Hello all, and welcome to Valvoline's Third Quarter Fiscal 2024 conference Call and Webcast. My name is Lydia, and I'll be your operator today. After the prepared remarks, there will be an opportunity to ask questions. If you'd like to ask a question during the Q&A, you can do so by pressing Star followed by One on your telephone keypad. I'll now hand you over to Elizabeth Russell with Valvoline to begin. Please go ahead. Thanks. Good morning, and welcome to Valvoline's Third Quarter Fiscal 2024 Conference Call and Webcast. This morning, Valvoline released results for the third quarter ended June 30, 2024. 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-Q with the Securities and Exchange Commission. On this morning's call is Lori Flees, our CEO and President, and Mary Meixelsperger, our CFO. As shown on slide two, any of our remarks today that are not statements of historical facts 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 our 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. Today, Lori will begin with a look at the key highlights from our third quarter, and Mary will then cover our financial results. With that, I will turn it over to Lori. Thanks, Elizabeth, and good morning, everyone. Thank you for joining us today. For the third quarter of fiscal 2024, we saw growth at the top line across the network, with system-wide store sales growing 12.4% to $809 million, with our growth rates from both company and franchise being consistent with the first half of the year. As we expected, we saw transactions grow each month throughout the quarter as we moved into the summer drive season. Our same-store sales growth for the quarter was 6.5%. We did see growth moderate in our customer base for the same stores in Q3 as we lapped strong growth in the prior year quarter, and we saw increasing competitive advertising spend in the current year quarter. The fundamentals of our business are strong, and demand for preventative maintenance has historically been resilient. From a customer behavior perspective, while we continue to not see trade downs or deferrals, we are seeing very slight differences in discounting and non-oil change service penetration for our stores in areas with lower-income demographics. Moving to our profit performance, Adjusted EBITDA improved almost 12% to $123 million, despite a strong comparison in the prior year. Operating income increased 8% to $93 million. We added 33 new stores to the network this quarter, with 15 stores coming from franchise. This brings our year-to-date net additions to 109 stores, which includes 48 net new franchise stores. Following the close of the quarter, we also announced a $400 million share repurchase authorization, consistent with the commitment for share repurchases to be part of our ongoing capital allocation framework. Before Mary covers the details of the quarterly results, I'd like to share some additional insights on how these results fit into our strategy. Our first strategic pillar is to drive the full potential of the existing business. We do this by driving traffic to the stores, both returning and new customers, by executing our Super Pro process to deliver a great customer experience, and by managing costs. We continue to focus our advertising investment to drive traffic to our stores and believe our data-driven approach will help us get the right message to the right customer at the right time in the most cost-effective manner. During this quarter, we saw benefits from the work our team has been doing to drive more organic search traffic to our website, which is a more cost-efficient acquisition channel. We also renegotiated one of our marketing contracts. These types of actions help ensure our return on ad spend is optimized in this more competitive environment. Once customers are in our stores, we want to provide a comprehensive service offering. A key component of that is our non-oil change service menu. This quarter, non-oil change service penetration was again the largest contributor to same-store sales growth across the system. The team continues to focus on how we educate our guests on the additional services recommended for their vehicles. We saw growth across the menu of services we offer. We continue to believe that the retention of the teams in our stores and their increasing tenure is what enables this improvement. Managing cost is always an important part of the success of our core business. We shared in Q2 that management of labor costs had exceeded our expectations. This quarter, the teams continued to manage labor costs well and delivered labor as a percentage of sales consistent with the prior year. Now, I'd like to touch on our second strategic pillar, accelerating network growth. We're really pleased with the 33 store additions this quarter. It brings our total network to 1,961 stores, representing an 8.7% growth over the prior year. Following the end of the quarter, we closed a transaction to refranchise 17 stores in the Las Vegas market. We've talked for some time that we would consider refranchising, and although this deal is relatively small, it is a capital efficient way to help fuel growth with one of our long-standing franchise partners. Also, following the end of the quarter, we closed on a transaction to purchase five stores in Texas from a retiring franchise partner. In this instance, the stores are part of a company-operated geography, and acquiring these stores will help us build regional scale and have more efficient SG&A spend in the region. Our third strategic pillar is customer and service expansion. Our fleet business is an important component of this strategy, and we continue to see positive momentum, with sales still growing at a higher rate than the company-wide growth. The growth is driven by both ticket and transaction from the addition of new fleet customers and increased volume within existing fleet