Valvoline Inc. Reports Third-Quarter Results

• Sales from continuing operations of $376.2 million grew 19%, while system-wide same-store sales (SSS) increased 12.5%
• Reported income from continuing operations of $64.5 million grew 62% and earnings per diluted share (EPS) of $0.40 increased 82%
• Continuing operations adjusted EPS of $0.43 increased 105% and adjusted EBITDA of $110.4 million increased 28%
• Net store additions total 23 (22 company-operated and 1 franchised) bringing total system-wide stores to 1,804
• Completed a modified "Dutch auction" tender offer to repurchase 27.0 million shares at $38.00 per share for an aggregate purchase price of $1.02 billion, excluding related fees and expenses

LEXINGTON, Ky., Aug. 9, 2023 /PRNewswire/ -- Valvoline Inc. (NYSE: VVV), a trusted leader in preventive automotive maintenance delivering quick and convenient service, today reported financial results for its third fiscal quarter ended June 30, 2023. All comparisons in this press release are made to the same prior-year period unless otherwise noted.

"Valvoline continues to demonstrate the resiliency of the preventive maintenance business and our algorithm for growth with sales growing 19% and adjusted EBITDA growth of 28% versus the prior year," said Sam Mitchell, CEO.

"We also made great progress on our commitment to return a substantial amount of the net proceeds from the sale of the Global Products business to shareholders," continued Mitchell. "We have returned $1.39 billion to shareholders this year through both the tender offer and open market repurchases, leaving $340 million on our current share repurchase authorization. We expect to execute on the remaining repurchase authorization over the next 12 months, subject to market conditions."

"The summer drive season is off to a great start and demand for our quick, easy, trusted service remains high. We continue to see strong same store sales growth for both company and franchise stores, with 12.5% system-wide same store sales growth this quarter," said Lori Flees, President, Retail Services. "This strong same store sales growth is balanced between transactions and ticket."

"As expected, we saw EBITDA margin improvement both sequentially and over prior year," continued Flees. "The margin improvement continues to be primarily driven by labor efficiency and SG&A leverage from the increased volume we see during the summer drive season."

Balance Sheet and Cash Flow

• Cash, cash equivalents, and short-term investments balance of $950.8 million; total debt of $1.6 billion
• Year-to-date continuing operations cash flow from operations of $249.9 million and free cash flow of $124.0 million
• Returned $1.39 billion in cash to shareholders year-to-date via share repurchases with $340.4 million remaining on the existing authorization
• Interest income of $24.9 million earned during the quarter on invested net proceeds from the sale of Global Products

Outlook

"We continue to deliver best-in-class top-line and bottom-line growth consistent with the long-term guidance provided earlier this year," added Mitchell.

"We are narrowing the range of our EBITDA guidance and raising our net income guidance. We are focused on creating significant value for shareholders by growing the core business, expanding the network and evolving with the car parc."

Information regarding the Company's updated outlook for fiscal 2023 is provided in the table below:

Valvoline's outlook for adjusted EBITDA and adjusted net income 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.

CEO Succession Plan

In a separate press release issued today, Valvoline announced that Sam Mitchell is retiring as Chief Executive Officer and a member of the Board, effective September 30, 2023. Current President of Retail Services, Lori Flees, was named incoming CEO and director. The full press release is accessible through Valvoline's website at http://investors.valvoline.com.

Conference Call Webcast

Valvoline will host a live audio webcast of its fiscal third quarter 2023 conference call today, August 9, 2023, at 9 a.m. ET. 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.

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

The following non-GAAP measures are included herein: Adjusted net revenues; EBITDA, adjusted EBITDA, and adjusted EBITDA margin; adjusted net income and adjusted diluted earnings per share; and free cash flow and discretionary free cash flow. Refer to the tables herein for management's definition of each non-GAAP measure and reconciliation to the most comparable U.S. GAAP measure.

Non-GAAP measures include adjustments from results based on U.S. GAAP that management believes enables comparison of certain financial trends and results between periods and provides a useful supplemental presentation of Valvoline's operating performance that allows for transparency with respect to key metrics used by management in operating the business and measuring performance. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation from, 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 manner used to compute the non-GAAP information used by management may differ from the methods used by other companies and may not be comparable.

Refer to the Appendix at the end of this release for descriptions of the adjustments that depart from the computations in accordance with U.S. GAAP.

About Valvoline Inc.

The Quick, Easy, Trusted name in preventive vehicle maintenance, Valvoline Inc. (NYSE: VVV) leads the industry with automotive service innovations that simplify consumers' lives. With an average consumer rating of 4.6 out of 5 stars*, Valvoline Inc. has built the model for transparency and convenience to take the worry out of vehicle care. From its 15-minute, stay-in-your-car oil changes to battery replacements and tire rotations, the Company's model offers maintenance solutions for all types of vehicles. The Company operates and franchises over 1,800 service center locations through its Valvoline Instant Oil Change^SM and Valvoline Great Canadian Oil Change retail brands, and helps independent operators grow their businesses through its nearly 300 Valvoline Express Care locations in North America. To learn more, or to find a Valvoline Inc. service center near you, visit vioc.com.

Forward-Looking Statements

Certain statements herein, other than statements of historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, benefits and synergies of the sale of Global Products; future opportunities for the remaining stand-alone retail business; and any other statements regarding Valvoline's future operations, financial or operating results, capital allocation, debt leverage ratio, anticipated business levels, dividend policy, anticipated growth, market opportunities, strategies, competition, and other expectations and targets for future periods. 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 Inc., or its subsidiaries, registered in various countries
^SM Service mark, Valvoline Inc., or its subsidiaries, registered in various countries
* Based on a survey of more than 600,000 Valvoline Instant Oil Change℠ customers annually

FOR FURTHER INFORMATION

Investor Inquiries
Elizabeth B. Russell
+1 (859) 357-3155
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Michele Gaither Sparks
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