

you on negotiated installer As volume, pricing. lot know, business, is the of a our of the based particularly on side index

quarter. automatically that pricing adjusts And so every

very get impact lag that on business. really side you So of little the

opposite there. in impacts the additive from supply had February on chain, falling This that's rising feel raw So a some we're crude. part we seeing costs. We'll the effects has and tailwinds where put has that year, pressure, had margin from back Also, year, we which additional Last where pressure perspective. material of pressure effect, shift stand in course, of some oil base of pricing had the disruption weather cost we us.

some we to hopefully, for that one sales we'll have that to is because subside. much the non-oil the the calling one it of and for revenue, of of those lever So focused and change regard business towards the progress driving growth levers opportunity end growth. We drive see that Lube lot of out see really pressures a same-store as on. many we're years sales With year, important a it's same-store very ahead. growth, It's in we Quick

mean some But of I while a really our what there's XXXX. seen that capture been strong to trust really we're we're contribution able We've for that, not properly, which an our customers, service, that teeing in made is I attention services fiscal just are that those results. battery more nice of battery services have pleased needed quite when that we with and customers, so on We're found some still upside. highlighted recommendations I've the -- some investments paying we're in we to. it's with that truly those we've the OEM big present especially years, seeing progression, service. vehicles. particular last would couple because up And there. But a the really early our we of bit of

the OEM is existing that combined the our that with we've maintenance it's leveraging key we driving effective growth in base, -- to lever presentations customer technology, leveraging the time. history, this service penetrating that investments vehicle strategy, with made long-term powerful so with a for the our have ticket better And vehicle's really understanding recommendations, over combined opportunities

Operator

Your from is next line Gutman Stanley. Simeon question of the with Morgan

Michael Kessler

Hey on guys. Kessler Thank taking the for This Simeon. for is you Michael questions.

Sam Mitchell

Hey, Michael.

Michael Kessler

I First the about morning good guys. ask wanted guidance. -- wanted guidance, I ask to the about to raised hey,

relative I outperformed trails bit guess, QX of a the Just, how magnitude expectations still in guidance to the to for the our you increase industry much and to guys QX. little

your as on I just that, have as little the maybe to puts the America back takes in earlier So should to ask far for profitability, quickly expectations year. bit some It half. expectations the a has the more of side. But kind than uncertainty trend want seems and like continue outperforming you about better probably Core North

just about are back as to as kind way those an could far right going going of to if Is the think you Is half? guess? So you. that how there I that, Thank offset through forward? talk the implication

Sam Mitchell

we the is in is half guidance. of from strength the the of the importantly, No, that a continued it to the lot strength first Quick in Lube Yes. most year. saw that we're And And pleased business. raise

Quick to of we so second the business in fully And Lube expect very half the perform year. strong the

carry we sales momentum a saw of QX in same-store basis the being -- we're obviously, that growth the even normalized So into beginning QX. double-digits, that seeing on

profit growth of biggest International It's our that driver. too, been though, outsized couple business last the is note, that quarters. over delivering the important to has So

side, is our that strengthening building our channels all investments and in across And so sustainable business to our that on to future. is making strengthening that about distribution, been growth into we're a the capabilities the supply deliver we're building of market, teams regions us we've excited our fact tells seeing chain going some this growth the our that of that that the

However, mean we the think benefited up. recovery do back the we exceptional. there was And to top-line I building some benefit growth process, where COVID from is inventories

performance. in sure contributed growth back to the the to same International So into but I of business at for rate would half year it continue first expect the that not the the half

And guidance then. back to so

costs International strong You've Lubes. are a from got And continue the but across North be business. then will Core lag very to it coming little that price feel because impact Quick performance a good, company. material bit product rising will to truly lag the execute we'll be as will the and bit half the But phenomenal just back effect of America up some all, in year. for feel pricing more all a year price in we adding raw challenged

Mary Meixelsperger

Yes.

