Company Overview - Valvoline Inc. operates and franchises a total of 2078 vehicle service centers in the United States and Canada [1] - The company provides a range of services including oil changes, lubricants, parts replacements, and safety services [1] Investment Philosophy - The investment philosophy focuses on identifying mispriced securities by understanding the drivers behind a company's financials [1] - A DCF model valuation is often used to reveal the true value of a stock, allowing for a comprehensive assessment of risk-to-reward [1] - This methodology is not limited to traditional investment styles such as value, dividend, or growth investing, but considers all prospects of a stock [1]

Core Points - Valvoline Inc. announced the winners of its 31st annual Oilympics competition, showcasing the fastest teams in providing a perfect service experience [1][2] - The competition included 40 regional teams from the U.S. and Canada, representing the top 1% of Valvoline service center technicians [2][3] - The tradition of Oilympics began in 1994 and has expanded to include over 2,000 Valvoline service centers across North America [3][4] Company Overview - Valvoline Inc. operates more than 2,000 franchised and company-operated service centers in the U.S. and Canada, completing over 28 million services annually [4] - Services range from 15-minute oil changes to various manufacturer-recommended maintenance services [4] - The company employs approximately 11,000 team members focused on business growth, retail network expansion, and future vehicle planning [4]

The competition highlights the best in the automotive preventive maintenance industry, competing to perform the quickest perfect service experience LEXINGTON, Ky., May 12, 2025 /PRNewswire/ -- Valvoline Inc. (NYSE: VVV), the quick, easy, trusted leader in preventive automotive maintenance, today announced its international Oilympics competition will be held in Cincinnati on May 13. This nod to the world Olympic games includes 40 regional Valvoline Inc. teams from across the U.S. and Canada competing to dete ...

