VVV - Earnings call transcript Q3 2024

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Operator

Hello, all, and welcome to Valvoline's Third Quarter Fiscal 2024 Conference Call and Webcast. My name is Lydia, and I will be your operator today. [Operator Instructions]

I'll now hand you over to Elizabeth Russell with Valvoline to begin. Please go ahead.

Elizabeth Russell

Thanks. to Quarter welcome Call XXXX and Webcast. and morning, Valvoline's Fiscal Third Conference Good released the results June Valvoline morning, This for XX, third XXXX. ended quarter earnings This should be in with presentation viewed that conjunction release. on of copy Relations investors.valvoline.com. which available A our is website Investor at

results Exchange Meixelsperger, Please and CEO we file the On and Flees, our our this morning's President; preliminary our note are until Mary XX-Q CFO. Form that with Lori and these Commission. Securities call is

not our based to Shown historical this statements from as on are any may today statements. These of are are of certain are statements remarks of uncertainties materially that Slide such on cause statements. forward-looking subject of and presentation and facts that results X, actual differ risks assumptions the forward-looking date current to

statements non-GAAP obligation by otherwise remarks, we Valvoline to required this and results forward-looking our basis, adjusted discussing any update on in unless presentation no an unless will our In law. assumes noted. be

for are is reconciliation under of in enhances a non-GAAP Non-GAAP our management's the and A the business. key approach non-GAAP of results to key of amounts ongoing and results items, appendix. use understanding this discussion or are unusual, restructuring our measures nature. believe which GAAP adjusted of We in business reported nonoperational presentation adjusted included

other information is companies. by to our used measures management by similar and The used provided comparable may not be

former Global of is the business purposes continuing segment services represents and reminder, Products retail the a as company's for reporting. As discontinued the classified GAAP the operations operations

will then financial from look the highlights Mary third begin our quarter, results. a will and our with at Lori Today, cover key

will I turn to that, it Lori. With over

Lori Flees

XX.X% the of us growth and $XXX Thank the million our company half everyone. morning, fiscal quarter rates line first with sales the for growth with good today year. network at with across XXXX, growing the the both store third we system-wide being and you from for franchise to of consistent Elizabeth, joining saw top Thanks,

transactions saw as the we the As grow into we each drive we quarter expected, moved throughout summer month season.

was quarter QX We the for moderate we year increasing the our Our quarter, in same-store stores prior in in lapped customer quarter. strong see advertising the growth competitive X.X%. we saw did spend as and for current sales the base growth in year growth same

lower of to The a preventative stores service differences has in not non-oil-change our deferrals, and fundamentals demand we are penetration From with for while business very seeing historically continue we downs demographics. maintenance trade our behavior and strong for see income resilient. perspective, customer are been or areas discounting and slight

performance. despite this network new We XX% EBITDA profit to million. in increased $XXX quarter coming X% income $XX franchise. XX added with almost our improved to comparison to from million stores to the XX Adjusted year. Moving a prior strong Operating the

includes XXX, XX additions which our This to new net stores. franchise brings year-to-date net

quarter, of with commitment close announced part also share repurchases framework. $XXX for repurchase allocation the of the million the be ongoing Following capital a share our we authorization, consistent to

share these into the strategy. covers the details results, how some to Mary on additional I'd fit like Before results quarterly our insights of

to full managing driving deliver to SuperPro both the business. great the drive potential by strategic We experience a to first Our of and customer do our process the new is and this traffic executing by pillar by existing customers returning stores, costs.

help We customer the believe us and to manner. most the to to right data-driven in the right the our investment our continue our stores message focus cost-effective to traffic at right drive advertising time get will approach

drive been the cost-efficient search doing to this quarter, our acquisition our which more to work channel. we has saw During website, team more benefits is organic traffic from a

service want offering. on help environment. ad more our optimized Once are we our contracts. return types marketing actions provide ensure These We in competitive customers a in stores, also renegotiated one is of comprehensive spend our of this to

is A non-oil-change component menu. of key our that service

non-oil-change on across focus their our growth continues we the was quarter, The guests to educate system. penetration largest This team sales for services the how vehicles. recommended same-store again to on contributor service the additional

of the across we growth services menu offer. saw We

to the labor this stores of our of always teams believe in of is what the important cost exceeded increasing QX their tenure Managing that had our the that in improvement. continue We business. We part an management retention enables core our expectations. is success and of shared costs

consistent quarter, with well teams and year. as percentage of the costs to manage delivered labor the continue This labor a prior sales,

to pleased It to over I'd quarter. brings an We're network year. our network really on X,XXX growth second growth. like total stores, strategic representing prior pillar, our store the touch this X.X% Now with additions accelerating XX the

