Hello, everyone, and welcome to the Valvoline 4Q 2023 Earnings Conference Call and Webcast. My name is Emily, and I'll be coordinating your call today. After the presentation, there will be the opportunity for any questions, which you can ask by pressing Star, followed by the number 1 on your telephone keypads. I will now turn the call over to our host, Elizabeth Russell. Please go ahead, Elizabeth. Thanks. Good morning, and welcome to Valvoline's fourth quarter fiscal 2023 conference call and webcast. This morning, at approximately 7:00 A.M. Eastern Time, Valvoline released results for the fiscal year and fourth quarter ended September 30, 2023. This presentation should be viewed in conjunction with that earnings release, a copy of which is available on our investor relations website at investors.valvoline.com. Please note that these results are preliminary until we file our Form 10-K with the Securities and Exchange Commission. On this morning's call is Lori Flees, our President and CEO, and Mary Meixelsperger, our CFO. As shown on slide 2, any of our remarks today that are not statements of historical fact are forward-looking statements. These forward-looking statements are based on current assumptions as of the date of this presentation and are subject to certain risks and uncertainties that may cause actual results to differ materially from such statements. Valvoline assumes no obligation to update any forward-looking statements unless required by law. In this presentation and in our remarks, we will be discussing the results on an adjusted non-GAAP basis, unless otherwise noted. Non-GAAP results are adjusted for key items which are unusual, non-operational, or restructuring in nature. We believe this approach enhances the understanding of our ongoing business. A reconciliation of our adjusted non-GAAP results to amounts reported under GAAP and a discussion of management's use of non-GAAP and key business measures is included in the presentation appendix. The information provided is used by our management and may not be comparable to similar measures used by other companies. As a reminder, the retail services business represents the company's continuing operations, and the former global product segment is classified as discontinued operations for the purposes of GAAP reporting. On slide 3, you'll see the agenda for today's call. We'll begin by discussing our best-in-class retail services platform and proven formula for growth. We will then look at a review of our financial results and guidance. Now, I'd like to turn the call over to Lori. Thanks, Elizabeth, and great to be with you all today. Fiscal 2023 was a transformational year for Valvoline, as it was our first year as a pure-play retail business. In addition to delivering the expected results for the year, we completed the sale of Global Products and made substantial progress on our promise to return the sale proceeds to shareholders, with $1.5 billion in share repurchases this year. With both a strong results track record and a clear strategy, our retail services platform is well positioned for long-term growth. Valvoline is the quick, easy, trusted leader in automotive preventive maintenance and also is a best-in-class retail services provider. We have a proven track record of growth. Fiscal year 2023 marked our 17th consecutive year of positive same-store sales, with system-wide sales growing to $2.8 billion. Our network of 1,852 stores is over 50% franchised, and Valvoline has been named the top franchisor in our category by both Entrepreneur and Franchise Times. We also have a proven track record of strong profit and returns, with mid-teens IRR and EBITDA margin growing to 26.3% for the year. As we've laid out previously, Valvoline offers a best-in-class value proposition to investors based on growth, brand, and performance. With a 150-year-old brand and a scaled platform of over 1,850 locations, Valvoline is a proven leader that has created significant revenue and EBITDA growth in recent years through store additions, same-store sales growth, and accretive M&A. The market we serve is large and nondiscretionary, with an estimated 470 million do- it-f or- me oil changes performed annually in the United States. While we've delivered an 18% compound annual growth rate in our system-wide sales since the IPO, Valvoline still has significant opportunity to build upon our estimated 5% market share. We have confidence in our ability to grow to 3,500+ stores while lowering our capital requirements through accelerated franchise growth. Our model of quick, easy, trusted service will allow us to continue winning market share and generate attractive returns and significant cash flows in the years to come. This creates an incredible value proposition for investors. Slide 8 shows our key metric performance over recent years, demonstrating our strong history of financial performance, including fiscal year 2023. With 137 stores added in 2023, including 51 franchise stores, our total store count is now 1,852. System-wide sales grew to about $2.8 billion in 2023, an impressive 18% compound annual growth rate from our IPO in 2016. System-wide same-store sales also saw strong and consistent growth across the network, with 11.9% growth for both company and franchise systems in 2023. From a profit perspective, Adjusted EBITDA grew 20% to $380 million in fiscal 2023, resulting in a 32% compound annual growth rate since 2020. Turning to slide 9, you can see our full year FY 2023 results, along with our FY 2023 guidance and long-term guidance we provided last year. Valvoline delivered strong growth across all metrics. Not only did we deliver against our fiscal 2023 guidance, our performance was aligned with our long-term algorithm across all metrics as well. In addition to strong sales and store growth, our EBITDA growth outpaced the top-line sales growth, capturing leverage across the business and improving margins to 26.3% for the year. For FY 2023, we saw 