Valvoline (VVV) 19 Nov 242024 Q4 Earnings call transcript

Hello, everyone, and welcome to Valvoline's Fourth Quarter Fiscal 2024 Conference Call and Webcast. My name is Lydia, and I'll be your operator today. [Operator Instructions] I'll now hand you over to Elizabeth Clevinger with Investor Relations to begin. Please go ahead.

Thank you. to Quarter welcome Call XXXX and Webcast. and morning, Valvoline's Fiscal Fourth Conference Good released the results fiscal Valvoline morning, This for September XXXX. year fourth XX, ended and quarter release, in This be Relations website available conjunction a Investor copy investors.valvoline.com. with on presentation our of viewed that should at is which earnings preliminary these our we Form Exchange XX-K note that until and Please with Commission. results are file the Securities

CEO; morning's and Lori President Mary our is Flees, On call and this Meixelsperger, CFO. our

today on that Slide fact date X, any to as are remarks certain and materially and of These of As subject such of presentation not shown historical results risks are differ from our uncertainties are forward-looking on statements statements current the statements. may forward-looking that this actual statements. to are of based assumptions cause

to noted. results obligation believe remarks, in and any nonoperational on an this basis, update this ongoing are nature. which unless the of business. adjusted discussing results approach or forward-looking our for our In law. unusual, restructuring required understanding We our Non-GAAP no in non-GAAP assumes are otherwise Valvoline adjusted by key presentation items, we enhances be will statements unless

companies. be and A to in The non-GAAP to GAAP of non-GAAP discussion comparable used is used is adjusted provided other of and information reconciliation management's not of similar the management use and results may measures our business appendix. key a included presentation our by by measures

Services business of operations Products purposes the the for Retail Global discontinued segment and reporting. a As as former GAAP continuing classified reminder, represents company's operations, is the the

to over will With Lori. turn it that, I

XXXX. financial year, for call, for progress priorities you on provide we'll our give fiscal the everyone. quarter Thanks, cover Elizabeth, good morning, fiscal year joining for us. guidance and On and strategic update a and today's results our Thank

a key messages. Let with me start few

line largely First, expectations. that we with in growth in and fiscal compelling were delivered our results XXXX

franchisee brand, quality proprietary partners, including Our and position important advantages, marketing competitive expertise. well-recognized performance is and technology driven and by well-capitalized a operational a market-leading excellence,

durable profit same-store and positions and differentiated model robust of by Our new fueled business growth growth deliver and store additions. a strong compounding us to sales

creation healthy repurchases Our focused generate a our and discipline supported on consistent balance to high by growth return that sheet a shareholders. returns, capital excess cash commitment share value investments to to is strong

Let's for look key at Slide highlights X. year fiscal some on XXXX

year. System-wide store prior sales were increase the billion, XX% over $X.X a

million #XX the XX,XXX service in trusted We of system-wide ended our delivered same-store growth consecutive experience also grow across Forbes our XX% continued year. to the network From thank XX stores. margin we went results. year a customer customer we points like driving over basis million October, profit our on continue X,XXX focus and completed to the partners pace, at we EBITDA XXth work as ranked best franchise be adjusted to year, year growth perspective, to transactions adjusted guests. overall team XXX $XXX was improved to X.X% were with network. we strong a with The that pleased In of delivering sales and for a strong by into all quick, up XX.X%. This these our easy, over I'd for to EBITDA the and to

in stores, system-wide XXXX, Slide new sales our shows over key our in strong growth profit. Since on and performance X metrics. have time IPO stable we same-store seen and

us performance within our and service provider sets as retail within pure-play financial apart and growth services overall. category a Our retail

and at EBITDA, 'XX of the compared same-store came came X. additions Turning our revenues range. range. midpoint above We'll adjusted store in guidance. or guidance our of the all below 'XX sales and to Net FY FY at in just to look Slide the the a Adjusted take EPS results just midpoint

to related driven our business. range, expenditures certain of and we're payments capital we growth planned. pleased continued modestly with had above the results fiscal what Our the our were the XXXX CapEx by versus of Overall, timing

to priorities the growth of business, the and to areas and near full deliver across made on will committed like growth and driving potential an We strategic Now network term. I'd existing progress these in provide update targeting accelerating expansion. X enable us we've on longer in X strategy. customer financial service our Actions our the remain to both

differentiators of serve main XX% start speed full come from the new. these On at look and core are to Quick channel. potential offer of in Convenience the the About the the Slide customers and X, returning. customers. made new we a customers serve outside driving are with business. in we've we the we our progress majority remaining we'll XX% are Lube The

trust, with high Our and the combined technology scale and best-in-class have stands and brand, to and for loyalty. network experience, be in customer customer investments marketing differentiators our reasons we we're quality continue making why key which

Our X stores typically to about take X maturity. ramp years to to

mature our additional lift stores to maturing to of account about of million would day mature. being our management. And continue grow base. year the with into store top we a with immature, per $XX immature growth refranchising cost line our we these while EBITDA each margins to better is continue and add a of stores significant vehicle portion Taking their expect this We that an store profit expect served as stores improving efforts, line a top With to increase open. meaningful the

strength the excellence of brand, The increasing the continue scale to core full business. of our potential operational drive and

year. with for accelerating of growth. to I'd new stores like total about QX, new delivery strong network XX Now year the We in stores our closed XXX bringing talk the to

recognize the for close company to work both. franchise council and we driving of we The through our together and delivery additions. process is practice, experiences fiscal development store franchise need best teams the improvements of consistency new the to continue share which As to improve XXXX,

ground-ups. how our and analytics store We year accelerating and and locations. is on actions also new increased network stores open build our additions. of estate the of This growth. accelerate new were we XXXX, our pipeline side. our franchisee testament of we ago, are the to marketing as additions store established ground-up XXXX to year significant learnings improved target successfully a by In to number Two years We've XXX stores capability on new that our taken the reaching visibility a XXX operational fiscal over franchise new real per