I we with in that, monitoring increased to year. are operate some International where COVID as strong thing we're additional in that incidence the India, parts of seeing we expect well joint would that as of the some of And Cummins in other carefully we is Asia, business The the half the we venture have add back a of where pressure to create segment. within Sam, some

in other negative for of also some able concerned us we in we've able get a of has the the to in of So relationship the of a of and in about this parts incidents and our they'll experienced guidance. here And back U.S. see in that and little the that ahead of certainly year improvements to be the our India to rise their hopeful that COVID seen and world. are teams half be terms outlook bit

Michael Kessler

Yes. to Got ask India. about it. I was actually about just

as far and question for well. Lubes guess mix one is over from. thinking EBITDA where Quick on picture, thanks as longer the coming other about addressing guess, more, I So as that the bigger time term I

a next on a of guys updated of for going you being of quarter three thoughts Quick generated saw high there really the what years -- couple any the of mix we as any could kind changed, target by where I a that the how as Lubes to now, out majority has record have thinking as call had kind into think with Lubes? Is the I next this two year. Quick think Or in far there given years? go

SamMitchell

news trends The that Yes. that definitely we sustainable. Lubes, see is in they're good we that Quick the feel

both just value long-term tremendous service also share. the And care as and it And market stores. to how customers year adding three franchisees so more in been with this expanded to building sure the to of stores. growth, we're more with ourselves That's to adding we more that more and got stores. performance even store continue we've growth too, new and important programs, make same-store we're they're of they're in our for And leverage to the business acquisitions XXXX, And bullish significantly then making in We've those sales and reach for their on one. We're working positioning opportunities number we there's on investing and levers where how capture the adding growth. relates contribute contribution fiscal beginning and an customers build our market share by households.

good, So long-term confident growth we're very looks and in that.

We forecasts. long-term look the are on at updates providing in near future. that And we forward looking to those

that helps. hopefully, So

Michael Kessler

good Thank the you Yes, toward it does. much very and year. luck

Operator

question Benjamin Truist. with next the of Stephanie comes from line Your

Stephanie Benjamin

the back half just from America. year. Core just through kind your a kind you question. of North walked margins the in of to you Sam, at unit expectations I And earlier as thoughts margin had an confirm for your follow-up I of quick And wanted look unit

year base to impact, the way So rise four sorry, target, fiscal mean about see call XXXX. or I'm margin we -- fiscal -- seeing I the lag it? and just early your to with to price Xs, the really Is in just early we're oil until high XXXX. it, that really that next Is low given right early return that think what shouldn't

Mary Meixelsperger

had changes, significant Stephanie, America Yes. the more if compression, high think said expect in in the base look the terms impact short-term be full forecast half to next yes, in the the recovery the pricing into back will Xs. we'll from we've We we're And of the the lag of business. year our going LIFO, that. noncash our next months. we're to here half But see without North on seen as be over through first than six lower impact, get you the recent be a in difference the that shorter that year with to Having costs. decline impact, the impact the at actually impact that, in in increases it year, that we the expect costs versus back to this LIFO high Core last half, in of seeing which LIFO excluding this be given increases the But it of a significant given year, year we're term do time margins of the price/cost for that in excluding margin last see LIFO a year, we'll oil the Xs. we the able with

Stephanie Benjamin

gears, to and on you're the underlying switching that's thoughts hear both in seeing, really And industry America. growth love And your North then some I'd helpful. that Lubes Great. of Quick

think America as in growth. in Quick you called Core business Quick think what's out growth So on there at North And overall how think sort comp that you how market? how North Lubes. channel, the outperforming industry well your Thanks. Lube if as the the low of in as more kind basis? on just Quick double-digit kind of normalized also you then could going with to has You pandemic? your I going frame America, compares Lubes, from what's you of performed? the particularly With looking a is forward the Was industry lap And favorable think you're just a outlook March Core of another unit moment? Where at DIY do quarter you