accounts. We see a long runway for growth for this part of our business. Now I'll turn it over to Mary to walk us through our third quarter financial results. Thanks, Lori. On slide five, we'll start with a closer look at our top-line performance. Net sales grew to $421 million, a 12% increase over the prior year. System-wide same-store sales grew 6.5% and 19% on a two-year stack. The growth for the quarter continues to be consistent and balanced between company and franchise stores, with 6.7% and 6.4% respectively this quarter. As a reminder, in the prior year, the 12.5% same-store sales included a very strong contribution from transaction growth, as well as considerable inflationary price increases. This quarter, ticket growth is the primary contributor to the comp. As Lori shared, increased non-oil change revenue service penetration is the largest driver of ticket growth. The remainder of the ticket growth comes from a balanced contribution from net pricing and premiumization. We saw a strong start to Q4 from the Fourth of July holiday shift, which was more than offset by the regional impact from Hurricane Beryl in our Houston market and a one-day impact across the system related to the global CrowdStrike outage in mid-July. Slide six looks at the other drivers of financial results. We saw a 40 basis point decline in year-over-year gross margin rate in the quarter. Depreciation caused 60 basis points of deleverage in the quarter. Without the impact of depreciation, the gross margin rate would have improved 20 basis points. Labor costs continued to be managed well and as a percentage of sales, was consistent versus the prior year. We also saw some modest deleverage from company versus franchise mix in the quarter. As a reminder, in the prior year, we benefited in Q3 from the timing of changes to franchise incentives. The franchise incentives introduced in fiscal year 2024 have been more consistent on a quarterly basis and are focused on driving network and same-store sales growth. Sequentially, we saw gross margin expansion of 210 basis points, primarily driven by volume from the start of the summer drive season. Adjusted SG&A as a percentage of sales increased 40 basis points over the prior year, driven largely by increased advertising spend. Overall, adjusted EBITDA margin declined 10 basis points over prior year, driven primarily by investments in advertising. Sequentially, we saw a 220 basis point EBITDA margin expansion due to higher volumes. On slide seven, we'll take a look at overall profitability. For the third quarter, adjusted net income decreased 16% to $58 million, a result of operating income growth of $7.5 million, offset by a reduction in interest income of $23 million. This interest income primarily relates to the short-term investment of the proceeds from the sale of the global products business in the prior year. We completed the $1 billion share tender offer near the end of Q3 last year. Adjusted EPS grew 5% from $0.43 to $0.45 per share, impacted by both the reduction in interest income and lower share count. The balance of the change came from the improvement in operating income. Turning to slide eight, we'll look at the balance sheet and cash position... During the third quarter, we completed the tender offer to repurchase the $600 million of 2030 senior notes, the last step for the use of net proceeds from the sale of global products. Recall that we were required by the indenture covenants to repay these notes. Year-to-date cash flows from operating activities were $170 million, a decrease of $80 million versus the prior year. As a reminder, the establishment of the supply agreement with Valvoline Global Operations in the prior year drove a one-time benefit to net working capital, which represents most of this change. In the third quarter, we did see improvement in accounts receivable as we continued to normalize our billings to franchisees following the implementation of our new ERP system in Q2. As Lori mentioned, we announced a $400 million share repurchase authorization subsequent to the end of the quarter. Our capital allocation priorities remain unchanged. First is to fund profitable growth, next is to stay within our targeted net leverage ratio, and third is to return excess cash flow to shareholders. On slide nine, we'll look at fiscal year 2024 guidance. Our guidance is unchanged from last quarter's update. Taking into account the impact of this CrowdStrike outage and the recently announced refranchising, we are expecting to be towards the low end of the revenue range, with same-store sales for the year being at or slightly below the midpoint of the range. For EBITDA and EPS, we are expecting to be at or slightly below the midpoint of the range as well. We are pleased with our store additions so far this year and are expecting to be at or above the midpoint of the 140-170 range. I'll now turn the call back over to Lori. Thanks, Mary. Through the third quarter, we've delivered substantially in line with our expectations for both financial performance and network growth. I'd like to thank our more than 10,000 team members and our strong franchise partners, who together helped us surpass $3 billion in system-wide store sales over the past 12 months, just 10 quarters after we hit the $2 billion milestone. Now, I'll turn the call back over to Elizabeth to begin Q&A. 