Valvoline Reports Record Fourth-Quarter Earnings
Valvoline last Tuesday reported record fourth-quarter earnings driven by good margin management, continued improvement in channel and product mix, strong same-store sales growth at VIOC and good overall volume growth. EBITDA rose 11 percent, to $97 million, marking the eighth consecutive quarter of year-over-year growth. EBITDA as a percent of sales was 20 percent, an increase of 330 basis points versus the prior year. Total sales declined 7 percent, to $484 million, primarily as a result of currency headwinds and pass-through pricing from lower raw-material costs. Within the Do-it-Yourself (DIY) channel, volume was essentially unchanged. At VIOC, same-store sales rose nearly 9 percent at company-owned sites. In total, VIOC sales at company-owned stores grew 11 percent versus a year ago. Over the past year, VIOC has added 20 stores, bringing the total of company-owned and franchise sites to 942 at the end of September. Within Valvoline's international channel, volume grew 15 percent, driven by strong execution of channel building efforts in addition to the effect of customer destocking in the year-ago period. Valvoline's overall mix continued to improve, with U.S. premium-branded lubricant sales volume increasing to 40.7 percent, up from 37.8 percent a year ago.
For the first quarter of fiscal 2016, Valvoline expects continued strong performances across each channel. Sales are expected to be approximately $470-$480 million, in line with normal seasonality. EBITDA margin is expected to be approximately 20 percent.
In late September, parent company Ashland announced a plan to separate into two independent, publicly traded companies - one focused on specialty chemicals and the other focused on high-performance lubricants. The announcement followed a comprehensive strategic planning review by the company's global leadership team to better understand Ashland's markets, customers and the opportunities for each business to create the most value for shareholders, customers and employees.
The new Ashland will be a global leader in providing specialty chemical solutions to customers in a wide range of consumer and industrial markets. Valvoline will focus on building the world's leading engine and automotive maintenance business by providing hands-on expertise to customers in each of its primary market channels. Each company will be a leader in its respective industry, with the capital structure, financial resources and capital allocation strategies to drive greater revenue and earnings growth.
Separation planning and key work streams are well under way. Ashland is in the process of designing each company to succeed. The work is being led by a project management team composed of business and resource group leaders from around the world. Ashland is on track to complete the separation consistent with the previously stated timeline.
Calumet Reports Record 3Q Adjusted EBITDA
Calumet Specialty Products Partners, L.P. reported a net loss for the quarter ended September 30, 2015 of $48.9 million compared to net income of $9.4 million for the same quarter in 2014. Excluding special items, Calumet reported Adjusted Net Income of $71.1 million for the third quarter 2015 compared to $38.5 million for the third quarter 2014.
Third quarter 2015 Adjusted Net Income excludes four special items: (1) a $56.9 million non-cash loss related to a lower of cost or market ("LCM") inventory adjustment, including a $46.5 million unfavorable LCM inventory adjustment in the fuel products segment, a $12.2 million unfavorable LCM inventory adjustment in the specialty products segment and a $1.8 million favorable LCM inventory adjustment in the oilfield services segment; (2) a $33.8 million non-cash goodwill impairment charge related to our oilfield services segment; (3) a $24.3 million non-cash impairment charge related to the impairment of our minority investment in the Juniper GTL LLC gas-to-liquids joint venture, resulting primarily from a lack of committed funding for the joint venture from a consortium of potential investors; and (4) a $5.0 million unrealized loss on derivative instruments.
Excluding special items, Calumet reported Adjusted EBITDA of $131.7 million for the third quarter 2015, versus $110.7 million for the prior year period.
Distributable Cash Flow ("DCF") was $44.9 million in the third quarter 2015, including an unfavorable non-cash LCM inventory adjustment of $56.3 million, down from DCF of $72.3 million in the prior year period.
Specialty products (which includes lubricants, waxes and solvents) gross profit decreased $9.1 million in the third quarter 2015 when compared to the third quarter 2014, from $99.4 million to $90.3 million.
Calumet said it is nearing completion on three remaining organic growth projects first announced in 2013, including the doubling of production capacity at the Partnership's Missouri esters plant to 75 million pounds per year. The company anticipates that the Missouri esters plant expansion will be completed during the fourth quarter 2015, at which time Calumet intends to ramp up sales volumes to customers.
FUCHS PETROLUB 9M 2015 Sales and Revenue Up
Globally operating lubricant producer FUCHS PETROLUB SE generated sales revenues of EUR 1,539 million in the first nine months of 2015,compared to EUR 1,403 in the same period last year, thus representing an increase of 10%. The growth is acquisition-driven (+4%) and reinforced by positive currency translation effects (+6%). Organic sales revenues grew by 0.1%. Deutsche Pentosin-Werke GmbH was consolidated for the first time in the third quarter of 2015. The acquisition of Statoil Fuel & Retail Lubricants Sweden AB had no effect on the financial statements for the first three quarters of 2015.
Earnings before interest and tax (EBIT) increased by EUR 25 million or 11% to EUR 261 million compared to EUR 236 for the same period last year. At the same time earnings after tax rose by EUR 17 million or 10% to EUR 181 million.
Free cash flow stood at EUR 33 million compared to EUR 108 in the same period last year, after net payments of EUR 110 million for acquisitions.
The FUCHS PETROLUB Group expects sales revenues to grow by around 10% for the financial year, largely as a result of acquisitions and currency translation effects. Organic sales revenues are likely to remain at the same level or increase slightly compared to the previous year. In terms of EBIT and earnings after tax, the Group continues to anticipate an increase in the higher single-digit percentage range. The FUCHS PETROLUB Group expects to record free cash flow of more than EUR 150 million before acquisition-related expenditure.