During XX the fourth quarter, franchise we X completed transactions, company of the to markets Denver. which stores Vegas refranchising growing and converted in Las

XX long-term and to the As benefits X will we a gains growth share West development, signed in drive Central for this we to which markets definitive to network a and capital-efficient we as morning, additional announced manner. Texas. significant in accelerate The an refranchise shareholders market these franchisees agreement committed stores have deliver in more quickly October, more

Fluid Care, and several Yellowstone partners welcomed new Group. year, Investment franchise We've our including Velocity network this into Automotive Auto

Interstate us with Auto recently of addition, Care the stores purchase retiring In from joined a franchisee.

working to and joining in forward have of their expressed parties We interest who network. to with franchise partners growth partners committed markets. All these our continue our to in have meaningful respective look with new have encouraging discussions additional

per stores fiscal to ongoing new the confident With deliver our planned have XXXX. by committed franchisees ability the new stores XXX or to our remain interest, year in we year and

with pleased store We growth. our are overall very

year, us confidence this The along store momentum gives franchise our continued network in to of company in path our X,XXX-plus network. stores, sustained with building growth a the

and Let's of turn to the service customer expansion. third targeting priority

annual transactions at growing continues rate attractive last pace over an compounded over business with X grow to Fleet growth XX% Our a at the years.

fleet their on and Our accounts. is strong large we new in market both as owners a a easy, addressable improving a trusted company productive, across activation to runway vehicles delivering see Fleet growth and business. those business-to-business keep well markets for in long for our quick, focus sales With growth way franchise as accounts within looking

years. non-oil success revenue System-wide, seen service impressive company we penetration On effective us growth this our training in seen rate way. stores to XX% improving and over process teams, compound past the best-in-class franchise Services change these the in investment execution present services guests The our side, our have SuperPro an and in allows annual to an have great X year.

very comment a in of our I'd Before to our external that on Mary's successor want serve a to over is leadership. as I We personally a CFO both onboards. I successfully her results comprehensive much Mary identify successor thank announcement to and started internal until has recent selected intention continue retire. Mary our that to it and Mary turn agreed continuing to appreciate financial detail, like include to We've more to candidates. will search discuss to for

it turn over Mary. I'll that, With to

the Thanks, to opportunity part a Valvoline successful to amazing smooth privilege for teammates and Lori. I'm work It's to a I'm committed an honor with and of grateful team. franchisees, ensuring transition. be and and the

turn to fiscal and performance financial let's look QX at year XXXX. our for Now

with On the Slide top start XX, performance. we'll line

prior point year. XX.X% from and X-year same-store saw growth that during net million, quarter, fourth positive the an XX% grew almost increase the We $XXX impact X.X% grew on For hurricanes to the a over the occurred despite sales quarter. sales a XX basis stack. transaction Crowdstrike and System-wide

just X-year a to For stack. sales net year, the sales on XX% $X.X X.X% billion. XX.X% System-wide grew over and fiscal same-store grew

premiumization. common call change year, our price contribution I'd drove to of same-store service fiscal like approach the out with ticket balanced the For the and with update more contributor, beginning determining sales to also penetration largest practices. XXXX net the in we to majority consistent from revenue be intend that Non-oil comp. was along to a retail

after XX enter the beginning full the in the operation comp updated month the system. With will months stores the at of approach, within

quarter. year X.X%. other for XXXX, the the looks basis fiscal system-wide to would same-store financial at the sales the Slide drivers For of XX XX points change the results increase

gross percentage For business expenses, SG&A and QX, as year-over-year by Adjusting we sales flat is of margin offset lower saw increase driven a costs a point in year-over-year. mix. rate, basis XXX product by store

deleverage basis of SG&A XX depreciation, Excluding points. had

advertising by adjusted gross XX points margin in improvements investments technology. year, over Overall, the margin make increased basis line. prior driven to continue We at and EBITDA the

slide, at we'll a full look Turning financial take next to fiscal the the for year. drivers the

is We've XX by XX.X%, which managing saw growth to base. On year operating margin driving to improvement front EBITDA our offset due we're labor points partially product basis point increased making efficiency store expenses XX.X% a the primarily the Slide immature the we'll costs, Our the and year. driven lower of been business in the margin a by take prior we scaling benefit XX, half XXX of and with adjusted pleased Gross progress rates. saw in fueled to costs, share per overall are the of at margin over $X.XX of overall increased basis the growth from fiscal $XXX million, an income XX%, expansion. We net generation. adjusted the buyback record to XX%, profitability. adjusted by by margin the versus by XX% of cash both million, business operating increase of share of and offset top in to increased line expense prior-year look Adjusted higher income and lower income EBITDA due comp. $XXX to interest EPS partially growth for interest driven increased share adjusted million XXXX, X% In $XX net utilizing growth modestly

cash the Turning to at fiscal and billion We'll $X XX. debt. with balance Slide position. 'XX ended We of look net sheet

the year the year. than establishing the the rating of agreement our basis Global prior the operating X.Xx During to adjusted year, supply were lower $XX payment reduced year, leverage net onetime Valvoline ratio flows million, at agency which EBITDA adjusted had $XXX million the on for end benefit terms a the from activities we Full with Operations. cash from is which

and the quarter totaled million and repurchases Share for respectively. year, $XX full million $XXX

a material related IT to of XXXX, general second we the controls. primarily reminder, in fiscal reported quarter a As weakness

still done. is While our there be made to efforts, work progress we have more significant in remediation

