How did VVV's revenue and expenses trend in Q1 2025?

Valvoline Inc. (VVV) exhibited robust growth in its revenue and key financial metrics during the first quarter of 2025, surpassing market expectations and reflecting strong operational performance.

1. **Revenue Growth**: VVV's revenue for Q1 2025 was reported at $414 million, marking an 11% increase year-over-year. This significant uptick was driven by system-wide same-store sales growth of 8% and the addition of 35 new stores, including 14 new franchise locations. The company's net sales exceeded the consensus estimate of $399.07 million, indicating a positive market response to its business strategies.

|code|Ticker|Name|Date|Cost of Goods Sold|Total Revenue|Net Income|market_code|
|---|---|---|---|---|---|---|---|
|VVV|VVV.N|Valvoline|2024 Q2|2.425E8|3.887E8|4.14E7|169|
|VVV|VVV.N|Valvoline|2024 Q3|2.539E8|4.214E8|4.59E7|169|
|VVV|VVV.N|Valvoline|2024 Q4|2.652E8|4.355E8|9.23E7|169|
|VVV|VVV.N|Valvoline|2025 Q1|2.614E8|4.143E8|9.16E7|169|

2. **Expense Management**: Despite the revenue growth, certain expenses increased, reflecting the company's expansion efforts and operational improvements. For instance, System-wide Same-Store Sales grew by 8%, and Adjusted EBITDA increased by 14% to $103 million. Gross Margin Rate improved by 80 basis points to 36.9%, and SG&A as a Percentage of Sales increased by 40 basis points to 19.6%. These figures suggest that VVV managed to maintain profitability while investing in growth initiatives.
3. **Net Income Impact**: The net income for the quarter was $94 million, which included a $71 million pre-tax gain from refranchising. This gain, coupled with strong revenue growth and improved operational efficiencies, contributed to a substantial increase in net income. The company's diluted EPS was $0.73, significantly higher than the estimated $0.29, indicating that VVV's earnings exceeded market expectations.
4. **Cash Flow and Shareholder Returns**: VVV's cash flows from operating activities increased by $20 million over the prior year, reaching $41 million. The company returned $39 million to shareholders via share repurchases, reflecting its commitment to shareholder value creation.

In summary, VVV's Q1 2025 financial performance showcased strong revenue growth, effective expense management, and improved profitability, underscored by strategic initiatives such as refranchising and store expansions.