Announces $1.6
Billion Share Repurchase Authorization; Sale of Global
Products Expected to Close in Early Calendar Year 2023
Full-year highlights
- Reported net income of $424.3
million grew 1% and earnings per diluted share (EPS) of
$2.35 grew 3%
- Adjusted EPS of $2.12 improved 9%
and adjusted EBITDA of $674.6 million
increased 7%
- Continuing operations net revenues of $1.2 billion increased 19%, reported net income
of $109.4 million decreased 45% and
adjusted EBITDA of $315.7 million
increased 14%
-
- Continuing operations results reflect supply agreement markup,
agency accounting treatment and indirect expense realignment
- System-wide same-store sales (SSS) increased 13.7% -- the 16th
consecutive year of SSS growth -- and net system-wide unit
additions increased 8%
- Returned $231.8 million in cash
to shareholders via share repurchases and dividends
- Provides fiscal 2023 guidance for continuing operations
adjusted EBITDA of $370 million -
$390 million
Fourth-quarter summary
- Reported net income of $157.7
million declined 7% and EPS of $0.88 decreased 4%
- Adjusted EPS of $0.59 improved
20% and adjusted EBITDA of $181.6
million increased 18%
- Continuing operations sales of $335.4
million increased 14%, reported net income of $12.4 million decreased 90% and adjusted EBITDA
of $87.5 million increased 11%
- System-wide SSS increased 9.2% and net system-wide unit
additions increased 1% during the quarter
- Returned $61.2 million in cash to
shareholders via dividends and share repurchases
LEXINGTON, Ky., Nov. 15,
2022 /PRNewswire/ -- Valvoline Inc. (NYSE: VVV), a
trusted leader in preventive automotive maintenance delivering
quick and convenient service, today reported financial results for
its fourth fiscal quarter and fiscal year ended September 30,
2022. All comparisons in this press release are made to the same
prior-year period unless otherwise noted. Refer to the Reporting
Changes and Basis of Presentation sections below for
additional information on continuing and discontinued operations
presentation. Prior periods have been recast on a consistent
basis.
"We see significant strength in our preventive maintenance
service model with system-wide store sales growing 20% to nearly
$2.4 billion in fiscal 2022," said
Sam Mitchell, CEO. "These results
were driven by a nearly 14% increase in system-wide same-store
sales – highlighting our 16th straight year of growth – and an
increase of 8% in our system-wide store count to more than 1,700
units.
"The sale of the Global Products business remains on track with
the close expected in early calendar year 2023. As a pure-play
automotive retail service provider, Valvoline's strategy is to
continue growing our preventive maintenance business through
ongoing improvements in service performance and investments in
network expansion, while continuing to develop capabilities for an
evolving car parc.
"The additional benefits of the separation are clear: we expect
to optimize our capital structure using the net proceeds from the
transaction and enhance our capital allocation. To that end, our
board has approved a $1.6 billion
share repurchase authorization. Combined with our growth strategy,
we are excited about the future and the compelling opportunities to
drive long-term shareholder value."
Results Summary
Retail Services
Historical Segment Results (a) - Fiscal Year
2022
|
(In millions, except
store count)
|
FY22 results
|
YoY growth
|
Net revenues
|
$ 1,490.9
|
22 %
|
Operating
income
|
$
349.2
|
9 %
|
Adjusted
EBITDA
|
$
421.6
|
11 %
|
System-wide
SSS
|
|
13.7 %
|
System-wide
units
|
1,715
|
8 %
|
System-wide store
sales
|
$ 2,360.2
|
20 %
|
|
|
(a)
|
The financial metrics
presented above reflect Retail Services historical segment results;
refer to Basis of Presentation for further details on results on a
continuing operations basis. Refer to Key Business Measures, Use of
Non-GAAP Measures, and Tables 4, 5 and 9, Retail Services
operating, store and historical segment information, for a
description of the metrics presented above.
|
Fiscal 2022 sales for the former Retail Services segment
increased 22% to $1.5 billion, as
expected, driven by system-wide SSS growth of 13.7% and system-wide
unit growth of 8%. Increased transactions – demonstrating continued
share gains – and expansion of average ticket – highlighting
pricing power and ongoing premium mix shift – both contributed
significantly and nearly equally to strong SSS performance. Unit
additions of 121 stores included an increase of 71
company-operated stores and 50 franchised locations. Adjusted
EBITDA grew 11% to $421.6 million on
a historical segment basis, as pricing actions began to offset
significant inflationary pressure on product and labor costs.
Incremental pricing taken in Q4 expanded margins on a
per-transaction basis and is expected to normalize margin
percentage by the end of fiscal Q1 2023.
Valvoline Continuing
Operations (Retail Services) - Fiscal Year 2022
|
(In
millions)
|
Retail Services
segment (a)
|
Adjustments to
align with
continuing
operations (a)
|
Continuing
operations (a)
|
Net revenues
|
$
1,490.9
|
$
(254.8)
|
$
1,236.1
|
Operating
income
|
$
349.2
|
$
(128.9)
|
$
220.3
|
Adjusted
EBITDA
|
$
421.6
|
$
(105.9)
|
$
315.7
|
|
|
(a)
|
Refer to Basis of
Presentation, Use of Non-GAAP Measures, and Tables 1, 7 and 9,
Statements of Consolidated Income, Adjusted EBITDA and Retail
Services historical segment information, for further details
regarding the metrics presented above. Valvoline did not generally
allocate activity below operating income to its historical
operating segments.
|
Reporting Changes
As previously announced on August 1,
2022, Valvoline signed a definitive agreement to sell its
Global Products business. The announcement resulted in the former
Global Products segment being classified as discontinued
operations, with the Retail Services segment becoming the Company's
continuing operations. The impact of these changes was primarily
the following:
- Indirect expense realignment — assignment of all indirect
expenses, including previously unallocated corporate costs, to the
appropriate business;
- Supply agreement markup — reflection of the agreed upon markup
in the product supply arrangement with discontinued operations;
and
- Agency accounting treatment — recognition of product sales to
franchisees and independent operators is reflected using agency
accounting.