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 on the line. With that, please open the line. Thank you. Please press star followed by the number one if you'd like to ask a question, and ensure your devices are muted locally when it's your turn to speak. A kind reminder to limit yourself to one question and one follow-up. Our first question today comes from Steven Zaccone with Citi. Please go ahead. Your line is open. Great. Good morning. Thank you very much for taking my question. I was hoping we could start with just understanding that fourth quarter same-store sales outlook. Could you help us understand how large the CrowdStrike impact is? And then I think I heard you correctly, but the full year sales guidance, you're now tracking towards the low end. So then in terms of that fourth quarter comp, like, should we think that's, you know, at a 6%, or could it be a little bit below that? Yeah, in terms of looking at the fourth quarter comp, Steve, in the month of July, we started strong, but we did have some bumps, both from the hurricane in the Houston market and along the Gulf Coast, as well as an issue with CrowdStrike that affected us. We did see a pretty rapid recovery throughout the day that day, so it didn't, we didn't have stores down for a full day. We estimate across the system, the system-wide revenue impact was just below $5 million. And so that does have an unfavorable impact in terms of the July comps, probably in the 30-50 basis point range. I'm happy to say that we did see a nice recovery from that, and we're back to business for almost all stores by the end of the day that day. In terms of, you know, the outlook for same store sales for the full quarter, you know, I think if you're able to just kinda run your models and do your math, you'll see that, you know, we think same store sales for the quarter will likely be coming in toward the low end of the range. There's a potential for it to be slightly below, but I think for the most part, we're looking toward the low end of the range for the quarter. Steve, I'll just comment- Okay. briefly. On the 19th of July, the impact actually required the stores to go into a manual mode, which, given the way our technology works, slowed the rate of service, and that was across the network. But by noon, we had about half of our stores back up and running, having to go to each store. And our franchise partners were amazing in terms of working with us so that we could get the entire network back up, except for a handful of stores that needed a new server back up and running within 24 hours. So really good, you know, response rate by the entire team, including our franchise partners, which is why the impact was really limited to that one day. Yeah, that's, that's good to hear. My follow-up question is just on the decision to refranchise some stores. How should we think about the potential for more refranchising in the future? Thanks very much. Thanks. It's a good question. We've talked about refranchising for some time, and when we have an existing or a new partner that can drive accelerated network growth and shareholder returns, we're absolutely gonna consider and pursue that. Obviously, they need to align with our brand and people standards, 'cause that's what drives the results over time. But this is one where you've got to have the right partner, putting the right capital work, not just to acquire the business, a very strong business that we have, at an attractive rate, but also committing and having the capital to accelerate the growth of that market faster than what we would. So it is a needle to thread, particularly given where our value is tracking in the market. But Vegas fit exactly in that sweet spot. We had a long-term partner who has personal and business connections to the Las Vegas market, and they had been wanting to put more capital into the Valvoline Instant Oil Change business. We were able to work with them to create that opportunity. They're committed to add more new units than what we would overall, and that just drives overall growth in the business. It is capital efficient, it delivers a good long-term shareholder return, and it provides growth opportunities for our people. So I can't tell you, you know, how many of those we'll continue to do. It really is an opportunistic, but we'll continue to evaluate it, and our conversations with new and existing partners continues to be very robust. It just ties back to our desire to drive network growth with a bias to increasing our franchise new unit growth three times, but doing that in both a capital efficient, but also, one with an eye towards overall shareholder return. Thank you. Our next question today comes from Simeon Gutman with Morgan Stanley. Please go ahead. Good morning, everyone. I wanna ask about the 6.5%. Can you talk about the 6.5% comp? Can you talk about the spread across markets? Is it normal? Is it widening? Is it narrowing? Can you talk about it in certain geographies, and then performance gap between mature and immature stores? I'll cover the regional, and I'll ask Mary to cover the mature versus new stores. You know, we are looking quite closely, given the macro environment, to see what trends we're seeing regionally. But I would just reinforce that our business fundamentals are strong, and our, you know, our business has historically been a very resilient business to any consumer, you know, macro trends. We're not seeing significant differences in regions. As I mentioned in my comments on the presentation, we're seeing very slight changes as it relates to discounting, meaning a slightly higher discount rate and a slightly lower non-oil change service penetration in store areas where they have lower income demographics. So where we have a cluster of stores in a region, that's really the only thing driving any regional difference that we're seeing, and I would just underscore, it's very slight, so much less than 1% on either metric. And Simeon, we, I'm sorry. No, you go ahead, Simeon. No, you go ahead, Mary. Sorry. I was just gonna comment on the mature versus immature stores. You know, we can continue to see nice comp performance in our mature stores. And then, you know, the younger stores that are part of the comp base do add some nice incremental benefit to the overall comp. We've estimated that in the past to be in the 100 basis point range, in terms of, you know, what younger newer stores to the