VVV

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. After a strong run so far this year, Valvoline stock no longer looks obviously cheap, and the broad valuation checks suggest investors need to be more selective about what they are paying for. Year to date, Valvoline is up 18.4%, which puts sharper focus on whether current expectations are already well reflected in the share price. Record system-wide store sales and an expanding service center footprint can support valuation, while the need to refinance debt and manage higher input costs may limit how much extra value investors are willing to ascribe. With a valuation score of 2 out of 6, Valvoline does not screen as a clear bargain on the broader checks. The issue now is whether Valvoline's recent share price strength leaves enough upside to justify taking or adding to a position at current levels. Find out why Valvoline's -13.1% return over the last year is lagging behind its peers. The P/E ratio suits Valvoline because earnings are a key driver for a service focused, asset light business. Valvoline trades on a P/E of 42.1x, which is more than double the Specialty Retail industry average of 19.9x and well above the peer group average of 9.7x. That indicates the market is willing to pay a steep premium for each dollar of Valvoline earnings. The fair P/E ratio from the broader checks is 43.6x, which sits only slightly above the current 42.1x level. Despite the recent lift in sentiment after Valvoline reported record system wide store sales above US$1b in Q3 2026, the market price and this tailored fair multiple are broadly aligned. The gap between them is small, so the P/E signal does not point to an obvious bargain or a clear excess. On the P/E multiple, Valvoline stock currently looks priced roughly in line with what the broader checks suggest is reasonable. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives take Valvoline's valuation puzzle and spell out what would need to be true about its future growth, margins and earnings for the stock to be worth meaningfully more or less than today's price on the Community page. Each narrative links its number to a clear view on where Valvoline's growth, profitability and key risks could go next, which you can revisit as fresh results and new information come through. Add your own narrative on Valvoline to present a clear, number-driven case on whether record system-wide store sales above US$1b and the new debt refinancing plans support today's valuation. Be one of the early voices in the Simply Wall St community to set out that view and then track how it holds up as new results and updates arrive. Do you think there's more to the story for Valvoline? Head over to our Community to see what others are saying! For Valvoline, the current P/E based checks suggest the stock now sits roughly in the middle ground rather than offering clear mispricing. The market is already paying up for the earnings profile and record system wide store sales, so the simple upside case from here relies less on a re rating and more on how consistently the company can deliver on those expectations. The key question is whether margins and cash generation can support that elevated multiple while handling debt refinancing and cost pressures without eroding the valuation case. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include VVV. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 9:00 a.m. ET Investor Relations - Elizabeth Clevinger President and Chief Executive Officer - Lori Flees Chief Financial Officer - Kevin Willis Operator: Hello, everyone. Thank you for joining us, and welcome to Valvoline's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Elizabeth Clevinger, Investor Relations. Elizabeth, please go ahead. Elizabeth Clevinger: Thank you. Good morning, and welcome to Valvoline's Third Quarter Fiscal 2026 Conference Call and Webcast. This morning, Valvoline released results for the third quarter ended June 30, 2026. This presentation should be viewed in conjunction with that earnings release, a copy of which is available on our Investor Relations website at investors.valvoline.com. Please note that these results are preliminary until we file our Form 10-Q with the Securities and Exchange Commission. On this morning's call is Lori Flees, our President and CEO; and Kevin Willis, our CFO. As shown in the accompanying presentation, any of our remarks today that are not statements of historical facts are forward-looking statements. These forward-looking statements are based on current assumptions as of the date of this presentation and are subject to certain risks and uncertainties that may cause actual results to differ materially from such statements. Valvoline assumes no obligation to update any forward-looking statements unless required by law. In this presentation and in our remarks, we will be discussing our results on an adjusted non-GAAP basis, unless otherwise noted. A reconciliation of our GAAP to adjusted non-GAAP results and a discussion of management's use of non-GAAP and key business measures is included in the presentation appendix. With that, I will turn it over to Lori. Lori Flees: Thanks, Elizabeth, and thank you all for joining us this morning. We delivered another good quarter with sales and profit growth in line with our expectations. The team continues to manage the business effectively through the changing supply and macro environment. Our results demonstrate the strength, resilience and growth in our business. On the top line, system-wide store sales increased 19%, crossing the $1 billion mark for the first time in a quarter. System-wide same-store sales grew 8%. Across the system, we saw growth in both transactions and ticket, with ticket contributing more than 3/4 of the comp. All 3 components of ticket, net pricing, premiumization and NOCR service penetration contributed. Net price was the largest contributor, given the pricing actions that were taken. Similar to last quarter, franchise was above the system average. For the quarter, EBITDA grew faster than sales with SG&A leverage improving. Before Kevin talks through the financials, I want to spend a moment on the operating environment as it relates to supply. The closure of the Strait of Hormuz has disrupted the global oil supply chain. And specific to our category has constrained the supply of Group III base oil, a key component of full synthetic lubricants. We expect this industry-wide supply constraint to persist over the medium term and beyond the initial reopening of the Strait. However, we are in a differentiated position. Our scale, combined with the strategic relationship we have with our supplier, gives us reliable access to product. Absent a significant change in the environment, we do not have supply concerns today, and we do not anticipate any in the near term. That said, constrained supply across the market has elevated finished lubricant costs. We saw costs begin to rise in the third quarter, and they continued to increase as we moved into the fourth quarter. Based on the current forecast, we expect finished lubricant costs could be approximately 60% above where they were in March. While that sounds significant, let me clarify that means we expect a total increase of approximately $5 to $7 per oil change depending on the lubricant type relative to the March period. Our teams are actively managing this cost dynamic through consumer pricing and operational discipline. Both company and franchisees have taken pricing actions in the third quarter. While we wait for the Strait to fully reopen, we are managing through the current environment effectively with both the short and long term in mind. On the customer front, we feel good about the overall health of the business. Across the system, we saw transaction growth in the quarter and broadly no signs of trade down or deferral of services. That said, we did see pockets of pressure in June with more moderate growth among lower-income households and some softness in NOCR penetration, similar to what we typically see in the summer drive season. Overall, our customer has remained resilient and we continue to see steady demand for the nondiscretionary services we provide, but we are watching consumer behavior closely across the network. And we continue to invest in strengthening our brand and attracting new customers. As the summer drive season got underway, we launched a new marketing campaign, The Ride Wrangler. This fresh platform reinforces Valvoline as a trusted preventative maintenance partner. Anchored by the tagline Change Wisely, the campaign increases brand relevance and consumer engagement while highlighting the quick easy trusted service we offer. It can be seen and heard across our full marketing mix from national advertising to local marketing, giving us broad reach as we invite more drivers to change wisely and choose Valvoline. A quick update on Breeze. The overall performance of the Breeze business continues to be at or above expectations and the overall deal thesis and return expectations we shared at the December investor update remain intact. As of Q3, we have converted 12 stores to the Valvoline Instant Oil Change brand. And while it's still early, the performance of the converted stores is slightly ahead of expectations. Turning to network growth. We added 47 net new stores in the quarter, bringing our overall network to 2,456 stores. We continue to have a strong pipeline for both company and franchise additions. In summary, we delivered a good quarter. I'm proud of our team's strong execution as we navigate a challenging macro backdrop. We remain focused on delivering quick, easy, trusted service to our guests while creating value for our shareholders. The actions we're taking to mitigate the current environment are strengthening profitability across the system, enhancing free cash flow generation and positioning Valvoline for sustainable long-term growth. With that, I'll turn the call over to Kevin to provide more detail on our Q3 financial performance and rest of year guidance. John Willis: Thanks, Lori, and good morning, everyone. A summary of our financial results is included in the presentation. Let's talk through the highlights. We delivered top line growth in line with our expectations with net sales of $545 million, a 24% increase over the prior year. This growth reflects a combination of continued momentum in our core business and the contribution from Breeze, which performed in line