Valvoline (VVV) Morgan Stanley Global Consumer & Retail Conference summary

Business transformation and growth

• Transitioned to a pure-play retail services provider, completing full separation and ERP implementation in 2024.

• Achieved 18 consecutive years of same-store sales growth, with 12% top-line and 17% EBITDA growth in fiscal 2024.

• Surpassed $3 billion in system-wide sales, up from less than $1 billion eight years ago.

• Store network now exceeds 2,000 locations, covering about 35% of the population, with significant expansion potential.

• Leadership team strengthened with industry veterans and new talent from major retail and service brands.

Franchise and store development

• Accelerated franchise growth, with strong interest from new and existing partners, aiming to double unit count.

• Three new franchise partners entered white space markets, and refranchising efforts are tripling store counts in select regions.

• Top five franchisees account for over 70% of US units; seven to eight partners will drive 90% of new development.

• Franchise relationships average 25 years, with new partners bringing additional capital and growth.

• Real estate analytics model de-risks investments and accelerates store maturity, improving ramp-up and returns.

Financial performance and outlook

• Fiscal 2024 EBITDA margin reached 27.2%, a 100 bps improvement; 2025 expected as a reset year due to refranchising and tech investments.

• Guidance for 2025 same-store sales growth is 5%-7%, reflecting less pricing power amid a more price-sensitive consumer.

• Capital allocation prioritizes growth investments, balance sheet strength, and returning excess cash via share repurchases.

• Store-level returns remain in the mid-teens IRR, with improved ramp and margin expansion at maturity.

• Refranchising is dilutive short-term but accretive long-term, with flexibility in company vs. franchise store mix.