Valvoline Q2 2025 Earnings Report

Valvoline EPS Results

• Actual EPS: $0.34
• Consensus EPS: $0.36
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: $0.37

Valvoline Revenue Results

• Actual Revenue: $403.20 million
• Expected Revenue: $405.38 million
• Beat/Miss: Missed by -$2.18 million
• YoY Revenue Growth: +3.70%

Valvoline Announcement Details

• Quarter: Q2 2025
• Date: 5/8/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 9:00AM ET

Valvoline (NYSE:VVV) engages in the operation and franchising of vehicle service centers and retail stores in the United States and Canada. The company, through its service centers, provides fluid exchange for motor oil, transmission and differential fluid, and coolant; parts replacement for batteries, filters, wiper blades, and belts; and safety services, such as tire inflation and rotation, bulbs, and safety checks. It offers its services for passenger cars, hybrid and battery electric vehicles, and light and medium duty vehicles. The company was founded in 1866 and is headquartered in Lexington, Kentucky.

Valvoline Q2 2025 Earnings Call Transcript

Presentation

[Operator]

Hello, everyone, and thank you for joining the Valvoline's Second Quarter twenty twenty five Earnings Conference Call and Webcast. My name is Marie, and I will be coordinating your call today.

[Operator]

I will now hand over

[Operator]

to your host, Elizabeth Clevinger of Investor Relations to begin. Please go ahead.

[Elizabeth Clevinger, Investor Relations at Valvoline]

Thank you. Good morning, and welcome to second quarter fiscal twenty twenty five conference call and webcast. This morning, Valvoline released results for the second quarter ended 03/31/2025. This presentation should be viewed in conjunction with that earnings release, a copy of which is available on our Investor Relations website at investors.valvoline.com. Please note that these results are preliminary until we file our Form 10 Q with the Securities and Exchange Commission.

[Elizabeth Clevinger, Investor Relations at Valvoline]

On this morning's call is Lori Fleis, our President and CEO and Mary Maxelberger, our CFO. As shown on Slide two, any of our remarks today that are not statements of historical facts 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. Sapling 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.

[Elizabeth Clevinger, Investor Relations at Valvoline]

Non GAAP results are adjusted for key items, which are unusual, nonoperational 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 Laurie.

[Lori Flees, CEO, President & Director at Valvoline]

Thanks, Elizabeth, and thank you for joining us today. I'd like to start with a quick look at our second quarter highlights on Slide three. Our system wide sales increased 11% to $826,000,000 and our same store sales growth for the quarter was 5.8%. Total net sales increased 11% to $4.00 $3,000,000 when adjusted for the impact of refranchising. Adjusted EBITDA increased 6%, also including the impact of refranchising.

[Lori Flees, CEO, President & Director at Valvoline]

Our system wide store count is now 2,078, up 8% over the prior year. And we announced this morning that Kevin Willis would be joining our team as CFO effective May 19. Before I provide an update on our strategic priorities, I want to cover a couple of topics that are top of mind given the current market environment. First, on Slide four, I want to provide our current assessment on tariffs. With what we know today, we expect the impact to be minimal.

[Lori Flees, CEO, President & Director at Valvoline]

We put together a cross functional team more than six months ago to collaborate with our suppliers. Our largest product cost is finished lubricants, which are primarily composed of base oils and additives. It's our understanding that base oils remain exempt from tariffs as of now, and we expect most additives to remain exempt from tariffs as well. The next largest supply category is ancillary products like filters and wipers. We've worked with our suppliers to shift the majority of our supply from China to Vietnam, and we continue to review alternate sources to optimize our flexibility.

[Lori Flees, CEO, President & Director at Valvoline]

When we look at our inventory on hand and factor in the ninety day pause on the reciprocal tariffs, we do not expect a significant change in cost for fiscal year twenty twenty five. And we continue to look at other areas of spend to evaluate any tariff impact. As it relates to construction materials and equipment for our store additions, we expect a single digit percentage increase on new store capital costs. As it relates to other costs like store maintenance and technology, we expect a low single digit increase as well. In total, for fiscal year twenty twenty five, we expect an operating cost impact of less than $4,000,000 system wide.

[Lori Flees, CEO, President & Director at Valvoline]

This includes the impact on franchisees, but excludes any additional mitigating actions. And we estimate the annualized impact to be about one to 2% increase to our cost of sales, which we will mitigate through cost reduction efforts, alternative supply strategies, or pricing pass through to customers. As a result, we feel very well positioned to navigate the changes as they come. The other topic is around the macro uncertainty and state of the consumer. It's important to remember that we are a strong business in a very resilient industry with a lot of growth potential.

[Lori Flees, CEO, President & Director at Valvoline]

Our industry has strong fundamentals and resilient long term demand drivers. Customers are continuing to drive more, keep their vehicles longer, and seek convenience, And we have not seen evidence of deferral of service or trade down from our customers. We are well positioned within the industry to provide customers the quick, easy, trusted service necessary to maintain their vehicles. Our powerful brand, superior service experience, strong franchise partnerships, and robust customer data differentiate us from our competitors and position us to meet customers' needs for preventative vehicle maintenance. As we look at the total available market, there is considerable opportunity for growth, considering we currently only have about 5% of the overall market share related to the do it for me oil changes.

[Lori Flees, CEO, President & Director at Valvoline]

Now let me provide an update on some of our strategic priorities. This quarter, we saw growth in our business across all quartiles of household income and growth in NOCR across all store quartiles. We had healthy transaction growth across our business, including for our mature store base. Our marketing sophistication is a key competitive advantage that helps us drive strong demand. We recently completed the transition of our customer and marketing database into the cloud, which will enable us to deliver increased efficiency and personalization of our marketing spend.

[Lori Flees, CEO, President & Director at Valvoline]

And we had a great launch of university athletic partnerships in two company markets of Ohio and Tennessee during March Madness targeted towards new customer acquisition. We also continue to make progress on talent management with rolling twelve month attrition rates remaining low and wage inflation moderating. To enhance capabilities, we successfully implemented the first phase of our HRIS system Workday. This new platform enables further development of our labor management capabilities and improves our ability to engage directly with our over 11,000 team members. As we approach the summer drive season, our team is staffed and ready to deliver outstanding customer experience.

