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Financial Data and Key Metrics Changes - System-wide store sales increased by 10% to $3.5 billion, marking the 19th consecutive year of same-store sales growth [4][6] - Adjusted EBITDA grew by double digits, reflecting the impacts of refranchising and technology investments [4][6] - For Q4, net sales reached $454 million, a 4% increase on a reported basis and a 10% increase when adjusted for refranchising [14][15] - Adjusted EPS was $1.59 per share, at the low end of the guidance range [7][14] Business Line Data and Key Metrics Changes - The company added 170 new system-wide stores, bringing the total to 2,180 across the U.S. and Canada [4][10] - Same-store sales growth for the fiscal year was 6.1%, with transaction growth accounting for over one-third of the comp [14][15] - The gross margin rate remained flat at 39.1%, with labor leverage offsetting increased product costs [15][16] Market Data and Key Metrics Changes - The company refranchised three markets: Denver, Las Vegas, and West Texas, leading to a 150% increase in new store additions in these markets compared to the prior year [10][11] - The fleet business continues to grow faster than the consumer business, indicating strong demand for quick and convenient service [12] Company Strategy and Development Direction - The strategic priorities include driving the full potential of the core business, delivering sustainable network growth, and innovating to meet customer needs [7][8] - The company plans to close the Breeze AutoCare acquisition, which will add 162 stores to its network, enhancing its market position [11][18] - The focus remains on leveraging technology and operational efficiencies to improve store-level performance and customer experience [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core business's performance for fiscal 2026, expecting same-store sales growth of 4%-6% [35][36] - The company anticipates continued investment in growth while moderating SG&A growth [16][21] - Management noted that the competitive environment remains fragmented, with significant opportunities for market share capture [39][40] Other Important Information - The company ended fiscal 2025 with a leverage ratio of 3.4 times and plans to increase it to approximately 4.2 times post-acquisition [17][18] - Capital expenditures for the year were $259 million, with 70% allocated to new store additions [17] Q&A Session Summary Question: Revenue and EBITDA contribution from Breeze acquisition - Management indicated that the core business is expected to perform well, but specifics on Breeze's contribution are still being assessed [23][24] Question: Same-store sales guidance and its components - Management confirmed that the same-store sales guidance reflects a balance between transaction and ticket growth, with expectations for consistency across quarters [52][53] Question: Margin outlook for 2026 - Management noted that while new acquisitions typically have lower margins initially, they expect margin improvement as the new stores are integrated [44][46] Question: Impact of higher product costs - Management explained that product costs are influenced by crude oil pricing and supply chain inflation, with expectations for continued headwinds in fiscal 2026 [64][66] Question: Interest expense increase and its impact on EPS - Management acknowledged that higher depreciation and an increased effective tax rate contributed to the lower-than-expected EPS [69][70]

Financial Data and Key Metrics Changes - System-wide store sales increased by 10% to $3.5 billion, marking the 19th consecutive year of same-store sales growth [4][6] - Adjusted EBITDA grew by double digits, reflecting the impacts of refranchising and technology investments [4][6] - For Q4, net sales reached $454 million, a 4% increase on a reported basis and a 10% increase when adjusted for refranchising [14][15] - Adjusted EPS was $1.59 per share, at the low end of the guidance range [7][14] Business Line Data and Key Metrics Changes - The company added 170 new system-wide stores, bringing the total to 2,180 across the U.S. and Canada [4][10] - Same-store sales growth for the fiscal year was 6.1%, with transaction growth accounting for over one-third of the comp [14][15] - The gross margin rate remained flat at 39.1%, with labor leverage contributing to a 120 basis point improvement [15][16] Market Data and Key Metrics Changes - The company refranchised three markets: Denver, Las Vegas, and West Texas, leading to a 150% increase in new store additions in these markets compared to the previous year [10][11] - Fleet growth outpaced consumer business growth, indicating a strong demand for speed and convenience in service [12] Company Strategy and Development Direction - The company aims to drive the full potential of its core business, focusing on transaction and ticket growth through increased store-level efficiency [7][8] - Plans to continue sustainable network growth and innovate to meet evolving customer needs [8][10] - The Breeze AutoCare acquisition is expected to close on December 1, adding 162 stores to the network and enhancing growth opportunities [11][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core business's performance for fiscal 2026, expecting same-store sales growth of 4%-6% [18][35] - The company anticipates continued investments in growth while moderating SG&A growth [16][21] - Management noted that the competitive environment remains fragmented, with significant market share still available for capture [39][40] Other Important Information - The company ended fiscal 2025 with a leverage ratio of 3.4 times and plans to increase it to approximately 4.2 times due to the Breeze acquisition [17][18] - Capital expenditures for the year were $259 million, with 70% allocated to new store additions [17] Q&A Session Summary Question: Revenue and EBITDA contribution from Breeze - Management indicated that the core business is expected to perform well, but specifics on Breeze's contribution are still being assessed [23][24] Question: Same-store sales guidance and its drivers - Management confirmed that the same-store sales guidance reflects a balance between transaction and ticket growth, with expectations for continued performance [32][35] Question: Margin outlook for 2026 - Management noted that while SG&A growth is expected to moderate, the inclusion of the Breeze acquisition may complicate margin analysis [43][44] Question: Impact of higher product costs - Management acknowledged that higher product costs have been a drag, but they expect potential benefits from declining base oil prices in the future [64][66] Question: Interest expense increase and its impact on EPS - Management explained that higher depreciation and an increased effective tax rate contributed to the lower-than-expected EPS [67][69]

