VVV - Earnings call transcript Q1 2022

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Operator

00:06 Hello, everyone, and welcome to the Valvoline Inc.

First Quarter 2022 Earnings Conference Call. My name is Victoria and I'll be coordinating your call today. [Operator Instructions]. 00:29 I will now pass over to your host, Sean Cornett from Investor Relations to begin. ahead. go Please

Sean Cornett

such Commission. historical for XX-K this our file This website viewed in Good the our presentation fiscal on are Victoria. remarks our X welcome Form Valvoline's note forward-looking statements. with these released the of adjusted at for enhances actual release. as be is discussing to to investors.valvoline.com. uncertainties risks ongoing Sam. Valvoline that Mary business conjunction the We on available assumptions preliminary be like any which our and call forward to and results are that approximately over cause presentation not ended to discussion and an of of slide Securities be which current on on CFO. XX:XX nature. management's the noted. turn Mitchell, items, non-GAAP companies. results by business. results basis and used of non-GAAP The required conference other Sam certain our we to will not X materially In in management morning and Exchange statements is call based remarks, As from in shown quarter XX:XX to call A Please results any Valvoline our copy Time this is slide differ our XXXX provided On I'd key of PM to should results results measures by of amounts are used of adjusted are until February fact under unusual, otherwise our is reported understanding our approach turn GAAP first of These measures we similar and the restructuring XXXX. non-operational no first as Now, unless to are presentation quarter X:XX this date comparable may and December believe and in information a XX:XX Thanks. Meixelsperger, or X, reconciliation XX:XX may Eastern obligation morning's forward-looking and the adjusted this with our law. assumes earnings use webcast. of CEO; key XX, at statements. update today A by unless statements statements presentation Investor we looking Relations and are Non-GAAP to that included appendix. are non-GAAP subject On that

Sam Mitchell

thank And joining today. you for XX:XX everyone us Thanks, Sean.

were Both Products growth this to we had achieving segments EBITDA adjusted mentioned headlined environment achieved our with with chain moving results XX% services We XX:XX and Let's to X% EPS. demand we're forward. turn believe XX% challenges supply store sales increased XX%. cost and sales total products performance XX% growth positioned both in line strong, on gain services. Overall, business the we by increasing growth. growth, performed, growth calls. continue in next the growth QX Global in in same Top sales. nearly strong by for Our to including top segments Valvoline’s sales continued XX% retail contributed adjusted pleased material recent slide. have and well given raw how to We're line share

CAGAR EBITDA adjusted to to the products highlights. Moving this success to and their into XX% segments XX:XX results. revenue unique with delivering value lead the and support growth, pursuing respective bring and have share XX% a of CAGAR year We since We in XXXX. leveraging to each retail well services our separation ability capabilities abilities we're customers, exceptionally expected our The are positioned team. gaining expect is market on continued markets. are X leading we strong each and guidance Based believe that global our

discuss Services on X. Retail Let's slide

Services same-store quarter year-over-year first System-wide XX% the fiscal and outstanding Retail XX% store pre-pandemic XXXX. nearly delivered combination year-over-year, be led growth sales Our ticket. versus unit and increasing increasing to by year exceptional, nearly over line of and average XX% growth of last sales top solid growth. continued was and QX sales by sales with Same-store segment a grew XX% from driven the transactions contribution

results guidance We ’XX. same-store through against as of growth growth the sales in stores. low by XX:XX our to expect [Technical full in growth, fiscal Top expect new Based to of -- year years our XX% we pace of on the moderate QX compare impressive were sales line Difficulty] same-store XX% addition be driven of the began that to our also growth we year X% top range. line

fiscal has the the next aggressively growth. to we with year franchisees fueled the I'm doubled as low and Since the two our our us to EBITDA well same our and with our acquisition that Increased pleased significant XX our both leaves in as new growth units store sales growth mid-single outstanding doing oil of in continue stores. outpacing with work their broader Services growth market. past the X,XXX add strength last driving expansion. increase for outpacing number nearly pipelines, versus examine ending to slide, of the have DIFM store the year range margin change partnership to XXXX, periods will digit its ago, is market, and system-wide years performance room over anticipate we're which well XX:XX transactions, [indiscernible] in months. of Retail transactions Turning over and adjusted of growth. exceptional and future Services Retail delivered store sales base. tremendous the We transaction segment

to quick addition in our develop a teams convenience data well to in our customer positions allowing share. consumer ongoing new well Our XX:XX the us capabilities With and us retaining experience, existing gain spend continue strengthen, deliver. easy predictive We've in-store trusted these drive into to acquisition. to superior ongoing analytics With customers. our models done approach to customers

next drive stores market customers to this leverage to As slide. reach advantage XX:XX can We the add more gains. we new continue accelerating services, future to current we and data. Let's and our competitive more will move share