with our expectations. The gross margin rate of 40% decreased 50 basis points year-over-year. We saw favorability in product costs this quarter, offset by higher other service delivery costs, including the impact of new store depreciation. Excluding the impact of depreciation, the gross margin rate would have improved by 10 basis points. As Lori mentioned, we continue to see finished lubricant costs increase. Our focus remains on protecting gross profit dollars while maintaining reliable supply across the system. The product cost favorability we realized in the quarter reflects pricing actions taken slightly ahead of the impact of finished lubricant cost increases, and we have taken additional pricing actions as lubricant costs have continued to increase. It's also important to recognize that finished lubricant costs are currently increasing at a faster rate than movements in the base oil index would suggest. While the index remains a useful market reference point, supplier costs today reflect broader industry conditions, including tight Group III base oil supply, inventory replenishment and other factors across the supply chain. As a result, the index is understating the cost pressure the industry is seeing in the market today. SG&A as a percent of net sales decreased 90 basis points year-over-year to 17% from a combination of increased transactions from the summer drive season and continued cost discipline across the business. We remain focused on improving operating leverage while continuing to support the growth of the business and navigating the macro environment. EBITDA increased 25% to $162 million with margin expanding 30 basis points to 29.8%, while EPS increased 21% to $0.57 per share. We had planned for about 100 basis points of EBITDA margin compression for the full year and now expect closer to half that amount. Year-to-date, operating cash flows improved $105 million to $285 million, and free cash flow was $112 million, an increase of approximately $93 million over last year. We used a portion of that cash to pay down debt in the June quarter, reflecting our continued focus on strengthening the balance sheet. Our leverage ratio now stands at 2.8x on a net debt to adjusted EBITDA basis, a sequential decline of approximately 10%. We remain focused on bringing leverage back within our target range and restarting share repurchases. We also completed a repricing of our Term Loan B during the quarter, which will improve our annual cash interest expense by approximately $1.8 million based on the current balance. We delivered a strong quarter, reflecting disciplined execution, profitable growth, EBITDA margin expansion and improved free cash flow. Let's turn to our outlook for the remainder of the year, which includes our expectations for the fourth quarter. First, we are raising our full year system-wide same store sales expectations to a range of 7.5% to 8%. This increase reflects the pricing measures we've taken so far. We are narrowing our adjusted EBITDA and EPS ranges to $550 million to $560 million and $1.70 to $1.75 per share, respectively. While the macro and supply environment remains dynamic, the fundamentals of our business have not changed. Preventive maintenance is a nondiscretionary service. Our customer has remained resilient, and our team continues to execute well. We are confident in the durability of our model and our ability to deliver profitable growth and long-term value for our shareholders even as we navigate near-term cost pressure. I'll now turn it back over to Lori to wrap up. Lori Flees: Thanks, Kevin. To wrap up, we delivered a strong quarter. I'm proud of how our team continues to manage the business effectively through a changing supply and macro environment. We remain confident in the resilience of our business model and the durability of customer demand. I want to thank our team members and franchisees. Their dedication and execution are what enables us to keep delivering V-Class service to our guests quarter after quarter. As we look forward to the end of the year, we're also celebrating 2 important milestones. This year marks the 40th anniversary of Valvoline being in the retail services business and the 10th anniversary of becoming a stand-alone publicly traded company. Over the past decade alone, we've grown our network from just over 1,000 stores to nearly 2,500, a testament to the strength of our model, the long-term value we've built for our shareholders and the passion of our people and franchisees. I'll now turn it back over to Elizabeth to begin Q&A. Elizabeth Clevinger: Thanks, Lori. [Operator Instructions] With that, the operator can please open the line. Operator: [Operator Instructions] Your first question comes from the line of Mark Jordan with Goldman Sachs. Mark Jordan: Congrats on another great quarter here. To start, can we just dig into the full year guidance a little bit? I think it implies 4Q comp trends are roughly similar to 3Q, maybe a little bit better there. But the EBITDA margins are in the 25% range and understanding there's some seasonality in 4Q, but what are the big drivers of the sequentially softer margins there? John Willis: Mark, this is Kevin. Thanks for the question. I would say that we're really pleased with how the team has executed year-to-date and continues to execute in Q4 as I think we can all appreciate the macro remains very dynamic. That said, the fundamentals of the business haven't changed. We're very pleased with where we are. As we look at Q4, really the math is all around what we have baked into the full year guide around product cost increases, us covering those with price that we started taking in the June quarter and continued into this quarter as well. And it's really about our focus on protecting gross profit dollars and the impact of that is, as you correctly calculated at the midpoint of the range, that would imply 300 to 400 basis points of margin compression in the September quarter, and that would be really all product cost related impacts. We don't really see any other significant impacts to the business. As we look at SG&A year-over-year, we would expect to gain some leverage on the SG&A front as we have been doing throughout the course of the year. We're managing costs very well when it comes to that. So it really comes down to what Lori mentioned. As much as 60% finished lubricant costs increase, $5 to $7 per oil change and making sure that we do what we need to do to cover that in the quarter. So that's what's driving the margin. Mark Jordan: Excellent. And then just as one follow-up. Can you talk about the SG&A leverage in 3Q? It looks like the largest benefit maybe came from the other G&A expenses. Can you break down what's included in that bucket? And maybe how we should think about it in 4Q? John Willis: Yes. Just as a reminder, Q3 tends to be our strongest quarter every year. We drive more transactions. It's the peak of the summer drive season. And so -- that does tend to help us on the leverage front. The team did a really nice job from an execution perspective around SG&A. We've been really focused on that. Since we got through and past making the SG&A investments that we needed to make in the business. And really, it's just -- it's been a concerted effort to manage our overall cost profile across the board, and the team has done a really nice job with that. Operator: Your next question comes from the line of Steven Zaccone with Citi. Ariana Warden: This is Ariana on for Steven Zaccone. My first question is, can you provide more detail on the extent to which pricing actions can continue to offset these increases without negatively impacting customer traffic? Lori Flees: Yes. Thanks for the question. Overall, when we look at, at least on the product cost side, there's 2 things that we do. One is we try to time pricing increases on the company store side as well as the franchise product cost pass-through to offset those increases. We always do pricing elasticity work to know exactly what we expect consumers to do. Now -- but we're not doing this in a vacuum. The entire industry is facing the same product cost -- product constraints that I talked about and the commensurate product inflation that comes with constrained supply. So we're not doing that in a vacuum. And as you look at the $5 to $7 number that I talked about on a base ticket of $115 on average or higher for some of our franchisees. That's actually a very small percentage of increase. And given our customers come back to us twice a year on an annual basis, it's not a significant out-of-pocket cost when you compare that to foregoing maintenance and the potential risk that you take for bigger repairs. So obviously, we look at that and we watch consumer sentiment, and we watch consumer return rates. So -- and we use -- and we watch consumer discount usage, all of those things factor into it as we look at passing price on to consumers. Ariana Warden: And my follow-up is despite raising the floor for same-store sales by 250 basis points, the top end of the total revenue remains the same. So I guess what specific revenue offsets are preventing a corresponding increase in the net revenue? John Willis: Yes. What I would point out is we actually did raise the midpoint of the full year sales guide from $2 billion to $2.1 billion to $2.05 billion to $2.1 billion. So effectively, it's a $25 million increase in the midpoint. Again, we're very focused on providing an update that we feel confident and comfortable with based upon what we know is happening in the broader marketplace with the macro and with our own business. And while we feel really, really good about the things we can control inside the business, the macro environment does remain dynamic. And so we did raise the midpoint, but we wanted to put numbers out there that we feel very comfortable with. Operator: Your next question comes from the line of Simeon Gutman with Morgan Stanley. Skylar Tennant: This is Skylar Tennant on for Simeon Gutman. I guess with some of the margin compression previously talked about, how temporary do you think that is? And do you think it can be fully resolved by Q1? Lori Flees: Sure. It's a great question. I want to just reaffirm that as product costs remain elevated given constrained supply base, we feel really good about the supply position that we're in. We have an advantaged position given our scale and size, not just on a location basis but on a network basis. And the constraint is being