comp are adding overall. But we continue to see nice performance in our mature stores as well. Okay. My follow-up, and I may have missed this on the prepared or even the question. If the 6.5% may be, I don't know, may be slightly below street expectations or your own, and there was some macro factor and/or deferral, but at the same time, you said the largest driver of sales growth was non-oil change. Does that—is that showing a sensitivity by the customer, or is that showing your success in converting a customer at a time of economic sensitivity? Yeah, it's a great question. I think it really is around the process and the team. So, you know, we're really proud of what the teams have been doing on non-oil change revenue, and this comes down, you know, to them following the process, not doing the pressure sales pitch, just an educational sales pitch, where they explain to the customer what the vehicle needs from a preventative maintenance standpoint, to really preserve the value and the longevity of the asset. And by doing that, customers may get the service done at the time, or they may come back and do it within a relatively short period of time, and that's really what's driving the strong NOCR benefit in our comp. Now, we've said, and it's been this way for a while, where we believe it'll contribute 100 to 150 basis points of comp. It has been, and we believe it will continue to do so. And I think this is more around executing a process of education to the customers, making sure the customer knows how our pricing for those services compares to others, and making sure they know that as they want to maintain the asset, which many customers are wanting to hold on and do the maintenance on their vehicles, so they don't have to buy a new car in the current interest rate environment. So I do think it's a combination of times and consumers holding on to their vehicles longer. Those two things coming in. And Lori, I just reiterate that, you know, as we shared in your comments, we're not seeing any deferral- No ... in our customer base. So, you know, when we're looking at oil drain interval and we're looking at customer performance, it's been very, very consistent. Yeah, across the core oil change, we're not seeing deferral or trade down. There's not a lot of trade down opportunity in our service mix. I think the only areas of potential deferral would be battery, but it's really not the season where people, if the battery is testing yellow, you know, in a stronger economy, you can see, and I'm talking personally, you can see people wanting to get ahead of that, but when they're feeling a little tighter in the wallet, they might defer and wait till it turns red. So those, but those are very small pieces of our business, and again, we're not seeing deferral in the core. Thank you. Our next question comes from Peter Keith with Piper Sandler. Please go ahead. Hi, thanks. Good morning. I want to touch on advertising. So you'd flagged competitive advertising as maybe a bit of an issue to traffic. At the same time, you've stepped up your ad spend. So I guess a two-part question is, is the ad spend increase, are you being forced to spend more? And then related to that, as the spend increase has picked up, does that tend to become immediate with traffic, or is there a bit of a quarter or two delay? It typically, so one, the advertising climate, I think we started to see that at the beginning of the quarter, where we had an increase in lower funnel advertising dollars coming into the market. As we got a little bit further into the quarter, we did see some steeper discounting from, you know, a couple of competitors. They didn't last long, but they were fairly, you know, fairly significant. We chose not to follow. We chose to continue to push our value proposition relative to those competitors. But we did give our stores, and have always given our stores, the full authority to ensure that they kept loyal customers, and not had them going to a competitor for a slightly steeper discount. So, one, you know, that's what we saw in the environment. How do we respond? What we're seeing is that, for example, search terms, the cost of search terms, slightly elevated with more dollars in the market. That meant in order to drive the traffic that we wanted to drive, that cost went up a little bit, so that return on ad spend went down a little bit. Again, we really try to make sure that we're driving the right amount of traffic on the right days to the stores to maximize the economics, and I think those are some of the things that you'll see. As we started to see that, the team quickly started to, as we always, you know, try to do, is be agile with where we spend the money, moving it to lower cost channels or affiliates, et cetera, renegotiating a contract, as I mentioned, in order such that we can maintain a really strong return on ad spend, and keep our cost of customer acquisition, our CAC, down, down to an appropriate level, that drives overall margin and return for the business. Okay, very helpful. And then, I guess just on the, a broader question on the, the same-store sales. So, the Q3 result at 6.5%, and then, looks like Q4 will probably be closer to 6%. I mean, these, on an absolute basis, they're, they're nice numbers, but they are towards the lower end of your longer-term framework. Doesn't seem like the economy is having that much of an impact. So maybe characterize why right now, this year, you're, at least these two quarters, you're trending towards the, the lower end of that long-term outlook. So, you know, and if you're looking just at Q3 performance, we did have a modest impact in Q3 of day mix versus Q2. And so, you know, when you're looking at any individual quarter, you're gonna see some impact from a day mix perspective. Over the year, we do expect, you know, about a 40 basis points benefit from day mix, really related to leap year