Valvoline (NYSE: VVV) reported Q4 EPS of $0.46, $0.10 better than the analyst estimate of $0.36. Revenue for the quarter came in at $652 million versus the consensus estimate of $617.47 million.

Fourth-quarter summary

• Reported net income of $122 million increased $95 million and earnings per diluted share (EPS) of $0.66 increased $0.52
• Adjusted diluted EPS grew 15% to $0.46
• Adjusted EBITDA of $150 million, up 16%
• Sales grew 4% to $652 million, while lubricant volume declined slightly to 46.2 million gallons
• Valvoline Instant Oil Change (VIOC) system-wide same-store sales (SSS) grew 8.3%
• Cash and cash equivalents on hand of $760 million and total available liquidity of just over $1.3 billion as of Sept. 30, 2020

"During the pandemic, our focus has remained on the health and safety of our employees, customers and business partners," said CEO Sam Mitchell. "Our strong performance in Q4 continues to demonstrate the durability of our business and the tremendous efforts of the entire Valvoline team, who have adapted to these unprecedented times to continue delivering superior customer service.

"We saw strong sequential and year-over-year improvements in profitability in Quick Lubes and Core North America and exceptional sequential profitability improvement in International in Q4. Our results this quarter significantly exceeded our expectations and demonstrate the true resiliency and competitive advantages of our business model. Quick Lubes' system-wide same-store sales grew 8.3% in Q4, returning to pre-COVID-19 growth rates as share gains continue. Core North America generated near-record quarterly profitability driven by ongoing performance in the retail channel and benefits from lower raw material costs. An increased contribution from key markets and improved margins drove the strong sequential growth in International profitability.

"Looking forward to fiscal 2021, we expect to generate low double-digit growth in adjusted EBITDA. Our confidence in this continued growth is driven by our diversified business model that is expected to generate approximately half of its adjusted EBITDA from our quick lubes segment."

GUIDANCE:

Valvoline sees FY2021 EPS of $1.57-$1.67, versus the consensus of $1.38.

Fiscal 2021 Outlook

The guidance provided in this press release is based on current data and expectations, and could be significantly impacted by future external events related to COVID-19, such as additional state, regional or country lockdown measures or significant changes in driving trends.

The outlook for fiscal 2021 includes the following:

• Quick Lubes — substantial top- and bottom-line growth with recovery from COVID-19 impacts and strong operational performance
• Core North America — modest top-line growth with stable retail channel performance; high-single digit profitability decline driven by year-over-year price-cost lag impacts
• International — significant top-line growth with continued recovery from COVID-19 impacts; EBITDA growth moderated by channel development and brand building initiatives
• Capital Investments — new company store growth and acquisitions drive modestly higher capital expenditures

Mitchell continued, "We are entering fiscal 2021 with positive momentum. Fiscal 2020 has demonstrated the durability of our business model and resiliency of our team. We remain focused on our long-term strategic shift to a more service-centered business and expect to deliver on our commitments. With more than half our adjusted EBITDA expected to come from Quick Lubes, I am confident that 2021 will be another strong year for Valvoline."

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