press have release we've As services we early piloting arrival, entrant a own pilot a earlier both We vehicle and evaluate named first may as on service We're trusted of now before in vehicles. markets our electric package. seen to progress represents as week, readiness previously additional expanding our we've focused EV will battery quick, [indiscernible] and and fleets. that begin consumers an electric service number limited pilot you on we manufacturer. stores fronts. capabilities the The begun The both to company-owned operational focus owners delivering EV on OEMs an partner offerings. this develop in to EV and partner for announced easy service a for announced in-store

sales with XX% superior conveniently our ready We're up pre-pandemic regions. customers. on new Let's to our QX taking slide. purchase The across to experience programs. review done to our delivering always We're we've up in Global customers services on disciplined period in and versus located seeing services Products stores. sales and with in our QX of serve of for results approach focus a the momentum rolling of Global growth a Products XXXX. system XX:XX we'll out continued in fiscal solid year-over-year business contribution technology XX% a the Ultimately, next As we them continue as across EVs EV as be future, the

was evidenced cost challenges lubricants by supply signals We are well versus Adjusted EBITDA for We deliver year, supply declined normalizes. main continue cash After pressure, price opportunities in products disruptions by take declining capture and incremental the solutions positioned solid, XX:XX the growth. base as the volume sources, margin with chain. another raw -- we Like cost Even rapid primarily believe to in at margins and share cash expect last chain pressures the the gain in strong. despite significant XXXX, onset supply flow segment a beginning lag, material experiencing and were free we're driven driven we Demand year many costs impacted increases of oil the chain margins. the generation. XX:XX which from to other discretionary to increases pandemic XXXX. our steady by Let's fiscal raw materials primarily cost and at of look are next in slide. industries closer on as X

to chart continue recover more continued in the the pricing experienced and costs to these continue in QX passing material monitor the expect of to began see this over price increases we've year. several XX:XX half activity. in As cost on through raw slide efforts months market past you moving good and ‘XX have with increases We material second progress to and stable pass forward. costs our We made can fiscal through in XX, raw

been and recently, inefficiencies, inventory although logistics and historically lag, cost environment manufacturing following challenges led As cycle More chain costs unit would at have including normally we impacted the higher a we've a lower these the increased of in customer raw extraordinary typically our to price carry, managing challenges inefficiencies. demand, Our temporarily reminder, than material part meeting job margins. an has we’re team higher in of done and costs XX:XX costs resulted what experience. than but levels in through to structurally improve of we rising by also supply able

changed induced cost and We leveraging pricing, recovery in confidence our success volatility but over on customer long recovering our cost see the strength slide brand has have a extended can typical increases of focus in on with As pandemic recovering time. not our XX. The history cycle, you of through the pass has our our XX:XX service.

using Our We've successful globally. in Products international markets, proven proved Global share gaining been drivers. grown growth at business has share our

and of develop brand consumer then our and add build spend to market, equity drive to and First, optimize to and routes platform a service channels solutions we marketing demand. our robust products

with approach selling enables mechanics, us win fleet and value-added Our installers to owners.

in Duty in to reach brand We our As is XX:XX well our such we've and network. to distributor at and to the our product recover as steady seeing winning significant Global product We're cash Heavy US I'll to cost expanded financial and generate over is doubled in top to and the detail. positioned and retailers marketing portfolio. to and over other relaunched space last shelf a example premium portfolio. Winning supply regions that, where discuss additional have an convenience category. awareness our chain a strengthened XX:XX share our leading gains Eastern India, where expanded in of called new markets Mexico We're and optimizing is and our up China We has our We've adding Protection by recently position product has our and years. markets job proving digital also market farm great Even invested across with in done we've highlighted successful DIY our share that picking distribution of outstanding before, X flow. challenges, Mexico the share and Europe. gains Mary continue synthetic more competitors. Extended Products results in customers, hand We new the outperforming With gain believe share, like supplying things stores. team launched in channels increase

Mary Meixelsperger

Thanks, XX:XX Sam.

Our are on QX results XX. summarized slide

to quarter cost lag earlier. was both the growth, period services continue in supply year-over-year business. ago. chain was Sales related top Sam each driven momentum cost Global by growth highlighting X the profitability years in see impacts tempered as the discussed in in by in We pre-pandemic exceptional segments, Outstanding and retail price growth Products, line versus both lingering

X of was retail exceptional newer Our driven year The as highlighting which slide. by open mature. margins Let's the years, for services segment XX:XX EBITDA anticipated the in lower more look came the basis than prior EPS. margin XXX QX runway expansion a take adjusted in on growth adjusted effective our stores roughly closer where expansion by topline next result XX%. tax to stores margins than at points margin EBITDA improved rate in benefited

pace sales pressures returned flat in strong for profitability in reflecting As pressure, Discretionary million CapEx in slightly fiscal model. growth expected for plus this EBITDA dividends cost decline by flow highlighting Global year, volume versus XX:XX timing of segment A and -- of flat quarter. X% to Adjusted $XX negative cost EBITDA flow continued in free Despite short-term capital of to remains free XX:XX QX was in million of pass remained and time. setting while improved segment you pre-pandemic sales outpaced to driven As a Sales operating share up $XXX growth. strong to shareholders million. flow the slide We free $XX a capital growth margins expect year. adjusted impacting XX outpaced fiscal can by cash volumes sales, fiscal growth $XX roughly QX last in cash steady repurchases margins. declined volumes generate the generation over Products In in me, total excuse ’XX, working driven XXX on and capital-light and increase again in this still on million healthy pricing see cash through we our related the via was than QX maintenance business year. led cash primarily our and highlighting more strong of at million flow year-over-year cash progress

