Kentucky | 001-37884 | 30-0939371 | ||||||||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
[ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||||
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||||
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||||
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common stock, par value $0.01 per share | VVV | New York Stock Exchange |
Emerging growth company | ☐ | |||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Item 2.02. | Results of Operations and Financial Condition |
Item 7.01. | Regulation FD Disclosure |
Item 9.01. | Financial Statements and Exhibits |
(d) | Exhibits | |||||||
99.1 |
VALVOLINE INC. | ||||||||
Date: July 31, 2019 | By: | /s/ Mary E. Meixelsperger | ||||||
Mary E. Meixelsperger | ||||||||
Chief Financial Officer |
![]() | NEWS RELEASE |
Updated Outlook | Prior Outlook | |||||||
Operating Segments | ||||||||
Lubricant gallons | (2)%-flat | (1)-1% | ||||||
Revenues | 4-6% | 5-7% | ||||||
New Quick Lube stores (excludes Valvoline acquired stores and franchise conversions) | ||||||||
Company-owned | No change | 27-32 | ||||||
Franchised | No change | 60-70 | ||||||
VIOC same-store sales | 9-10% | 8-9% | ||||||
Adjusted EBITDA | $465-$470 million | $460-$470 million | ||||||
Corporate Items | ||||||||
Adjusted effective tax rate | No change | 25-26% | ||||||
Diluted adjusted EPS | $1.30-$1.33 | $1.27-$1.33 | ||||||
Capital expenditures | No change | $115-$120 million | ||||||
Free cash flow | No change | $180-$200 million |
Valvoline Inc. and Consolidated Subsidiaries | Table 1 | |||||||||||||||||||||||||
STATEMENTS OF CONSOLIDATED INCOME | ||||||||||||||||||||||||||
(In millions except per share data - preliminary and unaudited) | ||||||||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||||||||
June 30 | June 30 | |||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
Sales | $ | 613 | $ | 577 | $ | 1,761 | $ | 1,691 | ||||||||||||||||||
Cost of sales | 406 | 376 | 1,168 | 1,088 | ||||||||||||||||||||||
GROSS PROFIT | 207 | 201 | 593 | 603 | ||||||||||||||||||||||
Selling, general and administrative expenses | 116 | 110 | 334 | 328 | ||||||||||||||||||||||
Net legacy and separation-related (income) expenses | — | (3) | 3 | 14 | ||||||||||||||||||||||
Equity and other income, net | (11) | (8) | (29) | (29) | ||||||||||||||||||||||
OPERATING INCOME | 102 | 102 | 285 | 290 | ||||||||||||||||||||||
Net pension and other postretirement plan income | (2) | (10) | (7) | (30) | ||||||||||||||||||||||
Net interest and other financing expenses | 19 | 15 | 55 | 45 | ||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | 85 | 97 | 237 | 275 | ||||||||||||||||||||||
Income tax expense | 20 | 33 | 56 | 154 | ||||||||||||||||||||||
NET INCOME | $ | 65 | $ | 64 | $ | 181 | $ | 121 | ||||||||||||||||||
NET EARNINGS PER SHARE | ||||||||||||||||||||||||||
BASIC | $ | 0.34 | $ | 0.33 | $ | 0.96 | $ | 0.61 | ||||||||||||||||||
DILUTED | $ | 0.34 | $ | 0.33 | $ | 0.96 | $ | 0.61 | ||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||||||||||||||||||||||||
BASIC | 189 | 195 | 189 | 199 | ||||||||||||||||||||||
DILUTED | 189 | 196 | 189 | 200 | ||||||||||||||||||||||
Valvoline Inc. and Consolidated Subsidiaries | Table 2 | |||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||||||||||||