Following Vegas help market. of is stores this And Las would time we some quarter, the is closed consider the the transaction We've XX to fuel relatively a refranchising. in although it franchise we refranchise way long-standing partners. end a for of deal with that our small, capital-efficient one talked to growth

Texas closed in these stores a more franchise on spend SG&A in part to In have transaction are we company-operated acquiring a instance, quarter, stores the and purchase of geography will efficient build help end us partner. and the a scale following from the this the of stores retiring region. Also X regional

pillar third strategic service Our expansion. and customer is

growing volume we is still to The with the increased than Our momentum is a this fleet ticket fleet an and sales from growth fleet addition accounts. and rate within component and both see business existing important by of at customers of higher new transaction growth. the continue driven company-wide strategy, positive

of long We for part runway business. growth see a this for our

turn over to financial us Now quarter to third Mary I'll it through walk our results.

Mary Meixelsperger

line quarter company XX% at $XXX a with prior continues year. a with this stack. over to X-year and respectively, consistent the increase start Slide balanced the XX% stores to X.X%, Thanks, The grew million, for growth Systemwide a Lori. on sales and same-store grew look On top X.X% X.X% quarter. X, franchise sales between . be closer performance. Net our and and we'll

increases. a well very contribution strong transaction sales As same-store as growth included price a in considerable prior the XX.X% inflationary year, reminder, from the as

the the to ticket contributor comp. quarter, growth primary This is

increased comes contribution balanced Lori revenue penetration shared, from The the and driver net largest service pricing of a is growth. the ticket from non-oil-change ticket premiumization. remainder of As growth

We holiday offset QX regional CrowdStrike a our to the than from and impact in by which the from Barrel system outage of the Houston saw impact market a across July shift, to mid-July. global X-day in Xth start Hurricane was strong the related more

points. Depreciation year-over-year Slide Without X results. have the basis in gross basis of rate point XX the the drivers of depreciation, deleverage XX margin basis caused in decline the financial the margin looks saw would rate at gross improved quarter. other quarter. We of points impact a in XX

well as year. of percentage consistent was and a Labor versus prior sales the costs managed continue to be

We the also versus quarter. modest franchise deleverage saw company some from mix in

changes year, As a to the from reminder, prior franchise in benefited incentives. the timing in of QX we

The year have and Sequentially, same-store more margin season. sales gross franchise the expansion saw summer start network driven 'XX growth. a fiscal in incentives on basis quarterly XXX been driving the primarily on drive of basis from consistent we and volume points, of focused introduced are by

due a as over increased declined volumes. largely SG&A driven XXX higher points points investments XX a expansion in we advertising. EBITDA saw sales spend. margin percentage adjusted Sequentially, basis the XX driven Adjusted basis of prior to basis point over year margin Overall, EBITDA primarily advertising by by prior increased year,

X, look we'll take a Slide at profitability. overall On

prior income third a income offset million, million, short-term growth $XX interest income the year. result Global of by business in from the Products of the XX% $X.X reduction operating of adjusted the million. relates sale investment to For quarter, $XX in This net a the of primarily decreased of to income the interest proceeds

from $X the share income. of income and completed change grew share came X% near the end billion in impacted year. We last of per The the the from tender to lower improvement count. the by in both $X.XX QX $X.XX Adjusted share reduction operating EPS offer balance interest

Turning to look We'll Slide balance cash at the sheet X. and position.

of third the the offer net the completed for senior the quarter, repurchase step of last million tender the Products. During use from XXXX notes, sale to of proceeds the Global we $XXX

cash prior $XXX that year. these notes. to of activities indenture from decrease $XX by a operating million covenants repay Recall were we flows the versus required Year-to-date, the million, were

establishment most the this Operations the net supply a to As Valvoline the with year prior agreement onetime of reminder, benefit working change. of represents which drove a in Global capital,

quarter, we billings to we ERP following of to franchisees the our our implementation as accounts receivable normalize improvement new third continue see the In in system did in QX.

authorization Lori repurchase we a share subsequent end As the of $XXX the quarter. to million mentioned, announced

allocation remain capital Our priorities unchanged.