that happened in Q2. And we talked about that in our last quarterly call. You know, I would tell you that in terms of what we're seeing, you know, we are comping against both in Q3 and Q4 some really strong transaction growth last year. We mentioned that last quarter, and you know, that's, that's certainly part of the equation here in terms of what we're looking at, in terms of, you know, comping against that. We are seeing overall, nice transaction growth in the system, and pretty consistent with our expectations. I wouldn't say that we see anything, in particular that is, you know, significant cause for concern. And, you know, we're continuing to, you know, focus in terms of our marketing efforts to both, attract new customers and retain existing customers. Lori, would you add anything? Yeah, the only thing I would add is, I think we were fairly clear, for FY 2024, that, ticket would be a big contributor, led largely by premium mix and NOCR, given the actions that we were taking. I think we were specifically, you know, suggesting that we were gonna be very cautious on price, given the macro environment, and particularly as we saw advertising and discounting activity. We just have to be very careful on price, not to have our posted price, get away from us in a competitive market. So I think when we started the year, we knew that price would not be as much of a contributor, but overall felt pretty good that we would fit within algo. And I think that's really when you look at the broader, you know, the broader same-store sales. In any year, you know, based on what you're lapping last year and what actions you're taking and the results of those actions, you know, there are many pieces that get us, you know, well within the guidance range. I think this year we expected ticket would be muted. We did say in the comments that our growth of customer base moderated a bit, and that's largely due to the lapping and the aggressive advertising that we're seeing in the marketplace. But we feel good about- Okay ... 6.5%, given all the dynamics that we're facing. And just to clarify on that, the lack of pricing this year, I think normally it's a 1%-1.5% lift, and so that's just something you just don't have this year, which you might in a normal year. Actually, we did see around that average for Q3. We did see benefits from pricing in Q3. Now, it really doesn't come from across the board pricing changes. They're more targeted pricing changes across the services we offer. But we did benefit from what I'll call net pricing. If you look at our pricing, net of any change in discounting, we did see benefits of that in the comp the quarter. Okay. Thank you very much for all the feedback. Our next question comes from Mike Harrison with Seaport Global Research. Your line is open. Hi, good morning. Was hoping that- Hi ... we could talk a little bit about the refranchising and kind of the impact that that has on the P&L. How much annual EBITDA and revenue headwind should we expect from that refranchising transaction? And then, can you talk at all about the proceeds that you're presumably receiving as part of that transaction? And where would you expect to deploy those proceeds? Sure, Mike, I'm happy to take that. Excuse me, when we look at the remainder of fiscal 2024, the refranchising transaction has a relatively modest impact. For the remainder of the fiscal year, it's less than $2 million of EBITDA, in terms of the impact on Q4. We'll provide more specific detail in our 2025 guidance on the full year impact. You know, I'll look for that in our next quarter update. As it relates to net proceeds, you know, initially, of course, we've got some revolver debt outstanding, and we'll use it for reducing our outstanding debt. But then we'll be looking at the use of the share repurchase authorization. And you know, we've just recently announced that new share repurchase authorization. And then we'll be moving forward in terms of evaluating, you know, what we think is the right thing to do from share repurchase versus debt reduction. All right, thank you for that. And then was also hoping that we could kind of rehash the labor leverage discussion that came up last quarter. You guys kind of warned us that we would not see as much gross margin leverage as we might anticipate going into this seasonally stronger period, and that is kind of what happened here. So help us understand again, why there wasn't as much leverage at that gross margin level in Q3, and maybe some insights on your expectations for labor leverage and gross margin leverage as we look at Q4 and start to get into fiscal 25. Yeah. So, you know, we talked last quarter about the fact that we didn't expect to see incremental labor leverage in Q3. We had really started our labor focus on labor management activities in Q3 of last year. And so while we saw a really nice sequential labor leverage in terms of, you know, where we performed in Q2 versus Q3, we saw almost 100 basis points of leverage. In Q3 itself, we were essentially flat from a labor perspective to last year. My expectation for Q4 is that'll hold pretty consistent. Again, we had started a lot of the labor management practices that we are focused on in the back half of last year, and my expectation for Q4 is that, you know, labor as a percentage of sales will be pretty consistent with the prior year quarter. So overall, you know, in terms of overall gross margin, if you exclude the impacts of depreciation and amortization, we are seeing modest leverage. In my comments on the earnings call this morning, I did mention we had some unfavorable impact of mix from franchise versus company. And if you recall, last year, we had some timing differences with franchise incentives being heavier in the front half of the year and lighter in the back half of the year, and those have really normalized this year between the front and back half. And