With summarize year XXXX. to our that, for will fiscal outlook turn I it provide to Lori and over

all progress growth compelling business Mary. to our of Valvoline making stores accelerate the results, financial XXX fiscal XXXX, our year we're model. growth. proposition We're customer of transactions growth attractiveness our the and and partners Thanks, new Adding momentum. will franchise pleased delivered value the the refranchising demonstrating with robustness welcoming new in in network our increase

We positioned year strong deliver and in to durable fiscal XXXX. are growth well

of our the provided the So let's business. on impact efforts out have On the take underlying Slide additional the look outlook the year. to of a demonstrate for XX, guidance our and at growth refranchising information laid upcoming we've

growth to new XXX X% growth and of XXX expect network of same-store to We sales overall X% stores.

fiscal This investments included year profitable stores the slide. million $XX for growth XX% talent business forma $XXX the and Because the this EBITDA modernization deliver to the to line certain to meeting the combined we've half with $XXX necessary would of scale with deliver the on our from million. in to during and million of results adjusted the million impact, future. Similar the expect to refranchising our anticipate top grow based this in dollars includes we to to underlying the of revenue the of the store technology quarter. to seasonality expenses next EBITDA timing shown for to pricing $XXX lapping September. took typical we level growth the prior XX% the of XX% to growth adjusted such come into EBITDA approximately business actions and to as Adjusting fiscal impact year annual transactions front the XXXX, NOCR expense, XX% in and as of in along occurred some first on years, in which we approximately XXXX, the contributed and adjusted pro hurricanes volume push business, in Due EBITDA

is range. same-store providing and a of XXXX it result. a the possible first We fiscal for quarter other the The quarters, a provided higher is comp in experience guidance year quarter sales with expect do we're we year full compared below

guidance the within and to financial results underlying XXXX strength best-in-class We're of excited year industry. continue fiscal and performance trajectory reinforces to business. deliver Our our our

over With to the turn I'll that, it begin Elizabeth to Q&A.

Lori. Thanks,

start Instructions]. we [Operator Before the Operator, Q&A line. the open please

Thank Elizabeth. Bellinger David Mizuho. question Our [Operator you, Instructions] with comes from first

Just QX focusing on first.

are were if they some Maybe higher algorithm? X% think comps again how picture, factors. comp should this longer-term sales of the But bigger we little out external back the about X% quarter. to So light a we

year. might you for quarter X% next mentioned just have You below a

do all going the just how And us So forward? X% to we that together? more give in confidence square X%

Yes.

-- the in start Crowdstrike fact, impact the specifically fourth more we September, of in on in me, So mentioned from earnings then first David, were company Southeast And end much the those the driven impacting from primarily impact last significantly it the did excuse towards hurricanes. those month, call. We in did, as saw franchisees we with that by some the July hurricanes, -- I'll quarter our our by comment event quarter in comps. see of in in some than the stores our impacted your markets

and of performance We portion some do gap. the a the weather you'll fiscal that store So the quarter franchise company sales that 'XX, we're in performance see push first the of regain Typically, some we to when of events. and out, we're we that explain store see differences the quarter that from business. that expect events, typically to between going able of see in weather regain

full still overall. terms fiscal of ticket in are demonstrate the expecting see strong over to transactions longer first the driver 'XX year, with term. continue contributing as our in expecting we're balanced as we So be see them the to to then we'd the growth quarter like of nicely, comps And not of the but majority same-store sales to

comment longer-term comps? do Lori, the to you want and outlook about

Happy Sure. to.

to the many near longer-term to to and are continue guide provide sales hope trying to change future. There evaluate we update our So -- we're sales in the an administration unknowns that same-store related factor in the in. political

actions during more the some in that have come the of confidence the year to And beyond fruition, we'll start the see guide XXXX. talked how were election until first we of think half I to a in fiscal year about

to uncertainty Just obviously, of that the both tailwinds corporate a would tax for and growth. there's headwinds the obviously could tailwind around there's rate give side, magnitude be come, those EPS benefit a on context, and lower

the in vehicles make more up of to benefits car also investments actions. the go But the in just terms obviously the the over longer in some administration maintain of shift developing we miles timing of And electrified required term, potential driven services us gradual park. given EVs to could customers' the an

have to -- out tariffs, figure timing the we to breadth own breadth depending would and ways customers we mitigate would or COGS, through the through magnitude on those pass have and magnitude impact those an On would actions. our that and obviously, on side, headwind efficiency or our

whether then the inflation increases whether or environment, affects or not and just competitive And pressure. how there's macro that subsides consumer

They or tend a see centers. start automotive we're their typically into we changes trade to way now, So and seeing who it promote down. oil are have other deferral business service core some drive in traffic to their to seeing as then players

retention Quick will and to Lube if out it impact obviously, could our customers environment, so worsens, that customers, channel. of And but ability not that channel attract impact the our of into

the lower mass how is quickly impacts wage that and then environment for impact is it and also labor And that level and how broad deportation how of the retail.