shareholders. First look On is is Slide guidance. to and fund to we'll our to excess stay within profitable is growth, ratio; targeted X, next year flow to cash 'XX fiscal at return leverage net third

last update. guidance quarter's unchanged Our is from

or at the sales the below range account expecting to end of and range. into for are refranchising, recently Crowdstrike we revenue the outage the low towards same-store midpoint with the the year be the announced being the of Taking of impact slightly

be of EPS, the at to slightly or the we For EBITDA and are below well. range expecting as midpoint

our this Lori. to pleased additions at back are store call turn with be far to expecting I'll the are the XXX XXX of or over midpoint We range. the above to year so now and

Lori Flees

team we milestone. franchise we've for $X growth. both members thank strong and store Through $X past XX,XXX billion our partners, after line expectations Mary. network our quarter, financial the XX surpass over and system-wide months, sales than third our billion the XX Thanks, in the us together substantially quarters delivered performance just helped who more I'd with to in like hit

Q&A. begin I'll back call to to Elizabeth Now the turn over

Elizabeth Russell

Instructions] Lori. [Operator Thanks,

open With that, the lines. please

Operator

Instructions] [Operator

Our Citi. first question today Zaccone comes with Steven from

Steven Zaccone

think I Could the sales large then but was impact now I us understanding we hoping low same-store fourth towards heard is? guidance, understand sales year quarter you're could you outlook. end. the CrowdStrike just help with tracking you the that how And full correctly, start I

terms a of comp, of X%? out quarter could should like Or that's it below bit we in then be So fourth think little that? that

Mary Meixelsperger

Yes.

In quarter both we the bumps, and well Coast with as hurricane issue started comp market some in at along CrowdStrike an July, the fourth the the us. of looking the did month as Steve, strong, we terms Houston Gulf that affected from have and of but

day. the We did a see that recovery rapid throughout pretty day,

impact didn't day. $X down systemwide million. for a it didn't estimate -- just So have below stores We the across full we revenue was

so unfavorable point of terms And an comps XX basis have range. the probably in July XX impact the to does in that

that And that And almost for by from recovery we're stores I'm day, back all the of happy a to business to did end the say see nice that. day. we

full we the to for able the the a for it the the for But quarter, the think the for quarter. low the towards think below. for There's in kind of end range models and most sales end toward I terms you'll coming range. slightly be see In outlook same-store quarter you're of your will looking to your likely math, just part, we're of be I the if low potential of do think run sales same-store that for

Lori Flees

the we July, which of And actually stores store. way But Steve, XXth a slowed impact I'll was just in briefly our manual on the back the into given and had up mode, network. that of by go having required noon, the to comment rate half the go across our about of stores running, to work the the to each service and technology

were franchise back handful of partners that us we hours. the And for terms back except amazing within of new entire server stores running get network that our a in with up could and up, XX working so a needed

that good the is response including limited impact which to why our day. franchise rate X really was So partners, team, entire by really the

Steven Zaccone

the is decision in the future? some should follow-up we Yes. My refranchise about stores. just to potential hear. think question to good on more for the How refranchising That's

Lori Flees

about partner pursue Thanks. that to It's a absolutely accelerated And question. and some refranchising that. shareholder growth, We've network we talked when and drive going consider existing for we're a can new or an good have returns, time.

have strong we that people not have just and an also one but because Obviously, rate, market they capital committing work, attractive at align faster a accelerate growth having what standards the the the and got very the this we acquire But to is business, the results to right business would. of putting what drives you've capital than the that over need to to our partner, that's time. brand with right where

to the in wanting business. our spot. where business value and them into exactly has create that work that a have more fit Valvoline we market. So the tracking the personal thread, non-oil-change long-term partner to get to Las able who market, capital with sweet in had needle it to is a to opportunity. given But been is connections Vegas We and they they and were particularly put

than for It growth growth what opportunities it and units overall They're committed in to more add new return, business, would that overall we people. our the delivers good is it provides long-term capital drives a shareholder just and efficient.

those of but it. many can't to continue is you tell continue I So opportunistic, really will an to how do. evaluate It we'll

franchise just desire drive also to conversations network back towards be efficient, in overall and existing new the the both unit one our eye our with growth And bias shareholder it growth continues partners to ties with very that robust. doing but capital to new our with return. And to increasing Xx, but an

Operator

Our with Gutman next Morgan Simeon question today Stanley. comes from

Simeon Gutman

I the narrowing? gap Is want the spread you it stores? X.X% about talk about immature it comp. widening? Can . you -- X.X%. talk to Is Is talk then it certain in you normal? Can ask and and Can it across markets? about performance geographies between mature the

Lori Flees

regional, the cover to cover and I'll new Mary the I'll versus stores. ask mature

very and strong regionally. a business the I trends. macro looking business business would closely quite any But historically macro to We given we're has are reinforce trends that resilient been our consumer are environment seeing fundamentals to just our what see

seeing not differences significant regions. in We're

the I as a non-oil-change very income discount where relates higher meaning slightly seeing it comments changes lower in we're slight As penetration to mentioned a my have demographics. rate lower in store discounting, presentation, areas they slightly service in and

we we're only the would And difference slight, less driving really just thing of regional either it's have on metric. seeing. much that a very a I underscore, where stores so So X% region, than that's in cluster any

Mary Meixelsperger

you we. ahead, No, go so And Simeon.

