Valvoline Inc.

RK Capital to drive success and create significant and sustainable value for our shareholders. Moving into segment highlights, let's discuss retail services on slide six. Our retail services segment is the second largest Quick Loops operator in North America with nearly 1,600 stores that deliver a wide selection of preventive auto maintenance services. The segment had another outstanding year in fiscal 2021. Sales of $1.2 billion grew 38% year-over-year and nearly 50% versus pre-pandemic fiscal 2019. The top line continues to be driven by our growth levers of same-store sales performance and unit additions. Our market-leading scale and data sophistication enhances our ability to gain share and expand average tickets. and drive sustainable growth and profitability. We expect that our superior business model will continue to deliver growth going forward. Top line results were driven by the combination of same-store sales, which increased 21%, plus unit growth of 9%. 2021 marked the 15th consecutive year of same-store sales growth, highlighting our superior in-store experience. Store-level sales across the system reached roughly $2 billion, growing 30% and demonstrating the scale of the preventive auto care business that our team has built. Our outstanding same-store sales performance for fiscal 2021 was driven first by transactions, as we can capture significant market share, as well as a high single-digit growth rate in average tickets. We exited fiscal 2021 at a rate of more than 50 oil changes per day across the system, significantly outperforming the industry average, which is in the low 30s. The top one-third of our stores finished the year performing more than 70 oil changes per day, demonstrating the strength of our system. Pricing power and the ongoing shift to synthetic drove growth in the average ticket. Recall from our May business update that synthetic oil changes generate roughly two times the revenue and three times the service margin versus conventional. Just over a third of our oil changes are synthetic, while roughly 70% of new cars would have a recommendation for a synthetic lubricant. We believe that our quick, easy, trusted customer experience and data-driven approach will continue today. transaction, and average ticket growth in the future. As we continue to grow our market share and open new locations, our customer base expands, generating more data to leverage further growth and avert your cycle. In the future, our customer relationships will be utilized to drive incremental services as the car park evolves. Let's review resulting global products on the next slide. I'm pleased with the strong top line growth in global products in fiscal 2021. Sales grew 20% year over year and 12% versus pre-pandemic fiscal 2019, led by international markets. Each region grew over this period, and international markets have seen accelerated growth as we continue to enhance our supply chain capabilities and invest in brand marketing. Global Products Business uses a value-added selling approach to win and retain installer and heavy-duty customers. We are driving synergy across the Global Products Business to accelerate share growth and benefit our customers. For example, we have recently expanded digital capabilities from North America, and we are bringing our expertise in heavy-duty internationally, where it represents a higher percent of our mix, to North America. The combination of international growth, performance in North America, and low maintenance capital needs has generated profitable share growth and strong discretionary free cash flow over the past several years, and we expect this to continue into the future. Next slide, please. Our global products business is well positioned to increase its market share globally by leveraging our leading Vowling brand, extensive distribution network, and robust technology. all of which helped drive top-line growth in fiscal 2021. We expect this momentum to continue in fiscal 2022. Adjusted EBITDA margins were close to 19% for the year. Margins were impacted by price-cost lag in the second half of 2021, and as expected, particularly in Q4, due to significant raw material cost increases this past spring. Although we expect lingering price cost lag and supply chain bottlenecks to impact the first half of fiscal 2022, we are making good progress passing these cost increases through. Even with pressure on margins, global products delivered another year of over $200 million in discretionary free cash flow. Across regions and channels, we are encouraged by our volume performance and strength of demand for our preventive maintenance products. North America's DIY volume has been healthy at auto parts retailers, mass merchandisers, and has benefited from new distribution in the convenience store channel. We saw volume growth in all international markets, both year-over-year and versus 2019, despite COVID-19 and supply chain challenges. We expect volume growth to continue in both North America and international markets in fiscal 2022. The fundamentals of the global products business are as is the long-term outlook. Now I'll turn things over to Mary to review our financial results in more detail.

