VALVOLINE INC

Previous wording

The following discussion and analysis should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as well as the condensed consolidated financial statements and the accompanying Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I in this Quarterly Report on Form 10-Q.

Current wording

The following discussion and analysis should be read in conjunction with the Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as well as the condensed consolidated financial statements and the accompanying Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I in this Quarterly Report on Form 10-Q. Unless otherwise noted, disclosures within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations relate solely to the Company's continuing operations.

Previous wording

As the quick, easy, trusted leader in automotive preventive maintenance. Valvoline Inc. is creating shareholder value by driving the full potential in our core business, accelerating network growth and innovating to meet the needs of customers and the evolving car parc. With average customer ratings that indicate high levels of service satisfaction, Valvoline and the Company’s franchise partners keep customers moving with 15-minute stay-in-your-car oil changes; battery, bulb and wiper replacements; tire rotations; and other manufacturer recommended maintenance services. The Company operates and franchises nearly 1,900 service center locations through its Valvoline Instant Oil Change SM and Great Canadian Oil Change retail locations and supports nearly 300 locations through its Express Care TM platform.

Current wording

As the quick, easy, trusted leader in automotive preventive maintenance, Valvoline Inc. is creating shareholder value by driving the full potential in its core business, accelerating network growth and innovating to meet the needs of customers and the evolving car parc. With average customer ratings that indicate high levels of service satisfaction, Valvoline and the Company’s franchise partners keep customers moving with 15-minute stay-in-your-car oil changes; battery, bulb and wiper replacements; tire rotations; and other manufacturer recommended maintenance services. The Company operates and franchises more than 1,900 service center locations through its Valvoline Instant Oil Change SM and Great Canadian Oil Change retail locations and supports nearly 300 locations through its Express Care TM platform.

Previous wording

The following were the significant events for the first fiscal quarter of 2024, each of which is discussed more fully in this Quarterly Report on Form 10-Q:

Current wording

The following were the significant events for the second fiscal quarter of 2024, each of which is discussed more fully in this Quarterly Report on Form 10-Q:

Previous wording

•Valvoline’s net revenues grew 12% over the prior year period driven by store operations, including system-wide same-store sales ("SSS") growth of 7.1% and the addition of 144 net new stores to the system from the prior year.

Current wording

•Valvoline’s net revenues grew 13% over the prior year period driven by system-wide same-store sales ("SSS") growth of 7.7% and the addition of 147 net new stores to the system from the prior year.

Previous wording

•Income from continuing operations grew 26% to $33.9 million for the three months ended December 31, 2023 compared to the prior year. The growth was attributable to gross profit expansion from operations and interest income earned on invested net proceeds from the sale of Global Products, which were partially offset by investments in the business and a modestly higher normalized effective tax rate. Diluted earnings per share from the continuing operations increased 73% to $0.26 in the three months ended December 31, 2023 compared to the prior year driven by this earnings expansion and share count reductions from repurchases, including benefits from the prior year execution of the tender offer.

Current wording

•Income from continuing operations grew 32% to $43.3 million for the three months ended March 31, 2024 compared to the prior year. This growth is attributable to strong gross profit expansion which was partially offset by increased investments in selling, general and administrative expenses. Diluted earnings per share from the continuing operations increased 74% to $0.33 in the three months ended March 31, 2024 compared to the prior year period driven by earnings expansion from operating results and share count reductions from repurchases, including benefits from the prior year execution of the share repurchase tender offer.

Previous wording

•Adjusted EBITDA increased 23% over the prior year period due to strong operational growth driven by gross profit expansion from service efficiency, increased ticket and transactions, modest contributions from acquisitions and other income, partially offset by investments in selling, general and administrative expenses.

Current wording

•Adjusted EBITDA increased 21% over the prior year period due to strong top-line growth driven by higher average ticket price from pricing actions, non-oil change service penetration and premiumization. Additionally, benefits from improved labor cost efficiency were partially offset by growth investments in selling, general and administrative expenses.

Previous wording

•The Company made additional progress on the commitment to return a substantial portion of the net proceeds from the sale of Global Products to shareholders through repurchasing 5.4 million shares of Valvoline common stock for $171.1 million during the quarter.

Current wording

•The Company returned $40.4 million to its shareholders during the quarter through repurchases of 1.0 million shares of Valvoline common stock completing the 2022 Share Repurchase Authorization for $1.6 billion and successfully returning a substantial portion of the net proceeds from the sale of Global Products to shareholders.

Previous wording

SSS is defined as net revenues by U.S. Valvoline Instant Oil Change (“VIOC”) stores (company-operated, franchised and the combination of these for system-wide SSS), with new stores, including franchised conversions, excluded from the metric until the completion of their first full fiscal year in operation as this period is generally required for new store sales levels to begin to normalize.

Current wording

Net revenues are influenced by the number of service center stores and the business performance of those stores. Stores are considered open upon acquisition or opening for business. Temporary store closings remain in the respective store counts with only permanent store closures reflected in the activity and end of period store counts. SSS is defined as net revenues by U.S. Valvoline Instant Oil Change (“VIOC”) stores (company-operated, franchised and the combination of these for system-wide SSS), with new stores, including franchised conversions, excluded from the metric until the completion of their first full fiscal year in operation as this period is generally required for new store sales levels to begin to normalize.