Previous periods have been recast on a consistent basis of
presentation. Results of continuing operations are comparable to
those previously discussed on a pro forma basis at the time of the
announcement.
Balance Sheet and Cash Flow
- Total debt and net debt of approximately $1.7 billion
- Full-year consolidated cash flow from operations of
$284.2 million and free cash flow of
$125.3 million
- Returned $231.8 million in cash
to shareholders via share repurchases and dividends, including
$61.2 million in the fourth
quarter
Outlook
"We're entering fiscal 2023 with strong momentum," said
Mitchell. "We expect to continue driving same-store sales growth by
winning new customers and expanding average ticket. We expect to
continue expanding our network of conveniently located stores,
including a renewed focus on franchise development over time. With
the combination of same-store sales and unit increases, we
anticipate 14% to 18% top line growth in fiscal 2023. Adjusted
EBITDA is forecast to grow 17% to 24% to $370 million to $390
million as margin leverage improves."
Mitchell continued, "Our business is resilient, highlighting the
non-discretionary nature of preventive maintenance and positioning
us well for future growth. Our key business drivers of miles driven
and an expanding car parc exhibit low cyclicality. Our performance
in previous recessionary environments gives us confidence in
achieving our fiscal 2023 guidance and long-range targets. We
continue making strategic investments to expand further into fleets
and to broaden our service offerings as vehicle powertrains
evolve."
Information regarding the Company's outlook for fiscal 2023 is
provided in the table below:
Continuing
Operations
|
Outlook
|
System-wide SSS
growth
|
8
|
—
|
12 %
|
System-wide store
additions
|
130
|
—
|
160
|
Company-operated
|
80
|
—
|
90
|
Franchised
|
50
|
—
|
70
|
System-wide store sales
growth
|
16
|
—
|
20 %
|
Net revenues
|
$1.4
|
—
|
$1.5 billion
|
Net revenues
growth
|
14
|
—
|
18 %
|
Adjusted
EBITDA
|
$370
|
—
|
$390 million
|
Capital
expenditures
|
$170
|
—
|
$200 million
|
Adjusted effective tax
rate
|
25.5
|
—
|
26.5 %
|
Adjusted net
income
|
$160
|
—
|
$180 million
|
Valvoline's outlook for adjusted EBITDA, adjusted net income,
and the adjusted effective tax rate are non-GAAP financial measures
that are expected to be impacted by items affecting comparability.
Valvoline is unable to reconcile these forward-looking non-GAAP
financial measures to the comparable GAAP measures estimated for
fiscal 2023 without unreasonable efforts, as the Company is
currently unable to predict with a reasonable degree of certainty
the type and extent of certain items that would be expected to
impact these GAAP measures in fiscal 2023 but would not impact
non-GAAP adjusted results.
$1.6 Billion Share Repurchase
Authorization
The company also announced today that its board of directors
approved a new share repurchase authorization of $1.6 billion. The board of directors approved the
share repurchase authorization to effectuate a significant return
of capital to shareholders of a substantial portion of the expected
net proceeds from the sale of the Global Products business. The
Company generally expects to repurchase shares of its common stock
up to the full amount of the authorization within 18 months of the
closing of the Global Products sale. However, the timing and amount
of any repurchases of common stock will be solely at the discretion
of the Company and is subject to general business and market
conditions, including closing the Global Products sale, as well as
other factors, including legal and regulatory restrictions. The new
share repurchase authorization is in addition to Valvoline's
$300 million share repurchase
authorization announced in May 2021,
of which $85.5 million remained as of
Nov. 11, 2022.
Conference Call Webcast
Valvoline will host a live audio webcast of its fiscal fourth
quarter 2022 conference call at 8 a.m. ET on Tuesday,
November 15, 2022. The webcast and supporting materials will
be accessible through Valvoline's website at
http://investors.valvoline.com. Following the live event, an
archived version of the webcast and supporting materials will be
available.
Basis of Presentation
In all periods presented herein, the assets and liabilities
associated with the Global Products disposal group have been
classified as held for sale within the Condensed Consolidated
Balance Sheets and its operations have been classified as
discontinued operations within the Statements of Consolidated
Income and Condensed Consolidated Statements of Cash Flows. Unless
otherwise noted, balances and activity disclosed herein relate
solely to the Company's continuing operations.
As a result of classifying the former Global Products reportable
segment as a discontinued operation, the Company has determined
that it now operates a single reportable segment as resources are
allocated and performance assessed on a consolidated basis for the
continuing operations.
Key Business Measures
Valvoline tracks its operating performance and manages its
business using certain key measures, including system-wide,
company-operated and franchised store counts and SSS; and
system-wide store sales. Management believes these measures are
useful to evaluating and understanding Valvoline's operating
performance and should be considered as supplements to, not
substitutes for, Valvoline's sales and operating income, as
determined in accordance with U.S. GAAP.