(In millions - preliminary and unaudited) | ||||||||||||||||||||
June 30 | September 30 | |||||||||||||||||||
2019 | 2018 | |||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 126 | $ | 96 | ||||||||||||||||
Accounts receivable, net | 423 | 409 | ||||||||||||||||||
Inventories, net | 200 | 176 | ||||||||||||||||||
Prepaid expenses and other current assets | 52 | 44 | ||||||||||||||||||
Total current assets | 801 | 725 | ||||||||||||||||||
Noncurrent assets | ||||||||||||||||||||
Property, plant and equipment, net | 455 | 420 | ||||||||||||||||||
Goodwill and intangibles, net | 490 | 448 | ||||||||||||||||||
Equity method investments | 35 | 31 | ||||||||||||||||||
Deferred income taxes | 113 | 138 | ||||||||||||||||||
Other noncurrent assets | 106 | 92 | ||||||||||||||||||
Total noncurrent assets | 1,199 | 1,129 | ||||||||||||||||||
Total assets | $ | 2,000 | $ | 1,854 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | $ | 7 | $ | 30 | ||||||||||||||||
Trade and other payables | 163 | 178 | ||||||||||||||||||
Accrued expenses and other liabilities | 242 | 203 | ||||||||||||||||||
Total current liabilities | 412 | 411 | ||||||||||||||||||
Noncurrent liabilities | ||||||||||||||||||||
Long-term debt | 1,334 | 1,292 | ||||||||||||||||||
Employee benefit obligations | 322 | 333 | ||||||||||||||||||
Other noncurrent liabilities | 184 | 176 | ||||||||||||||||||
Total noncurrent liabilities | 1,840 | 1,801 | ||||||||||||||||||
Stockholders' deficit | (252) | (358) | ||||||||||||||||||
Total liabilities and stockholders’ deficit | $ | 2,000 | $ | 1,854 |
Valvoline Inc. and Consolidated Subsidiaries | Table 3 | ||||||||||||||||
STATEMENTS OF CONSOLIDATED CASH FLOWS | |||||||||||||||||
(In millions - preliminary and unaudited) | |||||||||||||||||
Nine months ended | |||||||||||||||||
June 30 | |||||||||||||||||
2019 | 2018 | ||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||
Net income | $ | 181 | $ | 121 | |||||||||||||
Adjustments to reconcile net income to cash flows from operating activities | |||||||||||||||||
Depreciation and amortization | 43 | 39 | |||||||||||||||
Debt issuance cost and discount amortization | 2 | 2 | |||||||||||||||
Deferred income taxes | — | 71 | |||||||||||||||
Equity income from unconsolidated affiliates, net of distributions | (4) | (4) | |||||||||||||||
Pension contributions | (7) | (13) | |||||||||||||||
Stock-based compensation expense | 8 | 10 | |||||||||||||||
Other operating activities, net | — | (1) | |||||||||||||||
Change in operating assets and liabilities (a) | (9) | (44) | |||||||||||||||
Total cash provided by operating activities | 214 | 181 | |||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||
Additions to property, plant and equipment | (73) | (51) | |||||||||||||||
Acquisitions, net of cash acquired | (50) | (71) | |||||||||||||||
Other investing activities, net | (1) | 5 | |||||||||||||||
Total cash used in investing activities | (124) | (117) | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||
Proceeds from borrowings, net of issuance costs | 743 | 170 | |||||||||||||||
Repayments on borrowings | (727) | (39) | |||||||||||||||
Repurchases of common stock | — | (220) | |||||||||||||||
Payments for purchase of additional ownership in subsidiary | (1) | (15) | |||||||||||||||
Cash dividends paid | (60) | (45) | |||||||||||||||