We that slide. guidance fiscal Let's ‘XX we repurchase expect strategy the to review our share outlined. our next continue consistent XX:XX on previously

reiterating retail are and sales all We metrics. driven total pass and in guidance Global sales growth and anticipate our of roughly pricing in same-store by our We through continued across growth nearly Products key strength continued XX%, services. volume

side franchisees. and pipeline both for encouraged unit store ups are acquisitions additions, by company on growth and ongoing We of our the especially by ground strength the our

to to the EBITDA X% growth. XX% representing in adjusted million, to overall be $XXX expect to $XXX of continue million range year-over-year We

outlook lowering things the our turn $X.XX XX%, to XX:XX -- of expect flows to I'll over rate we slide Now, to modestly we back to to Sam. EPS, which adjusted $X.XX to XX% turn where range as turn to XX. be tax thing We’re per as we through in share.

Sam Mitchell

Thanks, XX:XX Mary.

our announced wanted a businesses. Before I and independent the to services are headway ongoing has our and with markets We solid leader with with scale touch we the pursue of our retail gains. in is progress operationally wrap-up today, making foundation significant financially segment decision tailwinds XX:XX share its Each a in to segments Products well performing on call great successfully and separation and operate demand since strong Both we are October. separation to as businesses. the Global

lay shareholders, transaction to stakeholders. to long-term to right capture and to mitigate each and support independently other of value work once the to We today's smooth has and dis-synergies for slide speed the done and formal employees for separation operate Moving operate separation. opportunity. is and believe XX:XX Our that the teams track We're compelling a have advisors on create presentation. groundwork last with our announced. significant ensure separation will significant external each to and to this prepare working with the We're business infrastructure working business independently our the

enabled open support XXXX. our rest strong reiterating of expect in we On XX:XX share back the allocation the for have execute and seeing a had to continue Valvoline’s opportunities We express across results Q&A. success. we fiscal growth returns. this to year, look teams turn that great trends significant I'll who Both quarter Valvoline. Now, continue side, topline and results to the to We I'd show The our to have we're and capital Sean early momentum repurchase we products perform it first against around to our to differentiated thanks fiscal And well. authorization line segments my to shareholder this like the to our market, given XX:XX outlook the are robust. for services driven world identified the for execute the leverage is demand leading as over we've the have

Sean Cornett

to that limit your XX:XX few follow-up I'd a like With Victoria we to we get open to make Thanks, one questions line. sure remind to and maybe Sam. everyone. can everyone that, just please the so

Operator

XX:XX Thank you, Sean.

go first ahead. We portion Please Q&A call. Stanley Simeon start Gutman now [Operator of Instructions] our from Morgan the from comes And question will the

line Your is open.

Simeon Gutman

not the price quarter, XX:XX quarter but volume everyone. the you may do it's sales The I to XX%, for X know and first up on questions. able and to Hey, possible, for on separate I -- North have separation. My us? this, want good morning are if and second on then you America, the

Mary Meixelsperger

just there. the benefit little specifically $XX products a a The talk on total direction the global negative you a cost the benefit Where in had the And million, million. price I'll $XX give total saw can impact side, I -- volume across cost about we products in Simeon, for Yes, about business. XX:XX global business was lag price quarter. under of

that's We've So made passing working. pricing in real gap through. we that progress the

recover recovered the we're for XX% costs work better we've continuing costs to think remainder. and of a to I little than bit our

about Simeon. business. was overall that the of really of across X/X in About North So was America that the cost the Products business, Global price lag the size

Simeon Gutman

I’m procure the retail think oil? how XX:XX separation. own services brand thinking this the But side that theoretical And helpful, question. you my Valvoline? you. to look about at to one I IP know it’s or Thank That's side Mary. if versus and the don't I second or will guess, if then if the the Is retail brand other? services belongs -- business answerable. is products which the as you global the

Sam Mitchell

XX:XX Yeah.

and stores. [indiscernible] a and expectation And brand installer course value to tremendous to is announced any just how be to the really command regard all channels the we the the business in Valvoline that the and believe of confident DIY the drives stores great shared add heavy in our brand amount haven't side are we a of accomplish. with and customers I helps we'll of success from relationship, what and across that in that us the product the to of the or duty and out what but access businesses product products. can of brand that, our business. So front both and service drive IP very first of of with context name, relationships There world. the And for essentially will premium sides XX:XX some brings our around excellent was and high have it for to on supply specifics The to will quality executed symbol business both margin

side business from to Valvoline important use is products source product. retail is the too of will service also continue and global that so And the that

in and clear Products own now be will there between the future Global and long-term services analysts a that, then what the to So contract supply Products. investors retail chain. is we'll should And Global be supply

margin retail can our Products high that the levels services stores. Global fair highest quality business can the all and a and of products service So on of from in offering our the and service earn benefit using

