Valvoline Inc.

Hello and welcome everyone to the Valvoline's 4Q earnings conference call and webcast. My name is Becky and I'll be your operator today. All lines will be muted throughout the presentation portion of the call with a chance for Q&A at the end. If you wish to ask a question in this time, please press start followed by one on your telephone keypad. I will now hand over to your host Elizabeth Clevenger with investor relations to begin. Please go ahead.

Thank you. Good morning and welcome to babbling fourth quarter fiscal 2025 conference call and webcast. This morning babbling released results for the fourth quarter and fiscal year ended September 30 of 2025. The presentation should be viewed in conjunction with that earnings release a copy of which is available on our investor relations website at investors babbling calm. Please note that these results are preliminary until we file our form 10 K with the Securities and Exchange Commission. On this morning's call is Lori Fleece, our President and CEO, and Kevin Willis, our CFO. 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. Babling 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 GAAP to adjusted non-GAAP results 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. With that, I will turn it over to Lori.

Thank you, Elizabeth, and thank you for joining us today. Let's start with a look at some key highlights for fiscal year 2025 on slide three. System-wide store sales again saw a double-digit increase to $3.5 billion, and we delivered our 19th consecutive year of system-wide same-store sales growth. This nearly two-decade-long streak accounts for almost half of our retail business's history and puts us in a special category of retailers. The network continues to grow with the addition of 170 system-wide stores this year, bringing the total to 2,180 across the US and Canada. We also saw double-digit growth in adjusted EBITDA, taking into account the impacts of re-franchising and including the investments in technology we made this year. This would not be possible without our team and our strong franchise partners, and I'd like to thank both groups for all of their work that went into driving these results. Slide four shows our performance over time on key metrics. Our historical performance shows our track record of steady new store growth, strong same store sales comps, and compelling net sales and profit growth. This performance is a function of the attractive market we operate in and the capabilities we've built over time, which allow us to deliver best-in-class customer, employee, and franchisee experiences. Turning to slide five, We'll take a look at our fiscal year 2025 performance compared to our updated guidance from August. Net revenues and system-wide same-store sales growth came in at the midpoint of the guidance range, while adjusted EBITDA landed above the midpoint. System-wide store additions of 170 demonstrate meaningful progress in new franchise store growth. They added 71 net new stores and 104 total stores this year, including transfers. Adjusted EPS came in at the low end of the range at $1.59 per share and our capital expenditures were above the range, driven by the timing and mix of new store additions at the end of the year. Overall, we're pleased with our fiscal year 2025 results and the continued growth of our business. Now I'd like to provide an update on the progress we've made against our strategic priorities this year. Our strategic priorities remain the same. First, drive the full potential of our core business. We are the retail leader in automotive preventative maintenance services and will continue to drive transaction ticket growth with increased store level efficiency. Second, deliver sustainable network growth. We'll continue to extend our reach to more customers across North America And we'll do that in a way that maximizes return on invested capital. And last, we will continue to innovate to meet the evolving needs of our customers and the car park. We made very good progress in fiscal 2025 to drive the full potential of our core business. And we continue to believe we have a lot more opportunity in front of us. This past year, we saw strong same store sales growth with a healthy balance from transaction and ticket. Transaction growth continued across the network, including in our mature store base. We also saw ticket growth across the network with contributions from premiumization, net pricing, and increased NOCR penetration. Our efficiency initiatives within company operated stores in fiscal 2025 included a continued focus on labor productivity. Workday implementation, combined with scheduling process improvements already underway, drove meaningful efficiencies in our largest cost category. As of Q4, all US company-owned stores have migrated to use Workday's forecasting and automated scheduling tools that enable our field leadership to more easily monitor and optimize schedules to match both team member availability and experience with expected customer demand. We recently spent time with both our operations leadership team and our franchise partners across the US and Canada. We spent time celebrating our accomplishments in 2025 and getting focused on 2026 our core business remains focused on four key things one consistent process execution. Our technology enabled super pro process earns a 4.7 star rating from customers in this builds loyalty. Two, increase store efficiency by leveraging fully the work started in FY25 in both labor and store level expense management. Three, enhance return on marketing spend as we gain benefits from our network scale and reach. And four, continued team member retention to help improve store throughput and NOCR penetration. As it relates to network growth, We closed fiscal 2025 with a strong Q4, delivering 56 net new system-wide stores in the quarter and bringing our total to 170 additions for the year. Over 60% of this year's new stores across the system were ground-up builds, a testament to our real estate analytics capabilities and our proven playbook for successfully open new construction sites. Franchise ground-ups drove much of the increase year over year, as they had 41 greenfield additions this year. At the end of 2024 and beginning of fiscal 2025, we re-franchised three markets, Denver, Las Vegas and West Texas. Our franchise partners for these markets committed to significant development agreements to grow the markets by two to three times in size. Since the closing of the re-franchising transactions, We have seen the new store additions in these markets grow by more than 150% over prior year and these franchise partners pipelines continue to grow. And our new store growth will continue to ramp in FY26 with continued momentum across our franchise partners. Fiscal 26 will also include the expected closing of the Breeze Auto Care acquisition. As we shared previously, bringing a year's worth of store growth in one step will allow us to leverage many of the investments we've already put in place across a larger store base, including retail-specific technology investments and fleet sales expansion. At the end of last week, we received regulatory clearance from the FTC and plan to close the transaction on December 1st. As part of the agreement with the FTC, we will divest 45 stores bringing the net additions to 162. Although we had to reduce the number of store additions in order to gain FTC approval, we believe this is still a good use of capital and will create long-term shareholder value. Turning to the third priority, fleet growth continues to outpace the growth in our consumer business. Our fleet customers tell us that they value the speed and convenience of our service to maximize the productivity of their assets. This year we've increased our work with our franchise partners to grow our fleet business across their geographies. Early days, but significant opportunity for growth. Before I turn it over to Kevin to discuss our financial results in more detail, I want to invite you to a planned investor update on December 11th. We'll introduce you to more of our management team and provide a deeper look at our strategic priorities, long-term growth targets, and the initiatives driving our business forward. Now I'll turn it over to Kevin.