Valvoline Gears Up for IPO

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Valvoline has filed an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). The company expects to price its 30 million shares in the range of $20 to $23 per share, with an overallotment option for an additional 4.5 million shares. At the maximum price the entire offering is valued up to $793.5 million. The company intends to list its shares on the New York Stock Exchange under the symbol VVV.

The underwriters for the offering are Merrill Lynch, Citigroup, Morgan Stanley, Deutsche Bank, Goldman Sachs, JPMorgan, Scotiabank, BTIG, Mizuho, PNC Capital Markets and SunTrust Robinson Humphrey.

This is one of the most recognized and respected premium consumer brands in the global automotive lubricant industry. Established in 1866, its heritage spans 150 years, during which it has developed powerful name recognition across multiple product and service channels. It has significant positions in the United States in all the key lubricant sales channels and also has a strong international presence, with its products sold in approximately 140 countries.

In the United States and Canada, its products are sold to consumers through over 30,000 retail outlets, to installer customers with over 12,000 locations and to approximately 1,050 Valvoline branded franchised and company-owned quick lube stores. It serve its customer base through an extensive sales force and technical support organization, allowing it to leverage its technology portfolio and customer relationships globally, while meeting customer demands locally. This combination of scale and strong local presence is critical to its success.

In the report Valvoline detailed:

In fiscal 2015, we generated approximately $2.0 billion in sales, $422 million in Adjusted EBITDA and $196 million in net income. During the same period, our Adjusted EBITDA margin, which we define as Adjusted EBITDA as a percentage of sales, was 21.5%. For the nine months ended June 30, 2016, we generated approximately $1.4 billion in sales, $346 million in Adjusted EBITDA and $208 million in net income. Adjusted EBITDA margin for that period was 24.1%. In addition, we generated free cash flow of $285 million and cash flows provided by operating activities of $330 million during fiscal 2015 and $154 million and $186 million, respectively, for the nine months ended June 30, 2016.

The company intends to use the net proceeds from this offering to reduce its obligations under its senior secured term loan and either senior secured revolving credit facility or any such short-term loan facility. Valvoline would retain and expect to use the remainder for general corporate purposes.

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