Valvoline Inc at Morgan Stanley Global Consumer & Retail Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Simeon Gutman - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>Can you talk about how you've adapted to these significant changes and how you're positioned for future growth?

Question: Simeon Gutman - Morgan Stanley - Analyst : Great. And we'll get back to why you do so many oil changes per site per day. A year ago, we caught you with less experience at the helm, you were new. I think I asked you to compare and contrast. But I guess, what surprised you? What didn't you fully appreciate that you do now?

Question: Simeon Gutman - Morgan Stanley - Analyst : When we visited at headquarters, and I think it's been twice since you've been running the company. One of the things that I think we noticed that investors is a much more institutionalized process around openings and the structure of franchise versus non, but also pipeline and development. And it's felt like then there must have been some opportunity to enhance that. Is that a fair observation?

Question: Simeon Gutman - Morgan Stanley - Analyst : Yeaj. 6% to 9% comp growth. I don't know if that's a monkey on Valvoline's back, but it will be a little less in the next year, 5% to 7%. It's not too shabby. I don't know if we were spoiled for all those years. The model just kept producing that number or we will get back to that and how to think about the moderation, why, when do we get back? Should we get back?

Question: Simeon Gutman - Morgan Stanley - Analyst : So if I can just paraphrase it, it's not really an oil change velocity throughput. It's more about how price is woven itself throughout the P&L over the last few years and how it's going to appear in the next 12 months.

Question: Simeon Gutman - Morgan Stanley - Analyst : Yeah. And there are a couple of competitors that are growing. This is not reflecting cannibalization, any kind of saturation or competitive encroachment?

Question: Simeon Gutman - Morgan Stanley - Analyst : Back to the highly productive store base, the number of oil changes per day. The perception, Lori, that you came into the business, why we were so productive? Is it the same of why we still are so productive today?

Question: Simeon Gutman - Morgan Stanley - Analyst : And how important is real estate and at the actual location?

Question: Simeon Gutman - Morgan Stanley - Analyst : Yeah. The election and things that could be impacted in your business, your labor force, if we're fracking oil again, what that consequently means for EV and then other things that we can talk about. But what is your board -- what are your management conversations of what could happen?

Question: Simeon Gutman - Morgan Stanley - Analyst : Can we tackle EVs broadly? It was something I was going to maybe look at, at the end. You answered most of the points. The adoption curve, what Valvoline is and was doing to position itself and then the overall level of either preparedness or lack thereof to what EV -- 20% EV population future could look like.

Question: Simeon Gutman - Morgan Stanley - Analyst : Market share and competitive landscape. I think it's important in the sector that it's either less followed and there's just less data. So it's always helpful to get a state of the union. What's the largest competitor up to, we generally have a sense. And then where or -- not who, but where are the competitive encroachment, like which parts of the country is it happening? And are there many or just a handful?

Question: Simeon Gutman - Morgan Stanley - Analyst : Have you ever shared a share gain or share target that Valvoline can occupy?

Question: Simeon Gutman - Morgan Stanley - Analyst : So we can double the 10% over time?

Question: Simeon Gutman - Morgan Stanley - Analyst : And the path towards this consolidation and market share, at one point, it was done a little bit through M&A. Are there -- there are still those opportunities?

Question: Simeon Gutman - Morgan Stanley - Analyst : The new unit economics, speaking of that, how have they evolved over the last few years? There's an opening?

Question: Simeon Gutman - Morgan Stanley - Analyst : As the store productivity has increased, you mentioned 50 oil changes per day, has that new space or that 60% to 70%, have you had to take it down or these stores are still hitting that level, not 50 right away, but 60% of that in year one or if you've taken that, has 70 come down to 60 over time?

Question: Simeon Gutman - Morgan Stanley - Analyst : When you started and it wasn't long after separation, the market was gone whole on value creation. So we've had this conversation about refranchising. And I think like the market's appetite for it was probably maybe greater than not yours, but you had to study this. And now we're seeing a mix. So have you draw a line in the sand of where you want to get to the business over time? Or the business is flexible and you're able to flex with it and make the right decision? Which of the two?

Question: Simeon Gutman - Morgan Stanley - Analyst : You can give them equity and then show how franchisee multiples happen over time. Can you talk about the franchise base? Concentration health, you put an example about someone leaning in and you've tripled a future road map. So what is the grand plan for the franchise?

Question: Simeon Gutman - Morgan Stanley - Analyst : In the last four minutes, I'm going to jam two questions into one because we didn't really talk financials other than top line. Margin and capital allocation. It wouldn't be complete without capital allocation. So on the margin, the '25 was positioned as a reset year. A couple of years ago at separation, we talked about margins expanding higher 20s EBITDA margin. So talk about the relationship between reset year and then when we get back from reset. And then Graham scheme of capital allocation, I think you have good problems generally in this regard. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 03, 2024 / 8:00PM, VVV.N - Valvoline Inc at Morgan Stanley Global Consumer & Retail Conference

Question: Simeon Gutman - Morgan Stanley - Analyst : Perfect. Any 10-second questions? Fine. I think with that, we appreciate you being here. Thank you very much, all the best, and good luck in fiscal '25 and calendar '25.