Other financing activities | (4) | (6) | |||||||||||||||
Total cash used in financing activities | (49) | (155) | |||||||||||||||
Effect of currency exchange rate changes on cash, cash equivalents, and restricted cash | — | (3) | |||||||||||||||
INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 41 | (94) | |||||||||||||||
Cash, cash equivalents, and restricted cash - beginning of period | 96 | 201 | |||||||||||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH - END OF PERIOD | $ | 137 | $ | 107 | |||||||||||||
(a) | Excludes changes resulting from operations acquired or sold. |
Valvoline Inc. and Consolidated Subsidiaries | Table 4 | ||||||||||||||||||||||||||||||||||||||||||||||
FINANCIAL INFORMATION BY OPERATING SEGMENT | |||||||||||||||||||||||||||||||||||||||||||||||
(In millions - preliminary and unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
Three months ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Sales | Operating income | Depreciation and amortization | EBITDA | Sales | Operating income | Depreciation and amortization | EBITDA | ||||||||||||||||||||||||||||||||||||||||
Quick Lubes | $ | 211 | $ | 48 | $ | 9 | $ | 57 | $ | 167 | $ | 38 | $ | 7 | $ | 45 | |||||||||||||||||||||||||||||||
Core North America | 260 | 38 | 5 | 43 | 264 | 41 | 5 | 46 | |||||||||||||||||||||||||||||||||||||||
International | 142 | 20 | 1 | 21 | 146 | 20 | 2 | 22 | |||||||||||||||||||||||||||||||||||||||
Total operating segments | 613 | 106 | 15 | 121 | 577 | 99 | 14 | 113 | |||||||||||||||||||||||||||||||||||||||
Unallocated and other (a) | (4) | (2) | 3 | 13 | |||||||||||||||||||||||||||||||||||||||||||
Total results | 613 | 102 | 15 | 119 | 577 | 102 | 14 | 126 | |||||||||||||||||||||||||||||||||||||||
Key items: | |||||||||||||||||||||||||||||||||||||||||||||||
Net pension and other postretirement plan income | — | (2) | — | (10) | |||||||||||||||||||||||||||||||||||||||||||
Net legacy and separation-related income | — | — | (3) | (3) | |||||||||||||||||||||||||||||||||||||||||||
Restructuring and related expenses | 4 | 4 | — | — | |||||||||||||||||||||||||||||||||||||||||||
Business interruption expenses (b) | 5 | 5 | — | — | |||||||||||||||||||||||||||||||||||||||||||
Acquisition-related foreign currency exchange loss (c) | — | — | 2 | 2 | |||||||||||||||||||||||||||||||||||||||||||
Adjusted results | $ | 613 | $ | 111 | $ | 15 | $ | 126 | $ | 577 | $ | 101 | $ | 14 | $ | 115 | |||||||||||||||||||||||||||||||
(a) Unallocated and other includes pension and other postretirement plan non-service income and remeasurement adjustments, net legacy and separation-related income and certain other corporate costs not allocated to the operating segments. | |||||||||||||||||||||||||||||||||||||||||||||||
(b) Business interruption expenses associated with Valvoline's Deer Park, Texas facility are recorded in Cost of sales within the Statements of Consolidated Income and included within total operating segments operating income. Refer to Table 8 for details of the expenses incurred by operating segment during the three months ended June 30, 2019. Reported and adjusted consolidated gross profit as a percent of sales was 33.8% and 34.6% for the three months ended June 30, 2019, respectively. | |||||||||||||||||||||||||||||||||||||||||||||||
