forward-looking statementss21.q4cdn.com/457874623/files/doc_financials/2018/q4/4q...acq other 2 fy...
TRANSCRIPT
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Fourth-Quarter Fiscal 2018 Earnings
Sam Mitchell, CEOMary Meixelsperger, CFOSean Cornett, Director of Investor Relations
November 6, 2018http://investors.valvoline.com
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2
Forward-Looking Statements
Certain statements in this presentation, other than statements of historical fact, including estimates, projections, 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, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Valvoline’s most recently filed periodic reports on Forms 10-K and Forms 10-Q, which are available on Valvoline’s website at http://investors.valvoline.com/sec-filings or the SEC’s website at http://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.
Regulation G: Adjusted Results
The information presented herein, regarding certain financial measures that do not conform to generally accepted accounting principles in theUnited States (U.S. GAAP), should not be construed as an alternative to the reported results determined in accordance with U.S. GAAP. Valvolinehas included this non-GAAP information to assist in understanding the operating performance of the company and its reportable segments. Thenon-GAAP information provided may not be consistent with the methodologies used by other companies. Information regarding Valvoline’sdefinition, calculation and reconciliation of non-GAAP measures can be found in the tables attached to Valvoline’s most recent earnings pressrelease dated November 5, 2018, which is available on Valvoline’s website at http://investors.valvoline.com/financial-reports/quarterly-reports.
http://investors.valvoline.com/sec-filings
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Notes on reporting and year-over-year (YoY) impacts
Pension-related items- Non-service pension and OPEB income reclassified as non-operating;
excluded from adjusted1 results as a Key Item• Prior periods revised to conform
Key items1Q4 Fiscal 2018
- Net pension and OPEB mark-to-market remeasurements and non-service income: $20 million after-tax expense
FY Fiscal 2018
- Kentucky and U.S. tax reform2: $78 million after-tax expense- Legacy and separation-related: $8 million after-tax expense- Acquisition and divestiture-related: $2 million after-tax expense
3
Fourth-Quarter & FY18 Reported Results
(in millions, except per-share data) Q4 FY18
Operating income $105 $395
Net income $45 $166
EPS $0.23 $0.84
1 For reconciliation of adjusted amounts to amounts reported under GAAP, please refer to Valvoline‘s earnings release dated November 5, 2018, available on Valvoline's website at http://investors.valvoline.com. 2 The estimated net impact of Tax Cuts and Jobs Act of 2017 (TCJA) may be refined in future periods as regulations and additional guidance become available.
Full-year cash flow from operating activities of $320 million
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Adjusted1 EBITDA growth of 9% in Q4 Full-year adjusted1 EBITDA growth of 4%, to a record $466 million
Adjusted1 EPS growth of 21% in Q4 Full-year adjusted1 EPS growth of 9%
Returned $114 million of cash to shareholders through dividends and share repurchases in Q4
Full-year returned $383 million to shareholders
4
Fourth-Quarter & FY18 Adjusted1 Results Overview
1 For reconciliation of adjusted amounts to amounts reported under GAAP, please refer to Valvoline‘s earnings release dated November 5, 2018, available on Valvoline's website at http://investors.valvoline.com.
(in millions, except per-share data) Q4 FY18
Adjusted1 operating income
$106 $412
Adjusted1 EBITDA $121 $466
Adjusted1 EPS $0.34 $1.29
Full-year free cash flow1 of $227 million
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447 466
(2)19
(19)
14
FY 2017 Vol / Mix Other2Margin SG&A FY 2018Acq
7
111 121
14 2 1
Q4 2017 Vol / Mix Other2Margin SG&A Q4 2018Acq
2
Fourth-Quarter & FY18 Financials
5
($ in millions, except per-share data)Preliminary and unaudited
P&L Results and Ratios 2018 2017Lubricant gallons (in millions) 46.6 45.6 2 %Sales 594$ 547$ 9 %
Gross profit as a percent of sales 34.2 % 35.8 % (160) bpAdjusted1 SG&A 102 102 - %Adjusted1 Equity and other income 5 5 - %
Adjusted1 operating income 106$ 99$ 7 %Depreciation and amortization 15 12 25 %
Adjusted1 Earnings before interest, taxes, depreciation and amortization (EBITDA) 121$ 111$ 9 %
EBITDA as a percent of sales 20.4 % 20.3 % 10 bp
Adjusted1 EPS 0.34$ 0.28$ 21 %
Fiscal Fourth QuarterThree months ended Sept. 30,
Change
Factors affecting year-over-year adjusted EBITDA1
1 For reconciliation of adjusted amounts to amounts reported under GAAP, please refer to Valvoline‘s earnings release dated November 5, 2018, available on Valvoline's website at http://investors.valvoline.com. 2 Other includes foreign exchange impacts, equity and royalty income, and other income/expense.
2018 2017181.9 179.7 1 %2,285$ 2,084$ 10 %35.3 % 37.2 % (190) bp428 396 8 %34 25 36 %
412$ 405$ 2 %54 42 29 %
466$ 447$ 4 %20.4 % 21.4 % (100) bp
1.29$ 1.18$ 9 %
Fiscal YearTwelve months ended Sept. 30,
Change
Factors affecting year-over-year adjusted EBITDA1
Corp
Adjusted Results Summary1Corp
($ in millions)Fiscal First Quarter
PreliminaryThree months ended Dec. 31,
20172016Change
Sales$ -$ -ERROR:#DIV/0!%
Gross profit$ -$ 2
Gross profit as a percent of sales-0%-0%-bp
SG&A$ (18)$ (2)
Equity and other income$ -$ -
Operating income$ 18$ 4350%
Operating income as a percent of salesERROR:#DIV/0!%ERROR:#DIV/0!%ERROR:#DIV/0!bp
Depreciation and amortization$ -$ -ERROR:#DIV/0!%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 18$ 4350%
EBITDA as a percent of salesERROR:#DIV/0!%ERROR:#DIV/0!%ERROR:#DIV/0!bp
ERROR:#REF!
VVV
Adjusted Results Summary1VVVok
($ in millions, expect per share data)Fiscal First QuarterCOGS and SG&A split of call-outs
PreliminaryThree months ended Dec. 31,GAAPCurrent QtrPrior QtrAdjusted
20172016ChangeRevenue489.0456.0Revenue489.0456.0
Lubricant gallons (in millions)43.140.47%COGS300.0326.0insert from GAAP financials (profit summary)COGS312.0311.0
Sales$ 489$ 4567%GP189.0130.0GP177.0145.0
Gross profit$ 185$ 1765%GP%38.7%28.5%GP%36.2%31.8%change Corp tab to get this number in cell C7
Gross profit as a percent of sales37.9%38.6%(70)bpSG&A60.096.0insert from GAAP financials (profit summary)SG&A & Corp85.088.0change Corp tab to get this number in cell C8
SG&A$ 77$ 85(9)%Corp exp alloc19.021.0insert from GAAP financials (profit summary)
Equity and other income$ 10$ 5100%Total opex379.0443.0Total opex397.0399.0
Operating income$ 118$ 9623%Equity and other inc3.05.0insert from GAAP financials (profit summary)Equity inc3.05.0
Operating income as a percent of sales24.1%21.1%300bpOp Inc113.018.0Op Inc95.062.0
Depreciation and amortization$ 9$ 9-%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 127$ 10521%Call outs18.0-44.0insert from profit recon file sent by Sam
EBITDA as a percent of sales26.0%23.0%300bp37.20%Check18.018.0these two should be equal (or close due to rounding)
Pension & OPEB income$ 17$ 4325%
Interest expense$ 10$ - -Breakout of key items - Dione's income statement forecasting file
Net Income$ 71$ 659%COGS-12.015.0
Reported Earnings per share (EPS)$ 0.35$ 0.329%SG&A-6.029.0
Adjusted earnings per share (Adj. EPS)$ 0.35$ 0.329%Equity inc0.00.0
Other inc0.00.0
Gross profit as a percent of sales37.9%38.6%
Equity and other income$ 3$ 5GAAPCurrent YrPrior YrAdjusted
SG&A expenses$ 70$ 85Revenue1,929.01,967.0Revenue1,929.01,967.0
COGS1,168.01,282.0insert from GAAP financials (profit summary)COGS1,180.01,267.0
Note: Fix date, and quarter in rows 3 and 4. Also make sure years are accurate. All tabs will correct from this one.GP761.0685.0GP749.0700.0
Must select B3 through M15 to get sizing correctGP%39.5%34.8%GP%38.8%35.6%
For cut and paste into ppt:SG&A270.0291.0insert from GAAP financials (profit summary)SG&A & Corp355.0341.0
TypeEnhanced MetafileCorp exp alloc79.079.0insert from GAAP financials (profit summary)
SizeHeight3.92Total opex1,517.01,652.0Total opex1,535.01,608.0
Width9.00Equity and other inc19.08.0insert from GAAP financials (profit summary)Equity inc19.08.0
Position (From: Top Left Corner)Horizontal0.49Op Inc431.0323.0Op Inc413.0367.0
Vertical1.45
Call outs18.0-44.0insert from profit recon file sent by Sam
Check18.0323.0these two should be equal (or close due to rounding)
Breakout of key items - Dione's income statement forecasting file
529COGS-12.015.0
-185SG&A-6.029.0
344Equity inc0.00.0
Other inc0.00.0
VVV EPS
Adjusted Results Summary1VVVok
($ in millions, expect per share data)Fiscal First QuarterCOGS and SG&A split of call-outs
PreliminaryThree months ended Dec. 31,GAAPCurrent QtrPrior QtrAdjusted
20172016ChangeRevenue489.0456.0Revenue489.0456.0
Lubricant gallons (in millions)43.140.47%COGS300.0326.0insert from GAAP financials (profit summary)COGS312.0311.0
Sales$ 489$ 4567%GP189.0130.0GP177.0145.0
Gross profit$ 185$ 1765%GP%38.7%28.5%GP%36.2%31.8%change Corp tab to get this number in cell C7
Gross profit as a percent of sales37.9%38.6%(70)bpSG&A60.096.0insert from GAAP financials (profit summary)SG&A & Corp85.088.0change Corp tab to get this number in cell C8
SG&A$ 77$ 85(9)%Corp exp alloc19.021.0insert from GAAP financials (profit summary)
Equity and other income$ 10$ 5100%Total opex379.0443.0Total opex397.0399.0
Operating income from Segments$ 100$ 929%Equity and other inc3.05.0insert from GAAP financials (profit summary)Equity inc3.05.0
Operating income as a percent of sales20.4%20.2%20bpOp Inc113.018.0Op Inc95.062.0
Recurring Pension & OPEB income$ 18$ 4NM%
OPEB remeasurement*$ 8$ -NM%
Separation Costs*$ 6$ -NM%Call outs18.0-44.0insert from profit recon file sent by Sam
Adjusted Operating Income$ 118$ 9623%37.20%Check18.018.0these two should be equal (or close due to rounding)
Operating Income as a percent of sales24.1%21.1%300bp
Interest expense$ 10$ -NM%Breakout of key items - Dione's income statement forecasting file
Taxes$ 37$ 3119%COGS-12.015.0
Adjusted Net Income$ 71$ 659%SG&A-6.029.0
Reported Earnings per share (EPS)$ 0.35$ 0.329%Equity inc0.00.0
Adjusted1 earnings per share (Adj. EPS)$ 0.35$ 0.329%Other inc0.00.0
Gross profit as a percent of sales37.9%38.6%GAAPCurrent YrPrior YrAdjusted
Equity and other income$ 3$ 5Revenue1,929.01,967.0Revenue1,929.01,967.0
SG&A expenses$ 88$ 89COGS1,168.01,282.0insert from GAAP financials (profit summary)COGS1,180.01,267.0
GP761.0685.0GP749.0700.0
Note: Fix date, and quarter in rows 3 and 4. Also make sure years are accurate. All tabs will correct from this one.GP%39.5%34.8%GP%38.8%35.6%
Must select B3 through M15 to get sizing correctSG&A270.0291.0insert from GAAP financials (profit summary)SG&A & Corp355.0341.0
For cut and paste into ppt:Corp exp alloc79.079.0insert from GAAP financials (profit summary)
TypeEnhanced MetafileTotal opex1,517.01,652.0Total opex1,535.01,608.0
SizeHeight3.92Equity and other inc19.08.0insert from GAAP financials (profit summary)Equity inc19.08.0
Width9.00Op Inc431.0323.0Op Inc413.0367.0
Position (From: Top Left Corner)Horizontal0.49
Vertical1.45
Call outs18.0-44.0insert from profit recon file sent by Sam
Check18.0323.0these two should be equal (or close due to rounding)
Breakout of key items - Dione's income statement forecasting file
COGS-12.015.0
529SG&A-6.029.0
-185Equity inc0.00.0
344Other inc0.00.0
VVV - Operating
Operating Segments Results Summary1VVV
($ in millions, except per-share data)Fiscal Fourth Quarter
Preliminary and unauditedThree months ended Sept. 30,
P&L Results and Ratios20182017Change
Lubricant gallons (in millions)46.645.62%
Sales$ 594$ 5479%
Gross profit2031964%
Gross profit as a percent of sales34.2%35.8%(160)bp
SG&A as reported1149520%
Tax indemnity with Ashland7- 0
Adjusted1 SG&A102102-%
SG&A adjusted as a percent of sales18.0%17.4%60bp
Adjusted1 Equity and other income55-%
Adjusted1 operating income$ 106$ 997%
Operating income as a percent of sales18%18.1%(30)bp
Depreciation and amortization151225%
Adjusted1 Earnings before interest, taxes, depreciation and
amortization (EBITDA) $ 121$ 1119%
EBITDA as a percent of sales20.4%20.3%10bp37.20%
Total Adjusted1 Results
Adjusted1 EBITDA in Unallocated & Other$ 18$ 5260%
Total Adjusted1 EBITDA$ 139$ 11620%
Total Adjusted EBITDA as a percent of sales23.4%21.2%220bp
Adjusted1 EPS$ 0.34$ 0.2821%
Gross profit as a percent of sales34.2%35.8%
Equity and other income$ -$ -
SG&A expenses$ 97$ 97
Note: Fix date, and quarter in rows 3 and 4. Also make sure years are accurate. All tabs will correct from this one.