downsides -- year. fiscal the and So there that in of making given we're the of and we potential timing watching upsides are a that number and sure But prepared I think guidance unknowns those that assessing timing FY we're for of we're and mitigate. our things, the those factored to have 'XX,

provide it's clear. guide. more do But beyond hope a to as soon as still 'XX, gets think to I that we FY do forward of But that early little a some

Got growing looks it. adjusted back those the out up pace I appreciate at implies XXXX, And at EBITDA that XX% about the adjusted second It than then lesser refranchising like midpoint, is question, XX%. we is piece for if my is up revenues. total all about revenue details. EBITDA a

that? then the type So could us talent. modernization some compression? I and business you just And margin what areas expecting think you help unpack mentioned of you're of in tech

on be more just give us maybe could So helpful. details those

Yes, David.

of cost understand cost. substantially, our reimbursement terms that underlying product overall what guidance a uncertain Lori are about So that yet more of fully down environment. 'XX, providing account how in play around the taking will consistent and oil we've fully the that notification of into us We used environment collection in uncertainty payments recently includes one for will we suggesting we're collection did to our underlying receive providers their with terms from talked a to go out

time. component cost environment sold and significantly the and our labor inflationary could over environment. watching our Labor of of largest goods impact us that inflationary closely also We're is

do financial and on think system, replace allow our in require of So around of and from view and in we of we're making uncertainties. then And HRIS those in update the that specifically are really what requiring is we're in conservative in we cloud-based place investments guidance 'XX, to both since term. reasonable to the the system updated and talent that a some us the prior did G&A business scale I the to and the our technology forward we're then we our where X,XXX-plus the financial expenses, taking systems, that's future. And modernization. The of today and the drive And light talent. in We system HRIS IPO. we places been ERP will systems to have systems right and we're working the rollout the in business talent on going stores focused very focused making right have on certain investments longer are

opportunity is ways, really kind with we're reset long-term that in drive So the growth believe that we a for of and making business. year still continued some those order to investments that in 'XX scale in is strongly us some of

are have will of of fit development cost systems those those the just start are and to implementing systems, Yes. we out. ERP year. either going we which do side prior for last fees have we've partial the spun the I'd systems come retail. but for add, year's life, to were not within full done through place financial, have financial in And around and on They implementations we'll on depreciation. And the are in or that not side system infrastructure HRIS, in place HR the were when that those in year we also the we Ashland also that end

I franchisees place investment, sure right they're we our make doing. G&A significant that in we So committing asking ensure the the that areas talent to a And that to most around increases us and then are of those unit growth. we're in as can have that want the specifically think are And few investment support to do in more they to invest that talent successfully. things

went started a our -- last of implement We January just of ERP Lori, my -- actually system actually had I mention fiscal 'XX. that live quarter that did the in in of comments. second 'XX, on 'XX. 'XX in and clarification And we calendar with we

that. clarify to wanted just I So

question next Steven from Our with Zaccone Citi. comes

from because prior I can up Zaccone to Citi. wanted the -- Steve on It's me? follow I think hear you question guys

Yes.

Yes.

Okay. Great.

get the uncertainty help wanted X% for for this think us view I through rate to question algorithm. versus to market to what the industry, the year to like going X% guide then And growth. prior X% of when overall to because you follow right? the the transaction on we used Sorry. sales same-store ticket a you're have and address growth as then Maybe to up because X% to that the formula the

Could that? we're where changed kind we Because to and run think bit I right I the all just this there? potentially Has go to like a the to call of little come anything for business? understand I rate X% X% forward. lower going we're be trying think is guess off as than it that's

assuming continuing to challenges difference seen same especially as inflation able likely guide pricing. that that the environment X.X% Yes, consumer We're challenging the pricing given to be we pricing we've Steve, the take moderate historical in have level biggest environment the 'XX. some the X% relative overall with look in will the fiscal that we to X% and in past, more at that net required not to Really, be the the in basis on comp. for is a did restated a more

growth. mentioned see, earlier, do as I We expect to transaction

We to to continue see strong from premiumization. benefits expect

in of we revenue We change non-oil quarter took actions stronger are second 'XX penetration. lapping the drive to

will modest that bit year-over-year think little well. so be a And that, basis a we on as more

that? anything add to Lori, you'd that

Sure, Steve.

for And and competitive it's have I to overall, at retail. industry our is in that. you expect trending been environment, that and think strong outperformed look we're advantages, same-store industry back post-COVID absolute when the to X% and outperform we the our going relative on what I reflect with would and that we sales deliver X% fully step

costs. from had back comps, When algorithm, pricing significant same-store inflationary levels, you go to double-digit you inflation of look when at XXXX, we the came when which sales pass-through the set we

sorry, I macro back inflationary different and that so included they as different the extent confident at 'XX. a to be pass-throughs you and in the -- labor not environment, think 'XX even we're and going when in inflationary are And to a look were

ability I you Quick new the acquisition could it's customer that having new short-lived, at the drive in because to ends the up but the combined seeing space, from be segment, you'll our factor outside do acquisition as think Quick we're Lube seeing when it that, we're competitiveness with what least the and now, significant of from presentation, the comes from a channels customer a note Lube XX%. part outside

have And provide discount those as and Once keep traffic they a quality see shift, reasonable harder customers our history preventative channel, within stay. they to those suggest channels it -- to that are to the pricing on try we our the would bundled trying of it the try for convenience, once and and acquire years maintenance, channel. or makes bundle years cost they us

it's of competitive just and acquisition. more bit X pass-through; impact so two, And really that customer intensifying and a on factoring things: the just those environment inflationary in little cost new one,

Okay.

the just for you? about sense why then does potentially on the the And as ones detail. follow-up to think course basis, to multiyear the is helpful of how decision the more this even decision make future? I potential a over do That's And in had of some stores. Okay. the criteria then go you additional refranchise these just Like year? we do what's on

you do to Lori, want go?