Thanks, Sam. Our Q4 results are summarized on slide 11. We saw robust top-line growth both year-over-year and versus the pre-pandemic period in Q4 of 2019, which is a testament to the ongoing strong demand for our products and services. Sales growth was primarily driven by retail services, including more than 300 basis points from store acquisitions. Year-over-year growth and adjusted EBITDA due to significant price-cost lag impacts, particularly in global products, as raw material costs were declining in fiscal 2020 and past year. Our adjusted effective tax rate in Q4 came in lower than expected due to a favorable discrete tax item which benefited adjusted EPS. Let's take a closer look at segment EBITDA margins on the next slide. Retail services adjusted EBITDA growth in the quarter was driven by exceptional same-store sales and strong unit additions. EBITDA margin declined compared to last year due to investments we made in labor during the quarter, along with the impacts of passing through pricing to cover higher raw material costs. As expected, price-cost lag was the primary driver of declines in adjusted EBITDA results in margin in global products. Sales grew faster than volume, highlighting progress in passing through cost increases. However, our sales growth will not translate into margin rate expansion as unit price increases generally offset unit cost increases. Focusing on each dollar and cash generation, more appropriate metrics than percentage margins in a volatile rate raw material environment. Our full year 21 results are summarized on slide 13. Both segments made contributions to the substantial growth in sales and gross profit compared to last year versus fiscal 19. Retail services led the way with top-line and margin improvement driven by leveraging outstanding same-store sales and unit growth. Acquisitions added 300 basis points to overall sales growth and roughly 260 basis points to adjusted EBITDA growth. SG&A was impacted by several key factors year over year. First, we reinstated advertising spending that we received prior year due to the severity of the pandemic. Second, we saw increases in variable compensation driven by our record results. Third, we made investments to drive future growth, including acquisitions and investments in IT and sales support. And finally, we saw increases due to FX impacts and inflation. As you can see on slide 14, the cash generative nature of the business remains strong. Maintenance capital was roughly 1% of sales for the year, while discretionary and free cash flow were 12% and nearly 9% respectively. Growth CapEx was modestly lower than we expected due in part to supply chain-driven delays in new company store openings. In fiscal 2021, we returned $218 million in cash to shareholders via dividends and share repurchases, including $27 million in share repurchases made in Q4 under our recent $300 million three-year share repurchase authorization. We believe our capitalized business model will continue to drive significant cash flow to fund growth and returns to shareholders. Let's review our fiscal 22 guidance on the next slide. We expect the top-line momentum we saw in fiscal 21 to continue in fiscal 22, driven by strong same-store sales growth of 9% to 12%, the addition of more than 100 new stores, continued top-line growth in global products. We anticipate overall adjusted EBITDA to be in the range of $675 to $700 million, representing 7% to 10% year-over-year growth. Retail services is expected to generate mid- to high-teens growth and contribute segment EBITDA of $440 to $455 million, while global products is projected to contribute segment EBITDA of $315 to $330 million. Unallocated corporate expenses comprise the balance. We expect improved profitability as we progress through fiscal 22 in global products, with projected second-half EBITDA and margin exceeding the first half due to the near-term impact of price-cost lag. Below the line, we anticipate our growth-focused capital investments to increase depreciation and amortization next year to between $105 million to $110 million. Based on current rates, interest expense should level up to roughly $18 million per quarter. We continue to expect our adjusted effective tax rate for the year to be in the 25% to 26% range, leading to adjusted EPS in the range of $2.06 to $2.18 per share for fiscal 22. With carryover capital from fiscal 21, including new company store bills, We expect an increase in capbacks in fiscal 22, leading to free cash flow of $260 to $300 million. With that, I'll turn things back over to Sam.