62% growth in adjusted EPS to $1.18, which was significantly impacted for the year by items related to the sale of global products, including share count reductions due to share repurchases and interest income from the investment of the net proceeds. Mary will discuss the FY 2024 guidance in more detail in a moment, but we do anticipate fiscal year 2024 results to fall within our long-term algorithm guidance as well. Turning to slide 11. We have a simple but highly effective formula for delivering long-term value to our shareholders. I first shared our three pillar strategy last year, which includes, 1, driving the full potential of our existing business, 2, accelerating network growth, and 3, expanding services to meet the needs of an evolving customer base and car parc. This proven formula will drive higher revenue, strong margins, free cash flow, and attractive return on invested capital. Let's take a look at each of those in more detail, starting with the potential in the core business. As you can see in slide 12, we've seen significant operational improvements in recent years. Our marketing sophistication continues to be a standout in the automotive services industry. We continue to build brand awareness and optimize the cost to acquire new customers. Our quick, easy, trusted service consistently delivers a strong customer experience and drives customer retention. Our average ticket continues to increase, demonstrating our pricing power, as well as strong execution of non-oil change revenue service penetration and premiumization. As we see costs increase, notably in product and labor, we take pricing actions, which we have already done in FY 2024. We do this with confidence in our pricing power as we continue to look for, but not see trade downs or service deferrals at this time. Our growth in customers and ticket drive four-wall EBITDA profitability improvement. This can be seen in our mature store performance, and we anticipate an additional $70 million of EBITDA as current non-mature stores mature. Next, let's look at an update on new units. As I mentioned earlier, we finished the year with a strong delivery of store additions, bringing our new store additions for the year to 137. After a challenging Q3, our franchise partners delivered 26 total units in Q4. We mentioned in Q3 that we expected some of the delayed units in Q3 to push into Q4 or Q1, but our franchise partners were able to deliver most of the delayed units in Q4. We also had a record number of new builds for the year for both company and franchise systems, with 47 and 24 units respectively, with nearly 50% of the new units being new builds. This demonstrates that our franchisees see the value in continuing to take advantage of both M&A and ground up opportunities. While we expect the challenges we saw in Q3 and construction permitting continue, our company and franchise teams are finding new ways of partnering to improve processes across the development cycle. For example, in fiscal 2023, Valvoline formed a development council, which includes our corporate real estate and developing franchise partners across the system. Our development council is highly engaged and focused on pipeline execution strategies, capital reduction plans, and reinvestments into the business. As we turn to slide 14, I'm proud of our progress toward accelerating network growth. Both our team and our franchise partners recognize the significant opportunity we have to expand our store footprint. Auto care remains a growing, highly fragmented market with significant white space for expansion. As we set out in FY 2022, we see potential to grow our retail system to over 3,500 units. We continue to target 250 units, new units per year by 2027, with 150 coming from franchise. We see multiple levers to fuel new growth, including partnering with our existing franchisees, adding new franchise partners, which we continue to pursue, and opportunistic M&A. We anticipate taking a step towards that goal with a projected 140-170 total unit additions for fiscal 2024, with 55-70 coming from additional franchise units, largely from our existing partners. On slide 15, we turn to the third pillar of our strategy, customer and service expansion. Today, I'd like to highlight our progress in the fleet business and non-oil change revenue service penetration. Currently, fleet is less than 10% of our total system-wide business and continues to grow at a faster rate than the consumer business. In fiscal 2023, the fleet business saw 25% sales growth as we added over 3,000 new accounts and increased our business within existing accounts. The fleet business ticket average is about 20% higher than the average consumer ticket based on company store performance. This is largely driven by the fleet owners taking advantage of the non-oil change services we offer in order to maintain their important business assets. For fleet customers, our proposition is compelling. The quick, easy, trusted service is not only convenient, but it helps fleet owners keep their vehicles safe and on the road. We're excited about the progress of the business and the growth potential it offers. Now, let's take a look at non-oil change revenue across the system. The growth in the fleet service business is certainly a contributor to our improvements in non-oil change revenue service penetration, but we're also seeing that improvement within our consumer base. The system-wide non-oil change revenue has grown consistently with an increase of $1.93 this year, our largest dollar increase in four years. For company stores, about half of this was driven by service penetration, which was enabled by an increase in training and new tools deployed to increase the consistency of our presentation of these services, as well as ensuring a quick, easy, trusted delivery. Now, I'll turn it over to Mary to discuss our financial results. Thanks, Lori. Let's start with a look at our revenue growth. We saw significant sales growth for