Financial Data and Key Metrics Changes - System-wide store sales increased by 10% to $3.5 billion, marking the 19th consecutive year of same-store sales growth [4][6] - Adjusted EBITDA grew by double digits, reflecting the impacts of refranchising and technology investments [4][6] - For Q4, net sales reached $454 million, a 4% increase on a reported basis and a 10% increase when adjusted for refranchising [13][14] - Fiscal year net sales grew 12% to $1.7 billion when adjusted for refranchising, with same-store sales growing 6.1% [13][14] Business Line Data and Key Metrics Changes - Transaction growth accounted for over one-third of same-store sales growth, with contributions from premiumization, net pricing, and increased NOCR penetration [13][14] - Adjusted EPS for the year was $1.59 per share, at the low end of the guidance range [6][13] - Capital expenditures for the year were $259 million, with 70% allocated to new store additions [17] Market Data and Key Metrics Changes - The company added 170 new system-wide stores, bringing the total to 2,180 across the U.S. and Canada [4][6] - Franchise partners committed to significant development agreements, leading to a 150% increase in new store additions in refranchised markets [10] Company Strategy and Development Direction - The company aims to drive the full potential of its core business, focusing on transaction and ticket growth while enhancing store-level efficiency [6][7] - Plans to continue sustainable network growth and innovate to meet evolving customer needs [7][10] - The acquisition of Breeze AutoCare is expected to close on December 1, adding 162 stores to the network [10][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core business's performance for fiscal 2026, expecting same-store sales growth of 4%-6% and overall network growth of 330-360 new stores [18][19] - The company anticipates adjusted EPS of $1.60-$1.70 per share for fiscal 2026, reflecting a 4% growth over the prior year [19] - Management noted that the competitive environment remains consistent, with no markets avoided due to competition [36] Other Important Information - The company ended fiscal 2025 with a leverage ratio of 3.4 times, with plans to return to the target leverage ratio of 3.0 times within 18 to 24 months [17][18] - The gross margin rate was flat year-over-year at 39.1%, with operating leverage generating a 60-basis-point improvement [15][16] Q&A Session Summary Question: Revenue and EBITDA contribution from Breeze - Management indicated that the core business is expected to perform well, but specifics on Breeze's contribution are not yet available [24][25] Question: Decline in EBITDA margins for fiscal 2026 - Management acknowledged that the inclusion of Breeze will complicate margin analysis, but they expect continued performance from the core business [24][25] Question: Same-store sales guidance and traffic vs. ticket mix - Management confirmed that the same-store sales guidance reflects a balance between transaction and ticket growth, with expectations for consistency across quarters [41][46] Question: Impact of higher product costs - Management noted that product costs have been impacted by crude oil pricing and supply chain inflation, which may continue into fiscal 2026 [59][60] Question: Interest expense increase and EPS impact - Management explained that higher depreciation and an increased effective tax rate contributed to the lower-than-expected EPS, alongside higher interest expenses [62][63]

