(In millions) | ||||
Retail Services | Q1 results | YoY growth | ||
Segment sales | $ | 346 | 36 | % |
System-wide store sales (a)
| $ | 551 | 31 | % |
Operating income | $ | 81 | 45 | % |
Adjusted EBITDA (a)
| $ | 98 | 40 | % |
YoY growth | ||||
System-wide SSS (a) growth
| 24.7% | |||
Global Products | Q1 results | YoY growth (decline) | ||
Lubricant sales (gallons) (a)
| 43.1 | 13 | % | |
Segment sales | $ | 512 | 28 | % |
Operating income | $ | 70 | (20) | % |
Adjusted EBITDA (a)
| $ | 77 | (18) | % |
Discretionary free cash flow (a)
| $ | 52 | (17) | % |
(a) | Refer to Key Business Measures, Use of Non-GAAP Measures, and Tables 4 and 5, Information by Operating Segment, for a description of the metrics presented above. |
Updated Outlook | Prior Outlook | |||||
Operating Items | ||||||
Sales growth | no change | 19 | - | 21% | ||
Retail Services system-wide store additions | no change | 110 | - | 130 | ||
Retail Services system-wide SSS growth | no change | 9 | - | 12% | ||
Adjusted EBITDA | no change | $675 | - | $700 million | ||
Corporate Items | ||||||
Adjusted effective tax rate | 24 | - | 25% | 25 | - | 26% |
Adjusted EPS | $2.07 | - | $2.20 | $2.06 | - | $2.18 |
Capital expenditures | no change | $180 | - | $200 million | ||
Free cash flow | no change | $260 | - | $300 million |
Valvoline Inc. and Consolidated Subsidiaries | Table 1 | |||
STATEMENTS OF CONSOLIDATED INCOME | ||||
(In millions, except per share amounts - preliminary and unaudited) | ||||
Three months ended | ||||
December 31 | ||||
2021 | 2020 | |||
Sales | $ | 858 | $ | 653 |
Cost of sales | 614 | 425 | ||
GROSS PROFIT | 244 | 228 | ||
Selling, general and administrative expenses | 135 | 117 | ||
Legacy and separation-related expenses | 3 | 1 | ||
Equity and other income, net | (15) | (14) | ||
OPERATING INCOME | 121 | 124 | ||
Net pension and other postretirement plan income | (9) | (13) | ||
Net interest and other financing expenses | 17 | 20 | ||
INCOME BEFORE INCOME TAXES | 113 | 117 | ||
Income tax expense | 26 | 30 | ||
NET INCOME | $ | 87 | $ | 87 |
NET EARNINGS PER SHARE | ||||
BASIC | $ | 0.48 | $ | 0.47 |
DILUTED | $ | 0.48 | $ | 0.47 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||
BASIC | 181 | 185 | ||
DILUTED | 182 | 186 |
Valvoline Inc. and Consolidated Subsidiaries | Table 2 | |||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(In millions - preliminary and unaudited) | ||||
December 31 | September 30 | |||
2021 | 2021 | |||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | $ | 152 | $ | 230 |
Receivables, net | 530 | 496 | ||
Inventories, net | 264 | 258 | ||
Prepaid expenses and other current assets | 55 | 53 | ||
Total current assets | 1,001 | 1,037 | ||
Noncurrent assets | ||||
Property, plant and equipment, net | 824 | 817 | ||
Operating lease assets | 309 | 307 | ||
Goodwill and intangibles, net | 782 | 775 | ||
Equity method investments | 50 | 47 | ||
Deferred income taxes | 13 | 14 | ||
Other noncurrent assets | 204 | 194 | ||
Total noncurrent assets | 2,182 | 2,154 | ||
Total assets | $ | 3,183 | $ | 3,191 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current liabilities | ||||
Current portion of long-term debt | $ | 32 | $ | 17 |
Trade and other payables | 218 | 246 | ||
Accrued expenses and other liabilities | 291 | 306 | ||
Total current liabilities | 541 | 569 | ||
Noncurrent liabilities | ||||
Long-term debt | 1,662 | 1,677 | ||
Employee benefit obligations | 248 | 258 | ||
Operating lease liabilities | 276 | 274 | ||
Deferred income taxes | 34 | 26 | ||
Other noncurrent liabilities | 255 | 252 | ||