(c) Acquisition-related foreign currency exchange loss is included within operating income for the Quick Lubes operating segment. |
Table 4 (continued) | |||||||||||||||||||||||||||||||||||||||||||||||
Nine months ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Sales | Operating income | Depreciation and amortization | EBITDA | Sales | Operating income | Depreciation and amortization | EBITDA | ||||||||||||||||||||||||||||||||||||||||
Quick Lubes | $ | 600 | $ | 130 | $ | 26 | $ | 156 | $ | 479 | $ | 111 | $ | 21 | $ | 132 | |||||||||||||||||||||||||||||||
Core North America | 735 | 109 | 13 | 122 | 773 | 130 | 13 | 143 | |||||||||||||||||||||||||||||||||||||||
International | 426 | 61 | 4 | 65 | 439 | 63 | 5 | 68 | |||||||||||||||||||||||||||||||||||||||
Total operating segments | 1,761 | 300 | 43 | 343 | 1,691 | 304 | 39 | 343 | |||||||||||||||||||||||||||||||||||||||
Unallocated and other (a) | (15) | (8) | (14) | 16 | |||||||||||||||||||||||||||||||||||||||||||
Total results | 1,761 | 285 | 43 | 335 | 1,691 | 290 | 39 | 359 | |||||||||||||||||||||||||||||||||||||||
Key items: | |||||||||||||||||||||||||||||||||||||||||||||||
Net pension and other postretirement plan income | — | (7) | — | (30) | |||||||||||||||||||||||||||||||||||||||||||
Net legacy and separation-related expenses | 3 | 3 | 14 | 14 | |||||||||||||||||||||||||||||||||||||||||||
Restructuring and related expenses | 12 | 12 | — | — | |||||||||||||||||||||||||||||||||||||||||||
Business interruption expenses (b) | 6 | 6 | — | — | |||||||||||||||||||||||||||||||||||||||||||
Acquisition-related foreign currency exchange loss (c) | — | — | 2 | 2 | |||||||||||||||||||||||||||||||||||||||||||
Adjusted results | $ | 1,761 | $ | 306 | $ | 43 | $ | 349 | $ | 1,691 | $ | 306 | $ | 39 | $ | 345 | |||||||||||||||||||||||||||||||
(a) Unallocated and other includes pension and other postretirement plan non-service income and remeasurement adjustments, net legacy and separation-related expenses and certain other corporate costs not allocated to the operating segments. | |||||||||||||||||||||||||||||||||||||||||||||||
(b) Business interruption expenses associated with Valvoline's Deer Park, Texas facility are included in Cost of sales within the Statements of Consolidated Income and included within total operating segments operating income. Refer to Table 8 for details of the expenses incurred by operating segment during the nine months ended June 30, 2019. Reported and adjusted consolidated gross profit as a percent of sales was 33.7% and 34.0% for the nine months ended June 30, 2019, respectively. | |||||||||||||||||||||||||||||||||||||||||||||||
(c) Acquisition-related foreign currency exchange loss is included within operating income for the Quick Lubes operating segment. | |||||||||||||||||||||||||||||||||||||||||||||||
Valvoline Inc. and Consolidated Subsidiaries | Table 5 | |||||||||||||||||||||||||
INFORMATION BY OPERATING SEGMENT | ||||||||||||||||||||||||||
(In millions - preliminary and unaudited) | ||||||||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||||||||
June 30 | June 30 | |||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||
QUICK LUBES | ||||||||||||||||||||||||||
Lubricant sales (gallons) | 7.2 | 6.2 | 20.7 | 17.8 | ||||||||||||||||||||||
Premium lubricants (percent of U.S. branded volumes) | 65.5 | % | 63.0 | % | 64.6 | % | 62.2 | % | ||||||||||||||||||
