Valvoline(US:VVV)2025-05-08 11:00Financial Performance - Valvoline reported second quarter sales of $403 million, representing a 4% year-over-year growth, and a system-wide same-store sales (SSS) growth of 5.8%[4] - The company experienced a decline in income from continuing operations of 12% to $38 million, with earnings per diluted share (EPS) decreasing by 9% to $0.30[4] - Adjusted EBITDA for the quarter was $104 million, a decline of 1%, but would have increased by 6% when accounting for refranchising impacts[4] - Net revenues for the three months ended March 31, 2025, were $403.2 million, a 3.5% increase from $388.7 million in the same period of 2024[22] - Gross profit for the six months ended March 31, 2025, was $303.4 million, compared to $281.0 million for the same period in 2024, reflecting a 7.9% increase[22] - Operating income for the six months ended March 31, 2025, was $210.7 million, significantly higher than $139.2 million for the same period in 2024[22] - The company reported net income of $129.2 million for the six months ended March 31, 2025, compared to $73.3 million for the same period in 2024, marking a 76.3% increase[24] - Reported net revenues for Q2 2025 were $403.2 million, an increase from $388.7 million in Q2 2024, representing a growth of 3.5%[31] - Reported income from continuing operations for Q2 2025 was $38.3 million, down from $43.3 million in Q2 2024, a decrease of 11.6%[31] - Adjusted diluted earnings per share from continuing operations for Q2 2025 was $0.34, compared to $0.37 in Q2 2024, a decline of 8.1%[31] - Free cash flow from continuing operations for the six months ended March 31, 2025, was negative $12.2 million, compared to positive $4.9 million in the same period of 2024[34] - Net profit margin for Q2 2025 was 9.5%, down from 11.1% in Q2 2024, indicating a decrease of 1.6 percentage points[31] - Adjusted EBITDA from continuing operations for the six months ended March 31, 2025, was $207.2 million, compared to $195.3 million for the same period in 2024, reflecting an increase of 6.9%[31] - Adjusted EBITDA margin for the six months ended March 31, 2025, was 25.3%, slightly down from 25.6% in the same period of 2024[31] Store Operations - Valvoline added 33 new stores in the quarter, comprising 15 franchise and 18 company-operated locations, bringing the total system-wide store count to 2,078[4] - The company is on track to achieve its target of 160 to 185 new store additions for the fiscal year 2025[10] - System-wide store sales for the three months ended March 31, 2025, reached $825.5 million, representing a year-over-year growth of 10.6%[25] - Same-store sales growth for company-operated stores was 4.8% for the three months ended March 31, 2025, compared to 8.2% in the same period of 2024[25] - The number of company-operated stores increased to 950 as of March 31, 2025, from 932 at the end of the previous quarter[27] Cash Flow and Debt - The company has a cash and cash equivalents balance of $62 million and total debt of $1.1 billion[14] - Year-to-date operating cash flow from continuing operations was $93 million, with a free cash flow of ($12) million[14] - Valvoline returned $21 million to shareholders through share repurchases, totaling $60 million year-to-date, with $325 million remaining in share repurchase authorization[14] - Cash and cash equivalents at the end of the period were $62.3 million, down from $494.5 million at the end of the same period in 2024[24] - Total current liabilities decreased to $315.6 million as of March 31, 2025, from $353.9 million as of September 30, 2024[23] Acquisition and Regulatory Matters - Valvoline announced the signing of a definitive agreement to acquire Breeze Autocare, which is expected to enhance growth and earnings potential[3] - The company received a Second Request from the Federal Trade Commission regarding the Breeze Autocare acquisition and is working towards obtaining approval[3] Adjustments and Costs - Total adjustments, after tax, for Q2 2025 amounted to $5.9 million, compared to $5.0 million in Q2 2024[31] - The weighted average diluted common shares outstanding for Q2 2025 were 128.2 million, a decrease from 130.7 million in Q2 2024[31] - Information technology transition costs for Q2 2025 were $4.9 million, compared to $3.1 million in Q2 2024, indicating an increase of 58.1%[31]