Total noncurrent liabilities | 2,475 | 2,487 | ||
Stockholders' equity | 167 | 135 | ||
Total liabilities and stockholders' equity | $ | 3,183 | $ | 3,191 |
Valvoline Inc. and Consolidated Subsidiaries | Table 3 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(In millions - preliminary and unaudited) | ||||
Three months ended | ||||
December 31 | ||||
2021 | 2020 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | $ | 87 | $ | 87 |
Adjustments to reconcile net income to cash flows from operating activities | ||||
Depreciation and amortization | 25 | 21 | ||
Deferred income taxes | 8 | - | ||
Stock-based compensation expense | 3 | 3 | ||
Other, net | (1) | (1) | ||
Change in operating assets and liabilities
| (90) | (31) | ||
Total cash provided by operating activities | 32 | 79 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Additions to property, plant and equipment | (35) | (35) | ||
Repayments of notes receivable | 3 | 9 | ||
Acquisitions of businesses | (14) | (218) | ||
Other investing activities, net | - | (1) | ||
Total cash used in investing activities | (46) | (245) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from borrowings | 30 | 11 | ||
Repayments on borrowings | (31) | - | ||
Repurchases of common stock | (31) | (58) | ||
Cash dividends paid | (23) | (23) | ||
Other financing activities | (8) | (3) | ||
Total cash used in financing activities | (63) | (73) | ||
Effect of currency exchange rate changes on cash, cash equivalents and restricted cash | - | 6 | ||
DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (77) | (233) | ||
Cash, cash equivalents and restricted cash - beginning of period | 231 | 761 | ||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - END OF PERIOD | $ | 154 | $ | 528 |
Valvoline Inc. and Consolidated Subsidiaries | Table 4 | |||
INFORMATION BY OPERATING SEGMENT - RETAIL SERVICES | ||||
(In millions - preliminary and unaudited) | ||||
Three months ended | ||||
December 31 | ||||
2021 | 2020 | |||
Sales information | ||||
Retail Services segment sales | $ | 346 | $ | 254 |
Year-over-year growth | 36 | % | 17 | % |
System-wide store sales (a)
| $ | 551 | $ | 421 |
Year-over-year growth (a)
| 31 | % | 11 | % |
Same-store sales growth (b)
| ||||
Company-operated | 22.1 | % | 6.1 | % |
Franchised (a)
| 26.8 | % | 6.0 | % |
System-wide (a)
| 24.7 | % | 6.0 | % |
Profitability information | ||||
Operating income (c)
| $ | 81 | $ | 56 |
Key items | - | - | ||
Adjusted operating income (c)
| 81 | 56 | ||
Depreciation and amortization | 17 | 14 | ||
Adjusted EBITDA (c)
| $ | 98 | $ | 70 |
Adjusted EBITDA margin (d)
| 28.3 | % | 27.6 | % |
Discretionary cash flow information | ||||
Adjusted operating income (c)
| $ | 81 | $ | 56 |
Income tax expense (e)
| (18) | (15) | ||
Maintenance additions to property, plant and equipment | (4) | (3) | ||
Discretionary free cash flow (f)
| $ | 59 | $ | 38 |
(a) | Measure includes 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. Retail Services stores, with new stores, including franchised conversions, excluded from the metric until the completion of their first full fiscal year in operation. | |||
(c) |
Segment adjusted operating income is segment operating income adjusted for key items impacting comparability. Segment adjusted operating income is further adjusted for depreciation and amortization to determine segment adjusted EBITDA. Valvoline does not generally allocate activity below operating income to its operating segments; therefore, the table above reconciles operating income to Adjusted EBITDA.