Simeon Gutman

sorry. you go Mary, ahead, No,

Mary Meixelsperger

to on mature stores. I comment was going versus just immature the

the that incremental then mature the continue continue be are comp. We the to some overall nice see in we what that performance point to younger XXX are stores basis overall, terms benefit but stores range stores. of well. our to in nice to of We've as base in younger estimated stores in newer see in do comp comp add our the And past nice adding the to comp part the performance mature

Simeon Gutman

maybe, on and there don't question. follow-up, the maybe the And was know, If I some I below factor own macro or or even missed deferral. and X.X% Street have expectations this slightly Okay. my may and/or prepared the your

that But the non-oil-change. at you of a said Or is that largest was a time by showing Does driver success in sensitivity showing customer same economic your sales converting the at time, growth a -- customer? sensitivity? of the is that

Lori Flees

great a Yes, question. it's

the think team. I around is it really and the process

the not not pitch, customer an just So the sales get NOCR really in have a we're comes what explain at the standpoint to really doing to pressure may needs really revenue. . And preserve the from benefit comp. the value customers back and down maintenance non-oil-change doing they a the the period that, they And by the vehicle service done of within of really strong proud -- And do it what's short this the or relatively what teams been following doing longevity the asset. process, sales come time. that's a in and the where pitch, them preventative to educational of time our doing may driving

contribute been, points to XXX of it comp. believe said, it will mean -- this has we've believe we've and XXX a Now continue will to we it where it's I and do so. while, way been we for basis

buy is And our knows this the to process I they don't vehicles education the maintain of making they to pricing customers hold their others compares to on environment. that in more those the so the customers to services they are wanting rate making a executing car on think a have customer and for asset, many do sure interest sure want how maintenance know current which as and to the new around

on to in. and coming So think longer. of it's I teams combination X their Those consumers do a vehicles holding things

Mary Meixelsperger

we your comments, in deferral And reiterate our seeing as just base. not in we're customer any Lori, shared I'd that

drain customer looking in at oil at looking performance. we're very been we're roll It's and a very, when consistent. So

Lori Flees

our core Across seeing change, Yes. a of trade in trade service down not the oil we're mix. lot or There's not deferral down. opportunity

I a testing talking of yellow battery think wanting that. the see would is people where it's areas the you really in you only see, potential I'm battery, but personally, the people can if ahead get be economy, of and can not -- to season stronger deferral

until the wallet, and turns when defer they're red. feeling wait in might they tighter little a But it

So business. those pieces again, the core. not our we're deferral seeing of small are And on very

Operator

with Our next Sandler. Piper question comes from Peter Keith

Peter Keith

on I advertising. touch want to

So the ad time, maybe advertising an bit flagged issue traffic. up you've you'd competitive as spend. to of At a stepped your same

Or question is does a traffic? being immediate with guess I X that picked So delay? the And to a is X-part is, quarter increase that, are there asset or the has more? you increase to up, bit spend come of a then forced related as spend

Lori Flees

climate, increase think beginning advertising so I where the an coming -- we market. of the see quarter, Typically dollars lower at we the that started funnel the to into advertising one, in had

we some of a we quarter, the little steeper competitors. see discounting get As bit did couple into a from further

were They they proposition fairly to but our them competitors, going cap authority relative to follow. given and significant. and chose we our not not to to they didn't We long, push have give stores to full ensure a discount. We last chose but customers value continue competitor always a to stores had steeper did the to slightly loyal for those that our

that, dollars What wanted slightly the do with order elevated search saw that's little that seeing what the to example, cost for we cost to is drive then in up one, how in that terms, So more search market. drive we the went terms in respond. a traffic the of bit. environment, we're we That

return with moving spend channels cost maintain we on see that, a driving lower quickly sure agile down affiliates, to to and amount days really I renegotiating try customer acquisition where you'll or in et always team to on such spend ad that drives the try orders and we CAC stores some the to business. the down spend we bit. traffic that cost we contract, see return the I started return are think overall margin or level be right to, maximize we're economics. on strong make of that that the as as an And went a is of things of appropriate to the those ad keep we it started a right can do really our So Again, as the the cetera, for to that money, to mentioned, little we're

