Monday, August 1, 2016   VOLUME 12 ISSUE 31  
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Valvoline 3Q Earnings Rise

Ashland last Tuesday reported strong third-quarter earnings (the third quarter of Ashland’s fiscal year), for Valvoline with EBITDA rising 3 percent, to $119 million, due to increased promotional activity in the prior year.

Operating income during the three months ending June 30 was $109 million, up 1.9 percent from $107 million year to year. Valvoline’s sales revenue for the quarter declined 2 percent to $500 million, down from $510 million in the year-ago quarter.

This marks the eleventh consecutive quarter of year-over-year EBITDA growth as Valvoline continued to execute its strategy of investing in higher-return opportunities within its core lubricants product lines. Results were driven by solid overall lubricant volume growth with particular strength among Do-It-For-Me (DIFM) customers, including both those served through installers and those served by VIOC. In total, lubricant volume grew by 3 percent and EBITDA margin increased by 110 basis points, to 23.8 percent, when compared to the prior year. At VIOC, same-store sales rose nearly 7 percent at company-owned sites. At the end of the third quarter, VIOC had a total of 1,055 company-owned and franchised stores within its network, a gain of 116 stores versus a year ago after including the acquisition of 89 Oil Can Henry's stores earlier this year. Within Valvoline's international channel, volume grew 6 percent, driven by continued strong execution of channel-building efforts. Valvoline's overall sales mix continued to improve, with U.S. premium-branded lubricant sales volume increasing to 45.3 percent of total sales volume, up from 40.8, a 450-basis-point increase from the prior year and a 70-basis-point gain from the second quarter of fiscal 2016.

Ashland said that due to securities law restrictions associated with the planned separation, it is not providing a fourth-quarter outlook for the Valvoline business segment.

For the quarter ended June 30, 2016, parent company Ashland reported income from continuing operations of $97 million on sales of nearly $1.3 billion. For the year-ago quarter, Ashland reported income from continuing operations of $115 million on sales of nearly $1.4 billion. On an adjusted basis, Ashland's income from continuing operations in the third quarter of fiscal 2016 was $122 million versus $131 million for the year-ago quarter. Operating income was $175 million,while net income totaled $71 million, a decrease of $36 million from a year ago.


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