both Q4 and fiscal 2023. For the quarter, sales grew 16.3% to $390 million, and for the year, we saw growth of almost 17% to $1.4 billion. System-wide same-store sales grew 10% for the quarter, with approximately two-thirds driven by ticket and one-third from transaction growth. For the year, system-wide same-store sales grew 11.9%, with approximately 70% driven by ticket. Ticket growth in the quarter and the year was largely driven by pricing, but we also saw meaningful contributions from non-oil change revenue, service penetration, and premiumization. On the transaction side, growth in customers was the largest contributor. The convenient and trusted service we are providing to our customers continues to drive this strong customer retention. On Slide 18, we have a look at margin performance. Year-over-year for the quarter, EBITDA margin increased to 190 basis points to 28%, driven primarily by improved labor efficiencies, along with lubricant cost declines that were largely offset by waste oil headwinds. Sequentially, margin rate decreased 130 basis points, which is largely driven by seasonally higher benefits expense within the labor line. As Lori mentioned, for the fiscal year, we saw EBITDA growth of 20%, outpacing the 17% top-line growth. EBITDA margin improved as well, increasing 50 basis points to 26.3%, largely driven by SG&A leverage. Turning to Slide 19, you'll see additional financial results for the quarter and the year. Adjusted EBITDA improved 24.8% to $109 million for the quarter and 20% to $380 million for the year. We also saw strong growth in adjusted EPS with $0.39 for the quarter, an 86% improvement over the prior year, and $1.18 for the year, an increase of 62%, both driven by stronger operating results, higher interest income, and share repurchase activity. Turning to Slide 20, we have an updated look at the balance sheet and cash position. We continue to make progress on our commitment to return a substantial amount of the proceeds of the global product sale to shareholders. In fiscal 2023, we returned $1.5 billion to shareholders. During the month of October, we repurchased an additional 2.8 million shares, leaving 124 million on the current 1.6 billion authorization as of October 31st. We continue to have a strong cash position and still anticipate the completion of the current authorization in the coming months. Our target leverage ratio remains 2.5-3.5x EBITDA on a rating agency adjusted basis, which translates to 1.5-2.5x from a non-rating agency adjusted basis. Cash flows from operating activity increased $219 million over the prior year to $353 million. As we mentioned earlier in the year, this includes favorable changes in net working capital due to the one-time benefit of the growth in payables as a result of the new supply agreement with Global Products. This quarter, we once again saw favorable interest income from the investments of the net proceeds from the sale of Global Products, earning $11 million for the quarter and bringing the total to $44 million for the year. On slide 21, we have our guidance for fiscal year 2024. As Lori mentioned, we expect fiscal year 2024 to be an on-algorithm year. Top-line revenues are expected to grow to $1.6 billion-$1.7 billion, driven by expected same-store sales growth of 6%-9%, and store additions of 140-170, with 55-70 stores from franchisees. From a profit perspective, we expect EBITDA to grow to $420 million-$460 million. As a reminder, with seasonality around customer driving patterns and the timing of our annual company meetings, we expect just over 40% of EBITDA to come in the first half of the year, with the balance coming in the back half. Capital expenditures are expected to be $185 million-$215 million, which includes amounts for additional new company store growth, increased maintenance, and technology costs. We expect adjusted EPS to be $1.40-$1.65. Now, I'll turn it back over to Lori to wrap up. Thanks, Mary. I want to thank our talented team of over 10,000 and our strong franchise partners for the hard work that delivered these results in fiscal year 2023. We continue to deliver best-in-class performance relative to high-growth retail peers. We're focused on creating shareholder value with our long-term algorithm of driving the full potential of our core business, accelerating network growth with a focus on franchise, and innovating to meet the needs of an evolving car parc. Now, I'll turn it back over to Elizabeth to begin the Q&A session. Thanks, Lori. Before we start the Q&A, I want to remind everyone to limit your question to one and a follow-up, so that we can get to everyone in the line. With that, can the operator please open the line? Thank you. If you would like to ask a question today, please do so now by pressing star, followed by the number one on your telephone keypad. If you change your mind and would like to be removed from the queue, that is star followed by two. When preparing to ask your question, please ensure that your device and your microphone are unmuted locally. Our first question today comes from the line of Daniel Imbro with Stephens Inc. Please go ahead, Daniel, your line is open. Yeah. Hey, good morning, everybody. Thanks for taking our questions. Good morning, Daniel. Maybe starting on the unit growth side... Morning. Starting on the unit growth side, obviously, franchise openings caught up a bit. How do you feel about the pipeline and cadence for 2024? And maybe how are the conversations going with potential new franchisees and the refranchising discussion you guys talked about last quarter? Yeah, great, great question, Daniel. We were really pleased with the progress in Q4. Obviously, Q1 was a surprise and a disappointment based on the pushouts we saw. But given some very quick actions that we took to support our franchisees in helping them put stores up and get them running given supply chain and permitting challenges, we felt really good about where we landed in Q4, as did our