Peter Keith

Okay. Very just broader question helpful. same-store And sales. the then guess a I on on

like X.X%, numbers, an looks I at your result framework. but to QX end nice basis, is the they're like absolute mean impact. much of that probably closer then longer-term are an it QX the X%. the So they and be seem economy on will towards Doesn't of lower having

year, are -- So are outlook? now these you're at lower quarters towards that X of the why long-term this least right end trending

Mary Meixelsperger

just at we in versus modest did looking impact you're of QX mix QX. if So a QX have day performance,

mix And individual see so you're quarter, some perspective. when looking at going you're from impact day to a any

the in QX. seeing, strong of expect to XX really we related growth year, bps call tell we terms are last what last our QX that in year. some really happened that that Over leap do a quarterly And mix day talked benefit QX, we're we you I year in about about from would against in both and comping transaction

of the and certainly what that equation last in mentioned against in terms part We of looking quarter, comping we're at that's of that. terms here

we expectations. new to existing continuing anything We that of to anything? and you with is in I wouldn't overall retain our And terms significant Lori, marketing pretty that add are focus growth we're in the consistent system particular attract see concern. cause customers. say our nice would transaction and customers both efforts for in seeing

Lori Flees

led is ticket we The that for actions were fairly the mix big largely given would think and a thing OCR add Yes. would clear an be by that premium 'XX, I were FY we only contributor, taking. I

in specifically macro price very us were price careful we think be activity, very not posted I to our we particularly that environment were we from a discounting the have and just on price on as advertising away get cautious have to going competitive and suggesting to be market. we given saw

based as good when knew started of we would that really price algo. the a we contributor, would not the get think you're what overall, in range. I at well much the -- us that's -- pieces there same-store broader would lapping and actions, year, but you're taking be sales I within felt that look fit what pretty of results year within think broader when last guidance So And we actions any that you we on those the are year that and the many

muted. this the We X.X% growth we're the largely I the lapping that's year, in customer and all the moderated we advertising and at in a dynamics comments did feel that marketplace. due think we aggressive to expected facing. the given of would we're our base about be seeing see bit that ticket But that

Peter Keith

that, year, And think to of I X.X% just it's a on to normally, this clarify X% the lift. lack pricing

just that's just this might so in And you which have don't normal year, a something you year.

Mary Meixelsperger

for see did in QX. around that did QX. we Actually, pricing We from average see benefits

benefit Now come board targeted did the call in from but They're pricing changes. pricing, . net we change the quarter. see the any I'll comp discounting, of we across from you it benefits in the at if we services really what in pricing more look our of did that net pricing, doesn't changes offer, across

Operator

Global Mike with Our next Harrison from question Seaport Research. comes

Michael Harrison

And and headwind little about expect the all P&L. should as would those transaction? that bit proceeds of from at you talk And of a How the EBITDA deploy we impact you transaction? hoping that could expect the kind the much can has and where about part then receiving that that, refranchising annual presumably was talk I on we to refranchising you're that proceeds? revenue that

Mary Meixelsperger

'XX, QX. fiscal EBITDA of refranchising It's million $X to on I'm less impact at relatively we that. terms take fiscal modest in second of impact remainder has the look me, the when Mike. the the for -- a the quarter remainder When look the happy excuse we of at than transaction Sure, of year.

year full And on we'll provide more guidance detail specific impact. the 'XX on our

for next update. So our quarter I'll look that in

share use revolver and debt then it outstanding, be But use what proceeds, the debt. net reduction. we'll some recently And reducing in authorization. new do repurchase versus got right share authorization think the As of debt we'll we our terms thing of for is at looking and course, we from to of just we've repurchase that be it evaluating to forward announced the then we'll repurchase share outstanding relates initially, moving

Michael Harrison

I that then kind gross we you also And what much kind was leverage hoping see rehash margin of quarter, period right. could of would kind happened is came might last warned anticipate and discussion we of seasonally as labor All leverage here. stronger us guys that we the not as up that going into the that

why So fiscal as margin leverage into gross understand level leverage help 'XX? your on look QX for again some maybe in that at QX us get wasn't there we and start leverage labor expectations much and gross at margin to as insights and

Mary Meixelsperger

Yes.