Simeon Gutman

there XX:XX just so oil, Sam. of That's -- cost procure and to business just helpful. you offset there I a follow-up is maybe or to way a be is there is cost there the will guess a expect? that, that to what that's a

Sam Mitchell

minimize we've to been important is this that any one areas Yeah, XX:XX on of dis-synergies. working the

And evaluating, it from terms yet but the will do exactly profitability other significant not so, to how shift with again, see work, in arrangements we announced the in of we're that not one a segment. segment

So come got and we've that, minimize on others any place is important for more to a but in to those that I what's dissynergies plan great understand synergies. think you to of

Simeon Gutman

Sam. Okay.Thanks, XX:XX

Operator

for question. next from go Mike question XX:XX Harrison your Research line Seaport Please ahead, Thank you your open. from And comes is Partners. our

Mike Harrison

XX:XX nice to a Hi, morning. good the on Congratulations year. start

Sam Mitchell

Mike. XX:XX Thanks,

Mike Harrison

oil materials you levels from if of think of wondering and leading impact I base kind the maybe seeing that decline. some was of also disruption terms saw a could you're sequential I inefficiencies. what you've of gross terms seen in you you talk We couple -- talk other little chain outside lower raw margin. inventory to a base mentioned a oil? base and additives supply prices you bit And in you're XXX some about oil more know maybe about margin mentioned -- pricing, of little of points basis what what I seeing watch and XX:XX gross talk stability were in bit There some

bottom gross Just margin. price the impact seen more a and gross the as terms we've cost Thank looking on of of sequential declined color bit for a on kind little you. in margin

Sam Mitchell

if picture Mary color don't some Why Yeah. to XX:XX and it can necessary. add cover big I

stabilization up have while recently we also we seen into months, range. $XX in crude the recent move some more have So seen

think I out inflationary fully nearing the maybe top of we're so, it. cycle, of And but the quite not

seen cycle. it's over increases are plus that increases oil been because think than period most in we market duration months. the X in range the that a X when base significant longer in cost these of XX% So the costs been a base we've challenging I from those in we've the past, roughly And oil of we've in, seen over the started last some

nonetheless So us to our in pretty So finished we've significant. cover market pricing XX:XX help making the lube adjusting those been costs. to moves appropriately

that in of As on quarterly a long-term the adjust we've a basis. past, on US portion pricing our contracts have quarterly good the business we explained in or contracts

us able have of in cost that's some so, effects it's mitigate larger for And to throughout lag impact And our where those price a for is to scheduled installer lag our accounts price we have for market big again, events merchandising But the large example. at tend help national increase. do us, year, of we DIY what the more promotions negotiated retailers. happens a

when so appropriate to kind locked of into prices. when adjust we're And we prices, can adjust it's

quarter. merchandising at recover both appropriate pricing right schedule, over of course would the lag XXXX moves definitely upcoming So So our the the say we appropriate we competitors I our actions quarter. the feeling to time. XX:XX to in those But the at And costs. the there will look make taking be current some in

it's confident again, back back additive are the costs, it is not to if just to trend we'll it's we in the to where kind in that how And that pressures be. of appropriately I base widespread, go was it we but inflationary XX pricing it market, lays need is presentation, cover to, the and logistics, get board. out Page you think those there oil, pricing adjusting across packaging, So

those in costs as about optimistic as we XX:XX long-term, because then move take we And strength meant so of this we're catch business this as to up. peak think the are this period actions the all recover through then pricing the inflationary period. we we that And we

growth long right And from we're really I now, both we're driving in positioned in the the US category term. general, I here demand think outperforming in markets. over share and If benefit the to of profitability you and the at strength look our that well think driving and international increased

is challenging a again, So an doing team amazing job. period,

pretty but it's of -- in out existing mentioned ability presentation our woods and competitors tight. yet. outperforming the inventories our we're to customers, that supply think are the not I our I

we'll with so, customer for great then we And hopefully ourselves from continue work keep off put term to in demand share gains. in our up longer And products. hope position tails to to benefit Valvoline a

Mary Meixelsperger

the only that tight, it's XX:XX not And inventories chain. way our the Sam, through are it supply is all

at So very levels low well. running as our customer inventories are

our as kind stock from safety has depleted inventory a been from take inventories get be over the us supply this overall production well. Sam that's chain normalizes just there didn't kind time, are benefits able as that meet creates are inventories. Those we for mentioned, is be replenished we and manufacturing the are end-to-end placed manufacturing that some operations been of levels there'll And and modestly demand lower higher from to in runs, on remarks of our will Mike, that the the frequent So the more lower environment of that some well. that, challenges demand that perspective opportunity significant. will one costs future as -- mentioned more higher be with coming to because being demands inventory thing us -- associated pretty at related the in seeing, where But

as that creating But And costs XX:XX is that's some so right. Sam dealing incremental we're with well.