[Lori Flees, CEO, President & Director at Valvoline]

Given about 80% of the customers we serve are customers we serve before, delivering a consistent and high quality experience is fundamental to our growth. We are pleased to report that based on over a million surveys in the past twelve months, our customers have increased their rating of Valvoline Instant Oil Change to 4.7 out of five stars. I want to thank our company and franchise store teams for the work they do every day to deliver best in class service to our guests. On accelerating network growth, this quarter, we added another 33 net new store additions, bringing our year to date total to 68. Our pipeline for the year is more back half loaded than we would have liked.

[Lori Flees, CEO, President & Director at Valvoline]

However, when we look at stores already in construction and the acquisition pipeline for both company and franchisees, we have confidence in our ability to deliver store additions well within our guidance range. During the quarter, we announced that we would be adding approximately 200 additional stores through the acquisition of Breeze Auto Care. In early April, we received a second request from the FTC. We remain excited about this opportunity, and we continue to work to gain approval to close the transaction. While we do not have complete control over the timeline, we hope we can close the transaction in the second half of fiscal twenty twenty five.

[Lori Flees, CEO, President & Director at Valvoline]

Before I wrap up my comments on accelerating network growth, I want to give an update on what we're seeing in the markets that we refranchised on slide seven. You'll recall during Q4 of last year and Q1 of this year, we completed three refranchising transactions, which included bringing on a new franchise partner in our Central And West Texas market. These transactions deliver shareholder value when the sum of the transaction price, combined with the present value of the future cash flow streams from existing and committed store growth represents a higher overall EBITDA multiple than our current trading. The key factor is delivering on the committed store growth, so I'd like to provide an update on that. While we are just a few months in, we're already seeing the new store pipeline grow from these pre franchise markets.

[Lori Flees, CEO, President & Director at Valvoline]

And we expect to have double digit additions by the end of the year. We also have two new franchise partners that joined the system in the last two years and have now ramped their pipeline from one store every couple of years to already opening four new stores this year, and their pipeline growth is exciting. I'm pleased with the momentum that we have been able to create with our franchise partners to accelerate network growth. While these refranchising transactions will create long term shareholder value, they do create near term comparison challenges. So Mary will provide additional information on how these transactions impact our financial comparisons as she reviews the results.

[Lori Flees, CEO, President & Director at Valvoline]

But before I turn it over to Mary to take us through our financial results in more detail, I'd like to thank her for her dedicated service to Valvoline since the company's IPO sixteen. I wanna personally thank her for her leadership and the many ways she supported me as I joined the company and then stepped into the CEO role. While she'll be supporting the transition, we wanna take this opportunity to wish her all the best in her much deserved retirement. With that, I'll turn it over to Mary.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Thanks, Laurie. It's been an honor and a privilege to be part of the Valvoline team. I'm looking forward to my retirement, and I'm grateful to have had the opportunity to work with amazing teammates and franchisees over the past nine years. Let's now turn to take a look at the financial results for the second quarter. Net sales for the quarter increased 4% on a reported basis and 11% when adjusted for the impacts of refranchising.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

System wide same store sales increased 5.814% on a two year stack. For the quarter, approximately one third of the comp growth came from transactions despite the impact of Leap Day and the shift of the Easter holiday during the quarter, which had a combined net 50 basis point headwind for the comp. On the ticket side, premiumization and net pricing were significant contributors. NOCR service penetration was also positive and as expected, did decelerate as we lap the training initiatives put in place in late Q1 of last year. Turning to the next slide, we'll take a look at the financial drivers for the quarter.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Gross margin rate declined 30 basis points year over year to 37.3%. During the quarter, there was deleverage on product cost and store expenses, primarily driven by depreciation from new stores. These items were partly offset by leverage in labor due to top line growth, moderating wage inflation and continued strong labor management. As we shared at the end of fiscal year twenty twenty four, we would expect maturing stores to add about $70,000,000 of additional EBITDA over time. SG and A as a percentage of sales increased 150 basis points to 19.3%.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

The deleverage was primarily driven by the impact of refranchising, while technology investments account for most of the remainder. Our adjusted EBITDA margin of 25.9% is 110 basis point decrease over the prior year. On Slide 11, we'll take a look at overall profitability. As Laurie mentioned, the refranchising transactions impact the comparisons to the prior year. Adjusted EBITDA is $104,000,000 a 6% increase over the prior year on a recast basis.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

During the quarter, adjusted net income of $44,000,000 increased 3%, taking into account refranchising. On a GAAP basis, net income for the quarter is $38,000,000 Adjusted EPS of $0.34 per share also increased 3% considering the refranchising impacts. Turning to Slide 12, we'll take a look at the balance sheet and cash flow. Net debt increased $44,000,000 during the quarter from additional borrowings on the revolver. We ended the quarter at 3.4 times leverage ratio on a rating agency adjusted basis.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Looking at cash flow impact, excluding growth CapEx decreased 1% and was also negatively impacted by the refranchising transactions. Our capital allocation priorities remain the same. First, to fund growth second, to stay within our target leverage ratio and third, to return cash to shareholders via share repurchases. As we mentioned last quarter, our share repurchases for Q2 were $21,000,000 and brought our year to date total to 60,000,000 Share repurchases have been paused in anticipation of completing the Breathe acquisition. I'll now turn it back over to Lori for some closing remarks.

[Lori Flees, CEO, President & Director at Valvoline]

Thanks, Mary. I'm pleased with the performance of our business in Q2. Our resilient and durable business is built to deliver growth despite the macro environment uncertainty. We anticipate the potential tariff increases will have a minimal impact in fiscal twenty twenty five, and we will continue to take actions to mitigate, including the flexibility to adjust pricing when needed. With the continued customer demand for our nondiscretionary services, we remain confident in the business momentum and are reaffirming guidance.

[Lori Flees, CEO, President & Director at Valvoline]

With that, I'll turn it back over to Elizabeth for Q and A.