I'll start.

opportunity market expand drive and an to I our been that we share growth. strategically, think we've clear have considerable very

those there's markets we looking side, also grow. markets, on the have within franchisee but company of lot territories opportunity the put our at to the growth team of We that where then there's company grow overall a And capability to the more together business in on the we've have side, markets. --

we transaction. to always if brand willing in focus And on into standards the partner Obviously, those than development more -- said to commit to drive value it's new has the have would an way. of that people, and this units long-term the higher would, the factor and they which has franchisee, operating have a that in market to the to to same capital-efficient going stores a business, the significantly we if more well-capitalized wants sell recognize has the a about deliver we've growth but currently overall -- that a that otherwise we're so who brand they're of we're we

So while it customers. in a us sort term, short very at given of completeness, in also least it looks allows on to as the level, it's network at to dilutive growth and the it drive -- higher accretive Fleet the term, has it impact more appears which long sales, capital-efficient an relates

So capital efficient. more It reinforces there's It's circular itself. a loop. and growth more drives

anything have there missed? is I Mary,

would announced that is The the transactions, only and say, other completed quarter thing X Lori, I soon. done fourth relatively we've will one in we X of we these the close that today

have We transactions. with to lot a absorb X those

going well, to then here the last X So I are perspective, in and the value. think of that in place we'll continue -- shareholder what's in driving a we'll the be monitoring and ensuring months from longer-term evaluate interest that changes longer-term that what put we've best just

over shareholder them. entertained IRR is Otherwise, the accretive time it on have look -- the delivers return you term, transactions the when the definitely are long very return. wouldn't attractive and that commitments the But at period these given, of partners over we on

Mary, this And all on Okay. last best is your the if retirement your call.

Thank much. you very

say No, it's not call. our last that, I'll Steve.

not see. We'll may or May be.

from next Stanley. Our Simeon question with Gutman Morgan comes

Lauren This on for is Simeon.

talk just markets a changes? you same And guys new in you bit in expand, can finding separately, markets? more is, question existing about are Quick opportunities little versus first Oil competitiveness Our as you the

Sure.

in space overall XX% market. relates are the do, it market, to again, that XX% Lube changes do-it-for-me the to to I of Quick think as the oil continues done the total

see our we the still to And of So small very it's continue other overall a competitors. competitiveness Quick percentage TAM. Lube the with same

a in not change there's significant environment. the So

QX activity. advertising think talked I we in -- advertising about earnings, competitive some the

I that has think moderated. some of already

material our increase or competitiveness way any across any in the So by we're within not category seeing geographies. --

to As it pockets that there's this XX% consistent we preventative to of seeing category to the base. tactics our changes of it's And to traffic. XX% -- maintenance promotional changes of This outside they're specific and for drive segment, on relates or the with oil fragmented a of when that our are outside oil or example, on are again, done not down new. very other and consumer history is maintenance trading competitors those like, is deferring pressure tires, or

national to discounting unlikely but that's happened. you'll scale, at it's some see So be

say our we and the the If But outside dealerships. from within as that not or promotional previously real we're at Lubes competitive pockets consistent relatively market -- differences what are not opportunities or opportunity would dynamics Lubes it's Quick But landscape scale. acquisition such. not seeing perspective of space significant saw anything, with it's competitive so it's a for that national new not in are estate the space. Same seeing of seeing We're pervasive with we and in I new tactics. the builds, any Quick

Got is That's we're helpful. to starting follow-up pick guess comfortable mix up on franchise a refranchising there percentage And into Okay. with it. just maybe us? see our I XXXX. it the Is you're piece, sharing

we by we've have commitments think And existing our we get have both want our partners more shifting partners. parties opportunities join as And the target space new lot. the the a got would the specifically don't white accelerate that handful our our I we're as very that do and and at the today, who and one bring It's question encouraged to we franchise. updated to a to love that a additional entertaining well transactions and asked and from are gotten interest growth. from commitments on we network. additional that those a on with franchise still announced business good commitments to looking We plans of we've refranchising We franchise have

new partners recently acquired a bring on as franchise new including in business came from development retiring we agreement with franchisee. several one acquisition important And did some partner a territory markets, who a Lori, in And strong well. that that

