Valvoline (NYSE: VVV) reported fiscal Q3 2026 net revenue of $544.6 million, up 24% from $439.0 million, while diluted EPS from continuing operations rose 16% to $0.51 from $0.44. System-wide same-store sales growth of 8.0% and continued store expansion supported the quarter, although gross and net profit margins narrowed even as adjusted EBITDA margin improved slightly.
Core financial results
Revenue grew faster than gross profit and operating income. Gross profit increased approximately 21% and operating income rose 18%, compared with 24% revenue growth, reflecting pressure from higher costs.
Adjusted EBITDA increased 25% to $162.4 million, with its margin edging up to 29.8%. Adjusted EPS rose 21% to $0.57.
| Metric | Fiscal Q3 2026 | Fiscal Q3 2025 | Year-over-year change |
|---|---|---|---|
| Net revenue | $544.6 million | $439.0 million | +24% |
| Gross profit | $214.9 million | $177.6 million | Approx. +21% |
| Gross margin | Approx. 39.5% | Approx. 40.5% | Approx. -1.0 pp |
| Operating income | $112.2 million | $94.7 million | +18% |
| Income from continuing operations | $65.0 million | $57.0 million | +14% |
| Diluted EPS from continuing operations | $0.51 | $0.44 | +16% |
| Adjusted EPS | $0.57 | $0.47 | +21% |
| Adjusted EBITDA | $162.4 million | $129.5 million | +25% |
| Adjusted EBITDA margin | 29.8% | 29.5% | +0.3 pp |
Adjusted results exclude items including information technology transition and remediation costs, investment and divestiture-related expenses, and debt modification costs.
Store network and system-wide performance
System-wide store sales increased 18.5% to $1.05 billion. Company-operated store sales grew faster than franchised store sales, while the total network expanded 15.6% from a year earlier.
| Operating metric | Fiscal Q3 2026 | Fiscal Q3 2025 | Change |
|---|---|---|---|
| Company-operated store sales | $481.0 million | $382.6 million | Approx. +25.7% |
| Franchised store sales | $572.9 million | $507.0 million | Approx. +13.0% |
| System-wide store sales | $1.054 billion | $889.6 million | +18.5% |
| System-wide same-store sales growth | 8.0% | 4.9% | +3.1 pp |
| System-wide stores at quarter-end | 2,456 | 2,124 | +15.6% |
Valvoline added 47 stores on a net basis during the quarter, including 22 company-operated and 25 franchised locations. It ended June with 1,232 company-operated stores and 1,224 franchised stores.
System-wide sales include sales generated by independent franchisees and therefore exceed Valvoline’s reported net revenue. Consolidated revenue includes sales from company-operated locations, along with royalties and other franchise-related fees.
Pricing supported sales while lubricant costs constrained reported margins
Management said the 8.0% same-store sales increase benefited from pricing actions. Those actions helped support revenue as the company faced higher finished lubricant costs, but they did not prevent reported gross margin from falling by approximately one percentage point.
Cost of sales increased approximately 26%, faster than revenue. Operating margin consequently declined to approximately 20.6% from 21.6%, while the reported net profit margin fell to 11.9% from 13.0%. Quarterly interest and financing expense also increased to $27.9 million from $18.6 million.
At the same time, adjusted EBITDA margin improved by 0.3 percentage points. Management attributed the result to operational discipline and improved selling, general and administrative expense leverage, indicating that expense management provided a partial offset to product cost pressure.
Cash flow and balance sheet
For the nine months ended June 30—not the third quarter alone—operating cash flow from continuing operations increased to $284.6 million from $180.0 million. Free cash flow reached $112 million, improving by $93 million from the prior-year period.
Valvoline ended the quarter with $84.2 million in cash and approximately $1.6 billion in total debt after making a $50 million voluntary term-loan prepayment. At September 30, 2025, cash was $51.6 million and total debt was approximately $1.07 billion.