Gross profit as a percent of sales (a) (b) | 39.1 | % | 40.5 | % | 39.0 | % | 40.4 | % | ||||||||||||||||||
Same-store sales growth - Company-owned | 9.2 | % | 8.7 | % | 9.7 | % | 9.3 | % | ||||||||||||||||||
Same-store sales growth - Franchised | 10.0 | % | 7.4 | % | 10.3 | % | 8.0 | % | ||||||||||||||||||
Same-store sales growth - Combined | 9.7 | % | 7.9 | % | 10.1 | % | 8.5 | % | ||||||||||||||||||
CORE NORTH AMERICA | ||||||||||||||||||||||||||
Lubricant sales (gallons) | 24.1 | 25.5 | 68.2 | 73.9 | ||||||||||||||||||||||
Premium lubricants (percent of U.S. branded volumes) | 53.1 | % | 49.7 | % | 52.2 | % | 49.1 | % | ||||||||||||||||||
Gross profit as a percent of sales (a) (b) | 32.5 | % | 34.4 | % | 32.8 | % | 36.5 | % | ||||||||||||||||||
INTERNATIONAL | ||||||||||||||||||||||||||
Lubricant sales (gallons) (c) | 14.3 | 14.3 | 43.1 | 43.6 | ||||||||||||||||||||||
Lubricant sales (gallons), including unconsolidated joint ventures | 25.2 | 24.7 | 74.3 | 74.4 | ||||||||||||||||||||||
Premium lubricants (percent of lubricant volumes) | 29.0 | % | 26.9 | % | 28.6 | % | 26.9 | % | ||||||||||||||||||
Gross profit as a percent of sales (a) (b) | 28.4 | % | 29.3 | % | 27.8 | % | 29.0 | % | ||||||||||||||||||
(a) | Gross profit as a percent of sales is defined as sales, less cost of sales, divided by sales. | |||||||||||||||||||||||||
(b) | Pre-tax adjustments associated with business interruption expenses are recorded in Cost of sales within each operating segment. Reported gross profit as a percent of sales for the three and nine months ended June 30, 2019 is presented in the table above. Adjusted gross profit as a percent of sales for the three and nine months ended June 30, 2019 was 39.3% and 39.1%, respectively, for Quick Lubes; 33.6% and 33.3%, respectively, for Core North America; and 29.5% and 28.2%, respectively, for International. | |||||||||||||||||||||||||
(c) | Excludes volumes from unconsolidated joint ventures. |
Valvoline Inc. and Consolidated Subsidiaries | Table 6 | ||||||||||||||||||||||||||||||||||
QUICK LUBES STORE INFORMATION | |||||||||||||||||||||||||||||||||||
(Preliminary and unaudited) | |||||||||||||||||||||||||||||||||||
Company-owned | |||||||||||||||||||||||||||||||||||
Third Quarter 2019 | Second Quarter 2019 | First Quarter 2019 | Fourth Quarter 2018 | Third Quarter 2018 | |||||||||||||||||||||||||||||||
Beginning of period | 483 | 471 | 462 | 451 | 445 | ||||||||||||||||||||||||||||||
Opened | 4 | 7 | 5 | 11 | 4 | ||||||||||||||||||||||||||||||
Acquired | 13 | 5 | — | — | 1 | ||||||||||||||||||||||||||||||
Net conversions between company-owned and franchised | 1 | — | 4 | — | 1 | ||||||||||||||||||||||||||||||
Closed | — | — | — | — | — | ||||||||||||||||||||||||||||||
End of period | 501 | 483 | 471 | 462 | 451 | ||||||||||||||||||||||||||||||
Franchised | |||||||||||||||||||||||||||||||||||
Third Quarter 2019 | Second Quarter 2019 | First Quarter 2019 | Fourth Quarter 2018 | Third Quarter 2018 | |||||||||||||||||||||||||||||||
Beginning of period | 844 | 830 | 780 | 703 | 696 | ||||||||||||||||||||||||||||||
Opened | 11 | 15 | 24 | 5 | 10 | ||||||||||||||||||||||||||||||
Acquired | — | — | 31 | 73 | — | ||||||||||||||||||||||||||||||
Net conversions between company-owned and franchised | (1) | — | (4) | — | (1) | ||||||||||||||||||||||||||||||