Core Insights - Valvoline reported quarterly earnings of $0.45 per share, missing the Zacks Consensus Estimate of $0.48 per share, and showing a slight decrease from $0.46 per share a year ago, resulting in an earnings surprise of -6.25% [1] - The company posted revenues of $453.8 million for the quarter ended September 2025, which was also below the Zacks Consensus Estimate by 0.28%, but an increase from $435.5 million year-over-year [2] - Valvoline shares have declined approximately 13.2% year-to-date, contrasting with the S&P 500's gain of 12.5% [3] Earnings Outlook - The future performance of Valvoline's stock will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.39 on revenues of $450.72 million, and for the current fiscal year, it is $1.88 on revenues of $1.9 billion [7] Industry Context - Valvoline operates within the Zacks Oil and Gas - Refining and Marketing industry, which is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable industry outlook [8] - Historical data suggests that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [8]

Financial Highlights - System-wide store sales reached $3.5 billion, an increase of 11%[8] - Net sales were $1.7 billion, up by 12%[8] - Adjusted EBITDA was $467 million, reflecting an increase of 11%[10] - Adjusted EPS was $1.59[12] Store Network Growth - Net store additions totaled 170[11] - System locations reached 2,180, an increase of 8%[13] Same Store Sales Growth - System-wide same store sales growth was 6.1%[9] FY2026 Guidance (Includes Breeze) - System-wide same store sales growth is projected to be between 4% and 6%[58] - Net revenues are expected to range from $2.0 billion to $2.1 billion[58] - Adjusted EBITDA is forecasted to be between $525 million and $550 million[58] Balance Sheet - Cash and cash equivalents totaled $51.6 million[53] - Total debt amounted to $1.074 billion[53] Cash Flow - Cash flows from operating activities were $307.1 million[55] - Capital expenditures totaled $259.2 million[55]

Financial Performance - Valvoline reported fourth quarter sales of $454 million, a 4% increase year-over-year, and full-year sales of $1.7 billion, growing 6%[6]. - The company achieved an adjusted EBITDA of $130 million in Q4, a 5% increase, and $467 million for the full year, up 6%[10]. - Valvoline's earnings per diluted share (EPS) for Q4 was $0.20, a 71% decline, while full-year EPS was $1.67, an increase of 2%[10]. - Operating income for the three months ended September 30, 2025, was $84.5 million, a decrease of 37.2% from $134.6 million in the same period of 2024[29]. - The diluted earnings per share for the year ended September 30, 2025, was $1.64, compared to $1.61 in 2024, reflecting a growth of 1.9%[29]. - The adjusted diluted earnings per share from continuing operations for Q4 2025 was $0.45, compared to $0.46 in Q4 2024[37]. - The net profit margin for Q4 2025 was 5.6%, a decrease from 20.5% in Q4 2024[39]. - The company reported an income from continuing operations of $25.6 million for Q4 2025, a significant decrease from $89.1 million in Q4 2024[37]. - Total adjustments after tax for Q4 2025 amounted to $32.4 million, impacting the adjusted income from continuing operations[37]. Revenue and Sales Growth - System-wide same-store sales (SSS) increased by 6.0% in Q4 and 6.1% for the fiscal year, with system-wide store sales growing 11% in both periods[10]. - Net revenues for the three months ended September 30, 2025, were $453.8 million, an increase of 4.9% from $435.5 million in the same period of 2024[29]. - Gross profit for the year ended September 30, 2025, was $658.5 million, up from $618.8 million in 2024, reflecting a year-over-year increase of 6.4%[29]. - System-wide store sales for the three months ended September 30, 2025, reached $918.4 million, representing a year-over-year growth of 11.1%[33]. - Valvoline reported a year-over-year same-store sales growth of 6.0% for the three months ended September 30, 2025, consistent with the previous year's performance[33]. Store Expansion and Acquisition - The company plans to close the acquisition of Breeze Autocare on December 1, 2025, expecting to add a net of 162 stores post-acquisition[10]. - The company plans to add 330 to 360 new stores in fiscal 2026, contributing to its growth strategy[9]. - The total store count increased by 56 in Q4, bringing the system-wide total to 2,180 stores, an 8% year-over-year increase[10]. - The number of company-operated stores increased to 1,016 as of September 30, 2025, compared to 950 in the same period of 2024, marking a growth of 6.9%[33]. - Valvoline's total system-wide stores increased to 2,180 by the end of Q4 2025, up from 2,010 in Q4 2024, representing a growth of 8.5% year-over-year[35]. - Valvoline opened 26 company-operated stores in Q4 2025, compared to 26 in Q4 2024, maintaining its expansion strategy[35]. Cash Flow and Shareholder Returns - Valvoline returned $60 million to shareholders through share repurchases during the fiscal year[6]. - Valvoline's operating cash flow from continuing operations for the full year was $307 million, with free cash flow of $48 million[10]. - Cash flows from operating activities for the year ended September 30, 2025, totaled $297.2 million, compared to $265.1 million in 2024, indicating an increase of 12.1%[32]. - Free cash flow from continuing operations for the year ended September 30, 2025, was $47.9 million, down from $58.5 million in 2024[42]. - Valvoline's operating cash flows from continuing operations for the year ended September 30, 2025, were $307.1 million, an increase from $282.9 million in 2024[42]. Future Projections - For fiscal 2026, Valvoline projects net revenues between $2.0 billion and $2.1 billion, with adjusted EBITDA expected to be between $525 million and $550 million[9]. - Valvoline anticipates continued growth through the proposed acquisition of Breeze Autocare, which is expected to enhance shareholder value and operational synergies[26].

