Valvoline Inc.

Hello and welcome to Valvoline's 2Q 2024 earnings conference call and webcast. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I'd now like to hand over to Elizabeth Russell. The floor is yours. Please go ahead.

Thank you. Good morning and welcome to Valvoline's second quarter fiscal 2024 conference call and webcast. This morning, Vaveline released results for the second quarter ended March 31st, 2024. This presentation should be viewed in conjunction with that earnings release, a copy of which is available on our investor relations website at investors.vaveline.com. Please note that these results are preliminary until we file our form 10-Q with the Securities and Exchange Commission. On this morning's call is Lori Sleeth, our CEO and President, and Mary Meichelsberger are CFOs. As shown on slide two, any of our remarks today that are not statements of historical fact are forward-looking statements. These forward-looking statements are based on current assumptions as of the date of this presentation and are subject to certain risks and uncertainties that may cause actual results to differ materially from such statements. Fableen assumes no obligation to update any forward-looking statements unless required by law. In this presentation and in our remarks, we will be discussing our results on an adjusted non-GAAP basis, unless otherwise noted. Non-GAAP results are adjusted for key items, which are unusual, non-operational, or restructuring in nature. We believe this approach enhances the understanding of our ongoing business. A reconciliation of our adjusted non-GAAP results to amounts reported under GAAP and a discussion of management's use of non-GAAP and key business measures is included in the presentation appendix. The information provided is used by our management and may not be comparable to similar measures used by other companies. As a reminder, the retail services business represents the company's continuing operations, and the former global product segment is classified as discontinued operations for the purposes of GAAP reporting. Today, Lori will begin with a look at the key highlights from our second quarter, and Mary will then cover our financial results. With that, I will turn it over to Lori.

Thanks, Elizabeth, and thank you all for joining us today. For the second quarter of 2024, we saw growth at the top line across the network, with system-wide store sales growing over 13% to $746 million. Profitability was strong with adjusted EBITDA improving 21% to $105 million and adjusted EPS improving over 60% to 37 cents per share. We added 38 net new stores to the network this quarter with 14 coming from franchise. This brings our year-to-date additions to 76 in total with 33 from franchise. Also this quarter, we purchased approximately 1 million shares, returning just over $40 million to shareholders through share repurchases. This completes the $1.6 billion share repurchase authorization well ahead of the 18-month commitment we made at the time we closed the sale of the global products business. Before Mary covers the details of the quarterly results, I'd like to share some additional insights on how these results fit into our strategy. We continue to focus on driving the full potential of the existing business. One of the key metrics to this strategic pillar is same-store sales growth. As I mentioned, this quarter we saw 7.7% system-wide same-store sales growth. Non-world change revenue was the largest contributor to this growth, across the system, mostly driven by increased service penetration. The teams focused on employee retention and best practice sharing continues to improve how we educate our guests on the additional services their vehicles need. The automotive manufacturer recommended services saw the highest improvement in service penetration in Q2, which is a testament to the training and tenure we've built across our stores. On the transaction side, after a choppy start to January due to weather events across the country, we recouped the volume in February and ended the quarter with modest improvement. Year to date, we have performed over 13.7 million services for customers system-wide. The other part of driving full potential is managing our cost to improve profitability. We're pleased with our Q2 performance in this regard. Specifically, strong labor management created significant benefit in the second quarter in our company store operations, which exceeded our expectations. Our ability to manage scheduling, especially during the weather events that happened in the quarter, continues to improve. We also saw benefit from improved supply chain costs and store expenses for company stores this quarter. As we enter the back half of the year, we typically see significant labor leverage due to the increase in volume during the summer drive season. While we'll continue to use the labor management tools that have benefited us year to date, we do not expect to have as strong of a year-over-year improvement in labor efficiency for the remaining half of the year. Now I'd like to touch quickly on accelerating network growth We're really pleased with the 38 net store additions this quarter. It brings our total network to 1,928 stores and 8% growth over the prior year. We continue to see a balanced mix of ground up builds and acquisitions. On the franchise side, half of the net additions this quarter were ground ups. As we look at our pipeline for the remainder of the year, We're on track to have the store additions in line with our original guidance of 140 to 170 total additions with 55 to 70 coming from franchise. Now I'll turn it over to Mary to walk us through our Q2 financial results.