franchise partners. And we had an opportunity two weeks ago to actually meet with our franchise partners. We have an annual workshop with them. And in that, we had a development council where we had our real estate and construction leadership and the leaders of the developing franchise partners all, you know, come together and talk about FY 2024 and beyond. I would say there's significant excitement about the opportunities in the market, both on the M&A side and on the new build side. I mean, this market is still very fragmented. And while Valvoline, as a brand, is the market leader in this space, we only have 5% market share, which means that there's incredible white space to develop our footprint. And so in working with the franchise partners, as we've stated, we have a goal of getting to 250 new units per year, developed by 2027, and 150 of those coming from our franchise partners. Now, within the 150, about two-thirds will come from our existing partners. So that meeting that we had two weeks ago was really reinforcing on both sides about how we'll work together to get to that. We feel good about the pipeline. Our franchisees, we have franchisees asking for some expansion of their territories. We have active development agreement updates underway. We feel really strong about the guide that we have laid out for FY 2024 of 140-170 new units, with 55-70 coming in from franchise. We expect the franchise piece to continue to build year-over-year from our existing players as a big component of that 150 total target. Lori, I would just comment that the comparison that you made in your early comments was really against Q3, where we only saw one franchise unit. And so we felt really good about where Q4 came in with 26 new franchise units. I would also say, we've seen progress in speaking with potential new franchisees. We really only want a handful of those that are capable of really driving meaningful growth. We've seen the addition of a couple smaller new franchisees and are making good progress in discussions with other franchisees, as well as making some progress in talking with new franchisees on the refranchising side. So, we're making good progress. Nothing specific to report on this call, but progress is being made on all fronts. Great! And then, Mary, for a follow-up, maybe just one on the guidance. Feels like a very algo type guide in line with historical ranges. Can you maybe talk about what kind of comp momentum you're carrying into this year, and what, you know, puts and takes we get you to the high or low end from here of the comp guide? And then to clarify on EPS, does that exclude any buyback activity this year? I didn't see any clarifier in the release. Thanks. Sure. Well, on the second part of your question on EPS, the EPS guide includes the completion of the $1.6 billion authorization, but doesn't include any additional share repurchase authorizations that we might do over and beyond the $1.6 billion. On the first part of your question, I feel really confident about the guide for the new year. We're seeing good performance coming into the first quarter, and we're well positioned both in terms of, you know, the operating side of the business. You know, I'm especially excited about the fact that our SG&A growth continues to be in just mid- to high-single digits, while we're seeing, you know, sales and growth in the mid-teens. We're gonna continue to see nice, margin leverage, coming from, the delta between, that sales growth and the slower, slower growth on the SG&A side. Good confidence and guidance. Lori, I don't know if there's anything you'd like to add to that. No, I would, I would add the same. I think, the teams are really energized around opportunities to both grow cars in our existing stores and drive ticket. And, our franchise partners and, and we on the company operating side, both feel like we're going into FY 2024 with really strong momentum. Yeah. I would also add, we saw some very modest leverage from lubricant costs in the fourth quarter, while it was about 10 basis points from a sequential quarter perspective of benefit from lower lubricant costs overall, which is, you know, the product cost net of the waste oil sales. And so I think going forward into the new year, we're well positioned. We take, you know, we watch the cost carefully, both on product and our largest cost in our cost of goods sold is our labor costs. We've already taken some price increases to begin fiscal year 2024, but we'll continue to watch that carefully as the year moves on, if we see any necessary adjustments within the cost areas that might require some additional pricing increase. And, you know, we feel pretty good about our pricing power and ability to make those adjustments. All righty. I'll leave it there. Thanks so much for the color, and best of luck. Thank you. Our next question comes from Steven Zaccone with Citi. Please go ahead, Steven, your line is open. Hey, good morning, everyone. Thank you very much for taking my question. I wanted to follow up on the prior question around same-store sales. I was curious on the cadence of the year, how you're thinking about that, well, also for the full year guidance you gave. And then within that, how should we think about the mixture of ticket versus transaction? Do you think you're at a point with pricing stabilizing in the industry? Great question, Steven. I think as we looked at Q4 and as we move into FY 2024, you know, we felt we finished very strong at 10% same-store sales growth. As expected, September was slightly lower than the rest of the quarter because we lapped a pricing increase that we did year-over-year. I think overall, we delivered the quarter as we would expect. Now, as we moved into the new year, the start of October was a little soft, but that was relative to a very strong compare year-over-year. As we moved through October, we saw the momentum year-over-year start to increase, and we feel really good about where our guide is and