talked last we QX really activities expect to So labor of see in focus didn't management QX. about labor we the leverage quarter on year. in last incremental started that labor fact We had our

performed QX nice we leverage while basis really sequential of QX, saw almost points we in in a XXX we of labor so versus And terms where leverage. saw

lot that for labor on consistent of pretty my the are And a is back last My a perspective of in be last sales the had that QX we focused quarter. practices will we In hold QX were for expectation QX Again, as with will flat we percentage of prior started the to management essentially year. pretty that from itself, year. labor consistent. labor is expectation a year half

leverage. of and exclude margin, impact overall amortization, depreciation in are overall, gross seeing if of you the terms we modest So

half In with impact differences call the really year, those in being front the my back year morning, I of And and if of franchise front half. you incentives in recall, and some we franchise did some the comments last half heavier earnings we this back had this versus mix had of year. year on unfavorable have lighter the the the mention normalized timing between company. from And

and company so from franchise is in would, last QX. influenced up tougher that you year being being comp, And QX against by if a versus mix

Lori Flees

technology just of believe I'll further that Mike, that -- add being of And deployment will the have this labor work is working may already efficient Yes. implemented. terms side, deployment, that whether on wave more in we inventory franchisees, that the first through as process those to it's We're standpoint team's margin, impact which on but the an want the time invest in and is will business. continue benefit be they they'll to company both things stores take to also management positive one They'll example. across also will And implement . very the from the network. impact labor our

or more leverage those are at Now have continue we level our plan offset be would a typically to us our allow and that investments will to on every whether wage that it year, guidance. always baked it's into wage in But in get comes state competitive labor and just the minimum dynamics increase increases wage.

Operator

question Our next comes from David Mizuho. Bellinger with

David Bellinger

also And promo the activity some these you're you these size promo pronounced percentage exposure? element this income seeing markets? lower type activities increased up? with can low-income that widespread seeing, help to stores on heavier are us more the you is First, in of picking of Or

Lori Flees

short more so players, but deeper We -- the so not not and again, discounts. most necessarily across quickly for the did time put don't of pulled small we We quarter, that did players, the dollars market. X saw see many it's into market, period deeper the a player And of across many it out follow brands. a advertising offer not was discount in much early the being of

traffic they're as as we on track not we more to tend in low operator-specific. do just business across They and be a areas they're where far their not generate limited seeing just know. income be they're to pockets based to and and see And board, the very trying a So period. it could

really don't the I it. know drivers So behind

those things, business. for search across say -- high a very go I coupon in slightly. where more correlates be stores that wouldn't anything see you is savvy. do driving. will lower-income differences not will slightly areas I our slightly, which and And higher there's significant are is demographic What They will rate. or out get customers operate, our But These discount I mean, say when

Mary Meixelsperger

we And income as the looked and quartiled our approach used, demographics portile. it income to stores we household at relates by really

And lowest income $XX,XXX be year. average an quartile us, so with household would for the a of income less demographic than areas

David Bellinger

just XXXX be to I thinking there commentary hold just us and initial sales my think second with comp pretty to but earnings next And then algorithm Okay. should you we can expect a considerations typical all and year? should Valvoline we through? question. continue provide Or early are it's towards still other some true any here,

Mary Meixelsperger

QX looking We'll question. we're or We your update our when typically earnings provide Well, we forward thanks you for in at do as don't call. this the guidance early year-end year.

talked refranchising quarter, we have one in the As of we markets. our in did about

And about impact hear for will and that looking be that similar of -- any I transactions into also what happen we're as in out you'll might 'XX that terms course, think so and there. more of be fiscal would

In robust terms really and a we really company. good about franchise feel have both pipeline, unit of unit counts, and in growth we

we'll some And so to franchise growth that next provide there. we provide and pipeline updates accelerate We're partners work excited the the won't see system, our guidance around any you be to we with quarter. surprises with franchise to of continuing when

Lori Flees

the on unit. Yes. Really franchise the progress with happy

year-to-date. relative You'll XX notice to XX% year we did last year-to-date

that So the progress we're growth. I on making the unit feel franchise about really good

Operator

JPMorgan. Our question with Zekauskas Jeff comes next from

Wenyi Huang

growth, stores. Lydia It store of franchisee because off count step is the fiscal store and similar driven? fourth Is Jeff. seasonality should a for drives here? growth quarter, your this VIOC quarter. in it's upswing in what And like on This seems Still had Huang also franchise fiscal we an year, on the the expect that mostly last

Lori Flees

we've feel we to would where I that really just about date. say delivered good

was part our franchise And paced the fiscal more QX of as that unit to year-to-date 'XX development by program relative is right. a driven gap evenly stronger. in You're much for The growth franchisees. for

