Valvoline(VVV) - 2024 Q4 - Annual Results

Sales Performance - Sales from continuing operations for fiscal year 2024 reached $1.6 billion, a 12% increase driven by system-wide same-store sales (SSS) growth of 6.7%[3] - Fourth quarter sales from continuing operations were $436 million, up 12%, with system-wide SSS growth of 5.4%[4] - Net revenues for the year ended September 2024 increased to $1,619.0 million from $1,443.5 million in 2023, representing a growth of 12.2%[28] - System-wide store sales for Q3 2024 reached $826.8 million, a 12.0% year-over-year growth[34] - Reported net revenues for Q3 2024 were $435.5 million, a 11.7% increase from $390.0 million in Q3 2023[40] Store Growth and Expansion - System-wide store count increased by 9% YoY to 2,010 stores, with 158 net stores added during the fiscal year[3][7] - Total system-wide store count as of September 30, 2024, was 2,010, an 8.5% year-over-year increase[34] - Company-operated stores opened 26 new locations in Q4 2024, bringing the total to 950[36] - Franchised stores opened 13 new locations in Q4 2024, reaching a total of 1,060[36] Financial Metrics and Profitability - Adjusted EBITDA for fiscal year 2024 grew 17% to $443 million, with an adjusted EBITDA margin improvement of 100 bps to 27.3%[3] - Fourth quarter adjusted EBITDA increased 14% to $124 million, and adjusted EPS rose 18% to $0.46[4] - Gross profit for the year ended September 2024 rose to $618.8 million from $544.5 million in 2023, an increase of 13.7%[28] - Operating income for the year ended September 2024 grew to $367.2 million from $247.2 million in 2023, a significant increase of 48.5%[28] - Net income for the year ended September 2024 was $211.5 million, compared to $1,419.7 million in 2023, primarily due to discontinued operations[28] - Diluted earnings per share from continuing operations for the year ended September 2024 increased to $1.63 from $1.23 in 2023[27] - Reported income from continuing operations for Q3 2024 was $89.1 million, up from $75.0 million in Q3 2023[38] - Adjusted income from continuing operations for Q3 2024 was $60.5 million, compared to $53.6 million in Q3 2023[38] - EBITDA from continuing operations for Q3 2024 was $162.1 million, up from $136.9 million in Q3 2023[40] - Adjusted EBITDA margin for Q3 2024 was 28.5%, slightly higher than the 28.0% in Q3 2023[40] Shareholder Returns and Capital Allocation - Company returned $227 million to shareholders via share repurchases in fiscal 2024, with $385 million remaining in share repurchase authorization[3][11] - Repurchases of common stock for the year ended September 2024 totaled $226.8 million, significantly lower than $1,524.8 million in 2023[32] Fiscal Year 2025 Outlook - Fiscal year 2025 outlook projects system-wide SSS growth of 5.0% to 7.0% and network growth of 160 to 185 stores[11] - Expected fiscal year 2025 net revenues are forecasted to grow 10 to 14% to $1.67 billion to $1.73 billion, with adjusted EBITDA of $450 million to $470 million[11] Refranchising and Transactions - Three announced refranchising transactions represented about $100 million of revenue and $24 million of adjusted EBITDA in fiscal year 2024[11] Cash Flow and Debt Management - Cash and cash equivalents balance stood at $68 million, with total debt of $1.1 billion following the repurchase of all outstanding 2030 Senior Notes in the third quarter[11] - Long-term debt decreased to $1,070.0 million as of September 2024 from $1,562.3 million in 2023, reflecting debt repayments[30] - Cash flows from operating activities for the year ended September 2024 were $265.1 million, compared to a negative $40.8 million in 2023[32] - Free cash flow from continuing operations for the year ended September 30, 2024 was $58.5 million, compared to $172.5 million in 2023[42] - Discretionary free cash flow from continuing operations for the year ended September 30, 2024 was $247.0 million, compared to $323.5 million in 2023[42] - Operating cash flows from continuing operations for the year ended September 30, 2024 were $282.9 million, down from $353.0 million in 2023[42] - Debt extinguishment and modification costs were incurred in connection with the 2030 Notes redemption and amended Senior Credit Agreement[55] Capital Expenditures - Additions to property, plant, and equipment for the year ended September 2024 were $224.4 million, up from $180.5 million in 2023[32] - Additions to property, plant and equipment for the year ended September 30, 2024 were $224.4 million, up from $180.5 million in 2023[42] - Maintenance additions to property, plant and equipment for the year ended September 30, 2024 were $35.9 million, up from $29.5 million in 2023[42] Asset and Liability Management - Total assets decreased to $2,438.7 million as of September 2024 from $2,889.9 million in 2023, mainly due to a reduction in current assets[30] - A former Global Products business was classified as held for sale and impaired as of September 30, 2023, and subsequently sold in Q1 2024[53] Tax and Expense Recognition - The company recognized $25.7 million of pre-tax expense for increased estimated indemnity obligation in fiscal 2023, resulting in a $29.0 million income tax benefit[51] Information Technology Transition - Information technology transition costs were incurred in fiscal 2023 and 2024 for implementing stand-alone ERP and HRIS systems[52]