PART I – FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS%20(Unaudited)) Unaudited financial statements for March 31, 2025, show increased net revenues and income, driven by store expansion and a refranchising gain [Condensed Consolidated Statements of Comprehensive Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) For the six months ended March 31, 2025, net revenues and income from continuing operations significantly increased, along with diluted EPS Key Income Statement Data (in millions, except per share amounts) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenues** | $403.2 | $388.7 | $817.5 | $762.1 | | **Gross Profit** | $150.5 | $146.2 | $303.4 | $281.0 | | **Operating Income** | $66.9 | $76.4 | $210.7 | $139.2 | | **Income from Continuing Operations** | $38.3 | $43.3 | $132.2 | $77.2 | | **Net Income** | $37.6 | $41.4 | $129.2 | $73.3 | | **Diluted EPS (Continuing Ops)** | $0.30 | $0.33 | $1.02 | $0.59 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets slightly increased, total liabilities marginally decreased, and stockholders' equity grew due to retained earnings Key Balance Sheet Data (in millions) | Metric | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $230.0 | $255.4 | | **Total Assets** | $2,452.6 | $2,438.7 | | **Total Current Liabilities** | $315.6 | $353.9 | | **Total Liabilities** | $2,203.9 | $2,253.1 | | **Stockholders' Equity** | $248.7 | $185.6 | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended March 31, 2025, operating cash flow remained stable, while investing and financing cash flows significantly decreased Cash Flow Summary (in millions) | Cash Flow Activity | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | **Operating Activities** | $88.4 | $88.2 | | **Investing Activities** | $10.3 | $230.6 | | **Financing Activities** | $(104.4) | $(237.6) | | **(Decrease) Increase in Cash** | $(6.4) | $81.4 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the discontinued Global Products segment, a significant refranchising gain, total debt, and the pending acquisition of Breeze Autocare - The sale of the former Global Products reportable segment was completed on March 1, 2023, and its results are now reported as discontinued operations[19](index=19&type=chunk) - In December 2024, Valvoline sold **39 company-operated service centers** to a new franchisee, recognizing a pre-tax gain of **$74.2 million**[30](index=30&type=chunk) - The company signed a definitive agreement to acquire Breeze Autocare for a base price of **$625 million**, with the transaction currently under FTC review, which has issued a Second Request for information[46](index=46&type=chunk)[47](index=47&type=chunk) Total Debt Summary (in millions) | Debt Component | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | 2031 Notes | $535.0 | $535.0 | | Term Loan A | $427.5 | $439.4 | | Revolver | $120.0 | $125.0 | | **Total Debt** | **$1,075.7** | **$1,093.8** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses revenue growth from SSS and network expansion, increased Adjusted EBITDA, strategic retail growth, the pending Breeze Autocare acquisition, and ongoing internal control remediation [Business Overview and Strategy](index=20&type=section&id=Business%20Overview%20and%20Strategy) Valvoline, a leader in automotive maintenance with **2,100 service centers**, focuses on network growth and service expansion, with a key pending acquisition of Breeze Autocare for **$625 million** - The company operates and franchises approximately **2,100 service center locations**[52](index=52&type=chunk) - Strategic initiatives include driving core business, accelerating network growth (company and franchise), and expanding services for fleets and non-oil change needs[55](index=55&type=chunk) - A definitive agreement was announced to acquire Breeze Autocare, which operates nearly **200 stores**, for approximately **$625 million**, pending FTC regulatory approval[53](index=53&type=chunk)[54](index=54&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) For the six months ended March 31, 2025, net revenues grew **7.3%** driven by SSS and network expansion, with operating income surging due to a refranchising gain and Adjusted EBITDA increasing System-Wide Store & Sales Growth | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **System-wide SSS Growth** | 5.8% | 8.2% | 6.9% | 7.7% | | **Company-operated SSS Growth** | 4.8% | 8.2% | 6.5% | 7.2% | | **Franchised SSS Growth** | 6.6% | 8.2% | 7.2% | 8.1% | Store Count at Period End | Store Type | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Company-operated | 950 | 919 | | Franchised | 1,128 | 1,009 | | **Total System-wide** | **2,078** | **1,928** | - SG&A expenses increased by **$22.3 million** for the six months ended March 31, 2025, due to investments in technology, talent, and advertising to support growth[80](index=80&type=chunk) - Other income for the six-month period increased by **$72.5 million**, largely due to a **$74.2 million** gain on the sale of company-owned service centers in a refranchising transaction[85](index=85&type=chunk) Adjusted EBITDA Reconciliation (in millions) | Metric | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Income from continuing operations | $132.2 | $77.2 | | Adjustments (Taxes, Interest, D&A) | $136.7 | $105.2 | | **EBITDA from continuing operations** | **$268.9** | **$182.4** | | Key Item Adjustments | $(61.7) | $12.9 | | **Adjusted EBITDA from continuing operations** | **$207.2** | **$195.3** | [Financial Position, Liquidity and Capital Resources](index=31&type=section&id=Financial%20Position,%20Liquidity%20and%20Capital%20Resources) The company's capital allocation prioritizes growth, with operating cash flow at **$93.2 million** and negative free cash flow due to increased capital expenditures, pausing share repurchases to prioritize debt repayment for the pending acquisition Free Cash Flow (in millions) | Metric | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Cash flows provided by operating activities | $93.2 | $92.1 | | Less: Maintenance capital expenditures | $(15.6) | $(13.6) | | **Free cash flow excluding growth capital expenditures** | **$77.6** | **$78.5** | | Less: Growth capital expenditures | $(89.8) | $(73.6) | | **Free cash flow** | **$(12.2)** | **$4.9** | - During the six months ended March 31, 2025, the Company repurchased **1.6 million shares** for **$59.8 million**, with **$325.0 million** remaining under current authorization[103](index=103&type=chunk) - Share repurchase activity has been paused to accelerate debt repayment in connection with the pending Breeze Autocare acquisition[105](index=105&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes to the company's market risks were identified during the six months ended March 31, 2025 - There were no material changes to market risks in the six months ended March 31, 2025[110](index=110&type=chunk) [Controls and Procedures](index=35&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls and procedures were deemed ineffective as of March 31, 2025, due to a material weakness in internal control over financial reporting related to a new ERP system, with remediation efforts underway - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to a material weakness in internal control over financial reporting[112](index=112&type=chunk) - The material weakness, initially reported in the quarter ended March 31, 2024, following a new ERP implementation, relates to ineffective IT general controls (user access, change management) and the design of certain business process controls[116](index=116&type=chunk)[117](index=117&type=chunk) - The material weakness did not result in any identified material misstatements in the financial statements[113](index=113&type=chunk)[118](index=118&type=chunk) - Management is actively executing a remediation plan, including enhancing access controls, improving change management, and validating control design, with completion expected in fiscal 2025[119](index=119&type=chunk)[121](index=121&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=38&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in various ordinary course legal proceedings, with management believing pending matters will not materially affect financial statements - The company is involved in ordinary course lawsuits and legal proceedings; for details, refer to Note 7 of the Notes to Condensed Consolidated Financial Statements[123](index=123&type=chunk) [Risk Factors](index=38&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to the company's risk factors were reported for the period - No material changes to the Company's risk factors were reported for the period[124](index=124&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During Q2 FY2025, the company repurchased **573,182 shares** for **$35.77 per share** in January, with **$325.0 million** remaining for future repurchases Share Repurchases (Q2 FY2025) | Monthly Period | Total Shares Purchased | Average Price Paid | Value Remaining (in millions) | | :--- | :--- | :--- | :--- | | January 2025 | 573,182 | $35.77 | $325.0 | | February 2025 | — | $— | $325.0 | | March 2025 | — | $— | $325.0 | [Exhibits](index=39&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files