felt across the system. When the Strait reopens, it will take some time for product to flow through to the next stream of lubricant manufacturing steps. And so we do expect that the elevated costs will persist for some time. Our understanding in working with the supplier is 4 to 6 months at a minimum once the Strait is fully reopened. Now obviously, we have a supplier that has a very strong network of supply and they've already been working with alternate sources, et cetera. But for cost to come down, you'd need the supply chain to be back fully inventoried. And we know that, that will take some time just given how long the Strait has been closed and some of the damage that's happened within the overall network. Skylar Tennant: Okay. Great. And then I guess on the cost increases, how much more pressure would you expect to flow through the P&L into the near term and future quarters? John Willis: Yes. We've -- we projected what we know today. And I think it will depend on really the macro, how things play out in the Strait, how things play out in the broader supply chain. But we have factored in everything that we know to date in terms of cost increases and related pricing action that we need to take. And we'll continue to do that as the situation unfolds. But we've taken action around what we know today. Operator: Your next question comes from the line of David Bellinger from Mizuho. David Bellinger: Just another clarification on the gross margin line. So you had about 6 percentage points of ticket or more in this quarter. It doesn't seem like that the product cost hit the gross margin line in Q3. So is this more of a timing issue where the higher cost will land in the Q4 period? And why is there such a lag between the cost increase versus the price increase to the consumers? Is there a way you can tighten that? John Willis: It's a good question. I would say that we were proactive around pricing in the June quarter. And intentionally so, as we were being informed of a lot of cost increase that was coming. And the timing of that can be difficult to get perfectly right, especially the timing between when we actually see the cost flow and when we take price. But we've tried to be proactive on the price side to protect those gross profit dollars. And we were successful in doing that in the June quarter. I would say, as we're in Q4, we face some of those same challenges around the timing of pricing and seeing the cost flow through. And I think in normal times, there is much better alignment around that because it's a more systematized process, whereas right now, we're in an incredibly dynamic environment with a lot of things going on and a lot of changes happening. And we're just trying to be as proactive as we can, given where we are right now. David Bellinger: Got it. Got it. And then my follow-up, just on the implied guidance for Q4. The system-wide same store sales number is about 8% to 10% implied there. You also talked about some of these pockets of pressure in June. So can you tell us a little more about how sales have recovered? Are you seeing more transaction growth? Or is that incremental uplift, is that mainly from more pricing? Lori Flees: Yes, it's a good question. I think we expect the fundamentals of the business to remain intact from a transaction growth, from a premiumization and NOCR. And that we do see the difference really being around price, both in terms of what company store pass-through on pricing is, but also what our franchisees do. I think that was a piece that was hard for us to forecast last quarter is how quickly our franchisees would take price at the time. At the time we had the call that last quarter, we didn't -- we hadn't had a pass-through yet with the franchisee base because of where the indexes and costs were. So some of that is real time and dynamic as Kevin talked out. But you're right in terms of the applied guidance, it's around 8% to 10% with the difference being around what is assumed on the price side. Operator: Your next question comes from the line of John Babcock with Barclays. John Babcock: Just the first one, what are your partners telling you about the supply and demand in the base oil market? And also, I don't know what they've said around like the Strait of Hormuz, but I'm just kind of curious, have they -- did the loosening that occurred in May or June, did that help at all? John Willis: So in terms of the supply-demand dynamic, obviously, still remains challenged. There's very little product going through the Strait. Lori talked about the supply chain taking 4 to 6 months to start to normalize, and that's very real. A lot of base oil is made in Asia, specifically South Korea. And it's been challenging for those companies to get crude oil so that they can do what they need to do to make base oil that eventually will make its way back here and be converted into finished lubricant. Group III base oil, which is the primary ingredient for full synthetic, has been the most challenged and continues to be. Group II less so, but also challenged, partly because of refiners managing their own mix. But this is -- and this is industry-wide. This is not a Valvoline phenomenon. Where we are right now, though, with our supplier arrangement, we do feel that we are advantaged on an overall basis and continue to work very, very closely with them to ensure that we remain supplied. If you don't mind repeating the second question, I didn't catch it. John Babcock: Yes. I mean the second half of the question was really just around the Strait of Hormuz because it opened up a little bit. And I'm just kind of curious if that ended up helping the market or if that was a relatively nonevent. Lori Flees: I think for -- as it relates to Group IIIs, that was at least from our understanding, pretty limited relief -- limited to little relief. And part of that is when you look at other uses for Group IIIs, it also goes into jet fuel. And obviously, summer season is high peak travel season. So the demand for Group III base oils is high, and that constraint is what's driving the price of that up, which then drives the cost of our finished lubricant up. So I would say there was a little bit of loosening in a few ships that came through in May, but I don't think broadly that was much relief. John Babcock: Got you. That's helpful. And then I guess just a quick follow-on here. I'm just kind of curious, are your suppliers preparing for any contingency plans? And what are those plans? Lori Flees: Yes, I don't want to speak for our suppliers, obviously. But what I would say is we work with a company that we -- used to be part of our company, and they have always been very forward-looking on reformulating product to meet the requirements of the product and the quality standards. And as there is -- whether it was tariffs on other products and/or now this lubricant base oil III constraint, they are very forward-looking at reformulating using new sources of base III group as well as others. So I would just say our supplier is in the business of creating lubricant, not just for us, but for others. And they do everything they can to keep their customers, including us, which we are one of their largest customers in stock so that we can continue to serve our guests. So I think I'll harken back to what Kevin said and that we are strategically advantaged given our relationship with our supplier. Operator: Your next question comes from the line of Thomas Wendler with Stephens Inc. Tom Wendler: Apologies if I missed this, but could you give us a breakdown of the traffic and ticket in 3Q? And then you had mentioned additional pricing actions being taken this quarter. Can you maybe help us gauge the price increases taken in 4Q? Lori Flees: Yes. So as I mentioned in the remarks, our same-store sales was very strong across the quarter, both for franchise and company. Ticket drove about 3/4 of the comp and transaction was the remainder. Ticket was slightly more of a contributor in Q3 versus Q2. But I think Q2, it was 2/3 and this quarter, it was 3/4. So not significantly different. And that was because of the net pricing contribution that we got within the quarter, both on the franchise and the company side. It was offset by slightly less growth in NOCR penetration, which we typically see in the summer drive season. So those are the dynamics for Q3. Tom Wendler: Perfect. And then understanding this is probably a ways out, but once base oil costs move lower, should we be expecting prices to move down or maybe some gross margin expansion? Lori Flees: Yes. If you look at historical industry norms around price. We have not been an industry that has rolled back pricing as base oil and finished lubricant costs move up or down. So we would expect that as the product costs start to moderate, and again, it will be some time before we see that. We would expect margin expansion, which then gets us back to a margin rate that would be more in keeping with our historical pattern and our objectives for margin expansion overall. Operator: Your next question comes from the line of Scott Stember with ROTH Capital. Scott Stember: Just talking about the competitive pricing environment as you roll out this $5 to $7 increase for oil change, what are you seeing from your direct Quick Lube customers? And just trying to get a sense of if anybody is trying to use this as an opportunity to gain share across the industry by maintaining price? Lori Flees: Yes, it is something that we watch. Yes, Scott, it's a good question. We are constantly monitoring competitor pricing, particularly in this environment where the landscape is changing. I will remind you, it is a very fragmented competitor base. And so for us to have true visibility of what independents are doing, what dealers are doing, et cetera, is very challenging. But we are looking at those players who offer a more consistent service that we do from a convenience standpoint. And we are seeing price movements happening, happening in different ways and at different tiers, but we are seeing pricing moves. Now some of it has been more recent, and we're not sure if it's pervasive across all geographies, that's the work that we constantly do to monitor geographic changes versus whole of network changes on our competitor side. Scott Stember: Got it. And then just digging into that $5 to $7 increase per oil change. In the past, you've talked about some offsets being increased price of waste oil that you farm out. How does that factor