Net revenues are influenced by the number of service center
stores and the business performance of those stores. Stores are
considered open upon acquisition or opening for business. Temporary
store closings remain in the respective store counts with only
permanent store closures reflected in the activity and end of
period store counts. SSS is defined as net revenues by U.S. stores
(company-operated, franchised and the combination of these for
system-wide SSS), with new stores, including franchised
conversions, excluded from the metric until the completion of their
first full fiscal year in operation as this period is generally
required for new store sales levels to begin to normalize.
Net revenues are limited to sales at company-operated stores, in
addition to royalties and other fees from independent franchised
and Express Care stores. Although Valvoline does not recognize
store-level sales from franchised stores as net revenues in its
Statements of Consolidated Income, management believes system-wide
and franchised SSS comparisons, store counts, and total system-wide
store sales are useful to assess market position relative to
competitors and overall store and operating performance.
Use of Non-GAAP Measures
To supplement the financial measures prepared in accordance with
U.S. GAAP, certain items herein are presented on an adjusted basis.
These non-GAAP measures have limitations as analytical tools and
should not be considered in isolation from, or as an alternative
to, or more meaningful than, the financial results presented in
accordance with U.S. GAAP. The financial results presented in
accordance with U.S. GAAP and the reconciliations of non-GAAP
measures should be carefully evaluated. The non-GAAP information
used by management may not be comparable to similar measures
disclosed by other companies, because of differing methods used in
calculating such measures.
The following non-GAAP measures are included herein: EBITDA and
adjusted EBITDA, adjusted net income and earnings per share, free
cash flow, and discretionary free cash flows. Refer to the tables
herein for management's definition of each non-GAAP measure and
reconciliation to the most comparable U.S. GAAP measure.
Management believes the use of non-GAAP measures provides a
useful supplemental presentation of Valvoline's operating
performance and allows for transparency with respect to key metrics
used by management in operating the business and measuring
performance. Management believes EBITDA measures provide a
meaningful supplemental presentation of Valvoline's operating
performance between periods on a comparable basis due to the
depreciable assets associated with the nature of the Company's
operations, as well as income tax and interest costs related to
Valvoline's tax and capital structures, respectively.
Adjusted profitability measures enable comparison of financial
trends and results between periods where certain items may vary
independent of business performance. These adjusted measures
exclude the impact of certain unusual, infrequent or
non-operational activity not directly attributable to the
underlying business, which management believes impacts the
comparability of operational results between periods ("key items").
Key items are often related to legacy matters or market-driven
events considered by management to not be reflective of the ongoing
operating performance. Key items may consist of adjustments related
to: legacy businesses, including the separation from Valvoline's
former parent company and associated impacts of related activity
and indemnities; the separation of Valvoline's businesses;
significant acquisitions or divestitures; restructuring-related
matters; tax reform legislation; debt extinguishment and
modification costs; and other matters that are non-operational or
unusual in nature, including the following:
- Net pension and other postretirement plan expense/income -
includes several elements impacted by changes in plan assets and
obligations that are primarily driven by changes in the debt and
equity markets, as well as those that are predominantly legacy in
nature and related to prior service to the Company from employees
(e.g., retirees, former employees and current employees with frozen
benefits). These elements include (i) interest cost, (ii) expected
return on plan assets, (iii) actuarial gains and losses, and (iv)
amortization of prior service costs and credits. Significant
factors that can contribute to changes in these elements include
changes in discount rates used to remeasure pension and other
postretirement obligations on an annual basis or upon a qualifying
remeasurement, differences between actual and expected returns on
plan assets, and other changes in actuarial assumptions, such as
the life expectancy of plan participants. Accordingly, management
considers that these elements may be more reflective of changes in
current conditions in global financial markets (in particular,
interest rates), outside the operational performance of the
business, and are also primarily legacy amounts that are not
directly related to the underlying business and do not have an
immediate, corresponding impact on the compensation and benefits
provided to eligible employees for current service. Adjusted
profitability measures include the costs of benefits provided to
employees for current service, including pension and other
postretirement service costs.
- Changes in the last-in, first out (LIFO) inventory reserve -
charges or credits recognized in Cost of sales to value certain
lubricant inventories at the lower of cost or market using the LIFO
method. During inflationary or deflationary pricing environments,
the application of LIFO can result in variability of the cost of
sales recognized each period as the most recent costs are matched
against current sales, while preceding costs are retained in
inventories. LIFO adjustments are determined based on published
prices, which are difficult to predict and largely dependent on
future events. The application of LIFO can impact comparability and
enhance the lag period effects between changes in inventory costs
and related pricing adjustments.
Management uses free cash flow and discretionary free cash
flow as additional non-GAAP metrics of cash flow generation. By
including capital expenditures and certain other adjustments, as
applicable, management is able to provide an indication of the
ongoing cash being generated that is ultimately available for both
debt and equity holders as well as other investment opportunities.
Free cash flow includes the impact of capital expenditures,
providing a supplemental view of cash generation. Discretionary
free cash flow includes maintenance capital expenditures, which are
routine uses of cash that are necessary to maintain the Company's
operations and provides a supplemental view of cash flow generation
to maintain operations before discretionary investments in growth.
Free cash flow and discretionary free cash flow have certain
limitations, including that they do not reflect adjustments for
certain non-discretionary cash flows, such as mandatory debt
repayments.