[Elizabeth Clevinger, Investor Relations at Valvoline]

You, Laurie. Before we start the Q and A, I'd like to remind everyone to limit your question to one and a follow-up so that we can get to everyone on the line. Marie, can you please open the line?

[Operator]

Our first question comes from the line of Mike Harrison of Seaport Research Partners. Please go ahead.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Hi, good morning.

[Lori Flees, CEO, President & Director at Valvoline]

Good morning, Mike.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Apologize if I missed this, but can you can you break out the the 5.8% same store sales between ticket and car count? I know you mentioned that non oil change revenue was decelerating in terms of the average ticket contribution, and it sounds like there was some day mix headwind to the car count. But roughly, how did that break out?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Mike. We said that transactions drove about a third of the overall comp and two thirds were driven by ticket. Transactions were adversely impacted by the net impact of weekday, offset by the Easter shifts. So the Easter shift last year, we were closed on one Sunday that we were open this year. So the net headwind from the combination of those two things was about 50 basis points to the overall comp, and most of that would have been on transactions.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

So if you were to adjust transactions for that, we would have been closer to fifty-fifty in terms of transaction growth versus ticket growth. So it pretty fairly balanced for the quarter, which we're pleased to see continued growth in transactions.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right. Thanks for the detail there. And then just in terms of the EBITDA margin decline compared to the prior year, it seems like that's kind of related to what's going on with SG and A costs. And you mentioned the refranchising impact on SG and A costs. And I'm just curious, is that an area where you're going to be taking some cost actions at some point in the rest of the year?

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Or is it something that we just need to see you kind of grow into in terms of additional store growth over time? Any thoughts on how we should see that SG and A as a percent of sales trend in the second half and into next year would be very helpful.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Yes. So when we set guidance for this year, we we knew this was gonna be a bit of a reset year. The refranchising transactions combined with some of the technology investments that we've made, we knew that we were gonna see some deleverage My expectation is as we move forward, we'll see that s g and a increase moderate, and we'll be lapping the impact of the refranchising transactions. So I would expect over time that we we should see, you know, some more less challenges in relationship to deleverage on the SG and A line.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Anything you'd add, Laurie?

[Lori Flees, CEO, President & Director at Valvoline]

No, Mike. I think Mary has it exactly right. This year, we talked about being a reset year because of the decrease in the top line and a lot of the cost to support the full network continuing combined with a step up on the technology side, which is not those kind of step ups aren't ones that we foresee continuing to have to make. And so when we talked about the long term algorithm, we talked about SG and A growing at a lower percentage than the sales growth. But this year, because of the change on the refranchising impacting the top line, that put pressure.

[Lori Flees, CEO, President & Director at Valvoline]

But we don't expect that to continue. We expect to get back towards leveraging our g and a as we continue to accelerate network growth and drive the core business.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

And, Mike, on your question on cost, you know, we're keenly aware of the need for cost efficiency and cost management. So it's an area that gets a a lot of attention internally. As we think about balancing our growth initiatives with type of investments that we need. Certainly, we've made some big investments on the technology side with our new our new HRIS system, the replatforming to the cloud of our marketing database, and continued work that we're doing around some of the replatforming of the techno the store level technology as well. But, you know, as you as we think about the management of overall cost, it certainly is an area where we're paying a lot of attention to it and really wanting to drive efficiencies.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

You know, when you implement some of these systems, you're basically implementing them at at kind of a a minimum viable product level and then being able to start really leveraging your capabilities over time. And I see there being real opportunities for the organization to be able to take advantage of some of the cost efficiencies and labor management as well as in some of the g and a categories to better automation, etcetera, from some of these investments that we've made over time.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right. Thanks very much.

[Lori Flees, CEO, President & Director at Valvoline]

Thank you.

[Operator]

We have a question from Steve Chimesh of RBC Capital Markets. Please go ahead.

[Steven Shemesh, Director, Equity Research - U.S. Hardlines/Broadlines, Food Retail & E-Commerce at RBC Capital Markets]

Great. Thank you for taking the question. Just higher level, there's obviously a lot of hesitation around the state of the consumer right now. So against that backdrop, can you maybe just provide a little perspective on the cadence of comps throughout the quarter and what you guys are seeing quarter to date?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Yes, Steve. Happy to do that. We did see a weaker February that was driven primarily by really challenging weather in certain mostly company geographies. But other than that, you know, we we we saw some pretty consistent January and March, and we're pleased with, you know, the continued strength of the business as we come through April here and into the early early first week in May.

[Lori Flees, CEO, President & Director at Valvoline]

Yeah. I would just add that, you know, this industry is a very resilient has very resilient demand because it's nondiscretionary, and there are a lot of underlining and positive tailwinds that we get from consumers, you know, driving more miles and that's, you know, back to close to pre COVID levels and growing, keeping their vehicles longer and looking for convenience. So those things all bode very well in terms of the underlining factors that are driving our business. I I would just reiterate based on my prepared remarks, we continue to not see customers trading down or deferring their service overall. And we look at that by income demographic segment as well as store performance tiers.

[Lori Flees, CEO, President & Director at Valvoline]

And and overall, we saw growth across every dimension that we look at, and that was on a transaction basis as well as on an NOCR basis.

[Steven Shemesh, Director, Equity Research - U.S. Hardlines/Broadlines, Food Retail & E-Commerce at RBC Capital Markets]

Got it. That's very helpful. And then just a follow-up on gross margin. Are you seeing any impact from base oil deflation, any benefit at this point? And maybe just a refresher on how exactly your contracts work and when that would actually flow through the P and L?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Yes. We've seen some saw some modest deleverage in product costs in the quarter, which were impacted to some degree by some of the reductions that we saw in waste oil collection benefits. We also you know, as we look forward, there's been about a $10 a barrel decline in crude. And we know that over the longer term time frame, base oils tend to follow crude. As we're looking forward, Steve, we haven't really seen that benefit starts coming through.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Certainly, the indexes haven't adjusted, but, you know, we'll continue to monitor it closely with our primary supplier. I'll I'll remind you that we're kind of in that high demand season for lubricants. So I'm not terribly surprised, but, you know, I'm hopeful that over time, we'll see some nice tailwinds from declining product cost. And, you know, all of that, again, is offset by some of the other uncertainties, you know, as that, you know, can reduce not reduce product consumer demand for crude can continue to drive down those product cost, whereas if there's any kind of refinery interruptions or turnarounds and those types of things can tighten demand. And so we keep a close eye on it with our supplier, but right now, we haven't seen any specifics as it relates to the balance of the year in terms of and nor have we baked anything into our guidance for, you know, potential future reductions.