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Sheet2
ACM - CNA
Adjusted Pro Forma Results SummaryACM
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20162015Change2016Change
Lubricant gallons24.123.62%25.1(4)%
Sales and operating revenue$ 229$ 241(5)%$ 239(4)%
Gross profit as a percent of sales40.2%41.4%(120)bp37.0%320bp
Selling, general and admin./R&D costs$ 48$ 464%$ 464%
Operating income$ 50$ 53(6)%$ 4316%
Operating income as a percent of sales21.8%22.0%(20)bp18.0%380bp
Depreciation and amortization$ 3$ 4(25)%$ 4(25)%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 53$ 57(7)%$ 4713%
EBITDA as a percent of sales23.1%23.7%(60)bp19.7%340bp
CNA
Results SummaryCore North America
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20172016Change20172016Change
Lubricant gallons (in millions)24.123.62%24.125.1(4)%
Sales$ 237$ 241(2)%$ 237$ 239(1)%
Gross Profit$ 96$ 99(3)%$ 96$ 42130%
Gross Profit as a percent of sales40.7%41.1%(40)bp4.8%2.1%270bp
SG&A$ 47$ 462%$ 47$ 4212%
Equity and other income$ 2$ -ERROR:#DIV/0!%$ 2$ 42(95)%
Operating income$ 51$ 53(4)%$ 51$ 4221%
Operating income as a percent of sales21.5%22.0%(50)bp21.5%17.6%390bp
Depreciation and amortization$ 3$ 4(25)%$ 3$ 4(25)%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 54$ 57(5)%$ 54$ 4617%
EBITDA as a percent of sales22.8%23.7%(90)bp22.8%19.2%360bp
Gross profit as a percent of sales40.2%41.4%
Equity and other income$ -$ -
SG&A expensesERROR:#REF!ERROR:#REF!
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ACM - QL
Adjusted Pro Forma Results SummaryACM
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20162015Change2016Change
Lubricant gallons5.34.615%5.6(5)%
Sales and operating revenue$ 135$ 10035%$ 1258%
Gross profit as a percent of sales37.8%40.5%(270)bp41.6%(380)bp
Selling, general and admin./R&D costs$ 22$ 1822%$ 1916%
Operating income$ 30$ 2330%$ 32(6)%
Operating income as a percent of sales22.2%23.0%(80)bp25.6%(340)bp
Depreciation and amortization$ 4$ 4-%$ 5(20)%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 34$ 2726%$ 37(8)%
EBITDA as a percent of sales25.2%27.0%(180)bp29.6%(440)bp
QL
Results SummaryQuick Lubes
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20172016Change20172016Change
Lubricant gallons (in millions)5.34.615%5.35.6(5)%
Sales$ 127$ 10027%$ 127$ 1252%
Gross Profit$ 51$ 4028%$ 51$ 4221%
Gross Profit as a percent of sales40.2%40.0%20bp2.5%2.1%40bp
SG&A$ 23$ 1828%$ 23$ 42(45)%
Equity and other income$ 1$ 1-%$ 1$ 42(98)%
Operating income$ 29$ 2326%$ 29$ 33(12)%Previously reported as $33M
Operating income as a percent of sales22.8%23.0%(20)bp22.8%26.4%(360)bp
Depreciation and amortization$ 5$ 425%$ 5$ 5-%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 34$ 2726%$ 34$ 38(11)%Previously reported as $38M
EBITDA as a percent of sales26.8%27.0%(20)bp26.8%30.4%(360)bp
Same Store Sales
Company operations-0%-0%6.2%5.4%
Franchise operations-0%-0%8.0%7.4%
Open Stores at End of Period1,07695612010761068
Company operations34728265347342
Franchise operations72967455729726
Express Care35933029
Gross profit as a percent of sales37.8%40.5%
Equity and other income$ -$ -
SG&A expensesERROR:#REF!ERROR:#REF!
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ACM - Int'l
Adjusted Pro Forma Results SummaryACM
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20162015Change2016Change
Lubricant gallons13.712.212%13.8(1)%
Sales and operating revenue$ 125$ 1159%$ 130(4)%
Gross profit as a percent of sales30.7%30.1%60bp33.0%(230)bp
Selling, general and admin./R&D costs$ 25$ 244%$ 25-%
Operating income$ 20$ 1625%$ 21(5)%
Operating income as a percent of sales16.0%13.9%210bp16.2%(20)bp
Depreciation and amortization$ 1$ 1-%$ 1-%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 21$ 1724%$ 22(5)%
EBITDA as a percent of sales16.8%14.8%200bp16.9%(10)bp
Int'l
Results SummaryInternational
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20172016Change20172016Change
Lubricant gallons (in millions)13.712.212%13.713.8(1)%
Sales$ 125$ 1159%$ 125$ 130(4)%
Gross Profit$ 38$ 359%$ 38$ 42(10)%
Gross Profit as a percent of sales30.4%30.4%-bp1.9%2.1%(20)bp
SG&A$ 25$ 239%$ 25$ 42(40)%
Equity and other income$ 7$ 475%$ 7$ 42(83)%
Operating income$ 20$ 1625%$ 20$ 21(5)%
Operating income as a percent of sales16.0%13.9%210bp16.0%16.2%(20)bp
Depreciation and amortization$ 1$ 1-%$ 1$ 1-%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 21$ 1724%$ 21$ 22(5)%
EBITDA as a percent of sales16.8%14.8%200bp16.8%16.9%(10)bp
Gross profit as a percent of sales30.7%30.1%
Equity and other income$ 3$ 5
SG&A expensesERROR:#REF!ERROR:#REF!