having a 6-9 year percent same-store sales across the board, you know, across the business for the year. I think the guidance is, is very good. There's always, you know, we're working to hit, you know, as high in the guidance as we can, and that comes from initiatives that we have around continuing to focus on non-oil change revenue penetration. We have some marketing optimization to drive new, new customer acquisition at a lower, you know, CAC rate. Then we have a bunch of initiatives around the fleet to get higher penetration of existing accounts. As those things start to come, then obviously the same-store sales growth will be stronger. But we feel really good about where we're coming into the year and how the teams have gone after the business so far. Okay. And then just on the, just to clarify, I should ask it more clearly. Just in terms of the cadence, is it also first half, second half, would you think, you know, could the first half be a bit above that range or are you within the second? Just on that ticket versus transaction. Yeah, so in terms of the overall same-store sales, we actually see a fair amount of consistency in the first half versus second half. And so, I do expect that we'll still see a little bit stronger amount of the comp coming from ticket versus transactions this year, but it'll be certainly more balanced than what we saw in fiscal 2023. Okay, great. And then just the second question I had was just on capital allocation. So when you've completed this authorization, what's the willingness to, you know, continue to buy back stock? How do you think about that as a priority for, you know, your overall cash flow? Yeah, well, we've made a commitment to return excess capital to shareholders. So as our EBITDA grows and as we manage through our target leverage ratio of 2.5-3.5x rating agencies adjusted leverage ratio, I expect that we will see continued returns of capital to shareholders over time. The business will continue to generate strong free cash flow. And again, with growing EBITDA, I don't expect us to allow the balance sheet to get lazy, and I do think that we should see continued returns of capital over time. I think we will re-evaluate that subject to market conditions, you know, after we complete the current authorization. And so I think you should expect to hear more about what our plans are with our next earnings call on Q1. Okay, great. Thank you so much for the detail. Best of luck this year. Thank you. Our next question comes from Simeon Gutman with Morgan Stanley. Please go ahead. Your line is open. Hi, everyone. Good morning. Mary, one of your answers preempted this question I was gonna ask, surprise, surprise, on base oils and the gross margin outlook. So, so you kinda suggested that product costs have already come in. I'm curious, you know, how that's embedded into the guidance, and then if those expectations changed at all, as you actually move through the fourth quarter. Yeah, well, you know, typically, Simeon, we take what we know today, and reflect that in the guidance. So to the extent that we see base oil increases, that ultimately would flow through to lubricant cost increases under our supply agreement, that's not factored in, we're really factoring in. And the same goes for base oil reductions. If we saw incremental base oil reductions from where we are today, that opportunity is not factored in either. We did do some math to try to help you better understand the impact of... So if there was a $1 increase in base oils, it would take about a 50% increase in price on the company side. $0.50 So I'm sorry, $0.50 increase. Excuse me. For a $1 increase in base oils, it would take about a $0.50 increase in price to be able to cover that cost increase. You know, said a little differently, about a $1 increase in base oil cost would impact unfavorably gross margins by about 50 basis points, and that 50 points, basis points would be made up with about a 50% increase in prices. Now, that's just on the company side of the business. On the franchise side of the business, we pass through base oil costs, lubricant costs on a quarterly basis under our contracts with the franchisees. Okay. And then I'm gonna ask a follow-up, and then with the second question in it. When you mentioned that the product costs got better, and you mentioned both, you know, the waste oil, is it that the underlying base oil got better or the waste, or both? And then the completely separate question is, can you talk about promotional and the promotional environment, what's happening? Is, you know, the higher prices that you're getting in the marketplace, they're sticking, but are they being, call it, funded by promotions? Can you talk about that overall? So, our waste oil contracts are tied to base oil indexes. So, when we saw a modest improvement in the quarter, it was a modest improvement on both ends, because they're kinda integrally tied contractually. Lori, do you want to talk about the promotional? Sure, Simeon. We're actually seeing, we see pockets of discounting happening by competitors, but it hasn't actually changed our overall approach. When we look at our retention rate for new- to- file customers, that's customers who've never been to a VIOC location, we have not seen any difference in retention rates over last year, and we don't expect to in the coming year. We actually have initiatives to try to increase retention by just addressing some of the feedback around our process for new customers.... In fact, if we look at FY 2023, we've been doing a lot of work to optimize our marketing spend and really get more almost personalization approach to discounts that are offered. Our year-over-year discount has come down, even in an environment where I think, you know, people are concerned about the resiliency of the customer. We're just getting smarter around what discounts are required for which type of customer based on the channel that we're acquiring from. But on the promotional side, you