Sam Mitchell

back and that Core over Yes. North terms I'll our demand America, steady impact address the Core results, very in solid. like Quick has remain Lubes. overall year category pretty North America seen COVID first the too. we've past And in in come to But what been and seen DIY we've of is that

line And that's off the miles with probably of has that's demand really been DIFM been in where on then the pretty side So business, installer encouraging. driven. substantially,

driven XXXX, So last versus if XX comparing go around back normalized been to off you miles over XX% to look months, if driving the example. you has for

definitely outperforming think, terms think the the benefit U.S. has that. But has of industry, installer so improved traffic. that in begins channel start will and industry And from to I as overall improve driven the We've held we miles to segment felt been up. our in how volume

some XXXX. into create the back start half and growth consistent And to more installer see channels so in that of in will opportunity to the year

America in driven that's much we by terms with of installer, more. healthy like been versus is miles North So very see how DIY, which Core of influenced hurt outlook has, again, course, industry the

share Regarding growing obviously, though, time. some Quick we've for quite Lubes been

so same-store new been model look And they at that where off have. year, we to than look in sales digital past we're digital Quick it's the are at the Lubes, that attract when the past within to strong to people our And year, our has our productive experience new get that taking because to addition pretty better. business outperforms -- And of the certainly we marketing investments industry marketing customer average trials I we stores continues data we have, mean over in Quick you counts the and to you the ability traffic, have the our and a yet When the Lubes. in really at loyalty traffic car this benefited -- share. analytics XX% be capabilities, that competitors more XX% behind it's really the And we strong continue we make substantially. when up, stores driven our roughly customers, look been our it's but performance our miles

then footprint that market adding share of existing keep on us of combination that top our it's so within that, gives the stores. ability new to course, the and And driving

performance of convenience. so to good Lubes more attract and as customers ability really an for the consumers Quick more look there. in And new and a position We're

from of Our we're -- growth, is the industry. break -- at yes, from Lubes, coming new DIFM much capturing down when competing customer look we other the but it Quick broader part

past that tire our of do-it-for-me business. repair, good DSMers, car over oil in DIYers share shared out in become includes dealers to about X% capture really that as that from and there. changes market the only customers shifting is the We we're So place and a even

market our of the of of we growing that driving part revenue services big households. more the share, a benefit presentation talked non-oil-change strategy in then, And today. is about reaching so And that the course,

positioned dynamics to with business. exciting well this it's how So we and the are see

Operator

Your Secaucus [ph]. next comes from question Jeff

Unidentified Analyst

Thanks Or oil prices? very else. a like $X.XX the current at everybody you at your oil It but movement guidance? week, this base base read much. how incorporated do in in up of Is not looks prices that Motiva, went gallon

Mary Meixelsperger

is depending costs see Hi XX% to ranging XX% we've Jeff, me, to considered appropriate that our our guidance excuse might the we see $X.XX the from the -- recent with in to an good even raise from oil on in on And morning. that base -- Yes, we depending increase that $X.XX, impact believe with change relationship change. did guidance. still we it's we that And grade. that provided, --

take And quarter. end toward all of might and as next our little quarter it's pricing of likely of mentioned, guidance, impact Jeff. a longer Sam fully an but first toward that the us year, into in considered So of the is through to terms updated our get fourth have -- our our to more it

Unidentified Analyst

the I or your you last when Maybe see waterfall a material element my in multiple might say charts, Okay. you look bought the EBITDA? stores you raw I question future, raw was then pay But materials that? did like you is What did include And for that. at And XX Texas. of that? where don't this what in

Mary Meixelsperger

business. by stores typically a announced believe that we range can for We we company-owned strong to transaction that sales us to across the that substantial was a stores. of marketing opportunities franchise return across multiple company-owned there's strong mid-teens really our And high-single-digit concentrating outlier. to that we and see kind market price market company-owned presence. been stores we XX before do And It most in deals from we've in in a field leverage a in pay building outlook. our the bring force typically last recently We investing to the company-owned where synergies Sure. convert a

the from So to the as on in question this And well we waterfalls, volume started your is well. Jeff. mix related breakout That breakout impact those on consistent LIFO acquisition lag most waterfalls, waterfalls. recent with impact we as to price margin, primarily that's margin the and on cost first the