About ValvolineTM
The Quick, Easy, Trusted name in preventive vehicle maintenance,
Valvoline Inc. (NYSE: VVV) leads the industry with automotive
service innovations that simplify consumers lives and take the
worry out of vehicle care. With an average consumer rating
of 4.6 out of 5 stars*, Valvoline has built the model for
transparency and convenience in automotive maintenance. From its
15-minute, stay-in-your-car oil change to cabin air filters to
battery replacements to tire rotations, the Company's model offers
maintenance solutions for all types of vehicles. The Company
operates and franchises over 1,700 service center locations through
its Valvoline Instant Oil ChangeSM and Great Canadian
Oil Change retail locations. To learn more, or to find a Valvoline
service center near you, visit valvoline.com.
Forward-Looking Statements
Certain statements in this press release, other than statements
of historical fact, including estimates, projections and statements
related to Valvoline's business plans and operating results, are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Valvoline has
identified some of these forward-looking statements with words such
as "anticipates," "believes," "expects," "estimates," "is likely,"
"predicts," "projects," "forecasts," "may," "will," "should," and
"intends," and the negative of these words or other comparable
terminology. These forward-looking statements are based on
Valvoline's current expectations, estimates, projections, and
assumptions as of the date such statements are made and are subject
to risks and uncertainties that may cause results to differ
materially from those expressed or implied in the forward-looking
statements. Additional information regarding these risks and
uncertainties are described in the Company's filings with the
Securities and Exchange Commission (the "SEC"), including in the
"Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and "Quantitative and
Qualitative Disclosures about Market Risk" sections of Valvoline's
most recently filed periodic reports on Forms 10-K and 10-Q, which
are available on Valvoline's website at
http://investors.valvoline.com/sec-filings or on the SEC's website
at http://www.sec.gov. Valvoline assumes no obligation to update or
revise these forward-looking statements for any reason, even if new
information becomes available in the future, unless required by
law.
TM Trademark, Valvoline or its subsidiaries,
registered in various countries
SM Service mark, Valvoline or its subsidiaries,
registered in various countries
* Based on a survey of over 250,000 Valvoline Instant
Oil Change℠ customers annually
FOR FURTHER INFORMATION
Investor Inquiries
+1 (859)
357-3155
IR@valvoline.com
Media Inquiries
Michele Gaither
Sparks
Sr. Director, Corporate Communications
+1 (859) 230-8097
michele.sparks@valvoline.com
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 1
|
STATEMENTS OF
CONSOLIDATED INCOME
|
|
|
|
|
|
|
|
|
(In millions, except
per share amounts - preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Year ended
|
|
September 30
|
|
September 30
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net revenues
|
|
$ 335.4
|
|
$ 295.2
|
|
$
1,236.1
|
|
$
1,037.2
|
Cost of
sales
|
|
206.3
|
|
175.8
|
|
759.7
|
|
604.9
|
GROSS
PROFIT
|
|
129.1
|
|
119.4
|
|
476.4
|
|
432.3
|
Selling, general and
administrative expenses
|
|
62.1
|
|
58.8
|
|
244.7
|
|
223.9
|
Net legacy and
separation-related expenses (income)
|
|
1.6
|
|
(25.3)
|
|
20.5
|
|
(23.6)
|
Other income,
net
|
|
(1.8)
|
|
(1.8)
|
|
(9.1)
|
|
(8.1)
|
OPERATING
INCOME
|
|
67.2
|
|
87.7
|
|
220.3
|
|
240.1
|
Net pension and other
postretirement plan expenses (income)
|
|
34.6
|
|
(87.8)
|
|
6.9
|
|
(128.2)
|
Net interest and other
financing expenses
|
|
18.1
|
|
17.3
|
|
69.3
|
|
108.3
|
INCOME BEFORE INCOME
TAXES
|
|
14.5
|
|
158.2
|
|
144.1
|
|
260.0
|
Income tax
expense
|
|
2.1
|
|
33.5
|
|
34.7
|
|
59.9
|
Income from continuing
operations
|
|
12.4
|
|
124.7
|
|
109.4
|
|
200.1
|
Income from
discontinued operations, net of tax
|
|
145.3
|
|
44.2
|
|
314.9
|
|
220.2
|
NET
INCOME
|
|
$ 157.7
|
|
$ 168.9
|
|
$ 424.3
|
|
$ 420.3
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS PER
SHARE
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ 0.07
|
|
$ 0.69
|
|
$ 0.61
|
|
$ 1.10
|
Discontinued
operations
|
|
0.82
|
|
0.24
|
|
1.76
|
|
1.20
|
Basic earnings per
share
|
|
$ 0.89
|
|
$ 0.93
|
|
$ 2.37
|
|
$ 2.30
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ 0.07
|
|
$ 0.68
|
|
$ 0.61
|
|
$ 1.09
|
Discontinued
operations
|
|
0.81
|
|
0.24
|
|
1.74
|
|
1.20
|
Diluted earnings per
share
|
|
$ 0.88
|
|
$ 0.92
|
|
$ 2.35
|
|
$ 2.29
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING
|
|
|
|
|
|
|
BASIC
|
|
177.4
|
|
181.2
|
|
179.1
|
|
182.5
|
DILUTED
|
|
178.6
|
|
182.6
|
|
180.4
|
|
183.5
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
Table 2
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
September 30
|
|
2022
|
|
2021
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
23.4
|
|
$
122.6
|
|
|
Receivables,
net
|
|
66.1
|
|
65.3
|
|
|
Inventories,
net
|
|
29.4
|
|
27.4
|
|
|
Prepaid expenses and
other current assets
|
|
38.0
|
|
27.3
|
|
|
Current assets of