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Highlight charts
PriorCurrent
Qtr44Revenues20162015
Year20152016($ in millions)Fiscal Fourth Quarter($ in millions)Fiscal Fourth QuarterAdjusted20162015Core NA9791,061
PeriodQ4 2015Q4 2016PreliminaryThree months ended Sept. 30,PreliminaryThree months ended Sept. 30,Volume174.5167.4QL457394
Volume (Lubricant gallons)43.544.520162015Change20162015ChangeSales1,9291,967Int'l493512
Adjusted EBITDA100113Lubricant gallons (in millions)43.140.47%Lubricant gallons (in millions)43.140.47%COGS1,267Total Revenues1,9291,967
Adj. EBITDA margin20.7%22.9%Sales$ 489$ 4567%Sales$ 489$ 4567%Gross Profit700
Adjusted EPS$0.30$0.32Gross profit2$ 185$ 1756%Earnings before interest, taxes, depreciation% of sales35.6%Gross Profit
Gross profit as a percent of sales37.8%38.4%(60)bp and amortization (EBITDA)$ 127$ 10521%Core NA403388
Earnings before interest, taxes, depreciationEBITDA as a percent of sales26.0%23.0%300bpSG&A Direct234QL190157
and amortization (EBITDA)$ 127$ 10521%Adjusted earnings per share (Adj. EPS)$ 0.29$ 0.284%SG&A Shared35Int'l155155
EBITDA as a percent of sales26.0%23.0%300bpSG&A Allocated80Total GP748700
Earnings per share (EPS)$ 0.32$ 0.16100%SG&A Subtotal349
Adjusted earnings per share (Adj. EPS)$ 0.29$ 0.284%($ in millions)Fiscal Year% of sales17.7%Gross Profit %
PreliminaryTwelve months ended Sept. 30,Pension (Income)/Expense0Core NA41.2%36.6%
20162015ChangeSG&A net of pension349QL41.6%39.8%
($ in millions)Fiscal YearLubricant gallons (in millions)174.5167.44%% of sales17.7%Int'l31.4%30.2%
PreliminaryTwelve months ended Sept. 30,Sales$ 1,929$ 1,967(2)%Total GP %38.8%35.6%
20162015ChangeEarnings before interest, taxes, depreciationOther (Inc.)/Exp-23
Lubricant gallons (in millions)174.5167.44% and amortization (EBITDA)$ 457$ 4219%Separation Costs0
Sales$ 1,929$ 1,967(2)%EBITDA as a percent of sales23.7%21.4%230bpOperating Income374
Gross profit2$ 754$ 7037%Adjusted earnings per share (Adj. EPS)$ 1.31$ 1.246%% of sales19.0%
Gross profit as a percent of sales$ 39.10%$ 35.70%340bpD&A38
Earnings before interest, taxes, depreciationEBITDA412
and amortization (EBITDA)$ 457$ 4219%% of sales20.9%
EBITDA as a percent of sales23.7%21.4%230bp
Earnings per share (EPS)$ 1.33$ 0.9639%Excluding Separation Costs
Adjusted earnings per share (Adj. EPS)$ 1.31$ 1.246%Operating Income374
% of sales19.0%
EBITDA412
% of sales20.9%
Operating Income
Volume (Lubricant gallons)Q4 2015Q4 201643.544.5Adj. EBITDA marginQ4 2015Q4 20160.206999999999999990.22900000000000001
Sheet1
Fiscal Fourth QuarterFiscal Year
ReferenceAmountNoteSame-store salesNet Store AdditionsSame-store salesNet Store Additions (including Oil Can Henry's)
News Release Table 5$ 419Adjusted fiscal 2016 operating incomeCompany5.4%26.2%63
News Release Table 8(17)Non-service component of pension and OPEBFranchise7.4%118.0%63
News Release Table 8/Prospectus(10)SG&A - stand-alone public company costs2
2017 Outlook662017 pension and OPEB accrual
$ 458Adjusted operating income on comparable
basis to fiscal 2017 outlook
201620172GCSASCmcladd'l corp
Valvoline segment$90.0VVV3654013655105
Net interest$8.8ASH627615-12
Pre-tax income$81.3992101624
Tax rate35%
Taxes$28.4
Net Income$52.8
22.0%
Bridges
Q4CYPYDelta ($,mm)Per shareFull YearCYPYDelta ($,mm)Per shareEBITDA BridgeVVV Sales Bridge
Core NA42.042.00$0.00Core NA212.0200.012$0.06Prior YearCore NAQLInt'lCorporateCurrent YearPrior YearVol/MixPriceFXCurrent Year
QL33.024.09$0.04QL117.095.022$0.11298(5)(26)176290635(44)(10)(23)558
International21.021.00$0.00International74.065.09$0.04
Corp5.02.03$0.01Corp16.023.0-7($0.03)
Op Inc101.089.012$0.06Op Inc419.0383.036$0.18Forecast Op Income Bridge
Int. Other Fin.-5.50.0-6($0.03)Int. Other Fin.-5.50.0-6($0.03)Prior YearCore NAQLInt'lCorporateCurrent Year
Pre tax income95.589.0Pre tax income413.5383.0271(16)(9)5(15)236
Taxes-36.3-30.0-6($0.03)Taxes-143.3-129.4-14($0.07)
Tax rate37.7%33.7%Tax rate34.6%33.7%
Net Inc59.259.00.2$0.00Net Inc270.2253.616.6$0.08
Shares204.5204.50ERROR:#DIV/0!Shares204.5204.50ERROR:#DIV/0!
EPS$0.29$0.29$0.00EPS$1.32$1.24$0.08
Ashland Segment to VVV GAAP to Pro Forma
Valvoline Segment of AshlandGain on Pension and OPEBSeparation Related CostsVVV GAAPGain on Pension and OPEBSeparation Related CostsAdjusted Operating IncomeInterest Component of Pension & OPEBService Component of Pension & OPEB2017 Pension & OPEB AccrualSG&A - Public Company Costs2016 Pro Forma
$40334-6$431-186$419-171066-20$458
Valvoline Segment of AshlandGain on Pension and OPEBSeparation Related CostsVVV GAAP
$40334-6$431
VVV GAAPGain on Pension and OPEBSeparation Related CostsAdjusted Operating Income
$431-186$419
Adjusted Operating IncomeInterest Component of Pension & OPEBService Component of Pension & OPEB2017 Pension & OPEB AccrualSG&A - Public Company Costs2016 Pro Forma
$419-171066-20$458
Table
GAAP OI1185
Less gain on pension-235
Add separation costs65
Adjusted OI1015
Add D&A107
Adjusted EBITDA1117
Less net pension & OPEB income-68
Add service cost for pension & OPEB48
Adjusted EBITDA exlcuding all pension effects109
Segment Adjusted EBITDATable
Core NA467
Quick Lubes387
International227
Combined106
Corporate3Corporate generated 5m of EBITDA which 2m was pension (6 of income less 4 of costs).
Public company20
SaaS6
Digital investments10
Compensation increase4
Savings from pension freeze-10
Total30
Guidance
For Year EndingGrowthActualAnalyst viewInternal Estimate
September 30, 20172016LowHigh201620172017Volume growth2%3%
Lubricant gallons2-3%174.50.9%3.2%Volume175179180Volume178.0179.7Prior Year Q4Revenue Growth4.5%6.0%
Revenues3-5%Revenue1,9292,024Revenue growth3%5%4824565.7%Revenues$477$483
New storesGross Profit761781Revenue$1,987$2,02510696EBITDA$112$118
VIOC Company owned5-10Gross Profit %39.5%4.361031518638.6%4.3442714127Gross Profit22.0%21.1%%23.50%24.50%
VIOC Franchised15-25SG&A365401Gross Profit %
Same Store Sales3-5%Pension(21)(66)SG&A
Pension income$66 millionSeparation costs627Pension(21)(21)
One-time separation related expenses$25 - $30 millionEquity & other(20)(20)Separation costs66
Adjusted EBITDA margin124.5-25.5%$39816.8%19.3%Operating Income431465440Equity & other(20)(20)
Depreciation and amortization$40 - $45 millionD&A3842420.2377235451Operating Income435465470495
Effective Tax Rate34-35%1.31(0.8%)6.9%EBITDA469507481D&A4242
Diluted adjusted earnings per share$1.31 - $1.41Interest & Other103836EBITDA477506
Capital expenditures$70 - $80 millionPre-tax income421427404EBITDA %24.0%25.0%
Free cash flow$90 - $100 millionTaxes149152141Interest & Other3636
Tax rate35.5%35.5%35.0%Pre-tax income399429
Net Income271275262Taxes140146
Shares204.5204.5206.0Tax rate35.0%34.0%
$1.30$1.40GAAP EPS$1.33$1.35$1.27Net Income260283
Shares206.0206.0
AdjustmentsAdj. EPS$1.26$1.37
Pension remeasurement18
Separation costs(6)(27)Volume growth2%3%
Adjusted OI419467Volume178.0179.7
Interest & Other636Revenue growth3%5%
Pre-tax income414431Revenue$1,987$2,025
Taxes143149Gross Profit$767$782
Tax rate34.5%34.5%Gross Profit %38.6%38.6%
Net Income270282SG&A400
Shares204.5204.5Pension(21)(21)
Adj. EPS$1.32$1.38Separation costs66
Equity & other(20)(20)
Adjusted OI419Operating Income402817
Change in pension(14)D&A4242
Interest & Other6EBITDA443858
Pre-tax income400EBITDA %22.3%25.0%
Taxes143Interest & Other00
Tax rate35.8%Pre-tax income402817
Net Income257Taxes141278
Shares204.5Tax rate35.0%34.0%
Adj. EPS$1.25Net Income261539
Shares0.00.0
Adj. EPSERROR:#DIV/0!ERROR:#DIV/0!
Liquidity & Net Debt
Liquidity & Net Debt
($ in millions)
LiquidityAt June 30, 2015
Cash$1,113
Available revolver and A/R facility capacity1,147FY '15FY '16FY '17FY '18FY '19FY '20FY '21FY '22FY '23 and after
Liquidity$2,26027772708101437151,1256633,874
InterestAt June 30,
DebtExpirationRateMoody'sS&P2015
4.750% senior notes, par $1,125 million08/20224.75%Ba1BB$1,120
Term Loan A06/20201L+175Ba1BB1,100
3.875% senior notes, par $700 million04/20183.875%Ba1BB700
3.000% senior notes, par $600 million03/20163.000%Ba1BB50
6.875% senior notes, par $375 million05/20436.875%Ba1BB376
A/R facility drawn208/2015L+75205
6.5% debentures, par $282 million06/20296.500%Ba2B+136
Revolver drawn303/2018L+175Ba1BB-
Other debtVarious11
Total debtBa1/StableBB/Stable$3,698
Cash$1,113
Net debt (cash)$2,585
1 The Term Loan has an amortizing principal starting in 2015,
with complete repayment in 2020.
2 AR securitization facility with maximum borrowing capacity of
$250 million; capacity as of June 30, 2015 of $224 million
3 $1.2 billion facility, including ~$72 million for letters of credit
CELL SIZES - 12.75 if no footnote, 15 if one line and footnote, 25.50 for two lines, 30.0 for two lines with footnote
FY '15FY '16FY '17FY '18FY '19FY '20FY '21FY '22FY '23 and after277.0005020474139371.74664262020546369.716152458858019810142.57151125663
Adjusted Volume Trends
Ongoing (except AD)Jun '12Sep '12Dec '12Mar '13Jun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '15
ASI - actives basis, excludes RDP and Biocides81.9981.6970.2781.9686.7783.0877.5583.3689.4986.1475.6980.0381.94
APM (lbs) ex Elastomers+AQ ex Casting Solutions and PVAc254,683241,200233,364252,129271,912244,080233,570262,626263,594248,768240,663260,807261,027
ACM40,80040,50037,10039,20041,30040,80038,60039,60042,80041,50038,90040,50044,400
APM tons ex elastomers115.5109.4105.9114.4123.3110.7105.9119.1119.6112.8109.2118.3118.4
ASI as reported (don't use)84.8384.9973.4084.6790.6787.3581.7487.3694.9891.1479.9182.6683.63
ANNUAL SUM
ASI (MT) ex Pinova320.7322.1329.4330.8333.5336.5334.7331.4323.8
APM (lbs/SD) ex Casting Solutions, but incl AQ for all periods998,605.31,001,485.11,001,690.71,012,188.21,003,870.21,008,558.01,015,650.81,013,831.31,011,264.0
ACM158,100.0158,400.0159,900.0160,300.0161,800.0162,500.0162,800.0163,700.0165,300.0
Jun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '15
Specialty Ingredients100%100%103%103%104%105%104%103%101%
Performance Materials100%100%100%101%101%101%102%102%101%
Valvoline100%100%101%101%102%103%103%104%105%
Update --->Q3Excluding Elastomers, RDP, Biocides for all periods
EFRD Q3 Ashland Inc. Volume Increase Calculation, Year-Over-YearEFRD Excluding Elastomers, RDP, Biocides for all periods Ashland Inc. Volume Increase Calculation, Year-Over-Year
CQ Sales per Earnings Release TablesCQ Volume per Earnings Release TablesPQ Volume per Earnings Release Tables% ChangeWeighting based on salesWeighted change in volumeCQ Sales per Earnings Release TablesCQ Volume per Earnings Release TablesPQ Volume per Earnings Release Tables% ChangeWeighting based on salesWeighted change in volume
Blue indicates inputASI23724.123.62.12%48.47%1.03%ASI237.081.989.5-8.44%48.47%-4.09%
Green indicates link to another cell on another tabAPM 1275.34.615.22%25.97%3.95%APM 127.0118.4119.6-0.97%25.97%-0.25%
Black indicates formula or link to cell on this tabACM12513.712.212.30%25.56%3.14%ACM125.013.712.212.30%25.56%3.14%
489100.00%8.12%489100.00%-1.20%
EFRD Q3 Ashland Inc. Volume Increase Calculation, SequentialEFRD Excluding Elastomers, RDP, Biocides for all periods Ashland Inc. Volume Increase Calculation, Sequential
CQ Sales per Earnings Release TablesCQ Volume per Earnings Release TablesPQ Volume per Earnings Release Tables% ChangeWeighting based on salesWeighted change in volumeCQ Sales per Earnings Release TablesCQ Volume per Earnings Release TablesPQ Volume per Earnings Release Tables% ChangeWeighting based on salesWeighted change in volume
ASI23724.1ERROR:#REF!ERROR:#REF!48.47%ERROR:#REF!ASI237.081.9ERROR:#REF!ERROR:#REF!48.47%ERROR:#REF!
