Valvoline Inc. (NYSE:VVV) Q2 2020 Earnings Conference Call - Final Transcript

May 07, 2020 • 09:00 am ET

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Valvoline Inc. (NYSE:VVV) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Valvoline, Inc. Q2 2020 earnings conference call. [Operator instructions] I would now like to hand the call over to your host, Sean Cornett, head of investor relations. Sir, please go ahead.

Executive
Sean Cornett

Thanks, Salida. Good morning, and welcome to Valvoline's second-quarter fiscal 2020 conference call and webcast. Valvoline released results for the quarter ended March 31, 2020, at approximately 5:00 p.m. Eastern Time, yesterday, May 6th.

And this presentation remarks should be viewed in conjunction with that earnings release. A copy of which is available on our Investor Relations website at investors.valvoline.com. These results are preliminary until we file our Form 10 Q with the Securities and Exchange Commission. A copy of the news release has been furnished to the SEC on Form 8K.

With me on the call today are Valvoline's chief executive officer, Sam Mitchell; and Mary Meixelsperger, chief financial officer. As shown on Slide 2, 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. Valvoline 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 basis unless otherwise noted. Adjusted results exclude key items which are unusual, non-operational, and restructuring in nature. We believe this approach enhances the understanding of our ongoing business. A reconciliation of our adjusted results to announced reported number GAAP and a discussion of management's use of non-GAAP measures is included in the presentation Appendix.

The non-GAAP information provided is used by our management and may not be considered similar measures used by other companies. As we turn to Slide 3, let's review our reported financial results for the quarter. For the fiscal second quarter, Valvoline delivered a reported operating income of 117 million net income of 63 million and EPS at $0.33. Year-to-date cash flow from operating activities was 154 million.

The primary key item in the quarter was costs related to debt redemption and issuance with an impact of 14 million of after-tax expense. In February, Valvoline issued 4.25 percent senior notes due 2030 with an aggregate principal amount of 600 million. Net proceeds from the offering were used primarily for the redemption of 5.5 percent senior notes due 2024 with a $375 million aggregate principal amount. Non-service pension and overhead income of 7 million after-tax was partially offset by other items totaling 4 million of after-tax expense.

In Q2 of fiscal 2019, key items total 4 million of after-tax expense, including restructuring and related expenses of 7 million, business interruption expenses of 1 million, pension and income of 2 million, and income tax adjustment benefits of 2 million. Now if we move to Slide 4, we can review our adjusted results. Our