Valvoline (VVV) Q1 2026 earnings summary

Executive summary

• Delivered strong first quarter results with double-digit growth in system-wide store sales and net sales, driven by productivity gains, network expansion, and the integration of Breeze Autocare, which added 162–204 stores.

• Same-store sales grew 5.8% year-over-year, with ticket growth as the main driver.

• Adjusted EBITDA rose 14–18% to $117–$117.4 million, and adjusted EPS increased 16–28% to $0.37, with recast results showing higher growth when accounting for refranchising.

• Reported a net loss from continuing operations of $32.2 million, primarily due to a $57.9 million pre-tax loss on FTC-mandated divestiture of Breeze stores.

• Customer demand for nondiscretionary services remains resilient, with no signs of trade-down or deferral.

Financial highlights

• Net sales/revenues reached $461.8–$462 million, up 11–15% year-over-year; system-wide store sales grew 12.6–13% to $923.6–$924 million.

• Gross margin rate increased 50 basis points to 37.4% year-over-year, with gross profit at $172.5 million.

• Adjusted EBITDA margin improved to 25.4%, up 60 basis points.

• Free cash flow was $7.4 million, up from negative $12.2 million in the prior year; operating cash flow improved to $64.8 million.

• Adjusted EPS was $0.37, up 16–28% year-over-year; reported diluted loss per share was $(0.25).

Outlook and guidance

• Fiscal 2026 guidance reaffirmed: system-wide same-store sales growth of 4–6%, 330–360 net store additions, net revenues of $2.0–$2.1 billion, adjusted EBITDA of $525–$550 million, and adjusted EPS of $1.60–$1.70.

• Management confident in ability to deliver on guidance, with focus on integrating Breeze, network growth, and margin improvement.

• Near-term margin headwinds expected from integration of immature Breeze stores and weather disruptions, but volume is anticipated to recover.

• Capital allocation will prioritize debt repayment and growth investments, with share repurchases paused to accelerate deleveraging.

• Capital expenditures planned at $250–$280 million for FY26.