APM 1275.3ERROR:#REF!ERROR:#REF!25.97%ERROR:#REF!APM 127.0118.4118.30.08%25.97%0.02%
ACM12513.7ERROR:#REF!ERROR:#REF!25.56%ERROR:#REF!ACM125.013.7ERROR:#REF!ERROR:#REF!25.56%ERROR:#REF!
489100.00%ERROR:#REF!489100.00%ERROR:#REF!
Year2012201220122012
QuarterQ1Q2Q3Q4
Old ASI (as reported)90.00104.60104.3096.60
Less I&S32.9342.1337.8933.48
Add Adhesives20.3422.5722.8221.32
New ASI77.4185.0389.2384.44
Per Helen (check)81.6970.2781.9686.77
Original all ASIDec '11Mar '12Jun '12Sep '12
90.00104.60104.3096.60
Year2012201220122012
QuarterQ1Q2Q3Q4
Old APM123.93140.26133.45132.70
Less Adhesives20.3422.5722.8221.32
Add I&S32.9342.1337.8933.48
New APM136.52159.82148.52144.87
Original APM (lbs)273229309212294213292561
Original APM (tons)123.93140.26133.45132.70
To update:1) Copy cells C7:N12 into cells B7:M122) Change name of cell N7 to current quarter3) Update cells N7-N12 with current quarter data
Adjusted Chart
Specialty IngredientsJun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '1511.00434402881735421.02705132303479731.03141750536211551.03990841196781331.04945171486508041.04365963050332941.03328077004028621.0097390437995777Performance MaterialsJun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '1511.00288376395831881.00308964527857781.01360183479247711.00527218518471791.00996656178812461.01706923738753071.01524720002053261.0126763253419808ValvolineJun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '1511.00189753320683121.01138519924098681.01391524351676151.02340290955091721.02783048703352311.02972802024035431.03542061986084751.045540796963947
Key Items
Total shares70
Insert these twoThese calc automatically
Pre-taxtax rateTaxesAfter-taxPer share
aRestructuring charge-17.96.25%-1.1-16.8-0.24
bVenezuela currency impairment-14.30.00%0.0-14.3-0.20
Asset impairment-26.037.00%-9.6-16.4-0.23
cISP tax indemnity17.10.00%0.017.10.24
Pension adjustment-9.325.00%-2.3-7.0-0.10
dMAP tax asbestos settlement-7.40.00%0.0-7.4-0.11
Total-57.8-13.1-44.7
Tax adjustments0.0%0.00.00.00
-57.8-13.1-44.7-0.64
EBITDA % Targets
Margin Change from 2014Margin Expansion to LT Targets
Operating Segment2014 Adjusted EBITDA %Performance Drivers2015 Adjusted EBITDA % Target1Expected Additional Long-term Margin Expansion (in bps)Performance DriversLong-term Normalized EBITDA % TargetsLowHighAfter adjustmentTTM salesEBITDA LowEBITDA HighLowHighAfter adjustmentEBITDA LowEBITDA High
Specialty Ingredients21.2%Growth in high-value-add areas and in emerging markets; cost efficiencies and SG&A savings; mix upgrades; somewhat offset by FX and energy23.0 - 23.5%200 - 400Growth through new technology focused on regional needs; enhanced customer service leading to improved value25 - 27%ASI15020022.70%23.20%ERROR:#REF!ERROR:#REF!ERROR:#REF!20040024.70%27.20%ERROR:#REF!ERROR:#REF!
Performance Materials10.5%Volume growth and margin management in composites; plant efficiency and cost-outs; offset by I&S headwind and FX~10.0%0 - 100New application development leading to volume growth; mix improvement; efficient use and optimization of assets; offset by I&S headwind10 - 11%APM-250-1508.00%9.00%ERROR:#REF!ERROR:#REF!ERROR:#REF!02008.00%11.00%ERROR:#REF!ERROR:#REF!
Valvoline17.6%25+ stores added to VIOC store count; Growth in target international markets; mix upgrade; favorable raw materials; improving domestic demand~20.0%0 - 0Continued volume increases in target high-growth international markets; additions to VIOC store count; continued mix upgrade19 - 20%Valvoline257517.85%18.35%ERROR:#REF!ERROR:#REF!ERROR:#REF!07517.85%19.10%ERROR:#REF!ERROR:#REF!
TotalERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!
ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!
TTMEBITDALowEBITDA%LowHighLowHigh
ASI52925%ERROR:#REF!25%27%ERROR:#REF!ERROR:#REF!
APM1668%ERROR:#REF!8%11%ERROR:#REF!ERROR:#REF!
Valvoline36018%ERROR:#REF!18%19%ERROR:#REF!ERROR:#REF!
Total1,055ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!
Stranded Costs75
Adjusted Total980ERROR:#REF!
Valvoline margins
%age of revsRM savingsGallons%age of benefitAvg lagDays per year
Lag benefit market based40%$1.00160100%90365$15.78
Lag benefit index and other60%$1.00160100%37.5365$9.86
Total lag benefit$25.64
Structural benefit market based40%$1.00$16050%$32.00
Annual sales$2,000
Structural gross margin benefit$32
Incremental gross margin %1.6%
Q2Q3PY
Sales481506532
GP%36.1%34.6%32.7%
GP174175174
SG&A848691
Other exp (inc)-6-6-7
OI969590
D&A10109
EBITDA10610599
22.0%20.8%18.6%
Rev$12.00$11.90
COGS$9.00$9.00
GPU$3.00$2.90
GP%25%24%
1
2
3
4
5
6
7
9
12
14
15
17
A
B
Operating Segments Results Summary
1
($ in millions, except per-share data)
Preliminary and unaudited
P&L Results and Ratios
Lubricant gallons
(in millions)
Sales
Gross profit as a percent of sales
Adjusted
1
SG&A
Adjusted
1
Equity and other income
Adjusted
1
operating income
Depreciation and amortization
Corp
Adjusted Results Summary1Corp
($ in millions)Fiscal First Quarter
PreliminaryThree months ended Dec. 31,
20172016Change
Sales$ -$ -ERROR:#DIV/0!%
Gross profit$ -$ 2
Gross profit as a percent of sales-0%-0%-bp
SG&A$ (18)$ (2)
Equity and other income$ -$ -
Operating income$ 18$ 4350%
Operating income as a percent of salesERROR:#DIV/0!%ERROR:#DIV/0!%ERROR:#DIV/0!bp
Depreciation and amortization$ -$ -ERROR:#DIV/0!%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 18$ 4350%
EBITDA as a percent of salesERROR:#DIV/0!%ERROR:#DIV/0!%ERROR:#DIV/0!bp
ERROR:#REF!
VVV
Adjusted Results Summary1VVVok
($ in millions, expect per share data)Fiscal First QuarterCOGS and SG&A split of call-outs
PreliminaryThree months ended Dec. 31,GAAPCurrent QtrPrior QtrAdjusted
20172016ChangeRevenue489.0456.0Revenue489.0456.0
Lubricant gallons (in millions)43.140.47%COGS300.0326.0insert from GAAP financials (profit summary)COGS312.0311.0
Sales$ 489$ 4567%GP189.0130.0GP177.0145.0
Gross profit$ 185$ 1765%GP%38.7%28.5%GP%36.2%31.8%change Corp tab to get this number in cell C7
Gross profit as a percent of sales37.9%38.6%(70)bpSG&A60.096.0insert from GAAP financials (profit summary)SG&A & Corp85.088.0change Corp tab to get this number in cell C8
SG&A$ 77$ 85(9)%Corp exp alloc19.021.0insert from GAAP financials (profit summary)
Equity and other income$ 10$ 5100%Total opex379.0443.0Total opex397.0399.0
Operating income$ 118$ 9623%Equity and other inc3.05.0insert from GAAP financials (profit summary)Equity inc3.05.0
Operating income as a percent of sales24.1%21.1%300bpOp Inc113.018.0Op Inc95.062.0
Depreciation and amortization$ 9$ 9-%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 127$ 10521%Call outs18.0-44.0insert from profit recon file sent by Sam
EBITDA as a percent of sales26.0%23.0%300bp37.20%Check18.018.0these two should be equal (or close due to rounding)
Pension & OPEB income$ 17$ 4325%
Interest expense$ 10$ - -Breakout of key items - Dione's income statement forecasting file
Net Income$ 71$ 659%COGS-12.015.0
Reported Earnings per share (EPS)$ 0.35$ 0.329%SG&A-6.029.0
Adjusted earnings per share (Adj. EPS)$ 0.35$ 0.329%Equity inc0.00.0
Other inc0.00.0
Gross profit as a percent of sales37.9%38.6%
Equity and other income$ 3$ 5GAAPCurrent YrPrior YrAdjusted
SG&A expenses$ 70$ 85Revenue1,929.01,967.0Revenue1,929.01,967.0
COGS1,168.01,282.0insert from GAAP financials (profit summary)COGS1,180.01,267.0
Note: Fix date, and quarter in rows 3 and 4. Also make sure years are accurate. All tabs will correct from this one.GP761.0685.0GP749.0700.0
Must select B3 through M15 to get sizing correctGP%39.5%34.8%GP%38.8%35.6%
For cut and paste into ppt:SG&A270.0291.0insert from GAAP financials (profit summary)SG&A & Corp355.0341.0
TypeEnhanced MetafileCorp exp alloc79.079.0insert from GAAP financials (profit summary)
SizeHeight3.92Total opex1,517.01,652.0Total opex1,535.01,608.0
Width9.00Equity and other inc19.08.0insert from GAAP financials (profit summary)Equity inc19.08.0
Position (From: Top Left Corner)Horizontal0.49Op Inc431.0323.0Op Inc413.0367.0
Vertical1.45
Call outs18.0-44.0insert from profit recon file sent by Sam
Check18.0323.0these two should be equal (or close due to rounding)
Breakout of key items - Dione's income statement forecasting file
529COGS-12.015.0
-185SG&A-6.029.0
344Equity inc0.00.0
Other inc0.00.0
VVV EPS
Adjusted Results Summary1VVVok
($ in millions, expect per share data)Fiscal First QuarterCOGS and SG&A split of call-outs
PreliminaryThree months ended Dec. 31,GAAPCurrent QtrPrior QtrAdjusted
20172016ChangeRevenue489.0456.0Revenue489.0456.0
Lubricant gallons (in millions)43.140.47%COGS300.0326.0insert from GAAP financials (profit summary)COGS312.0311.0