discontinued operations
|
|
1,464.2
|
|
794.5
|
|
Total current
assets
|
|
1,621.1
|
|
1,037.1
|
|
|
|
|
|
|
|
|
|
Noncurrent
assets
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
668.6
|
|
559.8
|
|
|
Operating lease
assets
|
|
248.1
|
|
226.1
|
|
|
Goodwill and
intangibles, net
|
|
663.1
|
|
642.2
|
|
|
Deferred tax
assets
|
|
61.6
|
|
—
|
|
|
Other noncurrent
assets
|
|
154.3
|
|
163.1
|
|
|
Noncurrent assets of
discontinued operations
|
|
—
|
|
562.7
|
|
Total assets
|
|
$
3,416.8
|
|
$
3,191.0
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
162.5
|
|
$
15.0
|
|
|
Trade and other
payables
|
|
45.0
|
|
38.6
|
|
|
Accrued expenses and
other liabilities
|
|
172.6
|
|
139.2
|
|
|
Current liabilities of
discontinued operations
|
|
539.3
|
|
375.9
|
|
Total current
liabilities
|
|
919.4
|
|
568.7
|
|
|
|
|
|
|
|
|
Noncurrent
liabilities
|
|
|
|
|
|
|
Long-term
debt
|
|
1,525.1
|
|
1,639.7
|
|
|
Employee benefit
obligations
|
|
199.4
|
|
245.1
|
|
|
Operating lease
liabilities
|
|
229.2
|
|
208.0
|
|
|
Other noncurrent
liabilities
|
|
237.1
|
|
262.5
|
|
|
Noncurrent liabilities
of discontinued operations
|
|
—
|
|
132.5
|
|
Total noncurrent
liabilities
|
|
2,190.8
|
|
2,487.8
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
306.6
|
|
134.5
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
3,416.8
|
|
$
3,191.0
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
Table 3
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
|
|
September 30
|
|
2022
|
|
2021
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
|
|
Net income
|
|
$
424.3
|
|
$
420.3
|
|
Adjustments to
reconcile net income to cash flows from operating
activities
|
|
|
|
|
|
|
Income from
discontinued operations
|
|
(314.9)
|
|
(220.2)
|
|
|
Loss on extinguishment
of debt
|
|
—
|
|
36.4
|
|
|
Depreciation and
amortization
|
|
71.4
|
|
62.1
|
|
|
Deferred income
taxes
|
|
18.0
|
|
50.4
|
|
|
Loss (gain) on pension
and other postretirement plan remeasurements
|
|
43.9
|
|
(74.3)
|
|
|
Stock-based
compensation expense
|
|
14.4
|
|
13.7
|
|
|
Other, net
|
|
4.2
|
|
3.4
|
|
Change in operating
assets and liabilities
|
|
(126.9)
|
|
(109.6)
|
|
Operating cash flows
from continuing operations
|
|
134.4
|
|
182.2
|
|
Operating cash flows
from discontinued operations
|
|
149.8
|
|
221.7
|
|
Total cash provided by
operating activities
|
|
284.2
|
|
403.9
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
(132.0)
|
|
(103.1)
|
|
Repayments of notes
receivable
|
|
11.2
|
|
16.9
|
|
Acquisitions of
businesses, net of cash acquired
|
|
(50.7)
|
|
(281.7)
|
|
Other investing
activities, net
|
|
0.6
|
|
9.2
|
|
Investing cash flows
from continuing operations
|
|
(170.9)
|
|
(358.7)
|
|
Investing cash flows
from discontinued operations
|
|
(36.7)
|
|
(41.2)
|
|
Total cash used in
investing activities
|
|
(207.6)
|
|
(399.9)
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
|
|
Proceeds from
borrowings, net of issuance costs of $7.1 million in
2021
|
|
23.0
|
|
527.9
|
|
Repayments on
borrowings
|
|
(38.1)
|
|
(800.0)
|
|
Premium paid to
extinguish debt
|
|
—
|
|
(26.2)
|
|
Repurchases of common
stock
|
|
(142.6)
|
|
(126.9)
|
|
Cash dividends
paid
|
|
(89.2)
|
|
(90.9)
|
|
Other financing
activities
|
|
(16.0)
|
|
(10.0)
|
|
Financing cash flows
from continuing operations
|
|
(262.9)
|
|
(526.1)
|
|
Financing cash flows
from discontinued operations
|
|
44.0
|
|
(9.4)
|
|
Total cash used in
financing activities
|
|
(218.9)
|
|
(535.5)
|
|
Effect of currency
exchange rate changes on cash, cash equivalents and
restricted cash
|
|
(5.2)
|
|
2.4
|
DECREASE IN CASH,
CASH EQUIVALENTS AND RESTRICTED CASH
|
|
(147.5)
|
|
(529.1)
|
Cash, cash equivalents
and restricted cash - beginning of period
|
|
231.4
|
|
760.5
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH - END OF PERIOD
|
|
$
83.9
|
|
$
231.4
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 4
|
RETAIL SERVICES
OPERATING INFORMATION
|
|
|
|
|
|
|
|
|
(Preliminary and
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Year ended
|
|
|
|
September 30
|
|
September 30
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Sales
information
|
|
|
|
|
|
|
|
|
|
|
System-wide store sales
- in millions (a)
|
|
$
641.9
|
|
$
554.7
|
|
$ 2,360.2
|
|
$ 1,969.8
|
Year-over-year
growth (a)
|
|
16 %
|
|
29 %
|
|
20 %
|
|
30 %
|
|
|
|
|
|
|
|
|
|
|
Same-store sales
growth (b)
|
|
|
|
|
|
|
|
|
Company-operated
|
|
8.5 %
|
|
17.3 %
|
|
11.4 %
|
|
19.6 %
|
Franchised
(a)
|
|
9.8 %
|
|
22.1 %
|
|
15.5 %
|
|
22.4 %
|
System-wide
(a)
|
|
9.2 %
|
|
20.1 %
|
|
13.7 %
|
|
21.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of stores at end
of period
|
|
|
|
Fourth
Quarter
2022
|
|
Third
Quarter
2022
|
|
Second
Quarter
2022
|
|
First
Quarter
2022
|
|
Fourth
Quarter
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated
|
|
790
|
|
772
|
|
757
|
|
738
|
|
719
|
Franchised
(a)
|
|
925
|
|
918
|
|
904
|
|
897
|
|
875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
2022
|
|
2021
|
System-wide store count
(a)
|
|
|
|
|
|
|
|
1,715
|
|
1,594
|
Year-over-year
growth
|
|
|
|
|
|
|
|
8 %
|
|
9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Measures include
Valvoline franchisees, which are independent legal entities.
