Group 1 - Valvoline Instant Oil Change (VIOC) locations in New England are participating in the "A Chance for Kids & Families®" program for the 12th consecutive year to raise funds for Dana-Farber Cancer Institute and the Jimmy Fund [1][2] - Customers can donate $1, $5, or $10 at participating VIOC locations from July 13 to August 2 to support cancer patients and their families [1] - Henley Enterprises, the largest franchisee of VIOC, has raised over $380,000 through this program to support critical research and patient care at Dana-Farber [2] Group 2 - Valvoline Inc. operates more than 2,000 service centers across the U.S. and Canada, completing over 28 million services annually [3] - The company employs 11,000 team members focused on growing the core business and expanding the retail network [3] - Henley Enterprises, founded in 1989, operates over 260 quick-lube service centers in 8 states [4] Group 3 - The Jimmy Fund, established in 1948, supports Dana-Farber Cancer Institute's mission for patient care and cancer research through community fundraising events [5] - The Jimmy Fund is an official charity of the Boston Red Sox and has received support from millions of people since its inception [5]

Valvoline (VVV) FY Conference Summary Company Overview - **Company**: Valvoline (VVV) - **Industry**: Automotive Services, specifically quick lube and oil change services - **Market Position**: Currently holds a 5% market share in a fragmented market with significant growth potential Key Insights and Arguments 1. **Growth Story**: Valvoline is positioned in a resilient industry with multiple growth drivers including increasing miles driven, aging vehicle ownership, and a shift towards premium synthetic oils [2][3] 2. **Market Opportunity**: The company has a substantial white space opportunity, covering only 35% of the population, indicating potential for expansion [4] 3. **Franchise Partners**: Long-term franchise partners are increasing their commitment to growth, which is expected to enhance Valvoline's market presence [4] 4. **Consumer Behavior**: Despite macroeconomic uncertainties, Valvoline's customer base remains stable, with no significant trade-down or service deferrals observed [10][12] 5. **Impact of Economic Cycles**: Historical data suggests that during economic downturns, consumers may defer purchases but still prioritize vehicle maintenance, benefiting Valvoline [13][15] 6. **Cost Mitigation**: The company has diversified its supply chain to mitigate tariff impacts, with labor being the largest cost component [18][19] 7. **Pricing Strategy**: Valvoline maintains pricing stability in the industry, with a focus on competitive pricing rather than merely passing through costs [21][29] 8. **Ticket Drivers**: Key contributors to ticket growth include premium mix, non-oil change revenue, and strategic pricing adjustments [22][23] 9. **Non-Oil Change Revenue**: This segment has grown to over 20% of the mix, with further opportunities for expansion through improved execution and service offerings [37][41] 10. **Operational Efficiency**: The company is focused on improving throughput and operational standards to enhance customer service and reduce wait times [49][51] Additional Important Points 1. **Refranchising Strategy**: Valvoline is strategically refranchising to create long-term shareholder value, with a focus on development agreements that incentivize franchisees [52][56] 2. **Store Growth Commitment**: The company aims to open 250 new stores by 2027, supported by updated development agreements with franchise partners [64][65] 3. **Margin Outlook**: Valvoline anticipates EBITDA margins to improve over the medium to long term, despite current pressures from investments and refranchising [61][63] 4. **Technology Investments**: Investments in technology and analytics are expected to enhance operational efficiency and customer service [45][46] This summary encapsulates the key points discussed during the Valvoline FY Conference, highlighting the company's growth potential, market dynamics, and strategic initiatives.

