For the fiscal fourth quarter ended Sept. 30, 2018, Lexington, KY-based Ashland Inc. saw its net sales rise 8.6 percent to $594 million, while adjusted net income grew 14 percent to $65 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 9 percent to $121 million.
Management pegged the improved results to strong performance at Valvoline Instant Oil Change (the Quick Lubes segment) and solid growth from Ashland’s international operations; however, a “highly competitive environment” for its Core North America business remained a challenge, negatively impacting the company’s overall results.
Quick Lubes sales grew 23.1 percent to $181 million, with increases in both transactions and average ticket. Management attributed the rise in transactions to marketing investments made in customer acquisition and retention programs, while previously implemented pricing actions and premium mix paved the way for the higher average ticket.
System-wide, Valvoline Instant Oil Change same-store sales rose 7.6 percent on top of an 8.6-percent increase a year ago for a two-year stack of +16.2 percent. For company-owned shops, same-store sales were up 6.9 percent on top of a 9.8-percent rise a year ago for a two-year stack of +16.7 percent. For franchised Valvoline Instant Oil Change locations, same-store sales increased 8.1 percent on top of an 8.1-percent rise a year ago for a two-year stack of +16.2 percent.
For the full fiscal year, system-wide VIOC same-store sales were up 8.3 percent, marking the 12th straight year of same-store sales growth. And, for the first time, average sales per store passed $1 million. Additionally, average store sales have grown at nearly 6 percent over the last 10 years, according to Ashland.
Management expects VIOC’s same-store sales momentum to continue in 2019, growing 6 percent to 7 percent.
“In 2019, we expect to continue to add company and franchised stores at a healthy pace while pursuing additional acquisition opportunities,” CEO Sam Mitchell told analysts on Ashland’s Nov. 6 quarterly results conference call. “We will also continue our focus on talent management. We’ve been proactive in adjusting wage rates to address local market conditions, and I’m pleased with the team’s ability to fill our stores with high-level talent in a tight labor market.”
Management’s forecast for 2019 calls for between 27 and 32 new company-owned shops and for between 30 and 40 new franchised locations. This excludes acquired shops and franchise conversions.
As of Sept. 30, 2018, Quick Lubes had a total of 1,242 shops — a net increase of 115 locations over the prior year. This included the addition of 73 Great Canadian Oil Change shops.