Group 1 - Valvoline reported $403.2 million in revenue for the quarter ended March 2025, a year-over-year increase of 3.7% [1] - The EPS for the same period was $0.34, down from $0.37 a year ago, with an EPS surprise of -5.56% compared to the consensus estimate of $0.36 [1][3] - The reported revenue was slightly below the Zacks Consensus Estimate of $404.05 million, resulting in a surprise of -0.21% [1] Group 2 - Valvoline's same-store sales growth was 5.8%, exceeding the average estimate of 5.5% by six analysts [4] - The total system-wide stores were reported at 2,078, slightly below the average estimate of 2,088 by four analysts [4] - Company-operated same-store sales growth was 4.8%, below the average estimate of 5.3% by four analysts [4] Group 3 - Valvoline's stock has returned +3.8% over the past month, compared to the S&P 500 composite's +11.3% change [3] - The company currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - System wide sales increased by 11% to $826 million, with same store sales growth of 5.8% for the quarter [7][20] - Total net sales rose by 11% to $403 million when adjusted for refranchising impacts [7][20] - Adjusted EBITDA increased by 6%, reaching $104 million, while adjusted net income rose by 3% to $44 million [20][24] - Gross margin rate declined by 30 basis points year over year to 37.3%, with adjusted EBITDA margin at 25.9%, a decrease of 110 basis points [22][23] Business Line Data and Key Metrics Changes - The system wide store count increased by 8% to 2,078 stores [7] - Approximately one third of same store sales growth came from transactions, with the remainder driven by ticket growth [21][32] - Non-oil change revenue continues to grow, contributing positively to overall sales [88][91] Market Data and Key Metrics Changes - The company has not seen evidence of customers deferring service or trading down, indicating strong demand resilience [12][46] - The company maintains a market share of about 5% in the overall market for oil changes, suggesting significant growth potential [12] Company Strategy and Development Direction - The company is focused on network growth, with plans to add approximately 200 stores through the acquisition of Breeze Auto Care [16][104] - Strategic priorities include enhancing marketing capabilities and improving customer engagement through technology investments [13][14] - The company aims to leverage its strong brand and service experience to differentiate itself from competitors [12][64] Management's Comments on Operating Environment and Future Outlook - Management expects minimal impact from tariffs and is confident in navigating cost changes through pricing adjustments and cost reduction efforts [10][27] - The company remains optimistic about growth potential, citing strong fundamentals and resilient demand drivers in the industry [12][27] - Management reaffirmed guidance for same store sales growth in the range of 5% to 7% for the full year [54] Other Important Information - The company is transitioning to a new CFO, Kevin Willis, effective May 19 [8] - Management highlighted the importance of customer service quality, with a customer rating of 4.7 out of 5 stars based on over a million surveys [15] Q&A Session Summary Question: Can you break out the 5.8% same store sales between ticket and car count? - Transactions drove about a third of the overall comp, with two thirds driven by ticket growth, impacted by weekday mix and Easter shifts [32][33] Question: Will you take cost actions on SG&A costs? - Management indicated that SG&A growth is expected to moderate, and they are focused on cost efficiency and management [36][39] Question: What is the cadence of comps throughout the quarter? - A weaker February was noted due to weather, but January and March showed consistent performance [45][46] Question: Are you seeing any impact from base oil deflation? - Modest deleverage in product costs was observed, with expectations for potential benefits from declining crude prices in the future [48][49] Question: What can we expect with the drivers of same store sales growth in the second half? - A balance between ticket and transaction growth is anticipated, with continued focus on customer acquisition and retention [71][73] Question: How do lower oil prices impact your gross margins? - Lower oil prices generally lead to delayed impacts on lubricant costs, with expectations for potential tailwinds if prices remain low [80][81] Question: What is the current penetration rate for non-oil change services? - The penetration rate for non-oil change services has been growing, with increases across all quartiles of household income [88][91] Question: Will you expect to see deferral of oil change intervals in a softer macro environment? - Management believes that customers are more likely to maintain their vehicles to avoid larger repair costs, indicating resilience in demand [97][98]