Mary we expecting in XXX which prepared will is As that her unit mentioned remarks, the are at above the be our midpoint, XXX to or new range. count is

expect to within franchisees, be XX. And XX that at to we

strong that feel with XX, very Now already they'll within at that franchisees range. we well be

we I feel So think good. pretty

quarter. a up last believe, stores we many delivered shows units, units, I or business Just looking that year, at QX, can XX start XX our within that XX which

you we we build XX, above. date, it, put midpoint are when didn't at at repeated us just on where to date. the well look at That if we're would or so and to And XXX

So have strong. we're it executing the to out we pipeline, have and the the capacity, just year we close

Mary Meixelsperger

Lori, recall QX, just small had in last number got franchise opened stores of pushed reiterate, if in And relatively you that I QX. year, that a into would we QX

more As the year. over you much just is now, consistent mentioned this franchise we're quarters

So to saw would QX than QX consistent expect in be year franchise more what I year. with last relatively this growth we

Wenyi Huang

So quarter? the about maybe my And seems quarter question, base relatively about second the September cost stable, you should for for think next price for oil can how September talk we pricing year? and

Mary Meixelsperger

Yes, you're right.

year-to-date, seen have stable. lubricant the really modest some our that's ups very seen stable. Really been through costs we've downs, We be and but

close from really keeping . from on We and are perspective a a activities eye macro the coming news the East. recent Middle

to our were affect that increase. oil will not our causes have spike its wouldn't eventually would and expect to course, we yet. to it it QX. it to even But I base were underlying costs if through that that fiscal lubricant into Of happen, cause seen If happen, crude oils if work way

through The balance length -- -- cost -- a supply terms it it the here I will of for come And increases few August September. takes fiscal have in of for chain short supply expect in terms how impact to long types term the of wouldn't year excuse that any months. in in chain me, of that those April the takes and

Operator

from Wells Lantz comes question David Fargo. next with The

David Lantz

talk can think about Curious bit longer you in that the outperforming. could sits a business get penetration detail. and where term? you if today more where Curious fleet It's

Lori Flees

the and Yes. Thanks. over years professionalized. leaned a really few that into been past great we've has Fleet opportunity

the sign penetration fleet to owners, have within new continue that work and also with we as with accounts increase signed up -- the accounts. the and/or number those of vehicles We we to we

higher obviously, leads EBITDA than to and franchise ticket transactions really but that we've we an are team's support. where their -- to X-wall have both growth our and and requested adds this contribution, this that geographies in on focus some consumer, for -- The franchisee attractive stores. attractive an the year, average a level. expanding business, And had fleet focus to good is company franchisees sales Both margin past include

than We've on about from given sales market, -- overall talked that count of an lower a slightly base. the car We -- less our higher, ticket our the we're and building small on XX% our it's it business basis. is business is fact is fleet a

There company that of have national is a this providers see to very we set very maintenance broad their sort of not because in will we many preventative not growth. are who continue that's We served. meet any not where strong growth can expectations excess And of we have think just well believe on target. network needs. market our get to very overall We

them the done the in of of taking deciding the able select being of that invested services out direct owner account the We've billing. services what and to the a drivers of be fleet mix driver in for terms number shouldn't then services

things to just to add there's in a we've that time value owners. So fleet invested number the of over

assets close we us on growing with that's to reason And greater or period that's that as preapproving less assets or a vehicles them time. business ensures in with put of their their It having direct the service And why billing of are top a their it's so just can as keeping services. quickly. service to XXX% them XX-minute being utilized not

David Lantz

That's was it. Can to X then helpful. Got relative expectations? me. And internal update that on just quarter tracking an for last implementation that's how ERP and out you just the more provide called

Mary Meixelsperger

to. happy be I'd Yes,

progress that those last quarter the what is efforts about made around our by still remediation year. some remediation material out really that new environment ERP and significant report more spoke details quarter. done challenges had remediated queue what's the implemented expectation of of fully we called the will in control we've We'll X to the end open I'm be and that talk this we the January and steps do. have of weakness around we specifically in that XXXX that IT general on So the happy my changes. system control some . And we've last to

still items the But pleased really the year. remediation good progress really I end are with made functioning that ensure them of as -- But of as year the open it. to really the the said, we've controls teams of through around fiscal about have testing that the fiscal all are end and we've I'm the through and feel those designed validation

Operator

Jordan comes Jefferies. question from Bret with next Our

Bret Jordan

little the addressing in To seen they you've about keep there. traffic have question. guess, discounting pricing abate a to said the And logging service moves I to more pricing you've oiling expect saw the in tire quarter? third quarter? relatively keep guess, to recent chain driver. would week one that as sort -- of seen said you maybe use you a July the of sort trends, I softer I return price of you the think and larger that Sorry, third ago