know, we're not seeing any deterioration on the retention of a new-to-file customer or the active customer base. Thank you. Our next question comes from Kate McShane with Goldman Sachs. Kate, please go ahead. Your line is open. Hi, good morning. Thanks for taking our questions. We wondered if we could ask first, what the average age of vehicles are that are coming to Valvoline, and just given what we've seen, at the dealerships with affordability headwinds, are you seeing any change in the age of cars coming in? You know, the average age of vehicles that we see, our sweet spot, Kate, is really between right around three years when cars come off a warranty up to about 12 years. So the average age of a vehicle that we see is kind of in the mid-8-year range, and that really we haven't seen any significant change in that in the quarter. So you know, I would tell you that our consumer is continuing to show the demonstrate their need for this kinda non-discretionary service and maintaining their vehicles. And we continue to like the spot that we see. We do think there's opportunities for us to take some more share from dealerships because our process is very convenient. So, over time, will we see that entry spot come down from that kinda three-year point? I think there's real opportunity for us there as we continue to market and really drive the point of how convenient our service is. Yeah. I'll just add, Kate, that the sweet spot or the highest percentage of penetration of the car parc is between years six and nine of vehicle life. But that said, the average age of the vehicle this year, this past year, that came in relative to the year before, was 10 months older. So we are seeing people keep their cars longer. We know that. That's data that's out in the market, and that has actually also been consistent with our customers' vehicle age. But the level of penetration is the highest in years six through about 10. And then it continues to expand out as customers keep their cars. I do agree with Mary. You know, we've been expecting the dealers to start to use oil changes or preventative maintenance as a way to bring people back in to look for cars. I think with the automotive strike, that they may have held off on that, just given where supply is, but that's, you know, our assumption, because we're not seeing it at this time. We may see pockets of it in a specific market, but we're not actually seeing those kinda dynamics happening from a customer retention or acquisition standpoint. Thank you. Thanks, Kate. Our next question comes from Bret Jordan with Jefferies. Please go ahead, Bret. Your line is open. Hey, good morning, guys. Morning, Brett. Good morning. In your prepared remarks, when you talked about your recent franchise committee meeting, you mentioned capital reduction plans. Could you give us more color on that? And is it sort of a way to make franchise acquisition more achievable, or, I guess, the back story on that? Actually, great question. Thanks for asking it. As with all retailers, these past couple of years, construction costs have been going up because of inflation, both on the GC labor side, just given the tightness, but just in terms of material costs have been going up. So we, as a company, in trying to make sure that we're maximizing our return on capital invested, are looking at ways to reduce the capital costs of new builds, in order to ensure that we continue to deliver really attractive return on invested capital. Which we have been doing, despite the increase in capital costs for new builds. We've taken an opportunity to hire an A&E firm to relook at our drawings from with a fresh perspective, to actually figure out where we can take capital costs out of our design. We're early on in that process. We've gotten back some initial, some initial results. We've engaged our franchise partners two weeks ago on some of those initial results, and we'll be taking some of the new designs to the market to bid out. This is really just trying to get ahead of, continued cost inflation and how can we bring down the capital cost. This is something that we've done proactively. We haven't done it because our franchise partners have asked us to, or because they're delaying any new builds. In fact, as I mentioned, the pipeline of new builds on the franchise side is higher than it's ever been. The reason why is because when you look at a fresh retail site... That is in the right location, given traffic and population density, the amount of traffic that then you can gain with an optimized marketing spend is very attractive from a cash-on-cash return, although it does take more time to build up to that than buying an existing site and converting it. So we're just getting ahead of trying to make sure that we drive, you know, the highest return on invested capital. We continue to do that and exceed, by a significant amount, our cost of capital, but we're always looking for ways to cut that down. One example I've used is we build out the ceiling in our stores, but nobody gets out of their cars, so why do we need to have a completed ceiling? That's just extra cost, which is not necessary. Those are just the things that we're looking at. Our design hasn't changed in many years, and it's just an opportunity to take a fresh perspective. And Lori, I want to go back real quickly. My follow-up sort of might link to that. No, go ahead. Go ahead, Jimmy. If you had more on that prior question, that's great. The follow-up question, I guess, would be tied to that, what you're seeing in the non-oil change services attachment, I guess, you're talking about more business with the fleet. Is that more of the same service, or are you finding new services to add? And as you look at a new store format, is there the possibility of maybe another bay to provide services other than a pit oil change system? The non-oil change revenue increases that we've seen, I mentioned $1.93 in fiscal year 2023, which was our highest growth in