Financial Data and Key Metrics Changes - System wide sales increased by 11% to $826 million, with same store sales growth of 5.8% for the quarter [6][20] - Total net sales rose by 11% to $403 million when adjusted for refranchising impacts [6][20] - Adjusted EBITDA increased by 6% to $104 million, with an adjusted EBITDA margin of 25.9%, a decrease of 110 basis points year over year [6][23] Business Line Data and Key Metrics Changes - The system wide store count reached 2,078, an 8% increase year over year [6] - Approximately one third of same store sales growth came from transactions, with the remainder driven by ticket growth [31][32] - Non-oil change revenue continues to grow, contributing positively to overall sales [90][93] Market Data and Key Metrics Changes - The company has not observed significant changes in consumer behavior despite macroeconomic uncertainties, with continued demand for services [12][44] - The company maintains a market share of about 5% in the overall market for oil changes, indicating substantial growth potential [12] Company Strategy and Development Direction - The company is focused on network growth, with plans to add approximately 200 stores through the acquisition of Breeze Auto Care [16][111] - Strategic priorities include enhancing marketing capabilities and improving customer engagement through technology investments [13][14] - The company aims to leverage its strong brand and customer data to differentiate itself from competitors [12] Management's Comments on Operating Environment and Future Outlook - Management expects minimal impact from tariffs and is confident in navigating cost changes through various strategies [10][26] - The company reaffirms its guidance for same store sales growth in the range of 5% to 7% for the full year [53][118] - Management remains optimistic about the resilience of the business, citing strong fundamentals and demand drivers in the industry [12][44] Other Important Information - The company is transitioning to a new CFO, Kevin Willis, effective May 19 [6] - Share repurchases for Q2 totaled $21 million, with a year-to-date total of $60 million, paused in anticipation of the Breeze acquisition [25] Q&A Session Summary Question: Can you break out the 5.8% same store sales between ticket and car count? - Transactions drove about a third of the overall comp, with two thirds driven by ticket growth, impacted by weekday mix and Easter shifts [31][32] Question: Is there a plan to take cost actions regarding SG&A? - Management expects SG&A growth to moderate and leverage to improve as refranchising impacts lessen [34][36] Question: Can you provide perspective on the cadence of comps throughout the quarter? - February was weaker due to challenging weather, but January and March showed consistent performance [42] Question: Are you seeing any impact from base oil deflation? - Modest deleverage in product costs was noted, with expectations for potential benefits from declining crude prices in the future [45][84] Question: What is the current penetration rate for non-oil change services? - The penetration rate for non-oil change services has been growing, with significant contributions from visual elements like wipers and filters [90][92] Question: How do lower oil prices impact gross margins? - Lower oil prices generally lead to delayed adjustments in lubricant pricing, with potential tailwinds expected if crude prices remain low [82][84]

Financial Performance - System-wide store sales reached $826 million, an increase of 11%[7] - Net sales were $403 million, up by 11%[8] - Adjusted EBITDA was $104 million, a 6% increase[11] - Adjusted EPS increased by 3% to $034[10] Network Growth - Valvoline achieved 58% system-wide same store sales growth[15] - The company added 33 net new stores, including 15 franchise and 18 company-operated locations[12] - Total system locations reached 2,078, an 8% increase[13] Strategic Initiatives - Refranchising and new partnerships are expected to add over 20 stores in fiscal year 2025[22, 25] - The company is targeting 250 unit additions per year[22, 25] Fiscal Year 2025 Guidance - Valvoline reaffirms its fiscal year 2025 guidance[48] - The company expects same store sales growth between 5% and 7%[52] - System-wide store additions are projected to be between 160 and 185[52] - Adjusted EBITDA is expected to be between $450 million and $470 million[52] - Adjusted EPS is projected to be between $157 and $167[52]

Company Performance - Valvoline reported quarterly earnings of $0.34 per share, missing the Zacks Consensus Estimate of $0.36 per share, and down from $0.37 per share a year ago, representing an earnings surprise of -5.56% [1] - The company posted revenues of $403.2 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.21%, compared to year-ago revenues of $388.7 million [2] - Over the last four quarters, Valvoline has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Outlook - Valvoline shares have lost about 4.5% since the beginning of the year, slightly underperforming the S&P 500's decline of -4.3% [3] - The current consensus EPS estimate for the coming quarter is $0.47 on revenues of $445.32 million, and for the current fiscal year, it is $1.69 on revenues of $1.71 billion [7] - The estimate revisions trend for Valvoline is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Automotive - Retail and Wholesale - Parts industry, to which Valvoline belongs, is currently in the top 19% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Exhibit 99.1 PRESS RELEASE Valvoline Inc. Reports Second Quarter Results Delivers sales of $403 million, 5.8% system-wide SSS growth; Announces new CFO LEXINGTON, Ky., May 8, 2025 – Valvoline Inc. (NYSE: VVV), the quick, easy, trusted leader in preventive automotive maintenance, today reported financial results for its second quarter ended March 31, 2025. All comparisons in this press release are made to the same prior-year period unless otherwise noted. "For the second quarter, the business performed in li ...