The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Peter Keith - Piper Sandler - Analyst
: <_ALACRA_META_ABSTRACT>Let's dig into it. So Valvoline, the oil services, we call it recession resistant. I think there's a lot of clamor on the consumer right now.
So what is Valvoline seeing in terms of consumer performance? Are you seeing any trade down, maybe lack of attachment services?
What's going on in the field today?
Question: Peter Keith - Piper Sandler - Analyst
: Okay. Great. And so I wanted to dig into your role. So you took over the CEO chair in October of 2023, you had been at the company
for about 1.5 years as President of Retail. You have a long tenure from Walmart. And so I know there hasn't been a huge strategy
shift, but I'm always interested, someone now you've been in the chair for almost a year. What are some areas of focus of yours as
you've taken the reins here that we should be aware of?
Question: Peter Keith - Piper Sandler - Analyst
: Okay. So it was interesting to me in visiting the store, I think Jordan was pointing out to me like -- I think you paint the ceiling of the
garages.
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SEPTEMBER 10, 2024 / 8:00PM, VVV.N - Valvoline Inc at Piper Sandler Growth Frontiers Conference
Question: Peter Keith - Piper Sandler - Analyst
: Yes. Okay. So on that point, so I think one of your value propositions is the customer stays in the car. That's why they wouldn't
necessarily notice nicely finished ceiling. So just talk about your differentiation in marketplace, how long it takes to get the oil change
at other peers that might be doing what you're doing?
Question: Peter Keith - Piper Sandler - Analyst
: Okay. Great. So maybe on the competition, who are you competing against? I think you've historically provided a little bit of breakdown
around share by industry group. Could you provide that for us today? And then where do you see the biggest share opportunity?
Question: Peter Keith - Piper Sandler - Analyst
: Every year.
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SEPTEMBER 10, 2024 / 8:00PM, VVV.N - Valvoline Inc at Piper Sandler Growth Frontiers Conference
Question: Peter Keith - Piper Sandler - Analyst
: Okay. So with the dealerships and general service garages, you have to make an appointment or certainly get out of your car and --
Question: Peter Keith - Piper Sandler - Analyst
: Yes. Do you think -- is there one segment that you think is the -- you're gaining the most share from?
Question: Peter Keith - Piper Sandler - Analyst
: Sure. Okay. Great. So I want to dig into some financial questions. More of a big picture though, because you have this really attractive
multiyear sales growth target of 14% to 16%. So about half of that is unit growth and half of that is same-store sales growth. Let's
tackle unit growth target of 7% to 10% first. So I looked it up. And historically, you have actually grown at an 8% CAGR since 2016.
So this is not anything new, but you get the law of large numbers.
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SEPTEMBER 10, 2024 / 8:00PM, VVV.N - Valvoline Inc at Piper Sandler Growth Frontiers Conference
The two-part question would be, can you get to 100 company-owned units per year based on real estate availability? And then
separately, can you get to 150 franchise per year when that's having someone else's capital go to work?
Question: Peter Keith - Piper Sandler - Analyst
: Okay. Great. That's very exciting on the store growth. We've got about five minutes left. And so I want to make sure we spend some
time on same-store sales. Let's go. So you have a very attractive annual target of 6% to 9%, somewhat data, it seems a little too high,
but very aggressive. So get us to the building blocks and maybe even just to break it down with ticket growth versus transaction
growth and why you feel like that is a very reasonable range to guide the Street to.
Question: Peter Keith - Piper Sandler - Analyst
: Yes, that's three good drivers.
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SEPTEMBER 10, 2024 / 8:00PM, VVV.N - Valvoline Inc at Piper Sandler Growth Frontiers Conference
Question: Peter Keith - Piper Sandler - Analyst
: Okay. The story yesterday at around 3:30 to 4:30, three-bay location was full the whole time we were there. So we --
Question: Peter Keith - Piper Sandler - Analyst
: Okay. So we just have a minute left might go a little longer. I want to get the one question in. What we're getting the most is you
have the 6% to 9% comp target. Fiscal Q3, you reported came in at 6.5%, and then you're guiding this upcoming quarter to be
roughly around 6%. I think on the -- in the call, you talked about some price promotions from competitors.
You talked about some higher ad spend from competitors. And I think the Street ran with that as it's getting more competitive and
that sounds awful. I don't think that was your intent. So I just want to clean that up a little bit.
Question: Peter Keith - Piper Sandler - Analyst
: Okay. All right. Well, we'll leave it there. Thank you very much, Lori. It's a great discussion, and thanks for coming.
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