dollars for non-oil change revenue services, is really focused on the services that we provide. So we started the year just going through do we have the supply and the equipment, and is the equipment all in working order such that the services can be provided for any customer whose vehicle requires them? The second is our team trained in those services to provide a quick, easy, trusted service delivery of those items, of those services? Then the third was how do we present the services to the customers such that the customer understands why their vehicle needs it, and our proposition on doing them relative to others in the marketplace? It's really just a going back to basics to make sure that our team is equipped and trained, and can communicate what the customer requires based on the age or the functioning of the vehicle as it presents itself to our stores. We are and always look at adding additional services, and we do see opportunities, but we have to make sure that, A, they fit our proposition of quick, easy, trusted, B, that we can train our team to do them, effectively and efficiently, and then make sure that we understand the requirements from a capital perspective. But we're always looking for ways to expand our reach, and, you know, when, as we talk to fleet managers, they're really, you know, leading some of that discussion or helping us evaluate because they love the one-stop-shop nature, and the more that we can do in our stores in a quick, easy, trusted way, you know, that, that's been a good discussion point and us validating where we should focus. But we don't have anything to report at this time. We'll obviously give updates and, and share more as we have it. Great. Thank you. So, Lori, I just wanted to go back and clarify a comment I made earlier on the average age of a vehicle we serve. I mentioned 8-9 years. That's actually the time where we over-index the most to the car parc. The actual average age of a vehicle we serve is a little bit lower than the average age of the car parc at 11 years, versus the car parc being at about 12.5 years. So I misspoke a little earlier. I wanted to correct that. Our next question comes from David Lantz with Wells Fargo. Please go ahead. Your line is open. Hey, good morning, and thanks for taking my questions. So SG&A management was impressive in the quarter. Can you talk about some of the moving pieces in that line and how you expect that to look as we move through fiscal 2024? Yeah. So, we did see really nice leverage year-over-year, that was largely driven by SG&A management. We saw 190 basis points of EBITDA margin improvement, year-over-year for the quarter, of which three-fourths was related to the SG&A leverage, and about a quarter of it was related to gross profit leverage, where we saw some good labor efficiencies year-over-year in the quarter. I would tell you that there's a lot of time and attention being paid on the SG&A line. We know that we're investing in the business to maintain our higher growth rate, and that does require some investment in SG&A, but we think that there's a real opportunity from an efficiency perspective to be able to scale as well. So a lot of focus in those, that area and a lot of time and attention being paid in that process, especially with, you know, our new plan in place, and our guidance for the coming year. We expect to continue to see leverage in the, on the SG&A line. ... Got it. That's helpful. And then on the fleet business, it's less than 10% of system-wide sales today, but growing really strongly at 25%. So curious how you're thinking about, one, the long-term penetration, and then two, how that, you know, sales growth rate could look through next year? Yeah, the one thing I'd just set context on is our market share of the fleet business is, I think, less than 1% or around 1%, and our overall market share in the oil change space is about 5%. So we see significant opportunity just to get our fleet penetration or share up to where we are overall as a market. We haven't shared what our growth rate is on the fleet side, but we expect that it will continue to outpace our overall growth, because we are having, you know, fantastic discussions with the fleet management companies, as well as with small fleet operators. In this past year, we actually expanded some of our fleet work to cover our franchise partners. So when you look at growth in fleet overall, fleet of our company stores is a much stronger, you know, growth rate, but it is. I think on the fleet side, we'll start to see that accelerate, and the less than 10% was on a system-wide basis. So again, we see a lot of opportunity on fleet, and we're trying to make sure that we can enable our franchisees to get the benefit of the work we've been doing for the company-operated stores. And Lori, I'd add that one of the biggest requests we get from our national fleet customers is an expanded footprint. You know, we currently are not in certain locations where they would like us to be, and so, continuing to expand that footprint will act as a tailwind to our growth in the fleet business as well. Absolutely. Great. Thanks. Our next question comes from Mike Harrison with Seaport Research Partners. Please go ahead. Your line is open. Hi, good morning. Lori, you mentioned- Good morning, Mike. Earlier that you are undertaking some efforts this year to optimize your marketing efforts and work to improve retention. Was just hoping you could talk in a little bit more detail about what some of those optimization actions are. And also, do you expect to see marketing spend be pretty similar to where it was last year, or is it moving higher year-on-year? I'll let Mary talk about the marketing spend overall, but in terms of our efforts, it's around... We look at new store marketing, so some of our marketing spend is tied around the number of stores that we're launching and where those stores are. Obviously, we've mentioned before that we're trying to focus our new store