Mary Meixelsperger

anything We haven't into July. changes significant that's been any seen

have other pricing And differentiates some of out no. So from trusted quick the we our different And our historically seen auto experience. what marketplace. is in services really easy us of kind providers

And certainly so we found services. of that value our consumers convenience are the those

And pricing significant. so and to change new in a oil services lower those typically drive are try on to activities have shorter other see effort don't not offer occasion, a it's lived an phenomenon And providers on typically to traffic.

haven't year add? over us will perspective. to increases. by you'd as from XXth really of sales be seen evidenced of this what Lori, competitive impact that an evidence impact seen We same-store year our anything time, haven't We a

Lori Flees

certain #X But activity and I always in services have be fragmented to center as few it whether independent a not always customer a a say the an players and player our a that new be do just decides traffic to us. There a it attract -- we where dealerships, seen or such from promotional there continued and use from impact broad-based a relative that's market have customers that right. try that it very we dealerships would is fertile this going acquisition from a of No, think QuickLubes. as I will ground that tire standpoint happen biggest auto standpoint. at are to that very broad that, be see previously driver. to experience look markets, will are which the will We pockets source comes much the overall customer anymore. value We

last several reviewing, for changed end just the is we're over the And of July, much us quarters. true. And through same hasn't so reviewing that as holding the

Bret Jordan

And question. format, then you've a Great. possible about project? lower on the talked in that know new costs. Okay. updates bigger past a Any I store build-out picture

Lori Flees

our to to the capital the many decisions made we with that into of in we the get general well given reduce show 'XX, already terms the contracts off also lot of be in of Many units brand. until set and will changes late which come We the those to have to both our units time online, building to been CapEx year team cost to, has in the Yes. for and order savings. is fiscal to permitting project's -- X/X design well first build extending making a that have line start which the the new locations not some in progress half units great cases, contractors convert change, or of weigh will 'XX the as in on to as fiscal

easier is accelerating to team construction we and our particularly brand, with the locations changes they our converting where way on to implement, some started operations make started the we've of can. that really But happy to implementation and that already

Also, were drive And construction has we find how partners of as units that continue new the builds our new opportunities. equipment been this costs increasing new in their our we franchisees pipeline engaged franchise to units. are they're quarter, new do our and to builds. and of in X/X incredible, And continue lower very engagement

we to we're a on we progress, order bit it, but start taking would as can say, seeing actions as good is everything and in that the team early can. quickly I So making little

Operator

next our Shahiwith. Jim And from comes question

Unknown Analyst

us that? I talked on about large update the just an give you in past finding partners. Can new franchise

Lori Flees

work is conversations unit, new our very feel of unit number which existing annual to I prizes. and have new triple great a interested that. as partners would good GCOC If goal about engagement from X/X -- who with to and going our was We well. incredibly we year, to earlier, And come prospective XXX that franchisees. and Yes. at VIOC continue look are I back our step mentioned we overall being in

In last the from would XXX of X/X new partners. franchise come the

going a It areas, and very in well. partners, them white a space franchisees is developing of and no time or the to now working to a be to would be to we doesn't them handful. seeding about talk wanting And are It XX. to some longer Now take really, right are needs need not expect conversations with to that an who to or continuing existing be those area transition. handful whether

discussions the of as get able that part system the in started, progress good the trying understand Vegas refranchising. announce little on time. want them partner exactly being to a to new takes But and they to longer work. discussion have how to educate continuing a take So the Las It's does

Operator

further no have queue. the We questions in

Valvoline So for I call would like team any the to to turn closing comments. back the

Lori Flees

see and I from We Yes. customers at the very is resilient call. fundamentals business just the for look that for not been attending and not thank and a feel to strong. everyone it's are our want we Historically, us. changing demand really has that

massive be of that have we last XX sales a franchisees milestone the we're building $X year you look sales think same-store and an same-store at XX alluded XXth for after $X expectations I of we of seeing coming our sales that months same-store business delivered in to in sales delivering speaks to the team to just is it our and acceleration quarters investing, it. of year-to-date X.X%. that and billion just want billion. feel store as system-wide over members I hit good, thank XX together. We've we'll It to us because hit it the our franchisees are years and we're and full Mary and really sort our

your So for thank time. you, everybody,

Operator

joining. This you call. for Thank today's concludes

disconnect now lines. your You may

Valvoline (VVV) 7 Aug 242024 Q3 Earnings call transcript