quarter. relative additives particular, that in We cost are we driving and saw fourth to some in decline the of sequential cost increases also margins in increases logistics that seeing are in

Mike Harrison

the customer vehicle electric of little broadly all right. more All I in can appreciate engine on services revenue locations. that services talk also about EV about base? at ask on some I there. a maintenance internal XX:XX compares color your wanted revenue that sense would the steps a bit to VIOC of that the you combustion your some you for the also program the period Maybe to expand vehicles? for the an all you're provide to see taking EV in Thanks. they from pilot year And need or announcement how

Sam Mitchell

XX:XX Mike. Yeah,

on going owners focused going making sure are we'll side, the service doing position offering can be OEMs some there us fleet help where example. strong of vehicles in with also stores, not Arrival, our car be those EV EV but pursuing our passenger also Arrival, working to fluids, OEMs learn with heat make we're the our But in market. offering like it's partnerships relationships to product incremental only I those help transfer to by that be for presented, learning in a and say, investments, OEM customers additional also and great need we're to we But we and for supplemented partnership strengthen work As growing like we're XX:XX them. in capabilities to our that be stores. in us for with So sales stores and and with think on our the technical

our advantage . doing we So decide EV their advance know those we're we're make making When location. longer sure qualified preventive teams know a dealership can excellence that to of then that's working pilot on like, there, and continue combustion any make trusted, per to to future customers the really going in be say important that and Consumers over be purchase. we're on that for the but is we're our car Going and insights and known the our modify studying EV service And that of revenue convenience I years we're that appropriately in back being the and trained learn years. to go service But to a less second purchase are of as than it if offerings serviced the to that's of at attractive size, time is -- to our now to fleets, strengthen on services. pursuing powered. part be is both And to. internal in some revenue XX:XX sides, And offering for make program might revenue an some It's your to then frequency what that's prepare what engine, they job question. a take vehicle advantages that passenger maintenance transaction service of route, that this a they an our going do versus our bit convenient really looks one highly frequency that's be sure, and might heck EV's term, that on quick basis. lot to a that annual one, for year to per look maintenance we've going to last we back in been XX:XX more Valvoline preventive that could car to coming but the they of And know be do, we're matter around and big easy is let very question cars. from few would better with understand we and what we'll Valvoline market significant part no for the want based of the do the too. us your the that that vehicle regarding that, and how well that provide

continue and the approach So that market, hybrid those to have our fleet No to they how we EVs, opportunities et And powered. matter grow the in to and cetera. vehicles Valvoline that's thrive. are were positioning combustion the engine market,

Mike Harrison

XX:XX very All much. Thanks right.

Sam Mitchell

XX:XX You bet.

Operator

question. Perfect. Thank for XX:XX your you, Mike

go Our comes from Zekauskas Jeffrey from ahead. next question JP Please Morgan.

Jeffrey Zekauskas

third you quarters from was really do in about income going In sorry, and you retail? the strong XX:XX are of the squeezed are I'm but getting Do with last It there, year-over-year, prices flat second what but your margins very kind fourth third retail that? quarter. looks the of to like second increase the was year are to operating business have and -- from Thanks much. down very you and

Sam Mitchell

pressures to detail important that can prices for and They the need And product are up costs Mary some we color inflationary part of retail in going our are add our services services. margin, Jeff. pricing Yeah. moving and on that is are reflect up with twofold but pricing XX:XX the hit an labor to equation, too. regard too. And the our

And so other We're We we everyone competitive. of appropriately wages that and to very want above the labor with some challenges on top is familiar of adjusting wages. sure entry-level making typically retailers be our we're on that. entry-level and pay

we're disciplined evaluating that actions different can adjusting XX:XX terms to also so some investments some separate in to price those We in But effect fact we're their taken month. those have making markets of around competitive markets and team. some where dynamics in And action, points this that locations. take we've in country. do you pilot the a of too pricing very of cover We you pricing prices tell I approach our have

Some the to a margins us way little of will take the these but margins anything make Mary, themselves. we've specifically inflationary year, them our later up to on this bit place sure that it some protecting else add of we're got pressures. allows on when

Mary Meixelsperger

and business that XX:XX quarter at for $XX quarter I a for last that think, better you record the I EBITDA our Yeah, the was, saw substantially tell year. for would million adjusted us Jeff we any than

ago, is X you compared fact ago. first our EBITDA to to years adjusted years X quarter XX%, the look at In if it up relative

continuing there. we're see So momentum to great

EBITDA being Our a our little bit and costs product through margins were that's really higher to of down passed a factor just franchisees.