Sales$ 489$ 4567%GP189.0130.0GP177.0145.0
Gross profit$ 185$ 1765%GP%38.7%28.5%GP%36.2%31.8%change Corp tab to get this number in cell C7
Gross profit as a percent of sales37.9%38.6%(70)bpSG&A60.096.0insert from GAAP financials (profit summary)SG&A & Corp85.088.0change Corp tab to get this number in cell C8
SG&A$ 77$ 85(9)%Corp exp alloc19.021.0insert from GAAP financials (profit summary)
Equity and other income$ 10$ 5100%Total opex379.0443.0Total opex397.0399.0
Operating income from Segments$ 100$ 929%Equity and other inc3.05.0insert from GAAP financials (profit summary)Equity inc3.05.0
Operating income as a percent of sales20.4%20.2%20bpOp Inc113.018.0Op Inc95.062.0
Recurring Pension & OPEB income$ 18$ 4NM%
OPEB remeasurement*$ 8$ -NM%
Separation Costs*$ 6$ -NM%Call outs18.0-44.0insert from profit recon file sent by Sam
Adjusted Operating Income$ 118$ 9623%37.20%Check18.018.0these two should be equal (or close due to rounding)
Operating Income as a percent of sales24.1%21.1%300bp
Interest expense$ 10$ -NM%Breakout of key items - Dione's income statement forecasting file
Taxes$ 37$ 3119%COGS-12.015.0
Adjusted Net Income$ 71$ 659%SG&A-6.029.0
Reported Earnings per share (EPS)$ 0.35$ 0.329%Equity inc0.00.0
Adjusted1 earnings per share (Adj. EPS)$ 0.35$ 0.329%Other inc0.00.0
Gross profit as a percent of sales37.9%38.6%GAAPCurrent YrPrior YrAdjusted
Equity and other income$ 3$ 5Revenue1,929.01,967.0Revenue1,929.01,967.0
SG&A expenses$ 88$ 89COGS1,168.01,282.0insert from GAAP financials (profit summary)COGS1,180.01,267.0
GP761.0685.0GP749.0700.0
Note: Fix date, and quarter in rows 3 and 4. Also make sure years are accurate. All tabs will correct from this one.GP%39.5%34.8%GP%38.8%35.6%
Must select B3 through M15 to get sizing correctSG&A270.0291.0insert from GAAP financials (profit summary)SG&A & Corp355.0341.0
For cut and paste into ppt:Corp exp alloc79.079.0insert from GAAP financials (profit summary)
TypeEnhanced MetafileTotal opex1,517.01,652.0Total opex1,535.01,608.0
SizeHeight3.92Equity and other inc19.08.0insert from GAAP financials (profit summary)Equity inc19.08.0
Width9.00Op Inc431.0323.0Op Inc413.0367.0
Position (From: Top Left Corner)Horizontal0.49
Vertical1.45
Call outs18.0-44.0insert from profit recon file sent by Sam
Check18.0323.0these two should be equal (or close due to rounding)
Breakout of key items - Dione's income statement forecasting file
COGS-12.015.0
529SG&A-6.029.0
-185Equity inc0.00.0
344Other inc0.00.0
VVV - Operating
Operating Segments Results Summary1VVV
($ in millions, except per-share data)Fiscal Year
Preliminary and unauditedTwelve months ended Sept. 30,
P&L Results and Ratios20182017Change
Lubricant gallons (in millions)181.9179.71%
Sales$ 2,285$ 2,08410%
Gross profit8067764%
Gross profit as a percent of sales35.3%37.2%(190)bp
SG&A as reported1149520%
Tax indemnity with Ashland7- 0
Adjusted1 SG&A4283968%
SG&A adjusted as a percent of sales4.7%4.6%10bp
Equity and other income342536%
Adjusted1 operating income$ 412$ 4052%
Operating income as a percent of sales18%19.4%(140)bp
Depreciation and amortization544229%
Adjusted1 Earnings before interest, taxes, depreciation and
amortization (EBITDA) $ 466$ 4474%
EBITDA as a percent of sales20.4%21.4%(100)bp37.20%
Total Adjusted1 Results
Adjusted1 EBITDA in Unallocated & Other$ 18$ 5260%
Total Adjusted1 EBITDA$ 484$ 4527%
Total Adjusted EBITDA as a percent of sales21.2%21.7%(50)bp
Adjusted1 EPS$ 1.29$ 1.189%
Gross profit as a percent of sales35.3%37.2%
Equity and other income$ -$ -
SG&A expenses$ 394$ 371
Note: Fix date, and quarter in rows 3 and 4. Also make sure years are accurate. All tabs will correct from this one.
Must select B3 through M15 to get sizing correct
For cut and paste into ppt:
TypeEnhanced Metafile
SizeHeight3.92
Width9.00
Position (From: Top Left Corner)Horizontal0.49
Vertical1.45
529
-185
344
Sheet2
ACM - CNA
Adjusted Pro Forma Results SummaryACM
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20162015Change2016Change
Lubricant gallons24.123.62%25.1(4)%
Sales and operating revenue$ 229$ 241(5)%$ 239(4)%
Gross profit as a percent of sales40.2%41.4%(120)bp37.0%320bp
Selling, general and admin./R&D costs$ 48$ 464%$ 464%
Operating income$ 50$ 53(6)%$ 4316%
Operating income as a percent of sales21.8%22.0%(20)bp18.0%380bp
Depreciation and amortization$ 3$ 4(25)%$ 4(25)%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 53$ 57(7)%$ 4713%
EBITDA as a percent of sales23.1%23.7%(60)bp19.7%340bp
CNA
Results SummaryCore North America
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20172016Change20172016Change
Lubricant gallons (in millions)24.123.62%24.125.1(4)%
Sales$ 237$ 241(2)%$ 237$ 239(1)%
Gross Profit$ 96$ 99(3)%$ 96$ 42130%
Gross Profit as a percent of sales40.7%41.1%(40)bp4.8%2.1%270bp
SG&A$ 47$ 462%$ 47$ 4212%
Equity and other income$ 2$ -ERROR:#DIV/0!%$ 2$ 42(95)%
Operating income$ 51$ 53(4)%$ 51$ 4221%
Operating income as a percent of sales21.5%22.0%(50)bp21.5%17.6%390bp
Depreciation and amortization$ 3$ 4(25)%$ 3$ 4(25)%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 54$ 57(5)%$ 54$ 4617%
EBITDA as a percent of sales22.8%23.7%(90)bp22.8%19.2%360bp
Gross profit as a percent of sales40.2%41.4%
Equity and other income$ -$ -
SG&A expensesERROR:#REF!ERROR:#REF!
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ACM - QL
Adjusted Pro Forma Results SummaryACM
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20162015Change2016Change
Lubricant gallons5.34.615%5.6(5)%
Sales and operating revenue$ 135$ 10035%$ 1258%
Gross profit as a percent of sales37.8%40.5%(270)bp41.6%(380)bp
Selling, general and admin./R&D costs$ 22$ 1822%$ 1916%
Operating income$ 30$ 2330%$ 32(6)%
Operating income as a percent of sales22.2%23.0%(80)bp25.6%(340)bp
Depreciation and amortization$ 4$ 4-%$ 5(20)%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 34$ 2726%$ 37(8)%
EBITDA as a percent of sales25.2%27.0%(180)bp29.6%(440)bp
QL
Results SummaryQuick Lubes
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20172016Change20172016Change
Lubricant gallons (in millions)5.34.615%5.35.6(5)%
Sales$ 127$ 10027%$ 127$ 1252%
Gross Profit$ 51$ 4028%$ 51$ 4221%
Gross Profit as a percent of sales40.2%40.0%20bp2.5%2.1%40bp
SG&A$ 23$ 1828%$ 23$ 42(45)%
Equity and other income$ 1$ 1-%$ 1$ 42(98)%
Operating income$ 29$ 2326%$ 29$ 33(12)%Previously reported as $33M
Operating income as a percent of sales22.8%23.0%(20)bp22.8%26.4%(360)bp
Depreciation and amortization$ 5$ 425%$ 5$ 5-%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 34$ 2726%$ 34$ 38(11)%Previously reported as $38M
EBITDA as a percent of sales26.8%27.0%(20)bp26.8%30.4%(360)bp
Same Store Sales
Company operations-0%-0%6.2%5.4%
Franchise operations-0%-0%8.0%7.4%
Open Stores at End of Period1,07695612010761068
Company operations34728265347342
Franchise operations72967455729726
Express Care35933029
Gross profit as a percent of sales37.8%40.5%
Equity and other income$ -$ -
SG&A expensesERROR:#REF!ERROR:#REF!
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ACM - Int'l
Adjusted Pro Forma Results SummaryACM
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20162015Change2016Change
Lubricant gallons13.712.212%13.8(1)%
Sales and operating revenue$ 125$ 1159%$ 130(4)%
Gross profit as a percent of sales30.7%30.1%60bp33.0%(230)bp
Selling, general and admin./R&D costs$ 25$ 244%$ 25-%
Operating income$ 20$ 1625%$ 21(5)%
Operating income as a percent of sales16.0%13.9%210bp16.2%(20)bp
Depreciation and amortization$ 1$ 1-%$ 1-%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 21$ 1724%$ 22(5)%
EBITDA as a percent of sales16.8%14.8%200bp16.9%(10)bp
Int'l
Results SummaryInternational
($ in millions)Fiscal First QuarterThree months ended
PreliminaryThree months ended Dec. 31,Sept. 30,
20172016Change20172016Change
Lubricant gallons (in millions)13.712.212%13.713.8(1)%
Sales$ 125$ 1159%$ 125$ 130(4)%
Gross Profit$ 38$ 359%$ 38$ 42(10)%
Gross Profit as a percent of sales30.4%30.4%-bp1.9%2.1%(20)bp
SG&A$ 25$ 239%$ 25$ 42(40)%
Equity and other income$ 7$ 475%$ 7$ 42(83)%
Operating income$ 20$ 1625%$ 20$ 21(5)%
Operating income as a percent of sales16.0%13.9%210bp16.0%16.2%(20)bp
Depreciation and amortization$ 1$ 1-%$ 1$ 1-%
Earnings before interest, taxes, depreciation
and amortization (EBITDA)$ 21$ 1724%$ 21$ 22(5)%
EBITDA as a percent of sales16.8%14.8%200bp16.8%16.9%(10)bp
Gross profit as a percent of sales30.7%30.1%
Equity and other income$ 3$ 5
SG&A expensesERROR:#REF!ERROR:#REF!
