On August 7, 2024, Valvoline Inc (VVV, Financial) released its 8-K filing for the third quarter of fiscal 2024, ending June 30, 2024. Valvoline Inc produces, markets, and sells automotive maintenance products, particularly lubricants, to retail outlets, installers, and customers. The company offers various products such as engine oil, heavy-duty engine oil, motorcycle oil, grease, and brake fluid, among others. The majority of its revenue is generated from the United States.
Performance Overview
Valvoline Inc (VVV, Financial) reported sales from continuing operations of $421 million, reflecting a 12% year-over-year growth, driven by a 6.5% increase in system-wide same-store sales (SSS). However, income from continuing operations declined by 25% to $48 million, and earnings per diluted share (EPS) decreased by 8% to $0.37, missing the analyst estimate of $0.48. Adjusted EPS was $0.45, a 5% increase over the prior year.
Financial Achievements and Challenges
Valvoline Inc (VVV, Financial) achieved a notable 12% growth in adjusted EBITDA, reaching $123 million. The company added 33 new stores during the quarter, bringing the total system-wide store count to 1,961. Additionally, Valvoline refranchised 17 stores in July 2024, aligning with its strategy to accelerate network growth in a more capital-efficient manner.
“We delivered 12% growth in sales in the third quarter driven by system-wide same-store sales growth of 6.5%,” said Lori Flees, President & CEO. “We are pleased with the continued momentum in non-oil change revenue service penetration which was the largest driver of same-store sales growth this quarter.”
Income Statement Highlights
| Metric | Q3 2024 | YoY Growth |
|---|---|---|
| Net Revenues | $421.4 million | 12% |
| Operating Income | $93.4 million | 8% |
| Income from Continuing Operations | $48.2 million | -25.3% |
| EPS | $0.37 | -7.5% |
| Adjusted EPS | $0.45 | 4.7% |
| Adjusted EBITDA | $123.2 million | 11.6% |
| System-wide Store Sales | $808.5 million | 12.4% |
Balance Sheet and Cash Flow
Valvoline Inc (VVV, Financial) reported a cash and cash equivalents balance of $66 million and total debt of $1.1 billion following the repurchase of all of the 2030 Senior Notes. Year-to-date continuing operations cash flow from operations was $170 million, with free cash flow of $17 million. The company also announced a new $400 million share repurchase authorization following the end of the quarter.
Analysis
Valvoline Inc (VVV, Financial) demonstrated strong revenue growth driven by increased same-store sales and strategic store additions. However, the decline in income from continuing operations and EPS indicates challenges in managing costs and interest income. The company's focus on refranchising and network growth is expected to drive long-term shareholder returns, but the immediate impact on profitability needs careful monitoring.
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Explore the complete 8-K earnings release (here) from Valvoline Inc for further details.