Valvoline does not consolidate the results of operations of its
franchisees.
|
(b)
|
Valvoline determines
SSS growth as sales by U.S. stores, with new stores, including
franchised conversions, excluded from the metric until the
completion of their first full fiscal year in operation.
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 5
|
RETAIL SERVICES
STORE INFORMATION
|
|
|
|
|
|
|
|
|
(Preliminary and
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated
|
|
|
|
Fourth
Quarter
2022
|
|
Third
Quarter
2022
|
|
Second
Quarter
2022
|
|
First
Quarter
2022
|
|
Fourth
Quarter
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of
period
|
|
772
|
|
757
|
|
738
|
|
719
|
|
698
|
|
Opened
|
|
12
|
|
5
|
|
10
|
|
7
|
|
9
|
|
Acquired
|
|
3
|
|
9
|
|
9
|
|
12
|
|
7
|
|
Net conversions between
company-operated and franchised
|
|
3
|
|
1
|
|
—
|
|
—
|
|
6
|
|
Closed
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1)
|
End of
period
|
|
790
|
|
772
|
|
757
|
|
738
|
|
719
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchised
(a)
|
|
|
|
Fourth
Quarter
2022
|
|
Third
Quarter
2022
|
|
Second
Quarter
2022
|
|
First
Quarter
2022
|
|
Fourth
Quarter
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of
period
|
|
918
|
|
904
|
|
897
|
|
875
|
|
871
|
|
Opened
|
|
10
|
|
16
|
|
9
|
|
25
|
|
12
|
|
Acquired
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net conversions between
company-operated and franchised
|
|
(3)
|
|
(1)
|
|
—
|
|
—
|
|
(6)
|
|
Closed
|
|
—
|
|
(1)
|
|
(2)
|
|
(3)
|
|
(2)
|
End of
period
|
|
925
|
|
918
|
|
904
|
|
897
|
|
875
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stores
(a)
|
|
1,715
|
|
1,690
|
|
1,661
|
|
1,635
|
|
1,594
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Measures include
Valvoline franchisees, which are independent legal entities.
Valvoline does not consolidate the results of operations of its
franchisees.
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 6
|
RECONCILIATION OF
NON-GAAP DATA - NET INCOME AND DILUTED EARNINGS PER
SHARE
|
(In millions, except
per share amounts - preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Year ended
|
|
|
|
September 30
|
|
September 30
|
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Reported income from
continuing operations
|
|
$ 12.4
|
|
$ 124.7
|
|
$ 109.4
|
|
$ 200.1
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Net pension and other
postretirement plan expenses (income)
|
|
34.6
|
|
(87.8)
|
|
6.9
|
|
(128.2)
|
|
Net legacy and
separation-related expenses (income)
|
|
1.6
|
|
(25.3)
|
|
20.5
|
|
(23.6)
|
|
Suspended
operations
|
|
(0.6)
|
|
(0.7)
|
|
0.9
|
|
(1.5)
|
|
Information technology
transition costs
|
|
—
|
|
—
|
|
2.6
|
|
—
|
|
Debt extinguishment and
modification costs
|
|
—
|
|
—
|
|
—
|
|
36.4
|
|
Restructuring-related
adjustments
|
|
—
|
|
—
|
|
—
|
|
(0.1)
|
|
Total adjustments,
pre-tax
|
|
35.6
|
|
(113.8)
|
|
30.9
|
|
(117.0)
|
|
Income tax (benefit)
expense of adjustments
|
|
(10.3)
|
|
22.3
|
|
(8.5)
|
|
23.2
|
|
Total adjustments,
after tax
|
|
25.3
|
|
(91.5)
|
|
22.4
|
|
(93.8)
|
Adjusted income from
continuing operations (a)
|
|
37.7
|
|
33.2
|
|
131.8
|
|
106.3
|
|
|
|
|
|
|
|
|
|
|
Reported income from
discontinued operations
|
|
$ 145.3
|
|
$ 44.2
|
|
$ 314.9
|
|
$ 220.2
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Net pension and other
postretirement plan expenses (income)
|
|
(3.5)
|
|
2.3
|
|
(3.4)
|
|
1.9
|
|
Net legacy and
separation-related expenses (income)
|
|
6.5
|
|
—
|
|
7.0
|
|
—
|
|
LIFO charge
|
|
25.5
|
|
14.6
|
|
43.3
|
|
40.5
|
|
Business interruption
recoveries
|
|
—
|
|
—
|
|
—
|
|
(2.7)
|
|
Total adjustments,
pre-tax
|
|
28.5
|
|
16.9
|
|
46.9
|
|
39.7
|
|
Income tax benefit of
adjustments
|
|
(7.9)
|
|
(4.2)
|
|
(12.5)
|
|
(9.9)
|
|
Income tax adjustments
(a)
|
|
(99.1)
|
|
—
|
|
(99.3)
|
|
—
|
Adjusted net income
from discontinued operations (a)
|
|
66.8
|
|
56.9
|
|
250.0
|
|
250.0
|
Adjusted net income
(a)
|
|
$
104.5
|
|
$ 90.1
|
|
$
381.8
|
|
$ 356.3
|
|
|
|
|
|
|
|
|
|
Reported diluted
earnings per share
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ 0.07
|
|
$ 0.68
|
|
$ 0.61
|
|
$ 1.09
|
|
Discontinued
operations
|
|
$ 0.81
|
|
$ 0.24
|
|
$ 1.74
|
|
$ 1.20
|
|
Total reported diluted
earnings per share