The nine-month cash flow statement also showed $652.5 million of acquisition outflows, $172.3 million of capital expenditures, and $755.0 million of borrowing proceeds. These figures help explain why stronger operating cash generation coincided with a higher debt balance.
Fiscal 2026 guidance
Valvoline raised its full-year system-wide same-store sales outlook and increased the lower ends of its revenue, adjusted EBITDA, and adjusted EPS ranges. It also reduced the capital spending range, while leaving expected store additions unchanged.
| Metric | Updated fiscal 2026 guidance | Prior guidance | Change |
|---|---|---|---|
| System-wide same-store sales growth | 7.5%-8.0% | 5.0%-6.5% | Raised |
| System-wide store additions | 330-360 | 330-360 | Unchanged |
| Net revenue | $2.05-$2.10 billion | $2.00-$2.10 billion | Lower end raised by $50 million |
| Adjusted EBITDA | $550-$560 million | $540-$560 million | Lower end raised by $10 million |
| Adjusted EPS | $1.70-$1.75 | $1.65-$1.75 | Lower end raised by $0.05 |
| Capital expenditures | $240-$260 million | $250-$280 million | Range reduced |
The largest revision was to same-store sales growth, with both ends of the range moving higher. The narrower financial guidance keeps the upper bounds unchanged while signaling greater confidence in the lower ends of the expected outcomes.
Recent insider transactions
The supplied insider data showed 50,243 shares purchased across nine transactions and 10,825 shares sold across three transactions during the previous six months, resulting in net purchases of 39,418 shares. The following are the nine most recent supplied entries that included both a transaction action and value; an April 1 entry without those details is omitted.
| Date | Insider | Role | Transaction | Reported value |
|---|---|---|---|---|
| June 25, 2026 | Jonathan L. Caldwell | Executive | Sale at $40.00 per share | $114,040 |
| June 2, 2026 | John Kevin Willis | CFO | Option exercise at $33.94 per share | $131,551 |
| May 15, 2026 | Jennifer Lynn Slater | Director | Purchase at $32.53 per share | $32,530 |
| May 14, 2026 | Richard Joseph Freeland | Director | Purchase at $32.37 per share | $100,347 |
| May 14, 2026 | John Kevin Willis | CFO | Purchase at $31.80 per share | $318,000 |
| March 3, 2026 | Jonathan L. Caldwell | Executive | Sale at $37.54-$38.00 per share | $137,924 |
| March 2, 2026 | Jonathan L. Caldwell | Executive | Option exercise at $20.29 per share | $180,114 |
| February 27, 2026 | Dione R. Sturgeon | Executive | Option exercise at $37.80 per share | $10,849 |
| February 20, 2026 | Julie Marie O’Daniel | Executive | Sale at $38.55 per share | $166,228 |
These transactions establish the reported buying, selling, and option-exercise activity but do not disclose the insiders’ motivations.
Risks investors should monitor
- Finished lubricant costs: Higher input costs already contributed to a lower gross margin. Valvoline’s ability to offset further increases through pricing and operational discipline will affect future profitability.
- Debt and financing expense: Total debt stood at approximately $1.6 billion, while quarterly interest and financing expense increased by roughly 50%. A sustained financing burden could continue to limit net income growth relative to operating performance.
- Execution against higher guidance: The revised outlook calls for 7.5%-8.0% same-store sales growth and 330-360 store additions. Delivering both requires continued same-store momentum while the company expands its network.
- Cash demands from expansion: Acquisition spending and capital expenditures remain significant, increasing the importance of maintaining the recent improvement in operating cash flow.
Summary
Valvoline’s fiscal third quarter combined 24% revenue growth with 8.0% same-store sales growth and continued network expansion. Pricing supported sales and adjusted EBITDA margin improved modestly, but higher lubricant costs and financing expenses weighed on reported margins. The raised same-store sales outlook and higher lower bounds for key financial guidance shift the focus to whether Valvoline can sustain sales momentum while controlling costs, debt, and expansion-related cash requirements.
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