Our next from question with Kleber Baird. comes Justin

And tends is I 'XX sales? about a non-oil how drive of one What of First and from variability to penetration where percentage terms variability? revenue at wanted that in then just standpoint? across there to ask finished system you system-wide change the much

the significant ticket in 'XX. the our non-oil ended of I was change And largely just 'XX, down there it's just started there, -- or from It's a comes from biggest services. really to transaction, Mary have our the those to some all we efforts be some mentioned second of coming year, question. in non-oil great services. that change not It's quarter X think dollars actually efforts It's clear, across and revenue and X stayed. in improvement per coming board. It we contributor revenue Obviously, the

and how process to explain we everyone that but to the conducting the we also them. made understood back guests, those in and in on what they the fact were trained our And to recertified were services go process SuperPro sure that

an the have some change service also speed We made because efforts take we to faster, oil of service the it's they convenience core the service is know and to likely if speed. then we an additional of all the and increase have because more time, customer around

look we when across the board. So the it's year-over-year, at

stores. is Now we still and differences at look stores, quartiling our between significant there

of tenure the that comes staff the down to in the of store. some And

younger a the speed well of the also less If less both guest, service in explaining performance. completing service as the staff, educated as just their the in but to you confident, have they're

And are quartile. so differences quartile the the top bottom significant there between and

I XXXX. pleased year-over-year in all think by improved is what quartiles we're

And start continue and this of year, we that work the as fiscal calendar we year. in began January the February into year the new

that we with encouraged. barriers educating serving and the October, what we store the at they our managers annual their this and very that just meeting spend time sure We in time guests. address we're our expectation in spend of key topics one is and on any know making So is that

follow-up. you to to to cost. get the that change would for then And from be waste beneficial it It reimbursement net at costs. in negative being sounds But a make is product this oil. driven my in your by base assume decline these collection lubricant changes color I'd helpful. to regarding expect oil, the comment which a least perspective, more Safety-Kleen's decline I seems on be Mary, like to like, wanted payments some just Very unrelated decision

I So clarify to that. wanted just

we No, costs how still a the full as point just yet cautionary not necessarily. It don't was be visibility have overall that will really to impacted. product

end for been the we'll still costs. quarter. an at on and have collection product has to a revenue working we're you overall that, hedge of So Historically, modest always update the

saw a we revenues. up, went costs benefit product collection as So from

it's to in costs product this historical. as not will And saw that And from follow came down, cadence related same received we clear us revenues. collection a change as -- decline we that that

the Longer the margins the benefit over we time, we Over longer-term in product product there did But The impact will real lower on our term, fourth time, quarter. from it I -- costs the fact, will benefit be. out. fourth will shorter And straighten in should benefit see cost. quarter, expect in you're question is what right. see term,

have it, So get that information. information outlook we provide and more with we investors as clear a certainly will on

Global from Our comes Harrison question Mike Seaport with Securities. next

up little takes discussion margin were oil lower through maybe product the into on bit costs, reimbursement? year helping Maybe that collection on QX. as about next we're going gross oil just costs talk expectations thinking the of the some puts in you a follow and and base Can just you to waste you about

anything if obviously, around and supply of know labor don't your leverage evolving And issue Aramco the your or is gross affecting I be a could with in agreement. there's that agreement kind margins. cost changing

to at of I gross you expect end or margin up flat So day, be the the year-over-year? year do kind of next mean,

into that we some our I impact the we're it year benefit changes as said in of do lower here, Mike, flat costs. product from the term year-over-year. the product quarter, see as as relative and to flows new see see And really, through I are guide, we'll our to in the did first part In waiting of -- mentioned, Yes. we are relatively fiscal fourth entering to how into collection assuming year. we the waste of oil some shorter I costs be the before,

that think the that that cost from the But then inflation the see will moderate inflation in we of will of some immature of the And overall our will scale couple continuing labor leverage business. that goods. where a that stores We we impact think base. overall there will number still just do the And continue last cost we labor has it from over headwind been expect in be we the we years. are to then will have see some to increases, although be labor think

generally And ramp lower have so as margins during period. those that stores maturity, X-wall ramp they to

add anything that? you'd Lori, to

Mike, storms those managing Yes. demand did I mean customer the we'll that, managing and they would just our overspend when back down staffing the And their an continue -- right be ready labor, teams I to well. particularly or to and our with teams to after and came I when say not the hurricanes was in excellent labor year up job think their traffic this times. set then are well around manage

I the to do and counter increases, have competitive every like increases wage the talent. think for environment retailer, we, minimum wage just the

than here wage. areas don't business is some states year. Now our of have the part leverage have more minimum where the gross others and in have wage reason margin this enacted on some significant in pressure to we're of all -- of factored And that step-ups why expect we the

to increases and mitigate technology in -- some costs. order tools in to implementing mitigate the are We continue labor

is factored so make. that investments into And the of we some need that to

of the investments. this year those see of later it lot be to of the With short benefit In the years. payback being a tough will implementation, see we'll But term.

All on stores. of That $XX ask and -- worth looks or to I about a sense. XX value wanted of EBITDA. refranchising And then right. of It now the like makes stores million

to selling you're the the value stores make to You for franchisees. mentioned you're that sure these getting you that want

So what transactions look the proceeds from like? do those

of expect to do that on of What multiple you $XX get kind million EBITDA?

the the of in that disposition does disclosed flows that stores Table show the The X the sold in the cash fourth of the proceeds release we $XX the release, in from businesses million we from the sold to press are in quarter, sale Mike. statement quarter. So the press

We the businesses today. the substantial a We haven't announced see in the to sale transaction gain from related sold the on we did disclosed proceeds we quarter. that