so that company versus franchise mix is being influenced by, you know, being up against a tougher comp, if you would, from last year, in Q3 and Q4. Yeah, and Mike, I'll just add that this is the first wave of work on labor that the teams implemented. We're already working through technology deployment, process deployment that we believe will have further impact in terms of being more efficient on the labor side, whether it's from an inventory management standpoint is one example. And those things will take time to implement across the network. They'll benefit both company stores and our margin, but also they'll also impact the franchisees, which will be very positive as they continue to want to invest in the business. Now, those investments that we have are baked into our plans, you know, and would always be in our guidance. But it will allow us to continue to get more labor leverage and offset the wage increase that typically comes every year, whether it's minimum wage increases at a state level or just competitive dynamics on wage. Our next question comes from David Bellinger with Mizuho. Please go ahead. Hey, good morning. Thanks for the questions. First, can you help us size the percentage of stores with this heavier low income exposure? And also on the increased promo activity you're seeing, is that more pronounced in these lower income markets, or are you seeing some type of widespread element to these promo activities picking up? We don't. So early in the quarter, we saw it across many players, not so much the small players, but across many of the brands. And again, it's more advertising dollars being put into the market, not necessarily deeper discounts. We did see one player for a short period of time, you know, offer a deeper discount, that most did not follow and was quickly pulled out of the market. So we do see just pockets, and they’re not across the board, and they’re not limited to low-income areas as far as we know. They tend to be very operator-specific. And it could be based on where they're seeing their business track and just trying to generate more traffic in a period. So I don't really know the drivers behind it, but I wouldn't say there's anything that correlates or is driving. What you do see is in lower income demographic areas where our stores operate, customers will be more coupon savvy. They will go out and search for those things which will get a high, slightly higher discount rate. And when I say slightly, I mean very slightly. These are not significant differences across our business. As it relates to the household income approach we used, we really quartiled our stores and looked at, you know, income demographics by quartile. And so for us, the lowest income quartile would be demographic areas with an average household income of less than $60,000 a year. Okay. Thanks for all that. Then, this is my second question. Understanding it's still pretty early here, but can you provide us with any initial commentary towards 2025? And should we continue to expect the typical, you know, Valvoline comp sales and earnings algorithm to hold true next year, or are there some other considerations we should all be thinking through? Well, thanks for your question. You know, we typically don't provide guidance this early or, you know, at Q3 as we're looking forward in the year. You know, we'll update you when we do our year-end earnings call. You know, we talked about in the quarter, we did have refranchising in one of our markets, and so, I think, you know, you'll hear more about that and what that impact would be, you know, in terms of, as we're looking out for 2024 into fiscal 2025. And of course, any similar transactions that might happen will also be there. In terms of unit counts, you know, we have a really robust pipeline, and we feel really good about unit growth in both franchise and company. And so you won't see any surprises there. We're continuing to work with our franchise partners to accelerate the growth of the franchise pipeline system. We'll be excited to provide you with some updates around that when we provide guidance next quarter. Yeah, really happy with the- Yeah, thanks, Mary. ... progress on the franchise unit growth. You'll notice we did 48 year to date, relative to 25 last year year to date. So feel really good about the progress that we're making on the franchise unit growth. Thank you. Our next question comes from Jeff Zekauskas with J.P. Morgan. Please go ahead. Hi, this is Lydia Huang on for Jeff. Thanks for taking my question. Still on the VIOC store growth, last year, your store count growth had an upswing in the fourth fiscal quarter, and it's mostly because of franchise stores. It seems like we should expect a similar step off in this fiscal quarter. Is that also franchisee driven, and what drives the seasonality here? So, I would just say that we feel really good about where we've delivered to date. You're right, our franchise unit growth for year to date is much stronger, and part of that was driven by the gap in Q3 of fiscal 2023, relative to a more evenly paced development program for our franchisees. As Mary mentioned in her prepared remarks, we are expecting that our new unit count will be at or above the midpoint, which is 140-170 is the range. And within that, franchisees, we expect to be at 55-70. Now, with franchisees already at 48, we feel very strong that they'll be well within that range. And so I think we feel pretty good. Just looking at last year, Q4, we delivered 46 or 48 units, I believe. 