Core Insights - Valvoline (VVV) is expected to report quarterly earnings of $0.48 per share, reflecting a 4.4% increase year-over-year, with revenues forecasted at $455.07 million, a 4.5% increase compared to the previous year [1] Earnings Projections - Changes in earnings projections are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate trends and short-term stock price movements [2] Analyst Forecasts - Analysts predict 'Same-store sales growth - System-wide' at 5.5%, slightly up from 5.4% a year ago [4] - The average estimate for 'System-wide stores - Franchised stores' is 1,165, up from 1,060 in the same quarter last year [4] - Total 'System-wide stores' are expected to reach 2,182, compared to 2,010 a year ago [4] Company-operated Metrics - 'Same-store sales growth - Company-operated' is projected at 5.1%, down from 5.9% in the same quarter last year [5] - 'Same-store sales growth - Franchised' is expected to be 5.6%, up from 5.1% a year ago [5] - 'System-wide stores - Company-operated stores' are estimated at 1,017, compared to 950 last year [6] - 'Stores Opened - Franchised' is projected to reach 25, up from 13 in the same quarter last year [6] - 'Stores Opened - Company-operated' is expected to remain at 26, unchanged from the previous year [7] Stock Performance - Over the past month, Valvoline shares have declined by 9.8%, while the Zacks S&P 500 composite has increased by 1.5% [7] - Valvoline holds a Zacks Rank 4 (Sell), indicating a likely underperformance compared to the overall market in the near term [7]

Core Insights - Valvoline Instant Oil Change has achieved the 37th position in the Franchise Times Top 400, which ranks the largest U.S. franchise systems based on global systemwide sales from the previous year [1][2] Company Overview - Valvoline Inc. operates approximately 2,100 franchised and company-operated service centers across the U.S. and Canada, completing over 28 million services annually, including 15-minute stay-in-your-car oil changes and various preventive maintenance services [3] - The company franchises more than half of its Valvoline Instant Oil Change locations in the U.S., emphasizing quick and efficient service [2] Leadership and Growth - The recognition in the Franchise Times Top 400 is attributed to the strength and entrepreneurial spirit of Valvoline's franchisees, highlighting the company's commitment to supporting their growth [2] - Valvoline Inc. employs around 11,000 team members focused on expanding the core business and planning for future vehicle needs [3]

Core Insights - Trade tariffs on original equipment manufacturers (OEMs) have negatively impacted stock prices, pushing some below their 52-week highs due to ongoing concerns about revenue and cost uncertainties [1] - Not all companies are equally affected by these tariffs, indicating the need for differentiated analysis to identify potential investment opportunities [1] - The focus is on undervalued growth companies that can justify a premium based on developments not yet reflected in their stock prices, suggesting a strategy for identifying hidden value [1] Company Analysis - The experience from institutions like Goldman Sachs and Citigroup has contributed to the ability to perform in-depth company analyses and identify special opportunities in long/short equity portfolios [1] - The emphasis on breaking down investment ideas for the common participant highlights a commitment to making complex financial insights accessible [1] Market Trends - The current market environment is characterized by price and cost uncertainty, which is affecting investor sentiment and stock valuations [1] - The analysis suggests that there are still viable investment opportunities within the market, particularly in sectors that may be undervalued due to external pressures like tariffs [1]