Valvoline Inc

Equity Research 5 August 2026 | 8:37AM EDT

Valvoline Inc. (VVV): First Take: 3Q26 EPS beat on stronger margins; FY26 SSS guidance raised supported by strong franchised growth

Valvoline’s 3Q26 adj. EPS of $0.57 beat the GS and consensus estimates (FactSet) of Mark Jordan, CFA | $0.49 and $0.50, respectively, primarily driven by better-than-expected margins. Goldman Sachs & Co. LLC Net revenue of $545mn came in slightly ahead of the GS and consensus estimate of Kate McShane, CFA $543mn despite system-wide same store sales growth of 8.0% beating by a much | wider margin (vs. GS/consensus of 6.0%/6.7%). The much stronger same-store sales Goldman Sachs & Co. LLC

growth but only slightly stronger revenue result is due to outperformance at the Emily Ghosh | company’s franchised channel, in our view, as franchised system-wide store sales Goldman Sachs & Co. LLC came in well above our estimate ($573mn vs. GS of $563mn) while company-operated sales were relatively in line. Adj. EBITDA of $162.4mn also beat Nishi Agarwal | the GS/consensus estimates of $151.5mn/$153.6mn, and adj. EBITDA margin of Goldman Sachs India SPL 29.8% increased 32 bps y/y, with gross margin coming in better-than-expected at Grace Chee -100 bps y/y (vs. GS/consensus of -130bp), while SG&A as a % of sales also came in | Goldman Sachs & Co. LLC better than expected. Samantha Chiang | Bottom line: VVV beat expectations on both the top and bottom line, though the Goldman Sachs & Co. LLC bottom-line beat was much stronger, and same-store sales trends were also much better than expected, driven by strength in the franchised channel. A much better-than-expected adj. EBITDA margin (29.8% vs. GS/consensus of 27.9%/28.3%) was also a highlight. FY26 guidance for system-wide same-store sales growth was raised, but guidance for net revenue was adjusted only slightly higher at the mid-point, suggesting continued outperformance by the franchised channel, in our view. The updated FY26 guidance, however, implies 4Q adj. EBITDA and adj. EPS that is below current consensus, and we expect this to be of particular focus on the conference call. Other topics we expect the Q&A to focus on include: (1) what drove the gross margin/SG&A rate beats during the quarter, (2) the margin impact of rising product costs, (3) expected SG&A leverage during 4Q as the company laps stronger labor productivity in the prior year, and (4) commentary regarding quarter-to-date same-store sales trends.

Key Highlights n We estimate the franchised channel outperformed: Sales for company-operated stores increased 25.7% y/y and includes a healthy contribution from the previous Breeze Autocare acquisition, while sales at franchised stores increased 13.0% y/y, outpacing the GS estimate of +11.0% for the channel. The company no longer provides a breakout of same-store sales growth by channel, but we view growth at franchised stores as the more

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Goldman Sachs Valvoline Inc. (VVV)

impressive figure, estimated at ~9% while we estimate company-operated growth was closer to ~6%. n Strong margin expansion: The company’s much better-than-expected adj. EBITDA margin of 29.8% (vs. GS/consensus of 27.9%/28.3%) was driven by a stronger gross margin as well as SG&A leverage. This result is encouraging as adj. EBITDA margin has been a focus in recent quarters, and could be in part a result of faster-than-expected synergy capture from the Breeze Autocare acquisition. n FY26 comp guidance raised; sales, adj. EBITDA, and EPS ranges narrowed: Management raised FY26 guidance for system-wide same-store sales growth to 7.5%-8.0% (from 5.0%-6.5%), and narrowed the range of their sales guidance to $2.05bn-$2.1bn…