Operator

Chris Crespi. comes with Monness, Shaw question line of Your from next the

Chris Shaw

because extra you just be Or out sequential pockets? people non-oil money -- stimulus guess, sure spending the that? from the did -- change do piece ticket, that have I the any I the Do the any you just out, ticket you curious. thought they to to that, the I'm want and, parse just any piece I higher you got able or do little checks? change in on you maybe same-store might much how more be sales. so around if I sense -- of mean ticket, you non-oil figure actually improvement but in a benefit have have would how work work their not sense

Sam Mitchell

are non-oil wasn't to great a that understand a non-oil different impacts in ticket change sudden, the what regard it on pop how we benefit it's And that like they we've dependent seen it's With pretty with afford effective progression. there of consistent the do we are people revenue due that, No, Yes. change has a we and and big more like services. customers services And presenting We try all more performance to question. been. our steady was the felt a how revenue, think for. are so though, could

provide both traffic. and in it's with more overall January April that a said, to That control. the think checks boost stimulus our our we did in So in

it's And think so helpful been we to very us.

past four driven the last right roughly improve over beginning or X% the And to at being we're the to fuel the miles But so if at now down month, months, so, down of X% I over look range -- the we've and looking XX%. you cells been XXXX. in the we last mentioned weeks when health or XX versus X% consumer think about

normal. this to think some busy miles hit I X. holidays summer, the to of road we're and always driven seeing that Day close Memorial people So I before driving think look of the to And as the return July pent-up demand -- we're

volume to I our going exciting that's their think summer. with coming to for this way and the be it's up keep challenging particularly stores

So that. about I feel really good

Mary Meixelsperger

would other out strong even But do certainly we is we we think see from continue consumers add from checks, further those the I saw stimulus. really thing move Chris, benefits momentum. as receiving to Yes. we

I incredibly strong think our So and combined do with really and service when there's satisfaction drive the customer is miles marketing continuing demand. effective our the to with driven convenience levels impact reopening,

Chris Shaw

taking driving on things. I a upcoming of app? pretty your Thanks. robust. the being couple at -- forget can retail the on season Maybe commentary wait One, And still Sam's you times locations

Sam Mitchell

Yes.

place of wait franchisees. the now. before it which the So be a our the provides program now the been time that is they for store, app, consumers all company has see And come in stores. It expected would to the to past opportunity rolled for what has to our year that's

So timing consumer now, their they of store closest can are the in to or a consumers store. see wait be times decide a miles has the of trips that to of what time, wait they store. download fortunately, can the all benefit there, a even has might direction go app lot those no to There's down road store may target store the of our they're XX-minute to and they get a the wait if that of time, but across to markets, before another their couple them that the decide course to

in works the it actually times benefit, of So demand, the spread to too, busiest day. helping particularly during out our

nice real rolled We're the benefit fact whole a there's it's that excited the across there. system. about now So

And on traveling. bringing as convenient as that so this the transactions bring more of use the still to a and for app we process customers in with value the to app more the app, for consumers we're more way

some tool So in to new and exciting hope years the we on progress really report us, an good ahead. it's for

Chris Shaw

If in a a What's if Or a in a another franchisee location either or you location? days you the easier up strategy? are wait Or you? your market or just for you through it times at and add add could, a you strategy? yourself? is busy Do location would get really what's lot, certain

Sam Mitchell

customers. a Yes, we us that our capacity have they within top-performing -- stores it's existing more -- interesting in handle show of that of they some lot stores; our they're to

you the compared an of under into So of they're the at day, overall system-wide XX. XX changes stores, average doing quartile say our the when look so that do transactions they oil per to number top just well

stores on can some capacity of the very also plenty see there's and well do top-performing in And both stores. So we that ticket. transactions of our

both. on and that ticket we're focus That in matter of there's fill where and we opportunity. add services. not looking We these do a stores other can volume it's said, So over to

that the have an we And where the there's at so high-end that know you that going neighborhood, stores opportunity are transactions, where market expanding. store to -- when typically, add to be of another has in been

plenty stores to and opportunity, there's opportunity add So us market. to the of continue for penetrate better

when overall of comes to We I have really changes. have oil it share As the mentioned, do a four model. we do-it-for-me that best only market

these better to add pace so And when above for invested do us we've growth. more And been potential of and growing model store, gives that stores where new terms we developing reach we steady and its well do that household? -- average so in a a so how and very and at estate more that we sophisticated store the being of confidence real a we're add