That as also consistent see item -- million where treated the nonrecurring And that we we gain was that its see closes that expect pretax. or in excess gain. see because key will transaction once announced to of we've nature. adjustment And an well, to also today you'll a substantial EBITDA as be $XX of a that

in the long order growth see the in network we overall to of in So in the most the the that focus stores positioning terms business rate on that of is well importantly term. of the for I will provide with the really return sale, we've that expect is to the but long-term that faster ensure the think those done well refranchising of terms positioned

had And going said a the the for sold this was million believe I about you you that be headwind quarter. Okay. million EBITDA quarter, stores that, to $XX $X the in

got million less closer to you than so a $X So Xx year, EBITDA? XXx,

we that of benefit going terms net well. provide on when our very long-term the we But Yes, the we related And cash some refranchising kept the a BGO that business flow on the we the those disclose overall, aren't focus multiple of that to modest had disposition stores. Retail again, modest was business to had that in the the in proceeds There will Russian the in returns value sold is as business. creation.

with from comes Wendler Stephens. Tom question next Our

but comps. my of maybe questions to same-store going back sales Most have answered, been

idea the maturing the give you can outlook? had at new impact it XXXX year stores, fiscal With us way of of looking on an

We Yes. of 'XX, method. year mention think we outlook, was first on that the over method importantly, year grows new that by perspective. impact about old impact smaller 'XX the did And starts quarter on basis impact the and XX points from and in a the quarter the the cadence the between

impact fiscal So expect be basis in points. to we 'XX, that XX-plus

year as maybe kind of look into quarter. you $XX you just touching repurchase 'XX? fourth What Perfect. fiscal on in million repurchases, the then activity expecting are And

activity. actually We to repurchase Yes. guided

if that look in state to guided you'll tables, it correctly. make our So guidance a terms you let see range, of we sure I me

$XX share to of million total to repurchase activity million. guided We $XX

and during market capital. the we growth think whether opportunities provide to significant not for that Now conditions also of subject opportunity is year a subject we any that other to better course, that or identify would

part is for creation But we do being value shareholders. that to cash think to our during component a our shareholders significant of able a significant flow the distribute of long-term free year

Thank great quarter. you, and

Sandler. Piper with Keith Peter from comes question next Our

roughly Q&A, get an to EBITDA trying out FY growth and the like the it guidance adjust characterizing refranchising EBITDA you're as the at 'XX XX% about midpoint. Looking investment And seems and the at to year. with

the of are much growth pressure the is a EBITDA taking certain up is, EBITDA year-on-year? the question causing Like heart you could out So percentage the investments maybe of frame on how guide? there

Yes. put that modest some that We for certainly that in modest see I G&A the you tell would expect we year. deleverage, not on some likely would Peter. cause significant, would costs our But call growth would EBITDA to pressure overall didn't specifically growth deleverage out, that certainly our but

Okay. people and technology? that's And

Yes.

Yes.

pace marketing roughly the I Peter, think, had 'XX. at will continue point same in we we that -- is the

investments immaterial. holds not really increasing or around then G&A It's flat. we're gross marketing and just the it's faster So margin assuming that relatively

indirect would wasn't Okay. and exposure? of suppliers you And is Or is you what tariffs. up then have exposure? you I thinking could is? you countries more tariff-exposed. import I did your flag concern with guys it as pricing? where pass frame on exposure guess, Maybe there potential some direct your Is it particular

Just potentially? help us understand negative how have that impact could some

happy Most our suppliers. is indirect our Yes, to. impact through of

imported meet Valvoline standards given actually the spec to Products brand of Global in terms most lubricant you the the look oils pricing, brand. just the base at our of of If are

just than China. just And on so just it or not tariffs whether there's depends or broad across more China

do China. of some of our have do and sourced filters our we services, China, are to some relates our it wipers like ancillary As from

at a we the that's when our see we obviously, have labor could for we highest, you our that the services. in COGS line, that So And piece reasonable being do pressure. use COGS some look in amount materials

we that in the of term. short already ways could we're looking Now some mitigate at that

before filters be tariff wipers, longer of enacted. could term, relates there we As and to in any But it now those an were more bring impact. can

through direct sourced those China... are And it and still to suppliers wipers, or as are indirect those the filters relates

-- Peter, that some sources with place to at but mitigate in we're our They're those of indirect through suppliers contracts that of alternative some actually There's got we're be margin. to looking of that that Yes, distribution. work we've things a order we we're looking as suppliers, obviously, need in agile all the but at protect it's just underway, lot to well. do

Our next question comes from Bret Jordan Jefferies. with

what the what was the just comp in car we about more comp the I premiumization in the give price color on you really think -- guess was what mix, same was when us and count, service could quarter?

I change the quarter majority a in would the comp get But largest We ticket was by the the revenue and pricing comp, Yes. specific ticket of that you premiumization. and was of tell followed non-oil by don't penetration, that Bret. that around contributor the driven to combination net

lines, those comp quarter, strong component during growth modest to see continue all did of non-oil but of the the contribution. overall. with contributions we transaction see So leading the X change service on it We revenue was penetration a more

And think even which was Crowdstrike transaction quarter, I true impacted with growth the quarters all was the the across fourth by and hurricane.