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Highlight charts
PriorCurrent
Qtr44Revenues20162015
Year20152016($ in millions)Fiscal Fourth Quarter($ in millions)Fiscal Fourth QuarterAdjusted20162015Core NA9791,061
PeriodQ4 2015Q4 2016PreliminaryThree months ended Sept. 30,PreliminaryThree months ended Sept. 30,Volume174.5167.4QL457394
Volume (Lubricant gallons)43.544.520162015Change20162015ChangeSales1,9291,967Int'l493512
Adjusted EBITDA100113Lubricant gallons (in millions)43.140.47%Lubricant gallons (in millions)43.140.47%COGS1,267Total Revenues1,9291,967
Adj. EBITDA margin20.7%22.9%Sales$ 489$ 4567%Sales$ 489$ 4567%Gross Profit700
Adjusted EPS$0.30$0.32Gross profit2$ 185$ 1756%Earnings before interest, taxes, depreciation% of sales35.6%Gross Profit
Gross profit as a percent of sales37.8%38.4%(60)bp and amortization (EBITDA)$ 127$ 10521%Core NA403388
Earnings before interest, taxes, depreciationEBITDA as a percent of sales26.0%23.0%300bpSG&A Direct234QL190157
and amortization (EBITDA)$ 127$ 10521%Adjusted earnings per share (Adj. EPS)$ 0.29$ 0.284%SG&A Shared35Int'l155155
EBITDA as a percent of sales26.0%23.0%300bpSG&A Allocated80Total GP748700
Earnings per share (EPS)$ 0.32$ 0.16100%SG&A Subtotal349
Adjusted earnings per share (Adj. EPS)$ 0.29$ 0.284%($ in millions)Fiscal Year% of sales17.7%Gross Profit %
PreliminaryTwelve months ended Sept. 30,Pension (Income)/Expense0Core NA41.2%36.6%
20162015ChangeSG&A net of pension349QL41.6%39.8%
($ in millions)Fiscal YearLubricant gallons (in millions)174.5167.44%% of sales17.7%Int'l31.4%30.2%
PreliminaryTwelve months ended Sept. 30,Sales$ 1,929$ 1,967(2)%Total GP %38.8%35.6%
20162015ChangeEarnings before interest, taxes, depreciationOther (Inc.)/Exp-23
Lubricant gallons (in millions)174.5167.44% and amortization (EBITDA)$ 457$ 4219%Separation Costs0
Sales$ 1,929$ 1,967(2)%EBITDA as a percent of sales23.7%21.4%230bpOperating Income374
Gross profit2$ 754$ 7037%Adjusted earnings per share (Adj. EPS)$ 1.31$ 1.246%% of sales19.0%
Gross profit as a percent of sales$ 39.10%$ 35.70%340bpD&A38
Earnings before interest, taxes, depreciationEBITDA412
and amortization (EBITDA)$ 457$ 4219%% of sales20.9%
EBITDA as a percent of sales23.7%21.4%230bp
Earnings per share (EPS)$ 1.33$ 0.9639%Excluding Separation Costs
Adjusted earnings per share (Adj. EPS)$ 1.31$ 1.246%Operating Income374
% of sales19.0%
EBITDA412
% of sales20.9%
Operating Income
Volume (Lubricant gallons)Q4 2015Q4 201643.544.5Adj. EBITDA marginQ4 2015Q4 20160.206999999999999990.22900000000000001
Sheet1
Fiscal Fourth QuarterFiscal Year
ReferenceAmountNoteSame-store salesNet Store AdditionsSame-store salesNet Store Additions (including Oil Can Henry's)
News Release Table 5$ 419Adjusted fiscal 2016 operating incomeCompany5.4%26.2%63
News Release Table 8(17)Non-service component of pension and OPEBFranchise7.4%118.0%63
News Release Table 8/Prospectus(10)SG&A - stand-alone public company costs2
2017 Outlook662017 pension and OPEB accrual
$ 458Adjusted operating income on comparable
basis to fiscal 2017 outlook
201620172GCSASCmcladd'l corp
Valvoline segment$90.0VVV3654013655105
Net interest$8.8ASH627615-12
Pre-tax income$81.3992101624
Tax rate35%
Taxes$28.4
Net Income$52.8
22.0%
Bridges
Q4CYPYDelta ($,mm)Per shareFull YearCYPYDelta ($,mm)Per shareEBITDA BridgeVVV Sales Bridge
Core NA42.042.00$0.00Core NA212.0200.012$0.06Prior YearCore NAQLInt'lCorporateCurrent YearPrior YearVol/MixPriceFXCurrent Year
QL33.024.09$0.04QL117.095.022$0.11298(5)(26)176290635(44)(10)(23)558
International21.021.00$0.00International74.065.09$0.04
Corp5.02.03$0.01Corp16.023.0-7($0.03)
Op Inc101.089.012$0.06Op Inc419.0383.036$0.18Forecast Op Income Bridge
Int. Other Fin.-5.50.0-6($0.03)Int. Other Fin.-5.50.0-6($0.03)Prior YearCore NAQLInt'lCorporateCurrent Year
Pre tax income95.589.0Pre tax income413.5383.0271(16)(9)5(15)236
Taxes-36.3-30.0-6($0.03)Taxes-143.3-129.4-14($0.07)
Tax rate37.7%33.7%Tax rate34.6%33.7%
Net Inc59.259.00.2$0.00Net Inc270.2253.616.6$0.08
Shares204.5204.50ERROR:#DIV/0!Shares204.5204.50ERROR:#DIV/0!
EPS$0.29$0.29$0.00EPS$1.32$1.24$0.08
Ashland Segment to VVV GAAP to Pro Forma
Valvoline Segment of AshlandGain on Pension and OPEBSeparation Related CostsVVV GAAPGain on Pension and OPEBSeparation Related CostsAdjusted Operating IncomeInterest Component of Pension & OPEBService Component of Pension & OPEB2017 Pension & OPEB AccrualSG&A - Public Company Costs2016 Pro Forma
$40334-6$431-186$419-171066-20$458
Valvoline Segment of AshlandGain on Pension and OPEBSeparation Related CostsVVV GAAP
$40334-6$431
VVV GAAPGain on Pension and OPEBSeparation Related CostsAdjusted Operating Income
$431-186$419
Adjusted Operating IncomeInterest Component of Pension & OPEBService Component of Pension & OPEB2017 Pension & OPEB AccrualSG&A - Public Company Costs2016 Pro Forma
$419-171066-20$458
Table
GAAP OI1185
Less gain on pension-235
Add separation costs65
Adjusted OI1015
Add D&A107
Adjusted EBITDA1117
Less net pension & OPEB income-68
Add service cost for pension & OPEB48
Adjusted EBITDA exlcuding all pension effects109
Segment Adjusted EBITDATable
Core NA467
Quick Lubes387
International227
Combined106
Corporate3Corporate generated 5m of EBITDA which 2m was pension (6 of income less 4 of costs).
Public company20
SaaS6
Digital investments10
Compensation increase4
Savings from pension freeze-10
Total30
Guidance
For Year EndingGrowthActualAnalyst viewInternal Estimate
September 30, 20172016LowHigh201620172017Volume growth2%3%
Lubricant gallons2-3%174.50.9%3.2%Volume175179180Volume178.0179.7Prior Year Q4Revenue Growth4.5%6.0%
Revenues3-5%Revenue1,9292,024Revenue growth3%5%4824565.7%Revenues$477$483
New storesGross Profit761781Revenue$1,987$2,02510696EBITDA$112$118
VIOC Company owned5-10Gross Profit %39.5%4.361031518638.6%4.3442714127Gross Profit22.0%21.1%%23.50%24.50%
VIOC Franchised15-25SG&A365401Gross Profit %
Same Store Sales3-5%Pension(21)(66)SG&A
Pension income$66 millionSeparation costs627Pension(21)(21)
One-time separation related expenses$25 - $30 millionEquity & other(20)(20)Separation costs66
Adjusted EBITDA margin124.5-25.5%$39816.8%19.3%Operating Income431465440Equity & other(20)(20)
Depreciation and amortization$40 - $45 millionD&A3842420.2377235451Operating Income435465470495
Effective Tax Rate34-35%1.31(0.8%)6.9%EBITDA469507481D&A4242
Diluted adjusted earnings per share$1.31 - $1.41Interest & Other103836EBITDA477506
Capital expenditures$70 - $80 millionPre-tax income421427404EBITDA %24.0%25.0%
Free cash flow$90 - $100 millionTaxes149152141Interest & Other3636
Tax rate35.5%35.5%35.0%Pre-tax income399429
Net Income271275262Taxes140146
Shares204.5204.5206.0Tax rate35.0%34.0%
$1.30$1.40GAAP EPS$1.33$1.35$1.27Net Income260283
Shares206.0206.0
AdjustmentsAdj. EPS$1.26$1.37
Pension remeasurement18
Separation costs(6)(27)Volume growth2%3%
Adjusted OI419467Volume178.0179.7
Interest & Other636Revenue growth3%5%
Pre-tax income414431Revenue$1,987$2,025
Taxes143149Gross Profit$767$782
Tax rate34.5%34.5%Gross Profit %38.6%38.6%
Net Income270282SG&A400
Shares204.5204.5Pension(21)(21)
Adj. EPS$1.32$1.38Separation costs66
Equity & other(20)(20)
Adjusted OI419Operating Income402817
Change in pension(14)D&A4242
Interest & Other6EBITDA443858
Pre-tax income400EBITDA %22.3%25.0%
Taxes143Interest & Other00
Tax rate35.8%Pre-tax income402817
Net Income257Taxes141278
Shares204.5Tax rate35.0%34.0%
Adj. EPS$1.25Net Income261539
Shares0.00.0
Adj. EPSERROR:#DIV/0!ERROR:#DIV/0!
Liquidity & Net Debt
Liquidity & Net Debt
($ in millions)
LiquidityAt June 30, 2015
Cash$1,113
Available revolver and A/R facility capacity1,147FY '15FY '16FY '17FY '18FY '19FY '20FY '21FY '22FY '23 and after
Liquidity$2,26027772708101437151,1256633,874
InterestAt June 30,
DebtExpirationRateMoody'sS&P2015
4.750% senior notes, par $1,125 million08/20224.75%Ba1BB$1,120
Term Loan A06/20201L+175Ba1BB1,100
3.875% senior notes, par $700 million04/20183.875%Ba1BB700
3.000% senior notes, par $600 million03/20163.000%Ba1BB50
6.875% senior notes, par $375 million05/20436.875%Ba1BB376
A/R facility drawn208/2015L+75205
6.5% debentures, par $282 million06/20296.500%Ba2B+136
Revolver drawn303/2018L+175Ba1BB-
Other debtVarious11
Total debtBa1/StableBB/Stable$3,698
Cash$1,113
Net debt (cash)$2,585
1 The Term Loan has an amortizing principal starting in 2015,
with complete repayment in 2020.