| |||
(d) | Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by segment sales. | |||
(e) | Income tax expense estimated using the adjusted effective tax rate for the period multiplied by operating segment adjusted operating income. | |||
(f) | Segment discretionary free cash flow is defined as operating segment adjusted operating income after-tax less maintenance capital expenditures. |
Valvoline Inc. and Consolidated Subsidiaries | Table 5 | |||
INFORMATION BY OPERATING SEGMENT - GLOBAL PRODUCTS | ||||
(In millions - preliminary and unaudited) | ||||
Three months ended | ||||
December 31 | ||||
2021 | 2020 | |||
Volume information | ||||
Lubricant sales (gallons) | 43.1 | 38.0 | ||
Year-over-year growth | 13 | % | 5 | % |
Sales information | ||||
Sales by geographic region | ||||
North America (a)
| $ | 304 | $ | 235 |
Europe, Middle East and Africa ("EMEA") | 67 | 51 | ||
Asia Pacific | 104 | 83 | ||
Latin America (a)
| 37 | 30 | ||
Global Products segment sales | $ | 512 | $ | 399 |
Profitability information | ||||
Operating income (b)
| $ | 70 | $ | 88 |
Key items | - | - | ||
Adjusted operating income (b)
| 70 | 88 | ||
Depreciation and amortization | 7 | 6 | ||
Adjusted EBITDA (b)
| $ | 77 | $ | 94 |
Adjusted EBITDA margin (c)
| 15.0 | % | 23.6 | % |
Discretionary cash flow information | ||||
Adjusted operating income (b)
| $ | 70 | $ | 88 |
Income tax expense (d)
| (16) | (23) | ||
Maintenance additions to property, plant and equipment
| (2) | (2) | ||
Discretionary free cash flow (e)
| $ | 52 | $ | 63 |
(a) | Valvoline includes the United States and Canada in its North America region. Mexico is included within the Latin America region. | |||
(b) |
Segment adjusted operating income is segment operating income adjusted for key items impacting comparability. Segment adjusted operating income is further adjusted for depreciation and amortization to determine segment adjusted EBITDA. Valvoline does not generally allocate activity below operating income to its operating segments; therefore, the table above reconciles operating income to Adjusted EBITDA.
| |||
(c) | Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by segment sales. | |||
(d) | Income tax expense estimated using the adjusted effective tax rate for the period multiplied by operating segment adjusted operating income. | |||
(e) | Segment discretionary free cash flow is defined as operating segment adjusted operating income after-tax less maintenance capital expenditures. |
Valvoline Inc. and Consolidated Subsidiaries | Table 6 | ||||
RETAIL SERVICES STORE INFORMATION | |||||
(Preliminary and unaudited) | |||||
System-wide stores (a)
| |||||
First Quarter 2022 | Fourth Quarter 2021 | Third Quarter 2021 | Second Quarter 2021 | First Quarter 2021 | |
Beginning of period | 1,594 | 1,569 | 1,548 | 1,533 | 1,462 |
Opened | 32 | 21 | 17 | 13 | 18 |
Acquired | 12 | 7 | 5 | 3 | 54 |
Closed | (3) | (3) | (1) | (1) | (1) |
End of period | 1,635 | 1,594 | 1,569 | 1,548 | 1,533 |
Number of stores at end of period | |||||
First Quarter 2022 | Fourth Quarter 2021 | Third Quarter 2021 | Second Quarter 2021 | First Quarter 2021 | |
Company-operated | 738 | 719 | 698 | 673 | 663 |
Franchised | 897 | 875 | 871 | 875 | 870 |
December 31 | |||||
2021 | 2020 | ||||
System-wide store count (a)
| 1,635 | 1,533 | |||
Year-over-year growth | 7 | % | 9 | % | |
(a) | System-wide store count includes franchised service center stores. Valvoline franchises are independent legal entities, and Valvoline does not consolidate the results of operations of its franchisees. |
Valvoline Inc. and Consolidated Subsidiaries | Table 7 | |||
RECONCILIATION OF NON-GAAP DATA - NET INCOME AND DILUTED EARNINGS PER SHARE | ||||
(In millions, except per share amounts - preliminary and unaudited) | ||||
Three months ended | ||||
December 31 | ||||
2021 | 2020 | |||
Reported net income | $ | 87 | $ | 87 |
Adjustments: | ||||
Net pension and other postretirement plan income | (9) | (13) | ||
Legacy and separation-related expenses | 3 | 1 | ||
LIFO charge | 6 | 4 | ||
Information technology transition costs | 1 | - | ||
Business interruption recovery | - | (1) | ||
Total adjustments, pre-tax | 1 | (9) | ||
Income tax expense of adjustments | - | 2 | ||
Total adjustments, after tax | 1 | (7) | ||
Adjusted net income (a)
| $ | 88 | $ | 80 |
Reported diluted earnings per share | $ | 0.48 | $ | 0.47 |
Adjusted diluted earnings per share (b)
| $ | 0.48 | $ | 0.43 |
Weighted average diluted common shares outstanding | 182 | 186 | ||
(a) |
Adjusted net income is defined as net income 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 earnings per diluted share calculated using adjusted net income.