into this net equation? John Willis: Sure. Historically, waste oil sales back to collectors have been an offset, especially as we've seen crude oil costs increase, waste oil has tended to move up some. I would say in the June quarter, we saw very little movement in the price of waste oil. Where we sit in the September quarter, we have started to see some movement upwards. So we do expect that, that will be a bit of an offset. But as a reminder, with the pace and the quantum of increases that we have seen, the industry has seen, it will be an offset, but we -- there's still a gap, and we're addressing that gap with pricing. All that said, I would say that the team has been executing really, really well around all of that. Generating really strong results as part of it and continues to do that, and we would expect that to continue into the future and drive strong business fundamentals. Operator: Your next question comes from the line of Maksim Rakhlenko with TD Cowen. Maksim Rakhlenko: So first, on gross margin, can you speak to the philosophy around Valvoline potentially starting to take price to maintain margins, not just profit dollars and whether there's opportunity to get a little bit more aggressive to protect the P&L? And then where you sit today, assuming everything holds, do we sort of roll the 4Q pressure into early fiscal '27? Or how do we think about that? Lori Flees: Thanks, Max. So I'll take the first one, and then I'll have Kevin talk through the last part. As we have looked at historical practice, both for Valvoline and what has worked very well is as we see cost inflate and we pass those through to consumers, we typically then -- we do have headwind on a margin rate perspective, but maintain margin dollar performance. And then we do know that the normal cycle for finished lubricant likely will come back down, and that's when you end up having the margin expansion back to a more normalized rate. I think where we want to be careful is in a macro environment where the consumer is having a lot of inflationary impacts, if you raise your prices significantly higher than competitors, there will be an elasticity trade-off. And therefore, we just want to make sure that we're managing that in line because transaction volume drives margin in our business. So to take short-term pricing positive wins, you may not like the consequences long term with volume if a competitor comes in with a promotional or lower pricing. So it's just a dynamic we have to watch very carefully, and we do and we have. And we do expect margin rate will expand back as we get through this period of supply constraint. John Willis: And Max, as for the second part of the question, I think it's still a little early to start talking about fiscal '27. But I mean, what I will say is a lot of the dynamic that we face is really tied to the -- it's tied to the macro. It's tied to what goes on with the Strait and what's happening with the supply chain and how that could ebb or flow. And so we will react and even proact to that as that continues to play out. But we will -- we and the industry will have to continue to navigate that. And we certainly feel like we're as well or better equipped than anyone else in the industry to do that. Maksim Rakhlenko: Got it. That's helpful. And then can you speak to progress you're making around the Breeze integration? How are synergies tracking? Do you potentially now see more versus less opportunities to achieve, whether it's top line or cost synergies? And then just any help around the store conversion time lines? Lori Flees: Sure. Thanks. We continue to be really happy with our integration efforts as we look at all the metrics that we track and having them be within or above our initial expectations. We've seen some early positive momentum on the stores we've converted to date. Obviously, it's early and the ramp is significant. So I don't want to overstate, but it is ahead of where we would have expected in the early months of that process. And it's a real testament because when we typically buy, we are buying 30 roughly 30 stores from independent operators every year. And so this is not new in terms of converting stores over to a Valvoline Instant Oil Change brand. But we typically have employee fallout when that happens. And I think because we were very clear in the first quarter that our focus was to settle down the teams to connect with them, we have seen very little attrition in the process of converting the stores. And I think that has bode well for the early on performance. Now that said, there are many actions that we're taking from a marketing and a fleet sales perspective that is not waiting for the Valvoline brand conversion. And so we are getting the benefit of that. On SG&A, we did talk last time of having some early synergy capture. So when we look at where we are year-to-date, we're definitely ahead on the cost, on the G&A synergy capture that we are expecting, although it's low numbers, but we continue to pace positive. So when we step back overall, the Breeze business is performing without the changes we made at or about where we expected. And then the changes that we've made are adding some fuel to their performance, which we're really pleased with. And we continue to have more interactions with their leadership team, their support teams, and it's a very strong team with a very strong culture. And so we continue to be really pleased and have no concerns about the business case and the return on capital invested to be very much in line with what we talked about in the December investor update. Operator: Your next question comes from the line of Bret Jordan with Jefferies. Bret Jordan: With all the refunds from IEEPA tariffs being thrown around in the aftermarket and probably a lot of imported filters in the mix, do you see yourself in a position to pick up any IEEPA refund? John Willis: Yes, I'll take that one. As we look at the tariff impact, that was sized last year as being pretty modest. And frankly, a lot of action was taken to mitigate or avoid a lot of the tariff -- a lot of the tariffs that could have come. Frankly, we saw very little impact from tariff actions. Last year, there was no impact when it came to finished lubricants. Those were excluded from any tariff impact, which is obviously a large component of what we purchase. So we saw very little. And to date, we have not received any refunds, but I just want to emphasize that those would be very, very modest if and when they come. Bret Jordan: So the filters are not imported in your mix? John Willis: They are. And our supplier changed their filter supplier geographically to significantly mitigate any tariff impact. And so again, we experienced very little cost headwind from the tariff actions that were taken. It just didn't impact the business very much at all. Bret Jordan: Okay. Great. And then I guess you talked about preferred supply chain relative to competitors on base level -- base IIIs. Do you have any competitors that are sort of disadvantaged from a price standpoint? Would Shell have to do more sort of working backwards to get supply that would add cost to that oil? Or is everybody pretty much same footing? John Willis: Yes, it's a good question. And a lot of the information that we have is, frankly, somewhat anecdotal. But what we have heard in the marketplace is everyone is kind of in the same situation. I think in terms of -- from a price perspective, everybody is seeing cost increase. And I think where we're advantaged is with the relationship we have, I think we have a lot more surety of supply than probably a lot of others in the marketplace do. And I don't think there's a whole lot else to say about it, and that's going to just continue to play out. Operator: Your next question comes from the line of Craig Kennison from Baird. Craig Kennison: It's been a helpful call so far. I wanted to ask about non-oil change revenue and whether you expect maybe attachment rates to drop as a result of higher prices as consumers realize it costs them a little bit more just to get the car oil change. Lori Flees: Yes. We -- as I mentioned, we're not seeing any trade down or deferral, and that includes on the non-oil change revenue. We typically, as we get into the summer drive season, as our stores get busier, sometimes the execution may drop just as people are trying to get cars through our base. And also customers that they've had to wait to get into the bay, they won't take additional services. So this is not new. And so where we see pressure is on continued growth in penetration. In the summer drive season, we're not seeing any trade down or deferral. We're still seeing positive contribution in the same-store sales from NOCR, just slightly less than what we've seen in the past 2 quarters. But we're not seeing any consumer demand fall off. I would say consumers remain very resilient, and this is a nondiscretionary category. So people want to take care of their vehicles, particularly as they're getting into the summer months and they drive -- they're doing more summer road trips. Craig Kennison: And then maybe just a follow-up on that. What is the inflation trend outside of your base oil impact? So just the inflation trend you're seeing on some of that non-oil change revenue business? Lori Flees: Are you talking about cost inflation or price inflation? Craig Kennison: I was thinking about price inflation, what your consumers face, but I'll take both. Lori Flees: Yes. Yes. I would say that our normal pricing, so we have 2 types of NOCR services. We have what we call our OEM recommended services, that's radiator flushes and differentials and things like that, that not all of our competitors in the Quick Lube channel offer. But we typically -- dealers -- we look at our dealer pricing, and we offer a value relative to that. So we're always looking at where dealer pricing is to ensure that we maximize the dollars that we get for those services, but still offer value relative to a dealer. And then as it relates to visuals, we continue to just look at what the customer is willing to pay, what our penetration rates are and margin levels, and we take regular pricing on those items in due course. I don't think we've done anything significantly different from our normal course on those items. Operator: Your next question comes from the line of David Lantz with Wells Fargo. David Lantz: On the SG&A front, can you walk through some of the puts and takes that we should