2 AR securitization facility with maximum borrowing capacity of
$250 million; capacity as of June 30, 2015 of $224 million
3 $1.2 billion facility, including ~$72 million for letters of credit
CELL SIZES - 12.75 if no footnote, 15 if one line and footnote, 25.50 for two lines, 30.0 for two lines with footnote
FY '15FY '16FY '17FY '18FY '19FY '20FY '21FY '22FY '23 and after277.0005020474139371.74664262020546369.716152458858019810142.57151125663
Adjusted Volume Trends
Ongoing (except AD)Jun '12Sep '12Dec '12Mar '13Jun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '15
ASI - actives basis, excludes RDP and Biocides81.9981.6970.2781.9686.7783.0877.5583.3689.4986.1475.6980.0381.94
APM (lbs) ex Elastomers+AQ ex Casting Solutions and PVAc254,683241,200233,364252,129271,912244,080233,570262,626263,594248,768240,663260,807261,027
ACM40,80040,50037,10039,20041,30040,80038,60039,60042,80041,50038,90040,50044,400
APM tons ex elastomers115.5109.4105.9114.4123.3110.7105.9119.1119.6112.8109.2118.3118.4
ASI as reported (don't use)84.8384.9973.4084.6790.6787.3581.7487.3694.9891.1479.9182.6683.63
ANNUAL SUM
ASI (MT) ex Pinova320.7322.1329.4330.8333.5336.5334.7331.4323.8
APM (lbs/SD) ex Casting Solutions, but incl AQ for all periods998,605.31,001,485.11,001,690.71,012,188.21,003,870.21,008,558.01,015,650.81,013,831.31,011,264.0
ACM158,100.0158,400.0159,900.0160,300.0161,800.0162,500.0162,800.0163,700.0165,300.0
Jun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '15
Specialty Ingredients100%100%103%103%104%105%104%103%101%
Performance Materials100%100%100%101%101%101%102%102%101%
Valvoline100%100%101%101%102%103%103%104%105%
Update --->Q3Excluding Elastomers, RDP, Biocides for all periods
EFRD Q3 Ashland Inc. Volume Increase Calculation, Year-Over-YearEFRD Excluding Elastomers, RDP, Biocides for all periods Ashland Inc. Volume Increase Calculation, Year-Over-Year
CQ Sales per Earnings Release TablesCQ Volume per Earnings Release TablesPQ Volume per Earnings Release Tables% ChangeWeighting based on salesWeighted change in volumeCQ Sales per Earnings Release TablesCQ Volume per Earnings Release TablesPQ Volume per Earnings Release Tables% ChangeWeighting based on salesWeighted change in volume
Blue indicates inputASI23724.123.62.12%48.47%1.03%ASI237.081.989.5-8.44%48.47%-4.09%
Green indicates link to another cell on another tabAPM 1275.34.615.22%25.97%3.95%APM 127.0118.4119.6-0.97%25.97%-0.25%
Black indicates formula or link to cell on this tabACM12513.712.212.30%25.56%3.14%ACM125.013.712.212.30%25.56%3.14%
489100.00%8.12%489100.00%-1.20%
EFRD Q3 Ashland Inc. Volume Increase Calculation, SequentialEFRD Excluding Elastomers, RDP, Biocides for all periods Ashland Inc. Volume Increase Calculation, Sequential
CQ Sales per Earnings Release TablesCQ Volume per Earnings Release TablesPQ Volume per Earnings Release Tables% ChangeWeighting based on salesWeighted change in volumeCQ Sales per Earnings Release TablesCQ Volume per Earnings Release TablesPQ Volume per Earnings Release Tables% ChangeWeighting based on salesWeighted change in volume
ASI23724.1ERROR:#REF!ERROR:#REF!48.47%ERROR:#REF!ASI237.081.9ERROR:#REF!ERROR:#REF!48.47%ERROR:#REF!
APM 1275.3ERROR:#REF!ERROR:#REF!25.97%ERROR:#REF!APM 127.0118.4118.30.08%25.97%0.02%
ACM12513.7ERROR:#REF!ERROR:#REF!25.56%ERROR:#REF!ACM125.013.7ERROR:#REF!ERROR:#REF!25.56%ERROR:#REF!
489100.00%ERROR:#REF!489100.00%ERROR:#REF!
Year2012201220122012
QuarterQ1Q2Q3Q4
Old ASI (as reported)90.00104.60104.3096.60
Less I&S32.9342.1337.8933.48
Add Adhesives20.3422.5722.8221.32
New ASI77.4185.0389.2384.44
Per Helen (check)81.6970.2781.9686.77
Original all ASIDec '11Mar '12Jun '12Sep '12
90.00104.60104.3096.60
Year2012201220122012
QuarterQ1Q2Q3Q4
Old APM123.93140.26133.45132.70
Less Adhesives20.3422.5722.8221.32
Add I&S32.9342.1337.8933.48
New APM136.52159.82148.52144.87
Original APM (lbs)273229309212294213292561
Original APM (tons)123.93140.26133.45132.70
To update:1) Copy cells C7:N12 into cells B7:M122) Change name of cell N7 to current quarter3) Update cells N7-N12 with current quarter data
Adjusted Chart
Specialty IngredientsJun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '1511.00434402881735421.02705132303479731.03141750536211551.03990841196781331.04945171486508041.04365963050332941.03328077004028621.0097390437995777Performance MaterialsJun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '1511.00288376395831881.00308964527857781.01360183479247711.00527218518471791.00996656178812461.01706923738753071.01524720002053261.0126763253419808ValvolineJun '13Sept '13Dec '13Mar '14Jun '14Sept '14Dec '14Mar '15Jun '1511.00189753320683121.01138519924098681.01391524351676151.02340290955091721.02783048703352311.02972802024035431.03542061986084751.045540796963947
Key Items
Total shares70
Insert these twoThese calc automatically
Pre-taxtax rateTaxesAfter-taxPer share
aRestructuring charge-17.96.25%-1.1-16.8-0.24
bVenezuela currency impairment-14.30.00%0.0-14.3-0.20
Asset impairment-26.037.00%-9.6-16.4-0.23
cISP tax indemnity17.10.00%0.017.10.24
Pension adjustment-9.325.00%-2.3-7.0-0.10
dMAP tax asbestos settlement-7.40.00%0.0-7.4-0.11
Total-57.8-13.1-44.7
Tax adjustments0.0%0.00.00.00
-57.8-13.1-44.7-0.64
EBITDA % Targets
Margin Change from 2014Margin Expansion to LT Targets
Operating Segment2014 Adjusted EBITDA %Performance Drivers2015 Adjusted EBITDA % Target1Expected Additional Long-term Margin Expansion (in bps)Performance DriversLong-term Normalized EBITDA % TargetsLowHighAfter adjustmentTTM salesEBITDA LowEBITDA HighLowHighAfter adjustmentEBITDA LowEBITDA High
Specialty Ingredients21.2%Growth in high-value-add areas and in emerging markets; cost efficiencies and SG&A savings; mix upgrades; somewhat offset by FX and energy23.0 - 23.5%200 - 400Growth through new technology focused on regional needs; enhanced customer service leading to improved value25 - 27%ASI15020022.70%23.20%ERROR:#REF!ERROR:#REF!ERROR:#REF!20040024.70%27.20%ERROR:#REF!ERROR:#REF!
Performance Materials10.5%Volume growth and margin management in composites; plant efficiency and cost-outs; offset by I&S headwind and FX~10.0%0 - 100New application development leading to volume growth; mix improvement; efficient use and optimization of assets; offset by I&S headwind10 - 11%APM-250-1508.00%9.00%ERROR:#REF!ERROR:#REF!ERROR:#REF!02008.00%11.00%ERROR:#REF!ERROR:#REF!
Valvoline17.6%25+ stores added to VIOC store count; Growth in target international markets; mix upgrade; favorable raw materials; improving domestic demand~20.0%0 - 0Continued volume increases in target high-growth international markets; additions to VIOC store count; continued mix upgrade19 - 20%Valvoline257517.85%18.35%ERROR:#REF!ERROR:#REF!ERROR:#REF!07517.85%19.10%ERROR:#REF!ERROR:#REF!
TotalERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!
ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!
TTMEBITDALowEBITDA%LowHighLowHigh
ASI52925%ERROR:#REF!25%27%ERROR:#REF!ERROR:#REF!
APM1668%ERROR:#REF!8%11%ERROR:#REF!ERROR:#REF!
Valvoline36018%ERROR:#REF!18%19%ERROR:#REF!ERROR:#REF!
Total1,055ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!ERROR:#REF!
Stranded Costs75
Adjusted Total980ERROR:#REF!
Valvoline margins
%age of revsRM savingsGallons%age of benefitAvg lagDays per year
Lag benefit market based40%$1.00160100%90365$15.78
Lag benefit index and other60%$1.00160100%37.5365$9.86
Total lag benefit$25.64
Structural benefit market based40%$1.00$16050%$32.00
Annual sales$2,000
Structural gross margin benefit$32
Incremental gross margin %1.6%
Q2Q3PY
Sales481506532
GP%36.1%34.6%32.7%
GP174175174
SG&A848691
Other exp (inc)-6-6-7
OI969590
D&A10109
EBITDA10610599
22.0%20.8%18.6%
Rev$12.00$11.90
COGS$9.00$9.00
GPU$3.00$2.90
GP%25%24%
1
2
3
4
5
6
7
9
12
14
15
17
A
C
D
E
F
G
H
I
J
K
L
VVV
2018
2017
181.9
179.7
1
%
2,285
$
2,084
$
10
%
35.3
%
37.2
%
(190)
bp
428
396
8
%
34
25
36
%
412
$
405
$
2
%
54
42
29
%
Fiscal Year
Twelve months ended Sept. 30,
Change
-
Corporate Items
• Net interest and other financing expense of $18 million in Q4, up $4 million YoY• Full-year net interest and other financing expense of $63 million, up $21 million YoY
• Effective tax rate of 21.1% in Q4, adjusted1 effective tax rate of 26.1%• Full-year effective tax rate of 50.0%, adjusted1 effective tax rate of 27.2%
• Full-year cash flow from operating activities of $320 million
• Full-year Capital expenditures totaled $93 million; full-year Free cash flow1 generation of $227 million
• Total debt of ~$1.3 billion and net debt of ~$1.2 billion
61 For reconciliation of adjusted amounts to amounts reported under GAAP, please refer to Valvoline‘s earnings release dated November 5, 2018, available on Valvoline's website at http://investors.valvoline.com.
-
Highlights
• SSS growth expected to continue• Adjusted1 EBITDA anticipated to
grow low-single to mid-single digits• Adjusted1 EPS expected to grow
mid-single to low-double digits • Projected free cash flow2 impacted
by higher YoY capital expenditures• Forecasted sales growth includes
~200 bps impact due to adoption of new revenue recognition accounting guidance
7
Fiscal 2019 Guidance
2019Outlook
Operating Segments• Lubricant Gallons 2.5-3.5%
• Revenues 7-9%
• New Quick Lube stores (excluding acquired stores)
• Company-owned (excluding franchise conversions) 27-32
• Franchised (excluding franchise conversions) 30-40
• VIOC same-store sales 6-7%
• Adjusted1 EBITDA $480-$495 million
Corporate Items• Adjusted1 effective tax rate 25-26%
• Diluted adjusted1 EPS $1.35-$1.43
• Capital expenditures $115-$120 million
• Free cash flow2 $190-210 million
1 Denotes a forward-looking non-GAAP financial measure that Valvoline is unable to reconcile without unreasonable effort as described in Valvoline‘s earnings release dated November 5, available on Valvoline’s website at http://investors.valvoline.com.
2 For reconciliation of adjusted amounts to amounts reported under GAAP, please refer to Valvoline‘s earnings release dated November 5, 2018.