a margin XX:XX unit customers. our arrangements of unit look that at And installer the is franchisees We operate from but But that perspective quarterly other margin from of at there you the stays a so type do whole. deflationary you causes perspective, through Our it rate, if on a impact margin with pass perspective, under a if lag. rate bit channel similar we look on the that some absolute little basis. indexed margin a

you those side I pass-through at pricing when seeing looking you are to that are our you're product think impact on sales franchisees. the of our margins some product of -- So

Jeffrey Zekauskas

Okay. XX:XX

quarter in million. the was EBITDA $XXX adjusted your So

annualize that, that's about million. So we if $XXX

million to the you capture EBITDA. you Where your so going price mostly think course can in recovery of to you to guidance don't And million XXXX? that that you that more to get $XX are from? $XX in Is know, I get need,

Sam Mitchell

to XX:XX lowest volume, be Jeff, of tends services. and retail Products QX our in quarter times at Global both

mean, cyclical other So you have a lower That's of than not biggest there. but is there's X QX quarters. your effect, right the driver -- lot I

expect we the of balance the So profitability year. to see in stronger

Jeffrey Zekauskas

it? you're happens the you'll something know does separate year? your as this Or going do before you to do going sort to or think XX:XX in one our this we going with, investor So base, done parts. you're And that, terms going year we to after? Okay. what find to do know, businesses businesses do get execute I your sold do it what What of do And know talking is of are And and lastly, to mean, of then will it say, plan you're before we that it or this to it we're you case? X or you base it? is will it then a

Sam Mitchell

questions. Great XX:XX

good we've X through when It’s some you about Ashland said and process discipline we earlier, ago. from separate go business feel we you're progress we're had very that the making. it course, experience I of a separating the that when years As

through So process. we're working that

sure Board to we're working separation. to Our make evaluating us ways accomplish is different the with too

that pretty excited clear means looking and value. that each I one that businesses. not the been And too there But of about to we're do accomplish for XX:XX to it's effective to it on for on a answer timing what the you that. important important that the today. far is future share to of so, be the when think and to clear, X separation it, it going be be debt way making forthright very quickly. shareholder drive news we'll are unlikely give move think separation as -- for for And able an we're to be to will prior I in shareholder it different goes, as we these We're market And a drive possible. that ways but we net there's can value we announcement of And And we've indicating as be we'll accomplishing to how clear it's as that. on us

very like got disciplined amazing following. so we're on. And got bullish that schedule And a that businesses we're very we've a, X we've

good in outcomes And expect I so, a fashion. timely

And so, yes, this fiscal would that I in expect year.

Jeffrey Zekauskas

you Great. much. Okay. so XX:XX Thank

Operator

you questions. XX:XX your Thank Jeffrey Perfect. for

next Laurence Please from Jefferies. ahead. from comes Our go Alexander question

Maria Milina

on what guidance I in the question. that Maria lower to of range, I'm the you Laurence. gave what is high XX:XX or on wondering you Based land guidance one the Hi. for Milina This just for end? happen the have the has has to end that happen

Sam Mitchell

still It will we the driver. there in will is biggest presentation today we're execute. some but XX:XX it. year our really what to be I we and impact have of businesses, is, will of Again, big we inflationary pressure pricing the think have may margin strength deal cost margins the with that issues heard bullish real on of you demand both and have on the sides during balance for the a

those where that timing and range. increases we the of increases are it's determine So in that will guidance price cost

Mary Meixelsperger

additives I the XX:XX And Sam, we base of see range. the or could that the continued to us environment at think as more coming raw the stability bottom material in push oils underlying or logistics, inflation well. If of us

Maria Milina

Thanks. Great. Okay. XX:XX

Operator

you so XX:XX Perfect. Thank much.

We go will Goldman Sachs. English to Jason on from move question now Please ahead.

Jason English

XX:XX It of your for questions. Two cetera. faced seems have far me Hey, disruptions, payments, business Omicron, a number slotting those good Thanks in. in this morning seems weather et headwinds -- folks. between like retail so services it may quarter margins

the on quarter more in color So to you that real-time performing is us how business some context, give can date?

Sam Mitchell

done keep for stores to and continue the the Yeah, resources being think providing industry. feeling to to job our effects team And and store customers. staffed, of that's I into our of services opening terms yet a seeing for we're the in momentum move time the within market January Definitely our XX:XX able necessary on great quarter. around good be true in Omicron in with has the staffing second

disruption handle things the of too. to So to impacting and One January. it’s of keep and our XX:XX the service ops we pleased customer quality a on just is big do really our close kudos with this as level ability in eye team scores satisfaction our that

scores overall quarter past our have satisfaction the Over even ticked up.

past, with on we first plan it's tremendous disruption increase got to to turnover moving stability, the moving Omicron, about in and reducing place good now in and to excited So our of and January a that. like efforts part the impacts And the are that stores. in we've staffing the say, I'm forward back stores do

term that a they Our people quality hire too. in their the stores. them, in on to is the when have are training they who only service, months an up career do but of is we've speed XX:XX be get better with employees employer engaged long ability going ways great job we through on the win one quickly. And success of to the in begin the our to that not providing that, dependent which fully we the and for to stability we first go opportunities the see Valvoline we And of tools choice give be and to X got that to

we've pleased making. we're there, but more with that's work our be formula, do to So got more couldn't that progress the