|
|
$ 0.88
|
|
$ 0.92
|
|
$ 2.35
|
|
$ 2.29
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted
earnings per share (b)
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ 0.21
|
|
$ 0.18
|
|
$ 0.73
|
|
$ 0.58
|
|
Discontinued
operations
|
|
$ 0.38
|
|
$ 0.31
|
|
$ 1.39
|
|
$ 1.36
|
|
Total adjusted diluted
earnings per share
|
|
$ 0.59
|
|
$ 0.49
|
|
$ 2.12
|
|
$ 1.94
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares outstanding
|
|
178.6
|
|
182.6
|
|
180.4
|
|
183.5
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Adjusted income from
continuing operations is defined as income from continuing
operations adjusted for key items. Adjusted income from
discontinued operations is defined as income from discontinued
operations adjusted for key items. Refer to "Use of Non-GAAP
Measures" in this press release for management's definition of key
items.
|
(b)
|
Adjusted diluted
earnings per share is defined as diluted earnings per share
calculated using adjusted net income.
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 7
|
RECONCILIATION OF
NON-GAAP DATA - ADJUSTED EBITDA
|
|
|
|
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30,
2022
|
|
Three months
ended
September 30,
2021
|
Adjusted EBITDA -
Valvoline
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
Net income
|
|
$
12.4
|
|
$
145.3
|
|
$
157.7
|
|
$
124.7
|
|
$
44.2
|
|
$
168.9
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
2.1
|
|
(84.4)
|
|
(82.3)
|
|
33.5
|
|
6.2
|
|
39.7
|
Net interest and other
financing expenses
|
|
18.1
|
|
1.9
|
|
20.0
|
|
17.3
|
|
0.7
|
|
18.0
|
Depreciation and
amortization
|
|
19.3
|
|
2.8
|
|
22.1
|
|
17.1
|
|
7.6
|
|
24.7
|
EBITDA
(a)
|
|
51.9
|
|
65.6
|
|
117.5
|
|
192.6
|
|
58.7
|
|
251.3
|
Key items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net pension and other
postretirement plan expenses (income)
|
|
34.6
|
|
(3.5)
|
|
31.1
|
|
(87.8)
|
|
2.3
|
|
(85.5)
|
Legacy and
separation-related expenses (income)
|
|
1.6
|
|
6.5
|
|
8.1
|
|
(25.3)
|
|
—
|
|
(25.3)
|
LIFO charge
|
|
—
|
|
25.5
|
|
25.5
|
|
—
|
|
14.6
|
|
14.6
|
Suspended
operations
|
|
(0.6)
|
|
—
|
|
(0.6)
|
|
(0.7)
|
|
—
|
|
(0.7)
|
Key items -
subtotal
|
|
35.6
|
|
28.5
|
|
64.1
|
|
(113.8)
|
|
16.9
|
|
(96.9)
|
Adjusted EBITDA
(a)
|
|
$
87.5
|
|
$
94.1
|
|
$
181.6
|
|
$
78.8
|
|
$
75.6
|
|
$
154.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
Table 7
(continued)
|
RECONCILIATION OF
NON-GAAP DATA - ADJUSTED EBITDA
|
|
|
|
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended
September 30,
2022
|
|
Year ended
September 30,
2021
|
Adjusted EBITDA -
Valvoline
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
Net income
|
|
$
109.4
|
|
314.9
|
|
$
424.3
|
|
$
200.1
|
|
$
220.2
|
|
$
420.3
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
|
34.7
|
|
(33.4)
|
|
1.3
|
|
59.9
|
|
62.7
|
|
122.6
|
Net interest and other
financing expenses
|
|
69.3
|
|
4.6
|
|
73.9
|
|
108.3
|
|
2.6
|
|
110.9
|
Depreciation and
amortization
|
|
71.4
|
|
25.9
|
|
97.3
|
|
62.1
|
|
30.1
|
|
92.2
|
EBITDA
(a)
|
|
284.8
|
|
312.0
|
|
596.8
|
|
430.4
|
|
315.6
|
|
746.0
|
Key items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net pension and other
postretirement plan expenses (income)
|
|
6.9
|
|
(3.4)
|
|
3.5
|
|
(128.2)
|
|
1.9
|
|
(126.3)
|
Legacy and
separation-related expenses (income)
|
|
20.5
|
|
7.0
|
|
27.5
|
|
(23.6)
|
|
—
|
|
(23.6)
|
LIFO charge
|
|
—
|
|
43.3
|
|
43.3
|
|
—
|
|
40.5
|
|
40.5
|
Suspended
operations
|
|
0.9
|
|
—
|
|
0.9
|
|
(1.5)
|
|
—
|
|
(1.5)
|
Information technology
transition costs
|
|
2.6
|
|
—
|
|
2.6
|
|
—
|
|
—
|
|
—
|
Business interruption
recovery
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2.7)
|
|
(2.7)
|
Restructuring-related
adjustments
|
|
—
|
|
—
|
|
—
|
|
(0.1)
|
|
—
|
|
(0.1)
|
Key items -
subtotal
|
|
30.9
|
|
46.9
|
|
77.8
|
|
(153.4)
|
|
39.7
|
|
(113.7)
|
Adjusted EBITDA
(a)
|
|
$
315.7
|
|
$
358.9
|
|
$
674.6
|
|
$
277.0
|
|
$
355.3
|
|
$
632.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
EBITDA is defined as
net income, plus income tax expense, net interest and other
financing expenses, and depreciation and amortization. Adjusted
EBITDA is EBITDA adjusted for key items, as described in "Use of
Non-GAAP Measures" within this press release.