Mary for and So opportunities those which, and their historical opportunities, of making talked been in the sure as at Texas, course, filling investments we've corporate and been are our about also we've with making markets working making fill-in significant. looking those we're that penetrating on markets, that new too, investments, we're like franchisees those looking

to acquisitions adding, adding franchise XXX we're be We the to the that than -- stores and growth XXX for new made. we opportunity year, opportunity every us. be combination store think, that this builds, stores of to of with want growth -- high-end XXX store the we is new gave, this a So more the I guidance year, at the long-term going year. We for we've

Operator

Wendy comes Nicholson Our the with line from Citi. next of question

Wendy Nicholson

So for and Is structure? how morning. it much good of us first for venture Hi, things A disproportionately That's how remind about the there, Mary, you? India should India. a my we couple profitable Can if on follow-up is just get you question. questions. worry worse that? given joint you big

Mary Meixelsperger

provide overall of XX% historically, contribution. about, talking don't mid-teens business, specific overall you we profit -- detailed to at look But It's the if the Sure. disclosure. international providing India we're

overall to business. International So the contributes or XX% so overall

a but a continue dollars of there the of the And can because incidence if there. see pandemic to be percent, million it of few rise the so it's degradation with the smaller we shutdowns

impact not material. small but So it have could a

Wendy Nicholson

Perfect. Perfect.

Okay. this you. then is Mary, And also, for

still do on on wondering But just incremental you a of normalized that abate cost? terms VIOC and expansion In are as the I can people to see -- I'm vaccinated? big a of are basis, we away? you that PPE, extra get keeping great of a job better just fades safe. how but priority you much trends beginning COVID they at look kind even or get as margin spending margin of business, as spending know people your the are good, maybe your elevated some

Mary Meixelsperger

the related of quarantining the We've Yes. improvements substantial reduction of already because to some significant the seen in spending incident. COVID in labor

to be around. think And expenses been were to we right as substantially with it's us, our have the who in ensure teammates PPE safe active in abated. Wendy. That certainly, eliminated. to see that, for a of and incidents. -- our had and labor been the tested any year, thing had someone said our continued invest Having be we long we I to high customers moved expect unproductive the employees costs paid had teammates there first as for talked people We quarter exposure our COVID to to priority quarantine teammates. do that our continue as continues if ultra-cautious that operating positive a last it that's we we has to about to unproductive Keeping part substantially very So those ongoing labor. But and COVID

Wendy Nicholson

risk sorry strategy NOCR six the on marketing Come "Hey, driven So email you've I has it's think months," Or part Sam, expand historical away we a there But for change been oil side heavily oriented offer broaden heritage? get or, can, many. I change from you you perspective, from the of back the if walking that asking how to message of oil probably the marketing in." your "Hey, or things. that? XX,XXX Do much been so then miles. I so perspective mean out toward business, we know, has opportunity been like, far people, from historically, more"? And in think sort there's is a to an too that Terrific. a of the marketing "Hey, really Just

SamMitchell

have we customer our existing to very much because so base Marketing Yes. sophisticated data. is

in We they have travel. their miles service they history. basis. We -- typically for oil when or basis how come time know changes know how many on We a miles

customers, with in. they we presentation definitely the those for And regard market the to they're when due up to them other so with for loyal services set so that kind come them helps and that of

happens OEM service then cetera, recommending the reminder XX,XXX what every they et is receive that workload about, need miles. as their are cooling But XX,XXX, to service the it. that their they store. that And why presentation system will provide not email So in appreciate that may they'll we [ph]

our part marketing it's of So program.