[Lori Flees, CEO, President & Director at Valvoline]

I'll just add, Steve, that, you know, 53% roughly of our store base is franchise operators. And based on the contracts that we have with them, we pass that through on a on a penny adjusted basis when the index comes through. So you have a few things that counter any base oil impact or or tailwind that we might get in margin one. We pass it through the franchisees. Two, waste oil waste oil tends to move up and down as base base oil index changes.

[Lori Flees, CEO, President & Director at Valvoline]

So there are a lot of things that will negate having the tailwind, but obviously, we'll look and continue to work with our supplier to lower our product cost.

[Steven Shemesh, Director, Equity Research - U.S. Hardlines/Broadlines, Food Retail & E-Commerce at RBC Capital Markets]

Got it. Thanks very much and best wishes, Mary.

[Operator]

Thank you.

[Operator]

We have a question from Simon Gutman of Morgan Stanley. Please go ahead.

[Simeon Gutman, Analyst at Morgan Stanley]

Hey, good morning everyone and congratulations, Mary. My first question, I heard comments quarter to date sounded fine. If we take the run rate that you did in the second quarter and then add back 50 basis points, is that like holding everything else constant, which I realize there's a lot of assumption in there, that should be the baseline run rate going forward for comps through the second half of the year?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Simeon, there's other things that come into play. Certainly, you know, lapping last year's numbers, both from a transaction and a ticket perspective come into play. You know, we're we're lapping some of the initiatives on ticket for NCR, although we're still seeing positive NCR penetration. We're lapping some weaker transaction numbers from last year, which are helping our We also are entering into summer dry season, and we certainly expect strong growth from a summer dry season perspective and always working on marketing initiatives that will help us to drive higher levels of new customer acquisition as well as existing customer retention. So I would certainly say that you could think of that as certainly being part of a range, but our expectations of our guidance for same store sales for the full year in that 5% to 7% range still hold.

[Simeon Gutman, Analyst at Morgan Stanley]

Okay. And my follow-up, the franchise store comp being a bit ahead of the company owned, we've seen spreads like this before, so it may just be seasonal location. Can you just talk about simplistically, I guess, on paper, you can argue that you should franchise more. And then should the rate of refranchising this year puts that spread even a little bit higher? What should we expect with that spread and how do we read it?

[Simeon Gutman, Analyst at Morgan Stanley]

Like, how should we look at it?

[Lori Flees, CEO, President & Director at Valvoline]

Yeah. It's a good question, Simeon. What I would say is year over year comparisons always have a play. But when we look at the comparison and what really drove the difference between the two is it was net pricing. And when we look at our franchise based system by system, they have done pricing changes at different times.

[Lori Flees, CEO, President & Director at Valvoline]

And so, we just see that that that is the biggest difference driver between the two comps is the the number of system changes, pricing changes that have happened on the franchise side that have not fully lapped a full a full year. So, you know, going back to the last question you have, that does have an impact on the on the go forward. Some of those will lapse, some of them will not. Our franchisees have full pricing authority for their businesses. You know, we can do benchmarking in the marketplace broadly with dealers and other competitors, and we provide that information to them that they decide when those pricing actions need to get taken.

[Lori Flees, CEO, President & Director at Valvoline]

I'll also just remind you that some of our franchisees are in different geographic areas. And so as they have labor, other inflationary pressures, they may pass that through more quickly than we might see in the central part of The U. S. Where most of our company stores operate.

[Simeon Gutman, Analyst at Morgan Stanley]

Okay. Thanks, Laurie. Good luck.

[Lori Flees, CEO, President & Director at Valvoline]

Thank you.

[Operator]

We have a question from Max Rachaelinco of TD Cowen. Please go ahead.

[Max Rakhlenko, Managing Director at TD Cowen]

Great. Thanks a lot and congrats on a nice quarter. Can you guys first discuss the pricing environment that you're seeing and whether peers are starting to move their price points around? And then bigger picture, how do you think the competitive environment could evolve if the backdrop were to soften?

[Lori Flees, CEO, President & Director at Valvoline]

Yeah. On the pricing environment, we're not actually seeing any significant changes, from the competition, you know, and and I say that very broadly. I'm looking at the way dealers are competing, way auto repair shops or tire centers who also do oil changes, our pricing, as well as, like, the retail auto service centers and quick loops. What what we would say is there's you know, we do look at pricing, and we are watching to see if given the tariff related environment, if there are folks that are changing their pricing, we're not seeing it pervasive, but it is a very fragmented marketplace. And so it's something that you do have to watch and look at in detail by region, but we're not seeing we're not seeing significant pricing changes.

[Lori Flees, CEO, President & Director at Valvoline]

We do we have seen over the past year some competitive spots where they have caught up to the market, but I don't think they're going beyond or significantly outpacing the market from a a pricing increase perspective. As it relates to the competitive environment, you know, continue to say that we don't see any significant changes in terms of the competitive landscape. Again, it's very fragmented, so it's it's difficult to see anything meaningful happening across the entire market. But we're not really seeing anything, significantly different. We do expect that marketing spend overall for the industry will increase as we move into summer drive.

[Lori Flees, CEO, President & Director at Valvoline]

You know, just looking at Google search, you know, the number of searches for oil change near me goes up at this time of year, and therefore, it it it's got a great return on investment for not just us, but others to spend in marketing in that way. But when we when we step back, we know that we're gonna continue to win share and grow transactions across geographies and even in our mature stores, which we've done.

