Valvoline Inc. executives outlined the company's growth, pricing and supply outlook at the Goldman Sachs Global Consumer and Retail Conference. Chief Executive Lori Flees and Chief Financial Officer Kevin Willis spoke with Goldman Sachs analyst Mark Jordan, who moderated the session. The discussion came with Valvoline shares trading near their 52-week low of $28.50, at recent levels around $30.37 to $30.64, and down roughly 25% over the past year. The company's market capitalization was $3.86 billion, while revenue over the last twelve months was $1.96 billion, up 16% year over year. Return on equity was 28%, and the price-to-earnings ratio was 37.55.
Valvoline operates nearly 2,500 locations, about half of which are franchised. Management said it is targeting 2,900 stores by the end of 2028, which implies roughly 250 openings per year, and has a long-term vision of more than 3,500 locations. The company holds about a 6% share of the quick lube market, and its stores are located near only about 40% of the car park population. Larger franchise partners have committed more than $1 billion through new development agreements. Breeze Autocare, which represents less than 10% of total stores and sales, is being integrated into the Valvoline platform; as of the third quarter, 12 of more than 160 Breeze stores had been converted. The company is seeking to lift average revenue per Breeze store from $1.1 million to $1.7 million.
Customer economics were a central part of the presentation. More than 80% of customers are returning customers, and 70% to 75% of new customers come from dealer and general automotive service channels rather than quick lube rivals. Mature stores average more than 50 cars per day, and the store maturity curve runs four to five years. Every technician receives 270 hours of training, whether the store is company-run or franchised. Valvoline uses the SuperPro process and technology, and every oil change includes an 18-point safety check covering tires, lights, wipers and filters. The brand's origins date back 160 years.
Pricing and product mix were also discussed. Company-owned stores have raised prices by $5 to $7 per oil change. Premium oil accounts for about 80% of oil changes, split roughly evenly between full synthetic and synthetic blend products. Management said the shift toward full synthetic products provides a roughly 3% annual tailwind. Flees described the service as non-discretionary for vehicle owners seeking preventative maintenance and said customers are increasingly willing to trade money for time.
Supply conditions were also discussed. Lubricant cost increases are expected to peak at 60% above pre-conflict levels in the fourth quarter. Flees said that removing 20% of global supply and further constraining Group III products leads to higher prices, a dynamic the company has observed. The discussion referenced Aramco in the context of the supplier base.
