Valvoline Second Quarter 2024 Financial Results

Overview

Valvoline is a leading provider of automotive maintenance services and products. In the second quarter of fiscal year 2024, the company delivered strong financial results driven by increased sales at both company-operated and franchised stores.

Key highlights:

• Total sales grew 13% to $746 million
• Same-store sales increased 7.7%
• Net income rose 32% to $43 million
• Earnings per share increased 74% to $0.33

Valvoline saw growth in all areas of its business in Q2 2024. The company continues to focus on driving growth at existing stores, expanding its retail footprint, and capturing new customers in the evolving vehicle market.

Financial Performance

Metric	Q2 2024	Q2 2023	Change
Net revenue	$388.7 million	$344.5 million	+13%
Net income	$43.3 million	$32.9 million	+32%
Earnings per share	$0.33	$0.19	+74%

• Net revenue increased due to strong same-store sales growth of 7.7% and the addition of 147 net new stores.
  
• Higher average ticket prices, increased penetration of non-oil change services, and pricing actions drove profitability gains.
  
• Net income and EPS rose substantially on higher gross margins and cost control.

Same-Store Sales Growth

Same-store sales measure growth in sales at stores open for at least one full fiscal year.

| Metric | Q2 2024 | Q2 2023 |

Company-operated same-store sales	+7.4%
Franchised same-store sales	+8.0%
System-wide same-store sales	+7.7%

• System-wide and franchised same-store sales growth remained strong despite lapping unusually high growth in the prior year period.
• Growth was driven by increased average ticket resulting from pricing actions and customers purchasing more premium services.

Store Count

Metric	Q2 2024	Q1 2024	Q4 2023	Q3 2023	Q2 2023
Company-operated	919	895	876	854	832
Franchised	1,009	995	976	950	949
System-wide	1,928	1,890	1,852	1,804	1,781

• Valvoline expanded its retail footprint to 1,928 system-wide stores, including 76 net new stores in Q2 2024 alone.
• The company remains focused on driving growth through both company-operated and franchised store expansion.

Financial Position

• As of March 31, 2024, Valvoline had $494 million in cash and cash equivalents.
• The company has significant financial flexibility, with $472 million in undrawn capacity on its $800 million revolving credit facility.
  
• Valvoline utilized the remaining authorization under its $1.6 billion share repurchase program, repurchasing $211 million in stock during the first half of 2024.
• To comply with debt covenants related to the sale of its Global Products business, Valvoline commenced a tender offer in March 2024 to repurchase $600 million of senior notes due in 2030.
  

Outlook

Valvoline reaffirmed its financial targets for full-year fiscal 2024:

• Net revenue growth of 11 to 13 percent
  
• Adjusted EBITDA growth of 15 to 20 percent
• Free cash flow conversion greater than 50 percent
  

The company appears to be executing well on its strategy of driving growth in its core quick lube business. Valvoline expects the operating environment to remain favorable in 2024 to deliver strong top and bottom line growth.