48 units, which shows that our business can, you know, start up that many stores within a quarter. So when you look at where we are to date, we're at 109 to date. That 48, if we just repeated and didn't build on it, would put us well at the midpoint or above. So we have the capacity, we have the pipeline, and we're just executing it to close the year out strong. I would just reiterate, Lori, if you recall last year in Q3, we had a relatively small number of franchise stores that opened in Q3 that got pushed into the Q4. As you mentioned just now, we're, you know, franchise is much more consistent over the quarters this year. So I would expect, you know, franchise growth in Q4 to be relatively more consistent with Q3 this year than what we saw last year. Good point. Thank you. And for my second question, can you talk about pricing for the September quarter? So base oil seems relatively stable. How should we think about price cost for the September quarter and maybe next year? Thank you. Yeah, we're there, you're right. It. We have seen our lubricant costs be very stable. You know, really through the year to date, we've seen some modest ups and downs, but it's been really stable. We are keeping a really close eye, from a macro perspective on, you know, the recent activities and news coming from the Middle East. You know, of course, if that causes crude oil to spike, that will eventually work its way through into base oils and cause our underlying lubricant costs to increase. But even if that were to happen, we have not seen it yet. If it were to happen, I wouldn't expect it would affect our fiscal Q4. The supply chain length, in terms of, you know, how long it takes for that, those types of cost increases to come through the supply chain takes a few months, and, I wouldn't expect that it would have any impact short term in terms of, for the balance of the fiscal year, year here in April, and, e xcuse me, in August and September. Thank you. The next question comes from David Lantz with Wells Fargo. Your line is now open. Hi, good morning, guys, and thanks for taking my questions. Curious if you can talk about the fleet business in a bit more detail? It's outperforming. Curious where, penetration sits today and where you think that could get longer term? Yeah, thanks. You know, fleet has been a great opportunity that we've over the past few years, really, leaned into and professionalized. We continue to sign new accounts with fleet owners, and we also work with the accounts we've signed up to increase the number of vehicles and or the penetrations that we have within those accounts. In this past year, we've had a focus on expanding our fleet sales team's focus to include some franchisee geographies, where the franchisees have requested that support. And this adds attractive full EBITDA to their business, but obviously is attractive growth lever. Both ticket and transaction are higher than an average consumer, and that leads to really good margin contribution both for company and franchise stores. We, you know, it's from an overall market, we're building our business on a small base. We've talked about the fact that our fleet business is less than 10% of our sales. And given the ticket is higher, it's slightly lower on a car count basis. We have not sort of set any expectations on where we think, you know, we will get to target. We just continue to see very strong growth, you know, growth in excess of our overall company growth. And that's because we believe this market is not very well served. There are not very many providers of preventative maintenance who have a broad national network that can meet their needs. We've invested in a number of services for the fleet account owner, in terms of them being able to select the services that the, that the drivers. Taking the driver out of the mix of deciding what services should and shouldn't be done, and then direct billing. So there are just a number of things that we've invested in over time that add value to the fleet owners, and that's on top of just the, the keeping their assets in service as close to 100% utilized as we can, with a 15-minute or less service, with us direct billing, them not having, you know, them pre-approving services. It ensures that their vehicles or their assets are being put to business a greater period of time, and that's the reason why it's growing so quickly. Got it. That's helpful. Then just one, one more from me. Can you just provide an update on the ERP implementation that was called out last quarter and how that's tracking relative to internal expectations? Yeah, I'd be happy to. So, we implemented the new ERP system on January first of 2024, and had some challenges around the IT general control environment that we called out last quarter. I'm happy to report that we've made really significant progress in our remediation efforts of those control changes. And my expectation is that the material weakness that we spoke about last quarter will be fully remediated by the end of this year. We'll have some more details in the Q that talk specifically around the remediation steps and what we've done, and what's still open to do. But the open items are still really around testing and validation through the end of the fiscal year, to ensure that all of those controls are functioning as we've designed them through the end of the fiscal year. But, as I said, I'm really pleased with the remediation progress that the teams have made and feel really good about it. Our next question comes from Bret Jordan with Jefferies. Please go ahead. Hey, good morning, guys. To keep flogging- Good morning ... the pricing. Hey, good morning. To keep flogging the pricing question, I guess one of the larger service and tire chains, about a week ago, said they would expect to use oil pricing as a traffic driver, and I think you'd said that you've seen relatively little price moves there. I, I guess, if addressing sort of the more recent, maybe July trends, have you seen sort of return to discounting, that you saw abate in the third quarter? Sorry, in the third quarter. You know, we haven't seen anything that's been any significant changes into July, so no. And, you know, we have historically seen different kind of pricing from, you