So that have impacted transactions. would

cycles the premiumization, seeing gone into ability are people same extended guess, a or us? to sell end seeing you guess, are as or at has the as change and the behind election pressured trend, customer What I all we the getting optimistic get of year seeing on? are you from I Or year more you is oil consumer the deferral sequentially getting

Yes.

be We see not deferring to trading or customers I continues for demand maintenance the has do and our resilient. preventative think our down business historically and the service.

to I a the added in think last oil of about services had how rate talked quarter, an change. lower we lower penetration income

We haven't seen that get worse.

year-over-year up transaction meaning overall, level But penetration. level, a lower In income spend still differences in quartiles change quartiles. incomes grew dollars QX. income services fact, went it than higher than We higher tend non-oil household added at the in all by per revenue to the in transaction did more see on penetration or per QX

seeing macro uncertainty our not of active some affect we're customer the So base.

proposition the understand acquire those I customers other easy, our quick, think value-seeking help Quick and of impacts to out ability typically don't is where and of customers we're activity value are channels Lube trusted. they looking if the both

Lantz with David Fargo. Our next from question Wells is

being you a the XXX throughout stores And then franchised? the detail? still assume safe balance 'XX, company-operated unit cadence for it talk is guidance XXX more XXX to also bit to the new the embeds opening about that, and that Within can year in

to. Happy Sure.

to said units. the new I side, company were get X stores on to ago we targeting think that years we've XXX

XXX that we in expect So for to be you're or guide would and around balance. company the be franchise right, within to

of relates openings, even more end to the obviously, little our franchise going and be is fourth it bit hard As quarterly us a always which typically worked But be a quarter-to-quarter. create see quarter. a we partners. our it the for across really paced to quarter, There's quarter to summer, more bit XXXX at after to both in cadence evenly higher general, for we've

us. on say visibility based is that acquisition in had front timing always of we've new would of builds. And and some what's I good of Now

allows total, I build higher number a think the with visibility new becoming percentage year. have actually better to the over of the us it

in order I so delivery to in new by to we're more units And support the get do consistent a quarter. think putting tools and of right

the Got it. over on around expectations then have the business, a XXXX? CAGR can That's years. for any Fleet transactions helpful. grown Curious last And at color X XX% if you provide additional

to have that an year operated company business-to-business part on side the frequency to for In have opt that last consumer. partners made visit seen of they our for business-to-business the us. of of in because some to regions pay started And they've just is take ticket more our as and the investments sales that can continuing by that off relative service growth additional and the into. selling attractive on overall had the We are an how that that are we've to years, we franchise team are X.X

So grow to in we we FY would 'XX is that Fleet growing share to business our expect were faster Consumer growth continue included, specific than really rates beyond. business don't the but and our

Shemesh next And Steve Markets. from comes our question Capital RBC with

my offer as well. I'll congratulations Mary,

top to know to where on trending maybe bit than back I mentioned rest higher quarter-to-date? circle you the year. to line. be you a Can sales of expect wanted the comment Just same-store XQ you we're

and I just And being more at a guide. already point. tire seeing full think into bit this XQ a deferral little quarter you hurricane much And below just the promotional we're guess in guess maintenance I XQ benefit how a then you of secondly, from possibility shops year mentioned coming of might contribute? I mean, the the

norm. kind I need it in of to the like feels the a that's happen quarter? to guess, to get So would what you sub-X%

in weather is quarter a pleased in year. early I well quarter had we the we in We strong in you early the really that the but last pickup if our -- saw was know call as quarter-to-date. in line recall, it some weakness but quarter-to-date, a talked us weaker strong by against the expectations last choppy of clearly where business the at that look this in year, year month a that were as about marketing October Yes. being October our we been with as helping trending comping more comping up recently, against year. It's influenced a last We're everything is quarter. trending first you don't little is

outperform I certainly quarter comps year. tell So last you quarter the what saw we expect I in the would that the in to

your the part of second get Lori So question. with to turn might that, over I to it

Yes.

you the the activity will think I look at impact when the number it about, talking can customers new we promotional to you're really be that of that -- acquire.

stores obviously XX% we don't So of our when customers are before year-over-year. the customers look seen if fleet, by that are grow our and XX% -- we've XX% number grow new. you don't across We our of

And pockets seeing that the that stores, our some be for pressure some the just continued of channels. where activity there'll that's existing other beyond they customers we're broaden from potential we if see is today. acquiring into come So and promotional

promotional rates we not impact to could so been the the our we around have below And has around experiencing. we difference really go see new to what that the we that or that's it really whether guide what acquisition relative activity and planned customer is and

holding are I the Okay. there largely. when mean, price And just promotions clarify, in environment, you're to

at slowdown, we're So a pricing or be somewhat anticipating to flat to that least maybe going some still positive there? traffic there's going but get of you're

Yes.

match keep we they thing it, the our before but right an served a our bring but do into and don't we hold the allow we'll it stores. customer customer. we gets we've If the So store, offer to pricing, that

competition, traffic. could of a little in And increase, a of see bit maintaining discount areas so you but bit the little those

to retention existing activities I'm try attractive with before. to a comment we haven't that's about promotional seeing that experience new Quick not What customers Now don't us are been Lube do the talking and get And try be a they of know promotion that is. been to is before to the Valvoline they other or promotions, if may perhaps a customers. difference definitely our to as haven't the what

need are And window. so it's competing decision in window activities that that for service in promotional just more customers or the

So it's for dollars customers, in not I marketplace. that's but those discount dependent. increase market-by-market to be don't it's new in And think chasing going -- an more the

We the have queue. no further questions in

So any you, I'll over for to turn comments. closing back it Elizabeth,

time Thank you, Lydia, for and you your today. thank our concludes This all call.

call. much very our for you concludes joining. Thank This

your You lines. may now disconnect