[Max Rakhlenko, Managing Director at TD Cowen]

Got it. Appreciate all the color. And then

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

oh, go ahead.

[Lori Flees, CEO, President & Director at Valvoline]

Go ahead.

[Max Rakhlenko, Managing Director at TD Cowen]

Okay. So next question. Just curious. Did the pricing component of ticket accelerate in 2Q? And if so, what do you attribute that to?

[Lori Flees, CEO, President & Director at Valvoline]

I missed that question. Can you I missed the start of that question. Sorry. Can you repeat it?

[Max Rakhlenko, Managing Director at TD Cowen]

Oh, did did the pricing component of ticket accelerate in February? And if it did, what do you attribute that to?

[Lori Flees, CEO, President & Director at Valvoline]

The pricing component of ticket overall, was strong. I don't think it was accelerated relative to past performance. It was largely consistent. And when we look at the contributors in q two, I think Mary covered this, premium mix, premiumization, and net pricing were were the two main contributors contributing roughly equally to the ticket overall, but NOCR was also a positive contribution. And I think the biggest change as it relates to ticket from q two relative to q one is on the company side, we lapped the NOCR initiatives, which were such a huge contributor to our same store not huge, but a significant contributor to our same store sales comp over the last four quarters.

[Lori Flees, CEO, President & Director at Valvoline]

It's still positive. It's just not at the same magnitude as it has been.

[Max Rakhlenko, Managing Director at TD Cowen]

Got it. Thanks a lot and best regards.

[Operator]

We have a question from Steven Zagoni of Citi. Please go ahead.

[Ariana Warden, Equity Research Associate - Consumer at Citi]

Hi, this is Ayanna Wernan on for Steven Zagoni. Thank you for taking my question. The first question is, what can we expect with the drivers of same store sales growth in the second half between ticket and transaction?

[Lori Flees, CEO, President & Director at Valvoline]

I I just you're a little muffled. Let me just clarify. I think your question was, what do we see the drivers for future growth in the company as it relates to a balance between ticket and transaction? Is that right?

[Ariana Warden, Equity Research Associate - Consumer at Citi]

Yeah. Same store sales growth in the second half.

[Lori Flees, CEO, President & Director at Valvoline]

Oh, in the second half. Yeah. Okay. Thanks for clarifying. You know, I'll ask Mary to to comment.

[Lori Flees, CEO, President & Director at Valvoline]

But as we've been saying throughout the year, we see a a really nice balance between transaction and ticket for the entire year, more so than what we've been in the past as we've lapped a number of initiatives from pricing as well as NOCR growth. So I think as you look forward to the back half of the year, we continue to expect a balance between transaction growth and ticket growth. I'll just restate, you know, when we look at q two performance, we saw growth in transactions across our store quartile, even in our mature stores. We're continuing to grow vehicles served per day. So and and that's exactly what we're trying to do, is we're trying to grow the number of transactions we have in our existing stores, ramp up new stores while continuing to give great service, which will drive that ticket component as well.

[Ariana Warden, Equity Research Associate - Consumer at Citi]

Got it. Thank you. And then my follow-up is, can you talk a bit more about gross margin performance in the second quarter and how it performed versus your own expectations? And if your full year view on gross margin being flattish year over year has changed at all?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Yes. Gross margin overall was pretty much in line with our expectations. If you look at the impact of new store depreciation, gross margin would have actually been up 10 basis points if you exclude the impact of new store depreciation. So we had talked about margin over the year being relatively flat year over year in our last quarter's call and then when we set guidance originally. So we did see overall a little bit of deleverage in the quarter, but it was pretty much consistent with what we expected.

[Ariana Warden, Equity Research Associate - Consumer at Citi]

Thank you.

[Lori Flees, CEO, President & Director at Valvoline]

Thank you.

[Operator]

We have a question from David Beninger of Mizuho. Please go ahead.

[David Bellinger, Director & Senior Analyst at Mizuho Financial Group]

Hey, good morning. Thanks for the question. And Mary thanks for all your help over the years. First one, just another crack on the SG and A side. Are there any areas of the business where you're seeing OpEx overages running hotter than your internal plan?

[David Bellinger, Director & Senior Analyst at Mizuho Financial Group]

And then should we expect you to leverage SG and A as you go into fiscal twenty twenty six?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

So we are not seeing any hot areas of SG and A overages relative to how we plan the year. I think we're doing a good job of managing SG and A relative to what our expectations for the year were when we set guidance. So I think the answer to your first question is no, nothing happening that's a surprise there. And, again, the biggest challenges we've been faced with in that deleverage has been the refranchising as well as the technology investments. On the technology side, you know, we went from legacy systems that had been in place and fully depreciated and amortized to, you know, both the implementation costs as well as the operating costs for new systems on new platforms that were significantly higher.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

So we we see a onetime step up related to those investments that we've made on the technology side. As it relates to moving forward, you know, we'll provide guidance at the appropriate time. But I think Lori mentioned earlier in this call that we do expect SG and A growth to moderate and to be below where we see sales growth going forward. So we would expect that we'll see some leverage in SG and A moving forward in the new fiscal year.

[David Bellinger, Director & Senior Analyst at Mizuho Financial Group]

Very good.

[David Bellinger, Director & Senior Analyst at Mizuho Financial Group]

Got

[David Bellinger, Director & Senior Analyst at Mizuho Financial Group]

it. And then just a follow-up on an earlier one,

[David Bellinger, Director & Senior Analyst at Mizuho Financial Group]

but it was still a

[David Bellinger, Director & Senior Analyst at Mizuho Financial Group]

little unclear. So how do lower oil prices impact your gross margins? And can you talk about the amount and timing of any impact that you might see?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Yes. So again, lubricants, you know, generally trail the pricing for lubricants generally trail or and and specifically base oils and additives that go into the makeup of lubricants generally trail the broader market for crude. So, you know, over time, it's it's they're very poorly correlated. So over time, as you see changes in crude, either up or down, if those changes stay in place for a protracted period of time, you generally will see the cost of lubricants either go up or down over the longer term time frame. So that's what we have seen and experienced in the business.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Where we are right now is we certainly short term have seen declines in crude. Those have not flowed through to the index base oil index prices yet nor has our supplier communicated that they're seeing significant opportunities moving forward for lower costs, but we still believe that if crude stays at this depressed level over time that we should see some tailwinds.