Thanks, Mary. We want to spend a few minutes discussing our recent decision to pursue a separation of our global products and retail services segments. We believe that this is the right time because Valving's transformation has progressed to the point where both parts of the business can stand on their own and fund their individual strategic priorities for continued success. With the significant growth of the retail services segment, the two businesses are now each of considerable scale and contributed in excess of $300 million in adjusted EBITDA. Just four years ago, our retail services business contributed 34% of segment EBITDA. It's important to note that this transformation reflects the strong growth of retail services as global products has continued to generate strong, stable cash flows. The board and executive team are confident that the separation will create significant and sustainable value for our shareholders, employees, and other stakeholders and will best position both outstanding businesses for continued long-term success. Turning to slide 18, this is a strategically compelling step for the company and its stakeholders. Both businesses are strong with robust financial and operational performance and scale. They are leaders in the respective markets. We have built a brand that stands for great products and great services. We have invested in our teams and digital capabilities and have developed an intense customer focus that sets both businesses up for long-term success. In addition, the separation will best position each segment to evolve its business model as needed to effectively and sustainably compete in an evolving powertrain environment. The separation will allow each business to focus on its own distinct customer base and business model and deploy capital where needed to enhance the respective services and product lines as the car park continues to evolve. With the separation, we see a clear path to unlocking significant shareholder value. On slide 19, we look at retail services and its attractive opportunities for continued growth. Auto aftermarket services is a $300 billion addressable market that is highly fragmented, growing, and resilient. Our retail services segment is well positioned to continue to increase its market share by leveraging its world-class service model and executing on our three-pillar growth strategy consisting of, one, expanding the footprint, your new company on location, acquisition opportunities, and franchise development. Two, leveraging proprietary data and analytics technology to effectively market and drive a best-in-class customer experience. And three, evolving our service offerings to capture growing opportunities in the market. For example, we are pursuing fleet service solutions to address medium and heavy-duty vehicles, which will require comprehensive maintenance needs. Additionally, we are exploring relationships with EV OEMs for both products and services, including our joint intent to partner with Arrival to service their future fleet of electric vehicles in the U.S. Our nearly 1,600 locations, our customer-centric brand, and leading operating model best positions Valving to expand service offerings and delivery in the future. In slide 20, we have compared our retail services segment against a few publicly traded peers on several sales growth and profitability metrics. As you can see, our business outperforms the peer group on most of these metrics. The peer multiples underscore the compelling opportunity we believe we have to unlock shareholder value. Let's review the opportunity in global products on the next slide. Global Products is a market-leading, strong cash-generating automotive solutions provider. Preventive maintenance products like lubricants are non-discretionary, which provides market resilience, while the shift towards synthetic premium lubricants drives the potential for margin expansion. The addressable market for lubricants internationally is estimated to be three and a half times larger than North America. Global products is well positioned to continue delivering profitable share growth driven primarily by international growth markets such as India, China, Latin America, and EMEA. Our industry-leading research and development capabilities, strong growing distribution network, and powerful brand are key competitive strengths in a changing market. We are partnering with technology leaders, OEMs, and researchers to address the needs of both current and future vehicles. Let's move to the next slide. As we just did with retail services, here we compare global products against a few publicly traded companies with similar business models on sales growth and profitability metrics. As you can see, global products performed in line or favorably against the peer group on these metrics. Again, we believe that pure trading multiples show the compelling value creation potential from a separation. On slide 23, we describe next steps. As noted in our October 12th announcement, we are working with outside advisors to determine the best way to accomplish the separation. While we are diligently evaluating possible transaction and capital structures for each business, No timetable has yet been established for the completion of a separation. Irrespective of how the separation is executed, we anticipate that retail services and global products will enter into commercially beneficial product supply and brand use agreements that will position both businesses for continued success. we will approach all upcoming decisions with the goal of minimizing the synergies for both businesses and maximizing shareholder value. In closing, I want to thank our Valvoline team for delivering a great year. Our teams have never been stronger and continue to do an outstanding job of taking care of customers and driving the business. We are focused on delivering results in the new fiscal year as we work to capture the compelling value that we see from the separation of our two excellent businesses. And with that, I'll hand things back to Sean to open the line for Q&A.