Closed | (3) | (1) | (1) | (1) | (2) | ||||||||||||||||||||||||||||||
End of period | 851 | 844 | 830 | 780 | 703 | ||||||||||||||||||||||||||||||
Total stores | 1,352 | 1,327 | 1,301 | 1,242 | 1,154 | ||||||||||||||||||||||||||||||
Express Care | |||||||||||||||||||||||||||||||||||
Third Quarter 2019 | Second Quarter 2019 | First Quarter 2019 | Fourth Quarter 2018 | Third Quarter 2018 | |||||||||||||||||||||||||||||||
Number of locations at end of period | 307 | 336 | 337 | 347 | 324 | ||||||||||||||||||||||||||||||
Valvoline Inc. and Consolidated Subsidiaries | Table 7 | ||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP DATA - NET INCOME AND DILUTED EARNINGS PER SHARE | |||||||||||||||||||||||||||||
(In millions, except per share data - preliminary and unaudited) | |||||||||||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||||||||||
June 30 | June 30 | ||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||
Reported net income | $ | 65 | $ | 64 | $ | 181 | $ | 121 | |||||||||||||||||||||
Adjustments: | |||||||||||||||||||||||||||||
Net pension and other postretirement plan income | (2) | (10) | (7) | (30) | |||||||||||||||||||||||||
Net legacy and separation-related (income) expenses | — | (3) | 3 | 14 | |||||||||||||||||||||||||
Restructuring and related expenses (a) | 4 | — | 12 | — | |||||||||||||||||||||||||
Business interruption expenses (b) | 5 | — | 6 | — | |||||||||||||||||||||||||
Acquisition-related foreign currency exchange loss (c) | — | 2 | — | 2 | |||||||||||||||||||||||||
Total adjustments, pre-tax | 7 | (11) | 14 | (14) | |||||||||||||||||||||||||
Income tax (expense) benefit of adjustments | (2) | 6 | (5) | 6 | |||||||||||||||||||||||||
Income tax adjustments (d) | — | 3 | (2) | 76 | |||||||||||||||||||||||||
Total adjustments, after tax | 5 | (2) | 7 | 68 | |||||||||||||||||||||||||
Adjusted net income | $ | 70 | $ | 62 | $ | 188 | $ | 189 | |||||||||||||||||||||
Reported diluted earnings per share | $ | 0.34 | $ | 0.33 | $ | 0.96 | $ | 0.61 | |||||||||||||||||||||
Adjusted diluted earnings per share | $ | 0.37 | $ | 0.32 | $ | 0.99 | $ | 0.95 | |||||||||||||||||||||
Weighted average diluted common shares outstanding | 189 | 196 | 189 | 200 | |||||||||||||||||||||||||
(a) | Pre-tax adjustments associated with restructuring and related expenses were recorded in Selling, general and administrative expenses as reported within the Statements of Consolidated Income in the three and nine months ended June 30, 2019. Adjusted Selling, general and administrative expenses for the three and nine months ended June 30, 2019 were $112 million and $322 million, respectively. | ||||||||||||||||||||||||||||
(b) | Pre-tax adjustments associated with business interruption expenses were recorded in Cost of sales as reported within the Statements of Consolidated Income in the three and nine months ended June 30, 2019. Adjusted Cost of sales for the three and nine months ended June 30, 2019 were $401 million and $1,162 million, respectively. | ||||||||||||||||||||||||||||
(c) | Pre-tax adjustments associated with the acquisition-related foreign currency exchange loss were recorded in Selling, general and administrative expenses as reported within the Statements of Consolidated Income in the three and nine months ended June 30, 2018. Adjusted Selling, general and administrative expenses for the three and nine months ended June 30, 2018 were $108 million and $326 million, respectively. | ||||||||||||||||||||||||||||