[David Bellinger, Director & Senior Analyst at Mizuho Financial Group]

And those aren't necessarily passed on to consumers, right? You would hold your pricing firm, or or is that a lever you could play if if we do get more promotional in any way?

[Lori Flees, CEO, President & Director at Valvoline]

Yeah. We haven't I I don't think across the industry, you've seen people lower their posted prices. Can make decisions around reinvesting some of that to drive more growth, but but posted prices haven't really come down as base oil or crude prices vary. In the same way though, when we we've always talked about when the when the base oil prices go up, you know, we have to pass that through to franchisees, which is an offset, and we look to pass that through to consumers. But typically, it's not the reverse.

[Lori Flees, CEO, President & Director at Valvoline]

When the base oil prices come down, you don't see people calling back their pricing. And we haven't had a history of doing that either and wouldn't plan to do so.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

The the other thing I would remind you of, David, is, you know, our largest component of our cost of goods sale sold is our labor cost as well as our store expenses. Product costs are a lesser component of the total cost of goods sold. Does have an impact both up and down in terms of margins, but it certainly we've spent a lot of time looking at the larger aspects of our overall cost of goods sold in terms of managing our margins.

[David Bellinger, Director & Senior Analyst at Mizuho Financial Group]

Yes. Very helpful commentary. Thanks again, Mary.

[Operator]

We have a question from Kate McShane of Goldman Sachs. Please go ahead.

[Mark Jordan, Vice President - Equity Research at Goldman Sachs]

Good morning. This is Mark Jordan on for Kate. Thank you for taking our question. It sounds like non oil change revenue continues to be a tailwind here, but maybe in the near term, it will be less so as we lap last year's initiatives. So can you remind us what your penetration is right now with non oil change and how that varies by quartile?

[Lori Flees, CEO, President & Director at Valvoline]

I'll start, and then I'll ask Mary. We we actually don't share the details on penetration rate. What I can say is that our penetration rate has been growing across our non oil change revenue services, and it can it did increase this last quarter as well. When we look at, you know, what services increased in penetration, The visual elements of our non oil change revenue services are the ones that have been increasing and continue to tick up. Those are the things that we can physically show the customer how the performance of those items are doing, windshield wipers, blades, battery, air filters, cabin air filters, etcetera.

[Lori Flees, CEO, President & Director at Valvoline]

That's the biggest component. And the reason it's the biggest component is also because it it's the things that the customer needs more regularly. As as miles driven go up, the need for those or the frequency of those also increases with miles driven. So we continue to grow our penetration. We look at it both from a income demographic as well as from a store performance demographic.

[Lori Flees, CEO, President & Director at Valvoline]

And on an income demographic, in stores with lower income demographics, there is some difference, but we continue to increase penetration even in those. And that's really we attribute that to operating excellence of our process and just making sure that we can communicate, you know, what is needed and show the customer. So when our team follows the process, that process sells those services on its own. We don't have to do a heavy sales approach. You just need to show the customer the performance of the items.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Yeah. And I think importantly, Laurie, you know, we're seeing growth in core non oil change revenue impacted ticket across every quartile. So even though we do have differences in performance by quartile, there's growth across all four quartiles, which we'd really like to see. Yeah.

[Lori Flees, CEO, President & Director at Valvoline]

And we've seen it increase in penetration for low income household demographic stores, pretty consistent with with the high income. So and part of that is educating our team on the importance of these items and not underselling them to consumers in those areas because it does drive safety for our customers. So really just educating our team on why these are important and ensuring that they have the right stock and they can do them quickly, driving convenience and ease for our customers. Those things actually really matter.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

You know, Laurie, you mentioned earlier as well that one of the big differences in, you know, having lower turnover and the right talent in the right places is we actually with the right talent that's well trained, we see higher NLCR penetration, which is driven by that training and the education of the customer on the service services being provided. So you mentioned earlier, we're we're really well positioned going into the summer dry season with talent. We're feeling really good about the position where we are right now.

[Lori Flees, CEO, President & Director at Valvoline]

Okay.

[Mark Jordan, Vice President - Equity Research at Goldman Sachs]

Perfect. Thank you for that. And then, I guess, it sounds like you're not seeing any changes in customer behavior, which is good to hear. But if we think about the potential for maybe a softer macro at some point, would you expect to see some degree of deferral with oil change intervals maybe extending out a month or two or another thousand miles? And would you expect to see, you know, certain of these attachment rates for some non oil change services come under pressure?

[Lori Flees, CEO, President & Director at Valvoline]

You know, before I came to Valvoline, that would have been my assumption. But part of what you have to understand how the customer's thinking about it is as the price of a new vehicle or changing their vehicle is increasing. So the worry about what the outlay would be for upgrading their vehicle and or repairing their vehicle if they didn't maintain it, The the price of those things is actually, I think, created the demand or the realization from the cuss for most of the customers. I'm not saying not everybody will defer, but for most customers, they will continue to maintain the vehicle they have to lower their overall sort of outlay of cash. So, you know, as customers are driving more and as they're keeping their vehicles longer, I think some of the macro uncertainty and tariff implications create more uncertainty around large repair bills and or car vehicle replacement or upgrades that actually create the resiliency in our industry.

[Lori Flees, CEO, President & Director at Valvoline]

So I would say, it feels like they're more resistant more resistant to defer trade down. Although I know that's not gonna be the case for a % of customers. When we look at the customers that we serve, we don't see it and we continue to watch for it.

[Mark Jordan, Vice President - Equity Research at Goldman Sachs]

Perfect. Thank you very much.

[Operator]

We have a question from Thomas Wendler of Stephens. Please go ahead.

[Thomas Wendler, Analyst at Stephens Inc.]