keep in mind for fiscal Q4 and how to think through the impact of advertising at the World Cup, both on a top line and expense front? John Willis: Yes. I think as we have gotten into Q4, like I said, we expect to have year-over-year SG&A leverage in Q4 versus last year. So continued focus on the cost dynamic and how we're managing our cost profile from an SG&A perspective. On the marketing piece, there can certainly be a little bit of seasonality to that, et cetera. But I would say from a general approach perspective, the marketing program tends to be planned well in advance, and we execute against those plans. And so I wouldn't expect anything particularly out of the ordinary from a marketing perspective in Q4 either. David Lantz: Got it. That's helpful. And then there's a fairly wide range of store openings implied for Q4. So can you walk through how we should think through that and the split between company-operated and franchised? Lori Flees: Yes. We did have a good healthy number of additions in Q3. We opened 47 net new additions for the quarter, 26 openings coming from franchise growth with 1 closure and company opened 20 and had 2 transfers from the Express Care platform for a total of 22. So overall, good Q3. Q4 always, if you look in history, is always a heavy new addition. Part of that is driven by the construction time frame for both us and our franchise partners. So we do expect to be within the range. I think some of this is timing of when things fall in September. It depends on where in the range will fall, but we're very confident that we'll be within the range after we finish Q4. Operator: Your next question comes from the line of Peter Keith with Piper Sandler. Peter Keith: I wanted to follow up on a question, I think it was from Bret earlier just around the base oil cost increases and shortages. So while it does seem like everyone is in the same camp from a cost perspective, I don't think everyone is in the same camp from a supply perspective. So we're hearing about smaller players out there facing some shortages being put on allocation. It sounds like you guys will be better positioned than anyone. Does this present a market share opportunity? Or can you market around it? Or conversely, maybe people just substitute other types of oil unbeknown to the consumer? Lori Flees: Yes, it's a great question and one that the team is actively working on. Peter, again, anecdotally, and it's such a fragmented market. We do know that there are players that are either on allocation or are facing some shortages of product. And part of the marketing work we're doing is trying to figure out how we tease that out and take advantage. It's very similar to during COVID when we stayed open because people could stay in their cars and we could safely deliver the service in a time of uncertainty and others could not. We stole share during that period. And this is a little different in that there are a lot of customers who would typically go elsewhere and they may not get service. How do we make sure that we are top of mind at those times and in places that they're searching? So obviously, from a marketing lower funnel perspective, being in the right place at the right time, but also augmenting that with our brand messaging such that we are continually increasing brand awareness and consideration such that when they're in the market to look for a new place because the place they have gone before cannot serve them, we are top of mind and ready to serve. So that is very much a focus within our marketing team. And we are trying to be proactive in getting new customers to trial our brand. So all of that work is well underway, and we do see opportunity. Hard to size it, but we are definitely -- that's one of the reasons why Kevin is saying we're not pulling back on marketing because this is the time when you just have to be razor sharp on where you spend your marketing to capitalize on those opportunities. Peter Keith: Okay. All right. Sounds interesting. And I guess my follow-up to Kevin would just be on the cost increases related to base oil. So I can appreciate a steady ramp of your own price increases to be competitive. Is the goal right now to basically have that price/cost ratio be neutral by the end of fiscal Q4, assuming base oil prices were to stay steady from here? John Willis: Yes, that's a fair assumption. As we've tried to be clear that we want to protect gross profit dollars. We want to be mindful of the consumer and where the consumer is in an inflationary environment. And so we're being as proactive as we can from a price/cost dynamic. Q3, very pleased that we were able to do what we did and get out a little bit ahead of where the cost increases rolled through. But yes, our plan, our expectation is to have those 2 dynamics match from a price/cost perspective. Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Valvoline (VVV) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Valvoline? Here are five stocks we like better. Strong Q3 performance: Sales rose 24% to $545 million, adjusted EBITDA increased 25% to $162 million, and adjusted EPS climbed 21% to $0.57. System-wide same-store sales grew 8%, driven primarily by pricing and premium services, while the store network surpassed 2,400 locations. Lubricant costs are pressuring margins: Tight Group III base-oil supplies could push finished lubricant costs roughly 60% above March levels, or $5–$7 per oil change. Valvoline is implementing pricing actions, but expects fourth-quarter EBITDA margin compression of about 300–400 basis points. Full-year outlook raised: Valvoline increased its fiscal 2026 same-store-sales forecast to 7.5%–8% and sales guidance to $2.05–$2.1 billion, while maintaining adjusted EBITDA guidance of $550–$560 million and adjusted EPS guidance of $1.70–$1.75. Trump Tax Reforms: 7 Stocks That Could Benefit in 2025 Valvoline (NYSE:VVV) reported third-quarter fiscal 2026 sales and profit growth that management said met expectations, supported by higher pricing, transaction growth and continued network expansion. The company also raised its full-year same-store-sales outlook as it works through rising lubricant costs tied to constrained Group III base oil supply. For the quarter ended June 30, system-wide store sales rose 19% to more than $1 billion for the first time in a quarter. System-wide same-store sales increased 8%, with ticket growth contributing more than three-quarters of the gain and transaction growth accounting for the remainder. → No Hangover: Revisiting Microsoft One Week After Earnings FMC stock just set a new ceiling higher, 50% higher indeed President and CEO Lori Flees said all ticket components contributed, including net pricing, premiumization and non-oil-change revenue service penetration. Net pricing was the largest factor after pricing actions during the quarter. Franchise same-store sales exceeded the system average, she said. Net sales increased 24% year over year to $545 million, reflecting momentum in the core business and contributions from the Breeze acquisition, according to CFO Kevin Willis. Adjusted EBITDA rose 25% to $162 million, while EBITDA margin expanded 30 basis points to 29.8%. Adjusted earnings per share increased 21% to $0.57. → MarketBeat Week in Review – 08/03 - 08/07 3 chemical stocks to play the industry breakout Gross margin was 40%, down 50 basis points from the prior year. Willis said product-cost favorability during the quarter was offset by higher service-delivery costs, including depreciation from new stores. Excluding depreciation, gross margin would have increased 10 basis points year over year. SG&A expense as a percentage of net sales declined 90 basis points to 17%, supported by higher summer-season transactions and cost discipline. Willis said the company expects further year-over-year SG&A leverage in the fourth quarter. → Why the Landlord of the AI Boom Could Outlast the Chipmakers Year-to-date operating cash flow improved by $105 million to $285 million, while free cash flow rose about $93 million year over year to $112 million. Valvoline used a portion of the cash to reduce debt during the June quarter. Its net-debt-to-adjusted-EBITDA leverage ratio declined sequentially by about 10% to 2.8 times. The company also completed a repricing of its Term Loan B, which Willis said is expected to reduce annual cash interest expense by about $1.8 million based on the current balance. Management said it remains focused on returning leverage to its target range and restarting share repurchases. Management said the closure of the Strait of Hormuz has disrupted the global oil supply chain and constrained supplies of Group III base oil, a key ingredient in full synthetic lubricants. Flees said Valvoline’s scale and supplier relationship have provided reliable access to product and that the company does not anticipate near-term supply concerns absent a significant change in the environment. However, finished lubricant costs began rising in the third quarter and continued to increase entering the fourth quarter. Based on current forecasts, Flees said finished lubricant costs could be about 60% above March levels, equivalent to roughly $5 to $7 per oil change depending on lubricant type. Willis said the base oil index understates current industry cost pressure because supplier costs reflect tight Group III supply, inventory replenishment and other supply-chain factors. The company has implemented additional pricing actions to protect gross-profit dollars as costs rise. For the fourth quarter, Willis said the midpoint of the company’s guidance implies roughly 300 to 400 basis points of EBITDA margin compression, driven by product costs. He said Valvoline expects its pricing actions to match the price-cost dynamic, while management continues to balance margin protection against consumer affordability and competitive conditions. Flees said the industry historically has not rolled back prices when lubricant costs decline. As costs eventually moderate, she said Valvoline would expect margin-rate expansion toward historical patterns. Management expects elevated costs to persist for at least four to six months after the Strait of Hormuz is fully reopened, as the supply chain replenishes inventory. Valvoline reported transaction growth across its system and said it did not see broad evidence of customers trading down or deferring services. Flees said the company did observe more moderate growth among lower-income households in June