(d) | Income tax adjustments in fiscal 2019 relate to Kentucky tax reform, and income tax adjustments in fiscal 2018 primarily relate to U.S. and Kentucky tax reform. | ||||||||||||||||||||||||||||
Valvoline Inc. and Consolidated Subsidiaries | Table 8 | ||||||||||||||||||||||||||||
RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA | |||||||||||||||||||||||||||||
(In millions - preliminary and unaudited) | |||||||||||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||||||||||
June 30 | June 30 | ||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||
Adjusted EBITDA - Valvoline | |||||||||||||||||||||||||||||
Net income | $ | 65 | $ | 64 | $ | 181 | $ | 121 | |||||||||||||||||||||
Add: | |||||||||||||||||||||||||||||
Income tax expense | 20 | 33 | 56 | 154 | |||||||||||||||||||||||||
Net interest and other financing expenses | 19 | 15 | 55 | 45 | |||||||||||||||||||||||||
Depreciation and amortization | 15 | 14 | 43 | 39 | |||||||||||||||||||||||||
EBITDA | 119 | 126 | 335 | 359 | |||||||||||||||||||||||||
Key items: (a) | |||||||||||||||||||||||||||||
Net pension and other postretirement plan income | (2) | (10) | (7) | (30) | |||||||||||||||||||||||||
Net legacy and separation-related (income) expenses | — | (3) | 3 | 14 | |||||||||||||||||||||||||
Restructuring and related expenses | 4 | — | 12 | — | |||||||||||||||||||||||||
Business interruption expenses | 5 | — | 6 | — | |||||||||||||||||||||||||
Acquisition-related foreign currency exchange loss | — | 2 | — | 2 | |||||||||||||||||||||||||
Adjusted EBITDA | $ | 126 | $ | 115 | $ | 349 | $ | 345 | |||||||||||||||||||||
Adjusted EBITDA - Quick Lubes | |||||||||||||||||||||||||||||
Operating income | $ | 48 | $ | 38 | $ | 130 | $ | 111 | |||||||||||||||||||||
Add: | |||||||||||||||||||||||||||||
Depreciation and amortization | 9 | 7 | 26 | 21 | |||||||||||||||||||||||||
EBITDA | 57 | 45 | 156 | 132 | |||||||||||||||||||||||||
Key item: (a) | |||||||||||||||||||||||||||||
Acquisition-related foreign currency exchange loss | — | 2 | — | 2 | |||||||||||||||||||||||||
Adjusted EBITDA | $ | 57 | $ | 47 | $ | 156 | $ | 134 | |||||||||||||||||||||
Adjusted EBITDA - Core North America | |||||||||||||||||||||||||||||
Operating income | $ | 38 | $ | 41 | $ | 109 | $ | 130 | |||||||||||||||||||||
Add: | |||||||||||||||||||||||||||||
Depreciation and amortization | 5 | 5 | 13 | 13 | |||||||||||||||||||||||||
EBITDA | 43 | 46 | 122 | 143 | |||||||||||||||||||||||||
Key item: (a) | |||||||||||||||||||||||||||||
Business interruption expenses | 3 | — | 4 | — | |||||||||||||||||||||||||
Adjusted EBITDA | $ | 46 | 46 | $ | 126 | $ | 143 | ||||||||||||||||||||||
Adjusted EBITDA - International | |||||||||||||||||||||||||||||
Operating income | $ | 20 | $ | 20 | $ | 61 | $ | 63 | |||||||||||||||||||||
Add: | |||||||||||||||||||||||||||||
Depreciation and amortization | 1 | 2 | 4 | 5 | |||||||||||||||||||||||||
EBITDA | 21 | 22 | 65 | 68 | |||||||||||||||||||||||||
Key item: (a) | |||||||||||||||||||||||||||||
Business interruption expenses | 2 | — | 2 | — | |||||||||||||||||||||||||
Adjusted EBITDA | $ | 23 | $ | 22 | $ | 67 | $ | 68 | |||||||||||||||||||||