know, some of our other auto services providers out in the marketplace. And, you know, what really differentiates us is our quick, easy, trusted experience. And so, you know, we, we've found that, you know, our consumers are certainly value the convenience of those services. And so it's not a new phenomenon to see other providers on occasion offer, you know, lower pricing on oil change services in an effort to try to drive traffic. And those activities are typically shorter-lived and typically don't have a significant. We haven't seen an impact to us over time, you know, as evidenced by what this year will be our eighteenth year of same-store sales increases. We really haven't seen evidence of a competitive impact from that perspective. Lori, anything you'd add? No, I think that's right. There are always gonna be pockets, and it, this is such a fragmented market, that there are very few players that will have a broad-based promotional activity that will impact us. But it will creep. It will happen in certain markets, whether it be a tire center auto services player that decides to try to use it as a traffic driver. We previously have seen dealers, dealerships do that, not as much anymore. We see independent quick lubes. I'll just say that we always look at where we attract our new customers from, and the number one or the biggest source of customer acquisition comes from the dealerships, which continue to be a very fertile ground relative from a customer experience standpoint and an overall value standpoint. And so that hasn't changed much for us over the last several quarters, and as we're reviewing the numbers through the end of July, you know, the same, the same is holding true. Okay, great. And then a bigger picture question. I know you've talked in the past about a possible new store format, lower build-out cost. Any updates on that project? Yeah, we, the team is making great progress to reduce the capital cost to both build new units as well as convert acquired locations to our brand. Many changes to the building design will, you know, that we've made decisions on will not start to show in our CapEx until, you know, those units come online, which will be late 20..., fiscal 2025 and into fiscal 2026. Given the contracts with general contractors have already been set for a lot of the units in the first half or 2/3 of the year, and permitting also has to, in many cases, change, which we, we have to weigh that off in terms of extending the project's timeline in order to get some of the savings. But some of the easier changes that we've started to implement, particularly on converting locations to our brand, you know, we've already started to make, and really happy with the way our construction and operations team is accelerating that implementation where they can. Also, the franchise partners, as they're increasing their pipeline of new builds, you know, this quarter, 2/3 of our new units were new builds. And our franchisees are very engaged in how do we continue to drive lower construction and equipment costs in our new units, and that engagement has been incredible, and we continue to find opportunities. So I would say a little bit early in order to start seeing it, but the team is making good progress, and we're taking actions on everything that we can as quickly as we can. Great. Thank you. Our next question comes from Jim Chartier with Monness, Crespi, Hardt. Please go ahead. Morning. Thanks for taking my question. You talked in the past about, you know, finding new large franchise partners. Can you just give us an update on, on that? Yeah, as I mentioned earlier, we continue to have great conversations with prospective partners who are interested in being VIOC and GCOC franchisees. You know, if we step back and look at our overall goal was to triple our new unit, our annual new unit number, to 150 a year, of which 2/3 would come from existing franchisees, and that work and engagement is going incredibly well. Feel very good about that. And the last 1/3 of the 150 would come from new franchise partners. Now, we would expect that to be a handful. It doesn't need to be 50. It needs to be a handful of partners, and those conversations are going very well. Really, you know, continuing to talk to them about seeding them an area or wanting to take a white space in some areas, working with existing franchisees who are no longer developing, and whether or not now is the right time to transition. Continuing to have good progress in the discussions, you know, being able to announce the Las Vegas refranchising, it's a part of that work. But the new partner discussion takes a little longer as trying to educate them on the system and understand exactly how they want to get started does take time. Great. Thank you. Thank you. We have no further questions in the queue, so I'd like to turn the call back to the Valvoline team for any closing comments. Yeah, I just wanna thank everyone for attending the call. You know, we look at our business and feel the fundamentals are really strong. Historically, it's a very resilient demand that we see from customers, and that is not and has not been changing for us. I think we feel really good, and Mary sort of alluded to it. We've delivered 17 years of same-store sales and have full expectations that we'll be delivering an 18th year of same-store sales as you look at our year to date, same-store sales of 7.1%. I just wanna thank our, our team members and our franchisees because it is a massive milestone for us to have hit $3 billion in system-wide store sales, over the last 12 months, and that coming 10 quarters after we hit $2 billion. It just speaks to the acceleration that we're seeing in the business, and our franchisees are investing, and we're building it together. So thank you, everybody, for your time. This concludes today's call. Thank you for joining. You may now disconnect your line.