Mary Meixelsperger

other sales thing out call last year's you XX:XX comp just I cadence the is, for Jason, you Yeah. by of And at look if quarter. store increases would our

X% The quarter first the was at year. relatively comp smallest last

in script, XX% XX%. So the that XX%. remarks, X-year then we the this be when better mentioned full our you take year just in over as we’ve year, to our X-year expect than almost stack stack our is And

think into were we're that significantly much comps because remainder those you up the take if up year, weaker comps comps, So account years the about in stronger to ago. I cadence think as X need the against of our you quarters future of against

an odd kind pandemic. phenomenon of it's the of So because just

if right. thinking models, about think you're it than on I better X stack, you're about so And a thinking year you’d about if thinking XX% your be

Jason English

Got Yeah, XX:XX sense. makes that it.

I think that the mentioned of The in is on question you product. it too. release global next

talking usual products. lot a in spend You more more on detail than time global

just I'm think And going long the to get last from part question, TAM about at appreciate The a per revenue business have bit take a you of a to a but you're to it's this average perspective, people out How your Sam, here. So doesn't and impact long-term sort lot in of much targets years long-term to this and probably guess that I want of I goodness, does point, been, rate at to your to gallon guys business. back secondly has your on declining to antiquated Is of penny percentage XXs. and there? Is the X it right a way most I then target your of margin put loading EBITDA say, back high profit what targets. mid and XX:XX I denominator piece price there. as second the quick really to? apologize, talk growth. that look EBITDA come numerator back get I cost context it in the

there. characteristics than larger have missing? Now this statements, argue? of many the inherently the contrast people do make When growth skeptics those you out they're think would business has confidence targets what much the that substantially with you more you obviously gives What

Sam Mitchell

XX:XX Yeah.

confidence details, it in that on on go able been First part but per way. get more we can at always we've basis, back And And look question, unit do profit to it a we your to again, of right. at -- the to cycle. look per little your bit our our EBITDA basis. impact inflationary end longer of a the percentage it the This unit at change there. doesn't deeper, to our on margin It a and profit does and ability one is get but

across And quarter business. volume it growth the key business. this back with elevated but on we that labors prices by target we a our it years, the regions. the disrupted for -- we that fruits right, that's COVID, based of really momentum adjust EBITDA our the saw we're X, growth all future expect bright to we going saw of couple some the these of for the you're a longer-term with margins has profitability even have So saw before got solid of and our for really seeing will internationally But in

growth, That the in And XX:XX of is been our we one to India markets. of to pricing, regions when US some manage see really our penetration those to capabilities company. our steady we're one from international about America. here excellent we've that investing back drivers. more and progress how growth increase product as new a we're it's very much capabilities we in marketing growth. our And We're portfolio, become in think share their the so number a exciting making and seeing -- then our the sprouts biggest the plans, market. And increase Latin as their as in teams significant Europe volume and markets global we China And seeing to result,

this that that they we're made for challenges ‘XX back familiar ’XX. even some working to with the You're the managing the business up the sure very are DIY bringing their for product that And where market results changes side building in we're volumes the sustainable. and business, and make had with plans we're some that accounts, improving price key our again, are for are that that new business. sustainable the gap that and we're distribution some from strengthen our incremental to for We distribution we we're of have in the And the business with, invest of over on we We’ve lineup. Valvoline confidence of picking of in their synthetic of plan the margins just with developing our steadily customers we're C-store relationships some business label product category. appropriately the those fruits retailers the that the farm share labor and XX:XX to seeing have seeing that gains has excellent again, them in do now categories that with versus are private driving that to time know and an new so

installers. a capabilities from competitors. independent operate sense of our of DIY the big the And strength with of So, like you confidence should sense new And is, we differently course, component business. other our about the then very

our we chemical their platform onto just communicate ticket the marketing we based. made performance. not majority plans, in installed teams suite their base, plus for loyalty products, more their up We increased how that we've have how driving stores moved out digital of we of investment that a work a we dollar digital business, how and installers. and volume coolants, And to line of and today them that train that execute vast much platforms a of with with a amount of line broader drive our heavy programs XX% how is is help a those product products, developed full lubricants, but We

look we really performance we low business Again, because And in slow, very compete, I growth about the growth strong high installer, growth, business. business how solid so, the and future there. that accelerated confident XX:XX steady how too. way And single-digit single-digit rates margin do growth, DIY rates, of at is growth, of but then it international

And next not next just so Where this go can on. business but the the with business year, bullish this is we that decade. we're and a

Jason English

the XX:XX Good all color. I'll on. stuff a Thanks lot. on incremental pass it

Sam Mitchell

bet. You XX:XX

Operator

go Jason XX:XX [Operator Moore your our ahead. Thank Truist. Instructions] Stephanie you from from question much so for next comes question. And Please

Stephanie Moore

you. Thank morning. good Hi, XX:XX

Sam Mitchell

Hi, XX:XX Steff.