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
Table 8
|
RECONCILIATION OF
NON-GAAP DATA - FREE CASH FLOWS
|
|
|
|
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
Free cash flow
(a)
|
|
Year ended
|
|
September 30
|
|
2022
|
|
2021
|
Total cash flows
provided by operating activities from continuing
operations
|
|
$
134.4
|
|
$
182.2
|
Adjustments:
|
|
|
|
|
Additions to property,
plant and equipment from continuing operations
|
|
(132.0)
|
|
(103.1)
|
Free cash flow from
continuing operations
|
|
$
2.4
|
|
$
79.1
|
|
|
|
|
|
Total cash flows
provided by operating activities from discontinued
operations
|
|
$
149.8
|
|
$
221.7
|
Adjustments:
|
|
|
|
|
Additions to property,
plant and equipment from continuing operations
|
|
(26.9)
|
|
(41.3)
|
Free cash flow from
discontinued operations
|
|
$
122.9
|
|
$
180.4
|
|
|
|
|
|
Consolidated free
cash flow
|
|
$
125.3
|
|
$
259.5
|
|
|
|
|
|
Discretionary free cash
flow (b)
|
|
Year ended
|
|
September 30
|
|
2022
|
|
2021
|
Total cash flows
provided by operating activities from continuing
operations
|
|
$
134.4
|
|
$
182.2
|
Adjustments:
|
|
|
|
|
Maintenance additions
to property, plant and equipment from continuing
operations
|
|
(19.3)
|
|
(17.6)
|
Discretionary free
cash flow from continuing operations
|
|
$
115.1
|
|
$
164.6
|
|
|
|
|
|
Total cash flows
provided by operating activities from discontinued
operations
|
|
$
149.8
|
|
$
221.7
|
Adjustments:
|
|
|
|
|
Maintenance additions
to property, plant and equipment from continuing
operations
|
|
(24.5)
|
|
(18.8)
|
Discretionary free
cash flow from discontinued operations
|
|
$
125.3
|
|
$
202.9
|
|
|
|
|
|
Consolidated
discretionary free cash flow
|
|
$
240.4
|
|
$
367.5
|
|
|
|
|
|
|
|
(a)
|
Free cash flow is
defined as cash flows from operating activities less capital
expenditures and certain other adjustments as
applicable.
|
(b)
|
Discretionary free cash
flow is defined as cash flows from operating activities less
maintenance capital expenditures and certain other adjustments as
applicable.
|
Valvoline Inc. and
Consolidated Subsidiaries
|
|
|
|
|
|
|
|
Table 9
|
RETAIL SERVICES
HISTORICAL SEGMENT
|
|
|
|
|
|
|
|
|
(In millions -
preliminary and unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Year ended
|
|
September 30
|
|
September 30
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Sales
information
|
|
|
|
|
|
|
|
|
|
|
Retail Services segment
sales
|
|
$ 410.8
|
|
$ 351.2
|
|
$
1,490.9
|
|
$
1,220.8
|
|
|
|
|
|
|
|
|
|
|
Profitability
information
|
|
|
|
|
|
|
|
|
|
Operating income
(a)
|
|
|
|
$ 95.5
|
|
$ 88.3
|
|
$ 349.2
|
|
$ 320.7
|
Key items
|
|
|
|
—
|
|
—
|
|
—
|
|
—
|
Adjusted operating
income (a)
|
|
|
|
95.5
|
|
88.3
|
|
349.2
|
|
320.7
|
Depreciation and
amortization
|
|
19.6
|
|
16.6
|
|
72.4
|
|
60.6
|
Adjusted EBITDA
(a)
|
|
$ 115.1
|
|
$ 104.9
|
|
$ 421.6
|
|
$ 381.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Historical segment
adjusted operating income is historical segment operating income
adjusted for key items impacting the comparability. Historical
segment adjusted operating income is further adjusted for
depreciation and amortization to determine historical segment
adjusted EBITDA. Historically, Valvoline did not generally allocate
activity below operating income to its historical operating
segments; therefore, the table above reconciles operating income to
adjusted EBITDA.
|
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SOURCE Valvoline Inc.