and some softness in non-oil-change revenue penetration, consistent with seasonal patterns during the summer driving period. “Overall, our customer has remained resilient,” Flees said, adding that the company continues to view preventive maintenance as a non-discretionary service. Management said it monitors pricing elasticity, customer return rates and discount usage when determining pricing actions. Flees noted that the anticipated $5 to $7 increase is a relatively small percentage of the company’s average ticket, which she said is approximately $115 or higher at some franchise locations. The company launched a marketing campaign called “The Ride Wrangler,” built around the “Change wisely” tagline. Flees said the campaign is intended to reinforce Valvoline’s position as a preventive-maintenance provider and reach consumers through national and local marketing channels. Valvoline added 47 net new stores during the third quarter, bringing its network to 2,456 locations. The additions included 26 franchise openings, one franchise closure, 20 company openings and two transfers from the Express Care platform, management said. Flees said the company continues to have a strong pipeline for both company-operated and franchise locations. The fourth quarter is typically a seasonally heavy period for openings, she said, and the company expects to finish the year within its planned addition range. The Breeze business continued to perform at or above expectations, management said. Valvoline had converted 12 Breeze locations to the Valvoline Instant Oil Change brand as of the third quarter, and Flees said early performance at converted stores was slightly ahead of expectations. She also said the company has experienced little employee attrition during conversions and is ahead of its expectations for G&A synergy capture, though the dollar amounts remain relatively small. The Breeze deal thesis and return expectations outlined at the company’s December investor update remain intact, according to management. Valvoline raised its fiscal 2026 system-wide same-store-sales forecast to 7.5% to 8%, reflecting pricing actions taken to date. The company raised the midpoint of its sales outlook by $25 million, guiding to $2.05 billion to $2.1 billion in full-year sales. Management narrowed adjusted EBITDA guidance to $550 million to $560 million and adjusted EPS guidance to $1.70 to $1.75. Willis said the company had previously expected roughly 100 basis points of full-year EBITDA margin compression but now expects closer to half that amount. Flees said Valvoline’s actions to navigate the supply environment are intended to support profitability, cash flow and long-term growth despite near-term lubricant cost pressure. Valvoline (NYSE: VVV) is a leading global producer and distributor of automotive and industrial lubricants. The company's portfolio spans engine oils, gear oils, transmission fluids, greases, coolants and driveline products, all designed to help improve vehicle performance and longevity. Valvoline's products are marketed under the Valvoline®, Valvoline NextGen® and Valvoline™ SynPower® brand names and are formulated to meet the stringent requirements of passenger cars, light trucks, heavy‐duty vehicles and off‐road applications. In addition to its core lubricant business, Valvoline operates one of North America's largest quick‐lubricant service networks through Valvoline Instant Oil Change℠ (VIOC). This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Valvoline Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Valvoline (VVV) came out with quarterly earnings of $0.57 per share, beating the Zacks Consensus Estimate of $0.5 per share. This compares to earnings of $0.47 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +14.00%. A quarter ago, it was expected that this automotive and industrial lubricants maker would post earnings of $0.35 per share when it actually produced earnings of $0.41, delivering a surprise of +17.14%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Valvoline, which belongs to the Zacks Oil and Gas - Refining and Marketing industry, posted revenues of $544.6 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.49%. This compares to year-ago revenues of $439 million. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Valvoline shares have added about 35.2% since the beginning of the year versus the S&P 500's gain of 13%. While Valvoline has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Valvoline was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.49 on $550.33 million in revenues for the coming quarter and $1.75 on $2.05 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Oil and Gas - Refining and Marketing is currently in the top 7% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the broader Zacks Oils-Energy sector, New Era Energy & Digital, Inc. (NUAI), has yet to report results for the quarter ended June 2026. This company is expected to post quarterly loss of $0.09 per share in its upcoming report, which represents a year-over-year change of +57.1%. The consensus EPS estimate for the quarter has been revised 10% higher over the last 30 days to the current level. New Era Energy & Digital, Inc.'s revenues are expected to be $0.25 million, up 19.1% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Valvoline (VVV) : Free Stock Analysis Report New Era Energy & Digital, Inc. (NUAI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Delivers 24% top-line growth, 47 net store additions LEXINGTON, Ky., August 05, 2026--(BUSINESS WIRE)--Valvoline Inc. (NYSE: VVV), the quick, easy, trusted leader in preventive automotive maintenance, today reported financial results for its third quarter ended June 30, 2026. All comparisons in this press release are made to the same prior-year period unless otherwise noted. "We delivered another strong quarter, with sales and profit growth in line with our expectations," said Lori Flees, President & CEO. "Top-line sales grew 24%, with system-wide same-store sales growth of 8.0%, benefiting from pricing actions taken in the quarter. We generated healthy profit growth, solid margins and improved SG&A leverage. The team continues to manage the business effectively through the changing supply and macro environment. Our results demonstrate the strength, resilience, and growth in our business." Continuing Operations - Operating Results Sales of $545 million grew 24% and system-wide store sales increased 19% to $1.05 billion System-wide same-store sales (SSS) growth of 8.0% Reported income from continuing operations of $65 million grew 14% and diluted earnings per share (EPS) of $0.51 increased 16% Adjusted EBITDA of $162 million increased 25% and adjusted EPS of $0.57 increased 21% System-wide net store additions in the quarter totaled 47 (25 franchise and 22 company-operated additions) Balance Sheet and Cash Flow Cash and cash equivalents balance of $84 million; total debt of $1.6 billion, reflecting a $50 million voluntary prepayment on the Term Loan A Year-to-date operating cash flow from continuing operations of $285 million and free cash flow of $112 million, an improvement of $93 million over the prior year Outlook Flees added, "We are operating in a period of meaningful change on the cost side of our business. Our team is focused on mitigating the impact of increased finished lubricant costs with pricing actions and ongoing operational discipline. We remain confident in the underlying strength of our business and our team's execution. As a result, we are narrowing our guidance ranges and raising full-year system-wide same-store sales expectations." Information regarding the Company’s outlook for fiscal 2026 is provided in the table below: Valvoline’s outlook for adjusted EBITDA and adjusted EPS are non-GAAP financial measures that are expected to be impacted by items affecting comparability. Valvoline is unable to reconcile these forward-looking non-GAAP financial measures to the comparable GAAP measures estimated for fiscal 2026 without unreasonable efforts, as the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact these GAAP measures in fiscal 2026 but would not impact non-GAAP adjusted results. Third Quarter Operating Results Conference Call Webcast Valvoline will host a live audio webcast of its third quarter fiscal 2026 conference call today, August 5, 2026, at 9 a.m. ET. The webcast and supporting materials will be accessible through Valvoline's website at http://investors.valvoline.com. Following the live event, an archived version of the webcast and supporting materials will be available. Key Business Measures Valvoline tracks its operating performance and manages its business using certain key measures, including system-wide, company-operated and franchised store counts and system-wide SSS and store sales. Management believes these measures are useful to evaluating and understanding Valvoline's operating performance and should be considered as supplements to, not substitutes for, Valvoline's net revenues and operating income, as determined in accordance with U.S. GAAP. 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 of U.S. Valvoline Instant Oil ChangeSM (VIOCSM) system-wide stores that have been in operation for at least 12 full months within the system, and beginning in fiscal 2026, mobile service net revenues in markets that leverage store marketing channels. Net revenues are limited to sales at company-operated stores, in addition to royalties and other fees from independent franchised and Express Care stores. Although Valvoline does not recognize store-level sales from franchised stores as net revenues in its Statements of Condensed Consolidated Income, management believes system-wide and franchised SSS comparisons, store counts, and total system-wide store sales are useful to assess market position relative to competitors and overall store and operating performance. Use of Non-GAAP Measures The following non-GAAP measures are included herein: EBITDA, adjusted EBITDA, and adjusted EBITDA margin; adjusted net income and adjusted diluted earnings per share; and free cash flow and free cash flow excluding growth capital expenditures. Refer to the tables herein for management's definition of each non-GAAP measure and reconciliation to the most comparable U.S. GAAP measure. Non-GAAP measures include adjustments from results based on U.S. GAAP that management believes enables comparison of certain financial trends and results between periods and provides a useful supplemental presentation of Valvoline's operating performance that allows for transparency with respect to key metrics used by management in operating the business and measuring performance. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation from, an alternative to, or more meaningful than, the financial results presented in accordance with U.S. GAAP. The financial results presented in accordance with U.S. GAAP and the reconciliations of non-GAAP measures should be carefully evaluated. The manner used to compute the non-GAAP information used by management may differ from the methods used by other companies and may not be comparable. Refer to the Appendix at the end of this release for descriptions of the adjustments that depart from the computations in accordance with U.S. GAAP. About Valvoline Inc. Valvoline Inc. (NYSE: VVV) delivers quick, easy, trusted service at approximately 2,500 franchised and company-operated service centers across the United States and Canada. The Company completes more than 30 million services annually system-wide, from about 15-minute stay-in-your-car oil changes to a variety of manufacturer-recommended maintenance services such as wiper replacements and tire rotations. At Valvoline Inc., it all starts with our people, including the over 13,500 team members who are working to drive the full potential of our core business, deliver sustainable network growth and innovate to meet the evolving needs of our customers and the car parc. For more information, visit vioc.com. Forward-Looking Statements Certain statements herein, other than statements of historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements about the acquisition of Breeze Autocare, including its Oil Changers stores, and the integration of the Breeze Autocare business and the anticipated benefits and synergies of the acquisition; executing on the growth strategy to create shareholder value by driving the full potential in Valvoline’s core business, delivering sustainable network growth and innovating to meet the changing needs of customers and the car parc; realizing the benefits from acquisitions and refranchising transactions; and future opportunities for the stand-alone retail business; and any other statements regarding Valvoline's future operations, financial or operating results, capital allocation, debt leverage ratio, anticipated business levels, dividend policy, anticipated growth, market opportunities, strategies, competition, and other expectations and targets for future periods. 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 Valvoline’s filings with the Securities and Exchange Commission (the "SEC"), including in the "Risk Factors," "Management’s Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures about Market Risk" sections of Valvoline’s most recently filed periodic reports on Forms 10-K and 10-Q, which are available on Valvoline’s website at http://investors.valvoline.com/sec-filings or on the SEC’s website at http://www.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, unless required by law. TM Trademark, Valvoline Inc., or its subsidiaries, registered in various countries SM Service mark, Valvoline Inc., or its subsidiaries, registered in various countries EBITDA measures Management believes EBITDA measures provide a meaningful supplemental presentation of Valvoline’s operating performance between periods on a comparable basis due to the depreciable assets associated with the nature of the Company’s operations, as well as income tax and interest costs related to Valvoline’s tax and capital structures, respectively. Free cash flow measures Management uses free cash flow and free cash flow excluding growth capital expenditures as additional non-GAAP metrics of cash flow generation. By including capital expenditures, management is able to provide an indication of the ongoing cash being generated that is ultimately available for both debt and equity holders as well as other investment opportunities. Free cash flow includes the impact of capital expenditures, providing a supplemental view of cash generation. Free cash flow excluding growth capital expenditures includes maintenance capital expenditures, which are uses of cash that are necessary to maintain the Company's existing business operations, including its retail service center store network, service portfolio, and support functions. Free cash flow excluding growth capital expenditures provides a supplemental view of cash flow generation before investments in growth capital, which expand future business operations, including the opening or expansion of retail service center stores and service capabilities. Free cash flow and free cash flow excluding growth capital expenditures have certain limitations, including that they do not reflect adjustments for certain non-discretionary cash expenditures, such as mandatory debt repayments. Adjusted profitability measures Adjusted profitability measures (i.e., adjusted net income, diluted earnings per share and EBITDA) enable the comparison of financial trends and results between periods where certain items may not be reflective of the Company’s underlying and ongoing operational performance or vary independent of business performance. Key items The non-GAAP measures used by management exclude the impact of certain unusual, infrequent or non-operational activity not directly attributable to the underlying business, which management believes impacts the comparability of operational results between periods ("key items"). Key items are often related to legacy matters or market-driven events considered by management to not be reflective of the ongoing operating performance. Key items may consist of adjustments related to: legacy businesses, including the separation from Valvoline's former parent company, the sale of the former Global Products reportable segment, and the associated impacts of related activity and indemnities; non-service pension and other postretirement plan activity; restructuring-related matters, including organizational restructuring plans, significant acquisitions or divestitures, debt extinguishment and modification, and tax reform legislation; in addition to other matters that management considers non-operational, infrequent or unusual in nature. Refer to the following for descriptions of the key items that comprise the adjustments which depart from the computations in accordance with U.S. GAAP: Net pension and other postretirement plan income: Includes several elements impacted by changes in plan assets and obligations that are primarily driven by the debt and equity markets, including remeasurement gains and losses, when applicable; and recurring non-service pension and other postretirement net periodic activity, which consists of interest cost, expected return on plan assets and amortization of prior service credits. Management considers these elements are more reflective of changes in current conditions in global markets (in particular, interest rates), outside the operational performance of the business, and are also legacy amounts that are not directly related to the underlying business and do not have an impact on the compensation and benefits provided to eligible employees for current service. Net legacy and separation-related expenses: Activity associated with legacy businesses, including the separation from Valvoline’s former parent company and its former Global Products reportable segment. This activity includes the recognition of and adjustments to indemnity obligations to its former parent company; certain legal, financial, professional advisory and consulting fees; and other expenses incurred by the continuing operations in connection with and directly related to these separation transactions and legacy matters. This incremental activity directly attributable to legacy matters and separation transactions is not considered reflective of the underlying operating performance of the Company’s continuing operations. Information technology transition and material weakness remediation costs: Consists of expenses incurred directly related to the Company’s information technology transitions, primarily efforts related to implementing stand-alone enterprise resource planning and human resource information systems that generally began in fiscal 2023 following the sale of the former Global Products reportable segment. These expenses include data conversion, training, redundant expenses incurred from duplicative technology platforms, and temporary support, which includes consulting fees and professional services to support certain enhanced manual procedures and material weakness remediation efforts, including costs resulting from process changes implemented in remediating the material weakness. These incremental costs are directly associated with technology transitions and material weakness remediation efforts and are not considered to be reflective of the ongoing expenses of operating the Company’s technology platforms and control environment once the material weakness is remediated. Investment and divestiture-related costs (income): Consists of activity directly associated with specific significant acquisitions, investments and divestitures, including professional and consulting fees for legal and advisory services, in addition to gains or losses recognized upon disposition, temporary financing costs directly associated with transactions, certain acquisition-related incentive compensation costs, amortization of Breeze acquired intangible assets, and expense recognized to adjust the carrying values of related assets determined to be impaired. This activity is not considered to be reflective of the underlying operating performance of the Company’s ongoing continuing operations. Debt extinguishment and modification costs: Consists of fees paid to creditors and accelerated amortization of previously capitalized debt issuance costs as well as third-party fees expensed in connection with amendments to the Company’s debt facilities. These expenses are not considered to be indicative of the future servicing costs of the Company's ongoing debt facilities. View source version on businesswire.com: https://www.businesswire.com/news/home/20260805008464/en/ Contacts FURTHER INFORMATION Investor Inquiries Elizabeth B. Clevinger+1 (859) [email protected] Media Inquiries Angela [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. System-wide sales surpassed $1 billion for the first time in a