|
Valvoline Inc. and Consolidated Subsidiaries | Table 8 | |||
RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA | ||||
(In millions - preliminary and unaudited) | ||||
Three months ended | ||||
December 31 | ||||
2021 | 2020 | |||
Adjusted EBITDA - Valvoline | ||||
Net income | $ | 87 | $ | 87 |
Add: | ||||
Income tax expense | 26 | 30 | ||
Net interest and other financing expenses | 17 | 20 | ||
Depreciation and amortization | 25 | 21 | ||
EBITDA (a)
| 155 | 158 | ||
Key items:
| ||||
Net pension and other postretirement plan income | (9) | (13) | ||
Legacy and separation-related expenses | 3 | 1 | ||
LIFO charge | 6 | 4 | ||
Information technology transition costs | 1 | - | ||
Business interruption recovery | - | (1) | ||
Key items - subtotal | 1 | (9) | ||
Adjusted EBITDA (a)
| $ | 156 | $ | 149 |
Segment Adjusted EBITDA | ||||
Retail Services | $ | 98 | $ | 70 |
Global Products | 77 | 94 | ||
Segment Adjusted EBITDA (b)
| 175 | 164 | ||
Corporate | (19) | (15) | ||
Total Adjusted EBITDA (a)
| 156 | 149 | ||
Net interest and other financing expenses | (17) | (20) | ||
Depreciation and amortization | (25) | (21) | ||
Key items | (1) | 9 | ||
Income before income taxes | $ | 113 | $ | 117 |
(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.
|
(b) | Segment adjusted EBITDA represents the operations of the Company's two operating segments, including expenses associated with each segment's utilization of indirect resources. The costs of corporate functions, in addition to certain corporate and non-operational matters, or key items, are not included in segment adjusted EBITDA. The table above reconciles segment adjusted EBITDA to consolidated pre-tax income. |
Valvoline Inc. and Consolidated Subsidiaries | Table 9 | ||||
RECONCILIATION OF NON-GAAP DATA - FREE CASH FLOWS | |||||
(In millions - preliminary and unaudited) | |||||
Free cash flow (a)
| Three months ended | ||||
December 31 | |||||
2021 | 2020 | ||||
Total cash flows provided by operating activities | $ | 32 | $ | 79 | |
Adjustments: | |||||
Additions to property, plant and equipment | (35) | (35) | |||
Free cash flow | $ | (3) | $ | 44 | |
Discretionary free cash flow (b)
| Three months ended | ||||
December 31 | |||||
2021 | 2020 | ||||
Total cash flows provided by operating activities | $ | 32 | $ | 79 | |
Adjustments: | |||||
Maintenance additions to property, plant and equipment | (6) | (5) | |||
Discretionary free cash flow | $ | 26 | $ | 74 | |
Free cash flow (a)
| Fiscal year | ||||
2022 Outlook | |||||
Total cash flows provided by operating activities | $ | 460 | - | $ | 480 |
Adjustments: | |||||
Additions to property, plant and equipment | 180 | - | 200 | ||
Free cash flow | $ | 260 | - | $ | 300 |
(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. |
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Valvoline Inc. published this content on 08 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 February 2022 22:07:06 UTC.