Hey, good morning everyone. Maybe just one more from me. As we think about the development agreements you have, how should we be thinking of the pace of new locations there? I think you noted 20 new stores and 25, then you've kind of talked around the a franchisee going from one to four new locations a year. Just any color on

[Thomas Wendler, Analyst at Stephens Inc.]

that.

[Lori Flees, CEO, President & Director at Valvoline]

Mhmm.

[Lori Flees, CEO, President & Director at Valvoline]

Yeah. And the reason why we gave the update is because, we always expected that when we refrange the mark refranchise the market or when there is a franchisee change in ownership, it does take time to build momentum. And so as we're just a few months in, we're already seeing that momentum change in a very positive way. And I and I don't wanna say that, you know, three or four stores is enough for us to declare victory, but it is coming very quickly. The opportunities in the marketplace to grow and put more stores on just given our stores only covered 35% of the population, you know, we're seeing that momentum accelerate.

[Lori Flees, CEO, President & Director at Valvoline]

And when we laid out our overall strategy to accelerate network growth, included refranchising and changing out franchise ownership with franchisees that have more opportunity in their market, but we're not investing appropriately against that opportunity. We knew that we would it would take us a couple of years to get those in place, and then the momentum would start to build. And that's exactly what we're seeing. While this year, the delivery in the first half is, you know, is lower than than what might have been expected, we look at the construction that's underway and the pipeline of acquisitions. We feel very strong for guidance and we feel we still feel very good about the momentum we have to get to our 250 new units per year by f y twenty seven.

[Lori Flees, CEO, President & Director at Valvoline]

So, you know, I think the development agreements help. We have carrots and sticks in those agreements, and they've been serving us well. And we continue to ask our franchise partners what we can do to support them and their growth.

[Thomas Wendler, Analyst at Stephens Inc.]

Perfect. I appreciate the color.

[Operator]

We have a question from Chris O'Cull of Stifel. Please go ahead.

[Chris O’Cull, Managing Director - Restaurants, Franchised Businesses at Stifel Institutional]

Thanks. Good morning, guys. Lori, I had a question about the Breeze Auto Care system. Can you talk a little bit about the level of investment needed to integrate that system? And I'm thinking about rebranding technology investments.

[Chris O’Cull, Managing Director - Restaurants, Franchised Businesses at Stifel Institutional]

But just curious what you discovered during your due diligence.

[Lori Flees, CEO, President & Director at Valvoline]

Yes. Thanks for the question on Breeze. I was wondering if anyone was to ask because it's a pretty exciting opportunity for us to grow our network at a considerable clip with just one transaction. And we continue to be very excited about Breathe. It's a well run business that complements us from a geographic perspective.

[Lori Flees, CEO, President & Director at Valvoline]

You know, our main focus right now is to work with the FTC to close the transaction. And, obviously, we look forward to providing more updates once we can get to that point. I think as we do our diligence, we we look at every location, and we look at it as if we were running it like we run our current network. And how much upside we would expect to drive with our brand, with our marketing sophistication, our fleet sales activity. You know, there there always are implementation costs, but I think the platforms we've been investing in that Mary talked about earlier, our ERP system, our HRS system, even moving the marketing data into the cloud, which allows us to integrate data in more quickly, more seamlessly.

[Lori Flees, CEO, President & Director at Valvoline]

All of those things will drive a more efficient integration over time. But, obviously, our main focus is to work with the FTC closely so that we can close the transaction. And then I I'll be excited when that day comes and we can talk more about the forward looking plans that we have for the combined business.

[Chris O’Cull, Managing Director - Restaurants, Franchised Businesses at Stifel Institutional]

Okay. Thank you.

[Operator]

We have a question from Justin Kleber of Baird. Please go ahead.

[Justin Kleber, Senior Research Analyst at Baird]

Hey, good morning. Thanks everyone for taking the questions. Curious if you gave any thought to tightening the comp outlook like you did last year after 2Q. It doesn't sound to me like the business is getting any more volatile, but the implied back half guide is pretty wide. And it looks like it would include something below 4% at the low end.

[Justin Kleber, Senior Research Analyst at Baird]

I assume you're not planning the business at that level, but I guess just trying to understand what the biggest swing factors are in your view as it relates to the second half comp. Is it more about transactions, or is it more about ticket?

[Lori Flees, CEO, President & Director at Valvoline]

Yeah. Good question. We we didn't narrow our guidance. I think it was important for us to reaffirm our guidance. And you'll remember, the first half of the year typically contributes 40% to 45% of our year from a profit standpoint.

[Lori Flees, CEO, President & Director at Valvoline]

And, you know, 55 to 60% of it come during the dry season, which is q three, q '4. So I think given how much we have ahead of us, I think we we just didn't feel that now is the right time to narrow guidance. I will say that we feel very confident on all elements of our guidance. So I I think we feel very good that our the momentum of our business is on track, and we expect to deliver, within the guidance on on every element. Harry, would you have anything to add to that?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

No.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

I think it's a good summary, Mark.

[Justin Kleber, Senior Research Analyst at Baird]

Got it. Okay. And just a modeling question as we think about the third quarter, and it sounds like you're going to have an Easter shift headwind. I don't know if there's any other offsetting day mix impacts, but just how are you thinking about or how should we think about the headwind to the comp from Easter moving into fiscal 3Q this year?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Yes, sure. We had a little bit of a benefit in Q2 from Easter where we were closed on a Sunday last year. This year, we were closed on a Sunday in April. The benefit that we saw in the month of March excuse me, in the quarter related to that was about 80 basis points, which offset the 130 basis points from weekdays. So that was a net 50 basis point headwind in the second quarter.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

So we'll see a little bit of that reverse headwind on the Easter shift in the third quarter. But overall, we've got that pretty well factored into our guidance and expectations when we plan the quarter.

[Justin Kleber, Senior Research Analyst at Baird]

All right. Thanks so much.

[Operator]

We have a question from Peter Keith of Piper Sandler. Please go ahead.

[Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Hi, thanks. Good morning, everyone. On the refranchising, I don't think it was quantified, but is there a way that you could give us the lost sales and EBITDA in the quarter from the refranchising? And what those numbers will then look like for Q3 so we can make sure we get our model set appropriately?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Yes. So in the press release that we issued this morning, we included a chart that shows both revenue and adjusted EBITDA recast for last year as if the refranchising had occurred, you know, and it's been in place last year, and and, of course, for, the current year as, we reported it. So, you can actually see that, the impact on revenues and EBITDA kind of detailed out there. And, you know, for the quarter, we had an impact. EBITDA recast for the refranchising was up 6%.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

And other than that, I think that that chart that's in the press release should be able to help you with that modeling question.

[Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Okay. Thank you for that. We are assuming in a lot of earnings this morning, so I'll take a closer look once the call concludes. What about on the EBITDA margin decline, including refranchising for the rest of the year and all the various puts and takes, is this the low watermark for year on year EBITDA margin decline and perhaps there's continued declines, but just not to the tune of what we saw in Q2?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Yeah. You know, I I I think if you just look at your modeling relative to, you know, the the guidance that we provided, you should be able to see, you know, the overall impact. You know, we we we reiterated our guidance at the 450 to $470,000,000 of EBITDA, and we reiterated our net revenue guidance as well in the 1.67 to 1 point 7 3 billion range. So I just think if you look at that from a quarterly basis and do your math, you should be able to see that play out. I would expect that the deleverage in SG and A will moderate in the back half of the year.

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

So helping me with that math a little bit, I think that we should see some improvement in EBITDA margins in the back half of the year.

[Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies]

Okay. Thank you very much.

[Operator]

We have a question from David Lance of Wells Fargo. Please go ahead.

[David Lantz, Equity Research - Hardline Retail at Wells Fargo]

Hey, good morning and thanks for taking my questions. Can you talk about the cadence of new store openings in the second half of the year? And if demand proves choppier than expected on the back of tariffs, would you contemplate pushing any of those openings to 26?

[Lori Flees, CEO, President & Director at Valvoline]

Yes. Good question. As I mentioned, we did 33 new store additions for the quarter and we're at 68 for the year. It's a little slower start than what we had in f y twenty four, I think largely just given the timing of m and a closure closings. But when we look at our like, what units are in construction, meaning they're already broke ground, they're already moving forward, and all the work we've done in the past eighteen months around permitting support to work with cities to make sure, you know, as we get trades done and they have to be approved before we can move forward, I think we feel pretty strong about the timing of those construction openings.

[Lori Flees, CEO, President & Director at Valvoline]

Obviously, they can always move, you know, a week or two around. But in general, we feel good about those. And then when you look at the acquisition pipeline both for us and for franchisees, in terms of those that are already under LOI or were, you know, actively negotiating the final details on. When we add all of those up with some wiggle room as we always would have, we feel pretty comfortable in our guide of a 60 to a 85 for the year, and and that will be well within that range. Got it.

[Lori Flees, CEO, President & Director at Valvoline]

That's helpful. I don't think we mentioned it. Don't think we mentioned it. We did have a couple of closures on the franchise side, and that's pretty unusual to have two and a quarter. But these related to lease expiries, And we typically have them from lease expiries or store relocations.

[Lori Flees, CEO, President & Director at Valvoline]

It's very rare given the profitability of our stores across the network, but we did have two this quarter, which we factored into the numbers I shared.

[David Lantz, Equity Research - Hardline Retail at Wells Fargo]

Got it. That's helpful. And then on gross margin, it seems like expectations are still flat for the year. But is there anything we should keep in mind in Q3 and Q4 as we're modeling outside of the compares?

[Mary Meixelsperger, Chief Financial Officer at Valvoline]

Just the fact that we're going into summer dry season just kind of naturally with higher sales expectation will help us with a little bit of leverage there on the margin side. If you look at the cadence of margin rates over the four quarters, over the last few years, typically the back half of the year has stronger margin rates than the front half of the year, and we certainly expect that again this year.

[David Lantz, Equity Research - Hardline Retail at Wells Fargo]

Got it. Thank you.

[Operator]

We currently have no further questions. So I will hand back to Lori Fleas for closing remarks.

[Lori Flees, CEO, President & Director at Valvoline]

Thank you. Appreciate all the great questions today. I wanted to take a minute on behalf of the entire Valvoline team to extend a heartfelt thanks to Mary once again for her exceptional partnership and leadership on the Valvoline team. We certainly would not be the company we are today without having had Mary's expertise and and just thoughtful leadership on the team. Additionally, you know, we're thrilled to welcome Kevin who brings deep financial expertise and will undoubtedly hit the ground running with our teams given his past experience with Valvoline.

[Lori Flees, CEO, President & Director at Valvoline]

We delivered a very strong quarter in line with our expectations. That's why we're reinforcing or reconfirming our guidance, and we feel good about the momentum of the business. With our differentiated service model, we're are really in good shape to continue driving market share gains and delivering strong profitable growth. So appreciate the time that you've all spent today with us.

[Operator]

This concludes today's call. Thank you all for joining. You may now disconnect your lines.

Participants

Executives

• Elizabeth Clevinger, Investor Relations
• Lori Flees, CEO, President & Director
• Mary Meixelsperger, Chief Financial Officer

Analysts

• Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners
• Steven Shemesh, Director, Equity Research - U.S. Hardlines/Broadlines, Food Retail & E-Commerce at RBC Capital Markets
• Simeon Gutman, Analyst at Morgan Stanley
• Max Rakhlenko, Managing Director at TD Cowen
• Ariana Warden, Equity Research Associate - Consumer at Citi
• David Bellinger, Director & Senior Analyst at Mizuho Financial Group
• Mark Jordan, Vice President - Equity Research at Goldman Sachs
• Thomas Wendler, Analyst at Stephens Inc.
• Chris O’Cull, Managing Director - Restaurants, Franchised Businesses at Stifel Institutional
• Justin Kleber, Senior Research Analyst at Baird
• Peter Keith, Managing Director & Senior Research Analyst at Piper Sandler Companies
• David Lantz, Equity Research - Hardline Retail at Wells Fargo