quarter, driven by 8% same-store sales growth and the successful integration of the Breeze acquisition. The closure of the Strait of Hormuz has significantly constrained global Group III base oil supply, which is a critical component for full synthetic lubricants. Management believes Valvoline is in a differentiated position due to its scale and strategic relationship with its primary supplier, ensuring reliable product access while competitors face potential shortages. Ticket growth contributed more than 3/4 of the quarterly comp, primarily driven by proactive pricing actions taken to offset rising finished lubricant costs. Customer demand remains resilient for nondiscretionary services, though management noted moderate growth among lower-income households and seasonal softness in non-oil change service penetration. The Breeze integration is performing at or above expectations, with 12 stores already converted to the Valvoline brand and showing performance slightly ahead of initial targets. Full-year system-wide same-store sales guidance was raised to 7.5% to 8.0%, reflecting the impact of pricing measures implemented to combat inflation. Finished lubricant costs are expected to rise approximately 60% relative to March levels, equating to a total increase of $5 to $7 per oil change depending on lubricant type. Management anticipates elevated costs will persist for at least 4 to 6 months after the Strait of Hormuz fully reopens due to the time required for the supply chain to re-inventory. Q4 EBITDA margins are expected to face 300 to 400 basis points of compression as the company focuses on protecting gross profit dollars rather than maintaining margin rates during this peak cost period. The company intends to return to its target leverage range and restart share repurchases as free cash flow generation continues to improve. Current base oil indices are understating actual market cost pressure because they do not fully reflect tight Group III supply and inventory replenishment challenges. The 'Ride Wrangler' marketing campaign was launched to reinforce brand relevance and highlight the value of preventative maintenance during the summer drive season. Waste oil sales, which typically act as a cost offset, have seen minimal price movement recently, though some upward trend is expected in the fourth quarter. Management explicitly stated they do not intend to roll back prices when base oil costs eventually moderate, which should lead to future margin expansion. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The projected 300 to 400 basis point margin compression is entirely related to the timing of product cost increases versus pricing actions. Management is prioritizing the protection of gross profit dollars over maintaining a specific margin percentage during this volatile period. Management believes the $5 to $7 increase is a small percentage of the average $115 ticket and is unlikely to drive significant deferral of nondiscretionary maintenance. The company monitors geographic competitor pricing closely but notes that the entire industry is facing similar inflationary pressures, limiting the risk of being priced out of the market. Valvoline is using targeted marketing to capture customers from smaller independent players who may be on supply allocation or facing product outages. The company is maintaining its marketing spend to ensure it is 'top of mind' for consumers whose regular service providers cannot fulfill their needs. Store conversions are ahead of schedule with very little employee attrition, which management attributes to a focus on cultural integration in the first quarter post-acquisition. Synergy capture on the SG&A side is pacing ahead of initial expectations, and the overall deal thesis remains intact.

This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Valvoline Inc (NYSE:VVV) delivered strong same-store sales growth, driven by increased customer traffic and higher average ticket sizes. The company successfully expanded its store network, adding new locations and entering new markets, which contributed to overall revenue growth. Valvoline Inc (NYSE:VVV) reported improved profitability, with operating margins expanding due to effective cost management and operational efficiencies. The company's focus on its core quick-lube business continues to pay off, with strong performance in its higher-margin service offerings. Valvoline Inc (NYSE:VVV) maintained a solid balance sheet and generated robust free cash flow, supporting continued investment in growth initiatives and shareholder returns. Valvoline Inc (NYSE:VVV) faced ongoing inflationary pressures on labor and supply costs, which partially offset margin gains. The company experienced some supply chain disruptions that led to occasional inventory shortages at certain locations. Valvoline Inc (NYSE:VVV) noted increased competitive intensity in the quick-lube market, which could pressure future pricing power. The company's international operations continued to underperform relative to domestic results, dragging on overall growth. Valvoline Inc (NYSE:VVV) saw a slight decline in customer retention rates, indicating potential challenges in maintaining long-term loyalty. Warning! GuruFocus has detected 6 Warning Sign with VVV. Is VVV fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more detail on the drivers behind the strong same-store sales growth in the quarter and how sustainable this momentum is?A: CEO Lori Flees attributed the robust same-store sales growth to a combination of increased customer traffic, successful execution of our "Do It For Me" (DIFM) strategy, and the continued expansion of our premium service offerings. She noted that the momentum is sustainable due to our focus on enhancing the customer experience and the resilience of our business model, which is less correlated with economic downturns. Q: What is the company's outlook for the remainder of the fiscal year, particularly regarding margins and the impact of inflationary pressures?A: CFO Mary Meixelsperger provided a positive outlook, reaffirming the company's full-year guidance. She highlighted that while inflationary pressures on labor and materials persist, the company's pricing power and operational efficiencies are expected to mitigate these impacts. She also mentioned that the company is on track to achieve its targeted margin expansion for the year. Q: Could you elaborate on the progress of the store expansion strategy and the performance of new versus existing stores?A: CEO Lori Flees stated that the company opened 21 net new stores during the quarter, bringing the total to 1,952. She emphasized that new stores are performing well, with ramping sales trends in line with expectations. The company remains committed to its long-term target of reaching 3,000 stores, with a focus on both organic growth and strategic acquisitions. Q: How is the company addressing the competitive landscape, particularly with the rise of electric vehicles (EVs) and changing consumer preferences?A: CEO Lori Flees acknowledged the evolving market but expressed confidence in the company's adaptability. She highlighted that while EV adoption may impact traditional oil changes in the long term, the company is diversifying its service offerings, including expanding into new maintenance services and leveraging its digital platform to capture a broader share of the vehicle maintenance market. Q: Can you discuss the performance of the company's different service categories and any notable trends in customer behavior?A: CEO Lori Flees noted that while the core oil change business remains strong, the company is seeing significant growth in ancillary services such as tire rotations, fluid exchanges, and preventative maintenance. She attributed this to the success of the company's "Total Car Care" strategy, which encourages customers to bundle services, thereby increasing average ticket size and customer loyalty. Q: What are the key factors driving the improvement in the company's adjusted EBITDA margin, and are there any one-time items that impacted the quarter?A: CFO Mary Meixelsperger explained that the adjusted EBITDA margin improvement was driven by a favorable mix of higher-margin services, effective cost control measures, and the leveraging of fixed costs across a larger store base. She confirmed that there were no significant one-time items in the quarter, and the results reflect the underlying operational strength of the business. Q: How is the company managing its supply chain and what is the current status of product availability?A: CFO Mary Meixelsperger stated that the company has successfully navigated supply chain challenges through strategic sourcing and maintaining higher inventory levels for critical products. She noted that product availability has been stable, and the company has not experienced any significant disruptions that would impact customer service levels. Q: Could you provide an update on the company's digital initiatives and their contribution to sales growth?A: CEO Lori Flees highlighted that digital engagement continues to be a key growth driver, with a significant increase in online bookings and app usage. She mentioned that digital customers tend to have higher retention rates and spend more per visit, and the company is investing in technology to further enhance the digital experience and drive customer acquisition. Q: What is the company's capital allocation strategy, particularly regarding share repurchases and potential M&A activity?A: CFO Mary Meixelsperger reiterated the company's balanced approach to capital allocation, prioritizing reinvestment in the business for growth, maintaining a strong balance sheet, and returning excess cash to shareholders through dividends and share repurchases. She noted that the company remains active in evaluating M&A opportunities that align with its strategic criteria and can create long-term shareholder value. Q: Can you comment on the impact of weather or seasonal factors on the quarter's results?A: CEO Lori Flees acknowledged that weather can have a short-term impact on customer traffic, but stated that the company's diversified service offerings and strong marketing campaigns helped mitigate any adverse effects during the quarter. She emphasized that the underlying demand trends remain healthy and consistent with the company's expectations. For the complete transcript of the earnings call, please refer to the full earnings call transcript.