Table 8 (continued) | |||||||||||||||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||||||||||||||
June 30 | June 30 | ||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||
Adjusted EBITDA - Unallocated and other | |||||||||||||||||||||||||||||
Operating (loss) income | $ | (4) | $ | 3 | $ | (15) | $ | (14) | |||||||||||||||||||||
Add: | |||||||||||||||||||||||||||||
Depreciation and amortization | — | — | — | — | |||||||||||||||||||||||||
Net pension and other postretirement plan income | 2 | 10 | 7 | 30 | |||||||||||||||||||||||||
EBITDA | (2) | 13 | (8) | 16 | |||||||||||||||||||||||||
Key items: (a) | |||||||||||||||||||||||||||||
Net pension and other postretirement plan income | (2) | (10) | (7) | (30) | |||||||||||||||||||||||||
Net legacy and separation-related (income) expenses | — | (3) | 3 | 14 | |||||||||||||||||||||||||
Restructuring and related expenses | 4 | — | 12 | — | |||||||||||||||||||||||||
Adjusted EBITDA | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||
(a) | The tables above reconcile Quick Lubes, Core North America, International and Unallocated and other operating income (loss) and relevant other items reported below operating income (loss), as applicable, to EBITDA and Adjusted EBITDA. | ||||||||||||||||||||||||||||
Valvoline Inc. and Consolidated Subsidiaries | Table 9 | ||||||||||||||||
RECONCILIATION OF NON-GAAP DATA - FREE CASH FLOW | |||||||||||||||||
(In millions - preliminary and unaudited) | |||||||||||||||||
Nine months ended | |||||||||||||||||
June 30 | |||||||||||||||||
Free cash flow (a) | 2019 | 2018 | |||||||||||||||
Total cash flows provided by operating activities | $ | 214 | $ | 181 | |||||||||||||
Adjustments: | |||||||||||||||||
Additions to property, plant and equipment | (73) | (51) | |||||||||||||||
Free cash flow | $ | 141 | $ | 130 | |||||||||||||
Fiscal year | |||||||||||||||||
Free cash flow (a) | 2019 Outlook | ||||||||||||||||
Total cash flows provided by operating activities | $300 - $315 | ||||||||||||||||
Adjustments: | |||||||||||||||||
Additions to property, plant and equipment | (115 - 120) | ||||||||||||||||
Free cash flow | $180 - $200 | ||||||||||||||||
(a) | Free cash flow is defined as cash flows from operating activities less capital expenditures and certain other adjustments as applicable. |
M!?",J3W^]?DU*XZQVONI^])C/R@*<;P:\[- ,
M=>DFAT3POIT^J7[PQ&61((4+N50 OR,(9/8(_J:^JX/S+ZIF$8R?NST?Z?B>!Q'@_;X1R6\=4?A'\(
M/B?JOP1^+'AGQEHIKCO^'%?[5Q_YI%J7U_M73^?_)BOU3PAX:P'#^7?
M6,54BL15UEJO=72/^9\=](+Q$Q?%N<_5,#&3PF'=HV3M*76?Z+R/DFBOK;_A
MQ5^U=_T2'4O_ :Z?_\ )%'_ XJ_:N_Z)#J7_@UT_\ ^2*_8/[8R_\ Y_Q^
M]?YG\^?V;B]O9R^YGR317UM_PXJ_:N_Z)#J7_@UT_P#^2*/^'%7[5W_1(=2_
M\&NG_P#R11_;. _Y_P ?O7^8O[,Q?_/N7W,^2:*^MO\ AQ5^U=_T2'4O_!KI
M_P#\D4?\.*OVKO\ HD.I?^#73_\ Y(H_MG ?\_X_>O\ ,/[,Q?\ S[E]S/DF
MBOK;_AQ5^U=_T2'4O_!KI_\ \D4?\.*OVKO^B0ZE_P"#73__ )(H_MG ?\_X
M_>O\P_LS%_\ /N7W,^2:V/ OC"X\"^)K?4+?+>6=LL?_ #VC/WE_SW%?3W_#
MBK]J[_HD.I?^#73_ /Y(H_X<5_M7#_FD.I]>VK:>/_:]5'/,!%IJO'_P)?YF
M.(R6O6I2HU*4G%JUK,;H^KV_B#2K>]M9%DM;A Z/GU]?<'(K[2_X) ?L*_\
M#2GQ:'C/Q%9B3P3X-N%8)(N8]3OAATB(/#(@P[COE%((8X\'_98_X(U_M/6'
MC"S\.^(OAW>:!H&HW*A]4GU&RDBTP%@'D94F+LNWYMJ@DD#&,FOW>^ 7P-T/
M]G3X3:+X-\.V_DZ;HMN(5+X\R=^KRN1C+NV6; R>PXKR^,>-Z,, J&"FG4J
M73:=^5==>[Z'Q/!?A766=RJX^#]A2=XW5N9]%\NIV,<6Q JCA>,8J9?EI%_=
MIS7@/[0W_!4/X%?LK_$E_"/C[QY#X?\ $4<,