Valvoline (VVV) 2025 Conference Summary Company Overview - Valvoline is a leading automotive services platform offering oil changes and preventative maintenance services with approximately 2,100 locations, over half of which are franchised [1][2] Core Industry Insights - The automotive services industry is resilient with positive tailwinds such as increasing miles driven, vehicle complexity, and vehicle age, which are expected to drive growth in ticket and transaction volumes [4][5] - Valvoline's market penetration is low, with only 20% to 25% of oil changes occurring in their channel, indicating significant growth potential [5] Company Strengths - Valvoline has a strong brand presence, nearly 60 years old, which denotes quality and customer loyalty [5] - The company boasts a customer experience rating of 4.7 out of 5 across its stores, serving over a million customers in the past year [6] - Valvoline has developed robust data analytics capabilities for customer and real estate, enhancing marketing efficiency and location selection [6][7] Market Share and Growth Potential - Valvoline currently holds a 5% market share, with some mature markets approaching 20%, indicating substantial upside potential [7][13] - The company aims to grow its network significantly, targeting 3,500+ units by 2027, with a focus on accelerating franchise growth from 50 to 150 new units annually [14][15] Financial Metrics and Investment Returns - New units typically mature in 3 to 5 years, with a projected 30% cash-on-cash return for franchise partners [17][18] - The company is focused on refranchising to enhance shareholder value, leveraging existing franchise partners and developing new ones [19][20] Recent Acquisition - Valvoline announced the acquisition of Breeze, adding 200 locations, which is expected to create synergistic value and enhance market presence [28][30] - The acquisition is under review by the FTC, which is not uncommon for the industry, and Valvoline is optimistic about the outcome [31][32] Same Store Sales and Growth Drivers - Same store sales have compounded close to 10% over the last decade, with a guidance of 5% to 7% for the current year due to more normalized inflationary levels [34][36] - Key drivers for growth include transaction growth from maturing stores, fleet sales, and non-oil change revenue services [38][39] Consumer Behavior Insights - Despite economic uncertainty, consumers are maintaining their vehicles longer and are not trading down in service quality [45][46] - Valvoline is adapting to evolving vehicle maintenance needs, including the rise of electric vehicles, by ensuring convenience and trust in service delivery [58][60] Margin and Cost Management - Valvoline is investing in technology to drive margin expansion, with a long-term goal of increasing margins from 26% to 29% [47][48] - The company anticipates returning to a growth trajectory where profit outpaces sales as it laps previous investments and refranchising impacts [52][53] Conclusion - Valvoline is well-positioned for growth with a strong brand, significant market opportunities, and a focus on enhancing customer experience and operational efficiency. The company is optimistic about its future prospects, driven by strategic growth initiatives and market dynamics.

Core Insights - Valvoline Inc. will participate in two investor conferences in June 2025, indicating active engagement with investors and stakeholders [1][2] Group 1: Investor Conferences - Baird 2025 Global Consumer, Technology & Services Conference will take place on June 3, 2025, at 3:45 p.m. Eastern Time [2] - TD Cowen 9th Annual Future of the Consumer Conference is scheduled for June 4, 2025, at 4:15 p.m. Eastern Time [2] - A live audio webcast of the events will be available on Valvoline's investor relations website, with an archived version accessible afterward [2] Group 2: Company Overview - Valvoline Inc. operates approximately 2,100 franchised and company-operated service centers across the United States and Canada [3] - The company performs over 28 million services annually, including quick oil changes and various maintenance services [3] - Valvoline employs around 11,000 team members focused on business growth, retail network expansion, and future vehicle planning [3]

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]

Core Points - Valvoline Inc. is hosting its international Oilympics competition in Cincinnati on May 13, featuring 40 regional teams from the U.S. and Canada competing for the best service experience [1][2] - The competition showcases over 100 technicians demonstrating Valvoline's service quality, with speed and execution being critical factors for winning [2][4] - The Oilympics has evolved since its inception in 1994, now involving more than 2,000 Valvoline service centers across North America [2][5] Company Overview - Valvoline Inc. operates over 2,000 franchised and company-operated service centers in the U.S. and Canada, completing more than 28 million services annually [5] - The company offers a range of services, including quick oil changes and various maintenance services, emphasizing the importance of its workforce of 11,000 team members [5]

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]