Stephanie Moore

on in or maybe Jason's you're first Hi, actually everybody. a XX:XX the little expand give could but to is here, international. is more strength color a My bit question follow-up you seeing

strong helpful. a what's And to you. You remarks, America continuing bit color, gain North Thank little incremental your momentum, like prepared kind share. substance noted continuing see just maybe be in to the just there would of more

Sam Mitchell

XX:XX Yes.

the -- So to bring our our the talking globalizing the moving installer goes we're about how doing in some we're value to of we customers, with products. bring US and What that service support tools that too. that fleet particularly business along we're faster so is our strategy,

more to customers to business the of of characteristics owners the you and market. markets been better owners. last what in fleet have having do we've so, And strong the And to like really networks means partners. one the international penetrate have years have of that international the able is those to X stronger first, strong distributor And channel to business distribution is and of installer more reach car over those

service business. an to can like of tools we're excellent the the of to to to were we XX:XX best that's at to both international be where for to building one our installers example, and And units us. closer our probably the across step installers them Mexico like market. installers of XX% then, products ago to half penetration call the they improve to so terms to X the help where reaching their number customer And have. And years because we market. we like It’s tend is for be, And in -- need country. out today channels step, the get second smaller provide that they

tend markets players accounts national a US some that business. with So pop XX:XX smaller, a we we that to make up or and big In the service do they handful regional of stores. of more smaller mom international very part large have locations the a our in be

very regions us about regional our what of our product the penetrate training now to solid but And leverage in good our those so, future we markets to them so XX:XX the they're have to loyalty as the there, markets. me other these each local clear how US, international is, particularly investments giving what And too are to into even that to grow share, programs penetrate then profitable, that have, them. make that margins, product unique and digital the on products. programs, profit that there's international teams and momentum Valvoline’s providing these we now strategies again the built business platform things better confidence still with for are then then bring synergy in And for teams, heavily markets. digital real some more some competitors on that, going that customers what's lubricants in gives drive doing sophistication based strengthen marketing of There internationally. us we'll solidly continue the are are And new or we're and we've be the not rely the the the our synthetic bringing is lineup, that market tools lineup are that each also of to internationally the

a managing some clear a couple of about the the the And way, we're Those very So chain seeing we're over we've in disruptions supply it's years, it's a we what quarter, growth the international, those of that. some impacting for move bullish solid COVID along we're prospects for last disruptions markets looking at through -- about. on are in and formula international talked as of of us. that very beyond business. we're We're that with too. disruptions seeing course, not But penetration long-term talking the the

Stephanie Moore

could then the just Maybe of shifting some non-oil of of a And lastly those update over progress change on just services. brief you give the us it. segment. Got retail XX:XX

some that Thanks. comment of on your – long-term algorithm? pilot, other of growth but are You services that’s part EV the those

Sam Mitchell

XX:XX Yeah.

reminder As from close change a to ticket to of XX% is coming revenues. everyone, our non-oil

understand to help in what And presentation by so we the grow our this database. ahead. to we years needs. to that car And that And improving, do like their them our to expect back is that one, leveraging customers

for in of So services what that owner's done have having to the also required. been history And services we with a elsewhere. Valvoline, services addition the that manual are great customer have

in incremental conversations confident that why last than still So we're customers maintaining changes and where And some see able had still. but COVID there some talking stores, on our there. as so services make expect program capable quick very a batteries. that make any then our our And And We've year presentations. and customers what both I'm a services to to the we in recommendations sales their over they year the to out Valvoline replacing sales can us our cars needs, essentially upside battery through is and those do life performance penetrating about program trusted. testing revenue One helping our still here battery upside well, on to battery better the And our and option performed, in So, place we at on we is as We're allow the we the it our stores. other our last our our and understand double what fast, to know considering have enable prepared marketplace. batteries as for to focus are with trying stores be time. we kind so program, to as batteries comes again across rolled customers and we we're the does making the better to our to great now left those have car what doing and vehicle. their to at remaining non-oil is we've in think lot offering highlighted opportunity of understand talk those strengthen more that continue we battery that upside our they're that we staffing that is necessary increase their to is that So, volt are the service sure over by you as when our know that, it honest, consistent every franchise XX offer they're the Again, get go our customer, we've what life that Valvoline seen like a of quite battery of we've programs get company -- the we a training lot training of our and conveniently us of that Valvoline testing how have has adding get disruptions the making has to better bit we're is them XX:XX and that the and easy made that good ways recommended be customers a about impact because choices progress there help of and but with manufacturer to ability that's -- the over too. focus to today sees change to teams XX:XX with of in it.

Stephanie Moore

you XX:XX so guys Great. Thank much.

Operator

now questions. and XX:XX disconnect you for at may further there this Thank today's you, your everybody And lines. I'd time Stephanie like joining to call, the for no are thank questions.

Valvoline (VVV) 9 Feb 222022 Q1 Earnings call transcript