-
Segment Results Summary
8
(YoY change)Q4 FY18
Total Volume flat -1%
Sales +2% +3%
Premium mix 49.5%, up 180 bps49.2%,
up 340 bps
EBITDA1 $47 million, down 2%$190 million, down 11%
(YoY change)Q4 FY18
SSS (system-wide) 7.6% 8.3%
Sales +23% +22%
Net new stores(company, franchised)
88 115
Adjusted1EBITDA
$51 million, up 21%
$185 million, up 22%
Quick Lubes
(YoY change)Q4 FY18
Volume +3% +2%
Volume with JVs +4% +4%
Sales +5% +9%
Adjusted1EBITDA
$23 million, up 10%
$91 million, up 12%
Core North America International
Challenging competitive landscape
Significant raw material inflation
Performance exceeding expectations
Organic and inorganic growth
Modest volume growth
Solid EBITDA growth
1 For reconciliation of adjusted amounts to amounts reported under GAAP, please refer to Valvoline‘s earnings release dated November 5, 2018, available on Valvoline's website at http://investors.valvoline.com.
-
Historical GP/gallon vs. Base Oil Price
Strong business model delivers solid results even in periods of significant inflation
9
Resilient Business Model
$1.90 /GAL
$2.10 /GAL
$2.30 /GAL
$2.50 /GAL
$2.70 /GAL
$3.70 /GAL
$3.90 /GAL
$4.10 /GAL
$4.30 /GAL
$4.50 /GAL
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
TTM TotalValvolineGP/Gallon
TTM AverageBase OilPrice/Gallon
Base Oil Price/GAL2
VVVGP/GAL1
1 Valvoline’s total company gross profit per lubricant gallon on a trailing twelve-month basis based on each quarter-end’s results.2 Based on Motiva’s posted prices for its Group II Star 4 base oil product on a trailing twelve-month basis at each quarter end.
-
FY18 Volume by Channel
10
Core North America - Performance
Retail
Other
Installer
Retail: DIY (auto parts & mass merchandise) and warehouse-distributor accountsInstaller: DIFM outlets and heavy-duty fleet accountsOther: OEM accounts and specialty
FY18 – Results below expectations- Retail – DIY volume impacted by increased competitive
promotional activity- Installer – unfavorable account mix and competitive
pricing
Lower unit margin outlook, ~$3.60 - $3.70/gallonKey factors:1. Accounting and business model changes: revenue
recognition; Great Canadian Oil Change2. Mix – softer DIY branded volume, growing HD volume3. Installer – account mix and pricing competition
-
Core North America – Outlook
FY19 – Taking actions
1. Adjusting marketing tactics in DIY
2. Driving value-added services, penetration of broader product portfolio in Installer channel
3. Pursuing share gain opportunity with low investment needed in Heavy Duty
4. Focusing on cost efficiencies
11
-
Average System-wide SSS1 per Store($k)
FY18 results exceeded expectations- 12 straight years of SSS growth; system-wide strength- Digital marketing programs & store-level execution- Added 115 stores, including first international
expansion with Great Canadian Oil Change acquisition
FY19 momentum expected to continue- SSS growth of 6-7%
- New unit growth: • 27-32 company-stores2
• 30-40 franchise stores• Continue to pursue M&A opportunities
- Focus on talent development and retention
12
Quick Lubes - Outlook
$579 $613$649 $672
$713 $738$774
$824$882
$947$1,022
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
1 System-wide SSS determined on a fiscal-year basis, with new stores included after first full fiscal year of operation.2 Includes six stores from FY18 that were delayed due to hurricane-related impacts.
-
FY18 Sales by RegionFY18 Adjusted1 EBITDA growth of 12%
- Adjusted1 EBITDA up 9% at constant currency- Softer volume growth- Emerging markets volume up 7% including
unconsolidated JVs
FY19 improving volume trend expected- High-single digit volume growth; share gain
opportunities in all regions
- Investing in sales & marketing to drive future growth
- FX expected to be a headwind
13
International - Outlook
Asia Pacific
LatAm
EMEA
1 For reconciliation of adjusted amounts to amounts reported under GAAP, please refer to Valvoline‘s earnings release dated November 5, 2018, available on Valvoline's website at http://investors.valvoline.com.
Sales exclude unconsolidated joint ventures
-
International - Opportunity
14
Share GainsLarge Markets
Asia Pacific -
Other
China
IndiaNorth America
Europe
Middle East & Africa
LatAm
Transportation Lubricants Market by Region1
1 Sources – Kline, IHS and internal estimates; excludes industrial lubricants.2 Includes unconsolidated joint ventures
20
40
60
80
Emerging Markets Volume2 (lubricant gallons, MM)
Channel development
Superior products and brand building
OEM partnerships
Volume Growth
Formula for Success
-
Driving Shareholder Value
-
53%
Capital Allocation Priorities
16
Sustain Core North America’s strong cash generation
Invest organically and inorganically to expand Quick Lubes and grow International
Return excess capital to shareholders viaDividends and Share Repurchases
% of Operating Cash Flow1 Spend2
FY16 – FY18
1
2
3 Target 45-60% of operating cash flow overtime3
1 FY16 and FY18 operating cash flow as reported; FY17 operating cash flow adjusted to exclude ~$400 million voluntary pension contribution.2 Includes capital expenditures, acquisitions, cash dividends share repurchases, inclusive of borrowings; FY18 share repurchases impacted in part by cash tax benefit of voluntary pension contribution in FY17.3 Valvoline’s ability to achieve this target will be based on its level of liquidity, general business and market conditions and other factors, including alternative investment opportunities.
12%
46%
-
Core North America Funds Growth Opportunities
17
Generated over $500MM in EBITDA-less-
CapEx in the last three fiscal years
Quick Lubes & Other High-
return projects
Strong EBITDA Margins
Low Capital Intensity
Core North America
-
Capital Allocation in Action – Quick Lubes
Quick Lube Market OpportunityNew Unit EconomicsSame Store Sales Growth1
18
1 Fiscal years and fiscal quarters aligned with Valvoline fiscal periods; peer fiscal year data is the average of the fiscal quarters during that period, FYTD2018 represents the three fiscal quarters so far reported by all peers
2 Auto Aftermarket includes Advance Auto Parts, AutoZone, Boyd, Monro and O’Reilly’s; quarterly value is median of the peer group3 Advance Auto Parts, AutoZone and Monro quarterly SSS data placed in most analogous calendar quarter4 Mid Cap Branded CPG Peers include Church & Dwight, Central Garden and Pet, Edgewell Personal Care, Energizer, Sherwin Williams and Spectrum Brands;
quarterly value is median of the peer group
5 Central Garden and Pet organic growth number is as reported for the period, and excludes the impact of portfolio changes where determined by the company6 Energizer quarter ending 3/31 excludes the impact of the divestiture of ASIA7 Sherwin Williams SSS represents the US, Canada, and the Caribbean, from Valvoline FQ2 onward, prior to that it represented the US and Canada8 Sherwin Williams SSS in Valvoline's FQ4 2016, excludes change in revenue classification per company press release9 Store count data based on internal company estimates
7.5 7.4
8.3
~1
~2 ~2
~3
FY20
16
FY20
17
FY20
18
FY20
17
FYTD
2018
FY20
17
FYTD
2018
VIOC AutoAftermarket2,3
Mid CapBranded CPG4-8
(Organic Growth)
Year 1 Year 2 Year 3
Store EBITDA Ramp
Avg. capital investment of $1.5M
~$350k U.S.
Jiffy Lube
Valvoline includingExpress Care
Express Oil Change
CanadaJiffy Lube
Valvoline includingExpress Care
Mr. Lube
Store count9(%)
Non-national brands
Non-national brands
-
Creating Value by Driving Quick Lube Growth
19
FY16 FY23E2
Trend in Adjusted EBITDA1 Mix
FY18
Our most profitable business is the fastest growing
1 For reconciliation of adjusted amounts to amounts reported under GAAP, please refer to Valvoline‘s earnings release dated November 5, 2018, available on Valvoline's website at http://investors.valvoline.com. 2 Expected adjusted EBITDA mix based on internal growth assumptions; denotes a forward-looking non-GAAP financial measure that Valvoline is unable to reconcile without unreasonable effort as described in
Valvoline’s earnings release dated November 5, 2018, available on Valvoline’s website at http://investors.valvoline.com.
FY2018 Segment Adjusted EBITDA1 % of SalesQuick Lubes 28%
Core NA 18%International 15%
Core NA Core NA Core NA
Int’l Int’l Int’l
Quick Lubes Quick Lubes Quick Lubes
-
Click to edit Master title style
Appendix
20
-
Key Items1 Affecting Income
($ in millions, except per-share data)Preliminary and unaudited
2018Net pension & OPEB expense -$ (30)$ (20)$ (0.11)$ Legacy and separation-related costs, net -$ -$ 3$ 0.02$ Acquisition and divestiture-related losses (1)$ (1)$ (1)$ (0.01)$ Income tax adjustments2 -$ -$ (2)$ (0.01)$
Total (1)$ (31)$ (20)$ (0.11)$ 2017
Net pension & OPEB expense -$ 78$ 48$ 0.23$ Legacy and separation-related costs, net 14$ 14$ 3$ 0.02$ Income tax adjustments2 -$ -$ (3)$ (0.01)$
Total 14$ 92$ 48$ 0.24$
Pre-tax After-taxEarnings per Share
Fourth Quarter ImpactTotal
Operating Income
211 For reconciliation of adjusted amounts to amounts reported under GAAP, please refer to Valvoline‘s earnings release dated November 5, 2018, available on Valvoline's website at http://investors.valvoline.com. 2 Income tax adjustments in 2018 primarily related to U.S. and Kentucky tax reform, and income tax adjustments in 2017 related to the partial loss of certain tax deductions as a result of the voluntary pension
funding.
Sheet1
($ in millions, except per-share data)Fourth Quarter Impact
Preliminary and unauditedTotal
Operating IncomePre-taxAfter-taxEarnings per Share
2018
Net pension & OPEB expense$ - 0$ (30)$ (20)$ (0.11)
Legacy and separation-related costs, net$ - 0$ - 0$ 3$ 0.02
Separation Costs
Tax Matters Agreement activity
Legacy multiemployer pension liability
Acquisition and divestiture-related losses$ (1)$ (1)$ (1)$ (0.01)
Income tax adjustments2$ -$ -$ (2)$ (0.01)
Total$ (1)$ (31)$ (20)$ (0.11)
2017
Net pension & OPEB expense$ -$ 78$ 48$ 0.23
Legacy and separation-related costs, net$ 14$ 14$ 3$ 0.02
Income tax adjustments2$ -$ -$ (3)$ (0.01)
--- 0
Total$ 14$ 92$ 48$ 0.24
1
2
3
4
6
7
11
12
A
B
($ in millions, except per-share data)
Preliminary and unaudited
2018
Net pension & OPEB expense
Legacy and separation-related costs, net
Acquisition and divestiture-related losses
Income tax adjustments
2
-
Core North America
22
($ in millions)Preliminary an unaudited
2018 2017Lubricant gallons (in millions) 24.9 24.9 - %Sales 262$ 256$ 2 %Operating income 42$ 43$ (2) %
Depreciation and amortization 5 5 - %EBITDA1 47$ 48$ (2) %
EBITDA as a percent of sales 17.9 % 18.8 % (90) bp
Three months ended Sept. 30,Change
Fiscal Fou