a that yes a that money at going service they be to which saying there'll back them course, too, tees that Valvoline, getting attached of of up for going service, again taken dealership. versus Of kind to care are discount save to to where typically

attracting to around more communication marketing that them the overall Valvoline new So stay-in-your-car our to marketing service. the comes maybe in about have our service is When our that ways with approach. and benefit savings part ticket try convenience initial of of is it customers,

the making toward them on come message reminding customer in existing So the also to but both it's transactions, time the have they services. geared sure is base whereas that's more other

Operator

[Operator Instructions].

question of line Harrison Mike comes Global Securities. the next from Seaport with Your

Mike Harrison

Hi, strong good quarter. morning. Congrats on the

basis we service? but like compared Going that's to something offering, service bulb Does a change as of I the that. change margin that margin as dollar light percentage maybe back suggested? bring for that to think or Should basis a you service dilutive on good battery change maybe expensive more that this being that relatively more filter a specific think more a attractive it a on of still or

Sam Mitchell

both a margin, on a really it's on basis. strong and basis dollar contribution No, percentage

particular it you They like understand to though. do don't -- people attention pay is So it, said, battery. their

in goes have their batteries for of green, so equipment, investment degradation so that will or that we progression making we available we're battery their essentially to our in every service. transactions from, Valvoline provide red. say, made replaced testing battery yellow equipment four And be to improved And customers their the over think us five And that process that lead the of to which only more sure see know in to to it's years. time, when stores, customers battery that's that our we allows

this a excellent And so opportunity dollar we margin. with high position want to be to capture service in very

Mike Harrison

climate. you tell to, can I it's I attention pay a living Northern something in

to out. want a it's cold have super die battery don't You when

Sam Mitchell

right. That's

Mike Harrison

Other in first the the marketing question efforts. marketing very about in you Quick segments, Obviously, I you've in that either effective or strength retention. the increasing your half has Lube in with been in the bringing the had digital the helping seen year? new is and earnings going marketing customers North America Core given Are of to be your spend overall

Sam Mitchell

that the we've the executing. we're that On place got plans plans -- put are Lubes the the the in at beginning we year front, of Quick

So we're planned. had increase say, not dollars those expecting versus see, to an in what we

traffic marketing programs per what new we've has up that a over If basis can time we've over that us. spending been discovered you as store help drive historically for on look gone

not percent we've investments increasing. been on So revenue has making been of basis those a that

in healthy we're marketing a so really place spend. with And our

the will per revenue. be it see dollar think a really programs. leverage We incremental grow might continue but in should not seeing on increases of I some store as that these case. small We to basis percent get a

what on advertising fact, return isn't generating. within see out And year. where are Quick high these than, we payout the a the that that is return If programs, that's really on investment. -- traffic those say, investment over in In of multiple this spend it's because We typically, dollars year within incremental new different for traditional years. we're the Lubes the space, in paying is look a the

to and The side COVID more the that impact, in the particularly versus Core been with in that in America is the spend, increased particularly of of in our steady business. we've the marketing health. appropriately more important, learn to continuing North DIY yet been been fiscal we're we're we've levels I the So performance to we've you with invest spend marketing helping long-term our side, depths for making if consumer business. at brand And XXXX in spend back And we've progress this and approach the But last is seen that go a past that that that DIY think year. normalized the year. just pleased channel

Mary Meixelsperger

And the Mike, economy our was across year, spending that third all just during kind marketing effective. we hard you, shutdown back to we as was did across on segments, into across the pretty three board, both I'd quarter, be didn't pull very remind of going an that globe substantially last think

Sam based sales, pretty And comparisons, up, in advertising of so a year-over-year on back to for marketing year. But we just the -- says. the we'll as increases what reminder, the of percentage just more balance sure, you be year-over-year, to our of year, seeing a be significant levels normalized look if balance at will for our

Operator

Valvoline conference today's conclude Incorporated does XXXX this gentlemen, and call. earnings Ladies XQ

disconnect now may You

Sam Mitchell

Thank you.

Valvoline (VVV) 1 May 212021 Q2 Earnings call transcript