entry in key markets where we're infilling the market, and therefore, marketing costs would be lower than a market that is much less penetrated or new, and therefore, requires a lot more brand building. But some of the optimization we're doing, both for company and for franchise, is around new store marketing and what are the most effective tactics, given the penetration in the brand that already exists, so that we get a faster ramp on new store sales. Second is, some of the tactics that we're doing on how to reactivate customers who are inactive. And by inactive, it just means that they haven't come to us within the last 12 months, and we want to find ways to reengage them. And we ran a number of pilots last year on how to do that, doing things like a Father's Day promotion for inactive customers. Those are days where our volume tends to be lower than what our capacity would be. And so if we can market to inactive customers to come in on days that are not as busy, one, they're gonna get a great experience, the speed is gonna be fantastic, and it's a chance to reengage a customer before they defect. The other thing is really optimizing the channels that we go after new customers and doing that in a more surgical way based on our store base. So we have stores that have been in market for, you know, 20 years, and the demographics around those stores are not growing at the same pace than other stores. And making sure that we're spending new customer acquisition dollars in areas that are growing and that we are maybe less mature in the marketplace. So these are taking the dollars that we have, both in reminding existing customers, you know, that they need to get another oil change given the time that we last saw them, but also optimizing our new customer acquisition so that our cost of customer acquisition is down on a per customer basis. The last one is we just continue to look at new digital channels and digital tools. You know, we've had a robust marketing and CRM, you know, backbone relative to our industry. It's, it really is a standout. But when you compare the things that we have done relative to what broader retail is doing on the digital side, we still see there's opportunities for us to be more effective and more efficient on the marketing side. ... Mary, do you wanna comment on getting spend expectations? Yeah. So overall, marketing as a component of SG&A for the new year will be growing in line with new store count growth for our company stores. So, you know, I expect it to be pretty consistent with, you know, a high single digit SG&A growth, that I mentioned earlier. We will see growth in marketing, but it'll be pretty much in line with store growth, which is the primary driver of the increases in marketing spend. A lot of what Lori talked about is driving efficiencies in our existing marketing spend. So overall, I'd say that we're likely seeing a high single digit increase in marketing for the year, for the new year. All right. That's very helpful. And then a couple of housekeeping questions, Mary. First of all, can you help us understand a little bit what drove that D&A number to move up so much sequentially to that $28 million level? Sure. Did you expect that? Yeah. Can you give us maybe some guidance for D&A expense as well as interest expense next year? Yeah, we certainly expected some of it. About 25% of the increase related to just new stores coming online, 75% was related to new technology that was placed in service. Now, a component of that, probably about half of it, was some catch-up from the prior quarters, where we had placed technology in service earlier in the year and didn't get the depreciation captured in the quarter. But I would tell you that moving forward, we'll continue to see increases in depreciation and amortization related to new stores, kinda consistent with where we saw it in the four quarters of this year. But I expect to see modestly higher depreciation and amortization moving forward as we make more technology investments to drive improved experience and more efficiencies in the stores. I think the fourth quarter itself was a bit unusual because we had some of that catch up. Going forward, you'll likely see a little bit higher growth rate because some of the new technology investments that we're making. Sorry, and interest expense for next year? Yeah. So interest expense, I think if you look at our interest income in the current year, we had $44 million of interest income that offset interest expense. And so, you know, we still have $757 million at year-end of cash and cash equivalents and short-term investments. We'll see some of that go away given market conditions with the tender for the 2030 bonds that I would expect sometime in our second fiscal quarter. So, you'll continue to see a little bit elevated or benefit to interest income in the current year given our cash position. But once we net through that, I think you'll start to see a more normalized interest expense based on the outstanding 2031 bonds that are just under 4% discount rate, excuse me, interest rate, and the Loan A which has a variable rate based on SOFR plus a spread. So you know, I think we're in good shape. I will tell you that we built in a little bit of cushion in our guidance, our EPS guidance, assuming that we're gonna see the Fed move interest rates another 100 basis points or so. And so that is built into our EPS guidance. All right. Thank you very much. Thanks, Mike. With that, we have no further questions, so I'll turn the call back to Lori for any closing comments. Thanks, Emily, and thank you all for joining us today and for your thoughtful questions. Since our last update, I've enjoyed spending time with many of you and our investors, and I look forward to the ongoing discussions. We have a resilient and durable business, and I'm excited about the momentum that we're taking into FY 2024. So I appreciate your time today. Thanks. Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.