Thanks Sam. Good morning everyone, and welcome to Valvoline's fourth quarter fiscal 2021 conference call and webcast.

On November 3 at approximately 5:00 p.m. Eastern Time, Valvoline released results for the fourth quarter and fiscal year ended September 30, 2021.

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 Sam Mitchell, our 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 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 [Technical Difficulty] of our adjusted non-GAAP results to amounts [Technical Difficulty] 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 we turn to slide 3, I'd like to turn the call over to Sam.

Thanks John. Fiscal year 2021 was a remarkable year for growth and transformation at Valvoline.

Our strategy to become a more service-driven business was strengthened as our Retail Services segment contributed 54% of our total segment adjusted EBITDA. Our year-over-year results were exceptional, with sales growing 27% and adjusted EBITDA seeing a 28% increase.

Both segments generated strong results, including 21% year-over-year same-store sales growth for Retail Services and 20% year-over-year sales growth in Global Products. We are very pleased with our progress to-date and excited about the results we are seeing.

Let's turn to the next slide. Our strategic investments to grow Retail Services helped us reach a critical inflection point in our fiscal 2021 results and helped us deliver 28% returns on invested capital.

With $3 billion in revenue, the benefits of our transformation to a service-driven business are evident in our growth since 2018. Success of both [Technical Difficulty] the tremendous progress we have made and we expect that both businesses will continue to thrive as separate entities.

We believe a separation will allow both businesses to pursue their individual strategic priorities allocate capital to drive success and create significant and sustainable value for our shareholders. Moving into segment highlights, let's discuss Retail Services on slide 6.

Our Retail Services segment is the second largest Quick Lubes operator in North America with nearly 1,600 stores that deliver a wide selection of preventive auto maintenance services. The segment had another outstanding year in fiscal 2021.

Sales of $1.2 billion grew 38% year-over-year and nearly 50% versus pre-pandemic fiscal 2019. The top line continues to be driven by our growth levers of same-store sales performance and unit additions.

Our market-leading scale and data sophistication enhances our ability to gain share and expand average ticket, and drive sustainable growth and profitability. We expect that our superior business model will continue to deliver growth going forward.

Top line results were driven by the combination of same-store sales, which increased 21% plus unit growth of 9%. 2021 marked the 15th consecutive year of same-store sales growth, highlighting our superior in-store experience.

Store-level sales across the system reached roughly $2 billion, growing 30% and demonstrating the scale of the preventive auto care business that our team has built. Our outstanding same-store sales performance for fiscal 2021 was driven first by transactions as we capture significant market share as well as a high single-digit growth rate in average ticket.

We exited fiscal 2021 at a rate of more than 50 oil changes per day across the system significantly outperforming the industry average, which is in the low 30s. The top one-third of our stores finished the year performing more than 70 oil changes per day, demonstrating the strength of our system.

Pricing power and the ongoing shift to synthetic drove growth in average ticket. Recall from our May business update that synthetic oil changes generate roughly two times the revenue and three times the service margin versus conventional.

Just over a third of our oil changes are synthetic, while roughly 70% of new cars would have a recommendation for a synthetic lubricant. We believe that our quick easy trusted customer experience and data-driven approach will continue to do -- transaction and average ticket growth in the future.

As we continue to grow our market share and open new locations, our customer base expands generating more data to leverage further growth in a virtuous cycle. In the future, our customer relationships will be utilized to drive incremental services as the car park evolves.

Let's review results in Global Products on the next slide. I'm pleased with the strong top line growth in Global Products in fiscal 2021.

Sales grew 20% year-over-year and 12% versus pre-pandemic fiscal 2019 led by international markets. Each region grew over this period and international markets have seen accelerated growth as we continue to enhance our supply chain capabilities and invest in brand marketing.

Global Products business uses a value-added selling approach to win and retain installer and heavy-duty customers. We are driving synergy across the Global Products business to accelerate share growth and benefit our customers.

For example, we have recently expanded digital capabilities from North America and we are bringing our expertise in heavy duty internationally, where it represents a higher percent of our mix to North America. The combination of international growth performance in North America and low maintenance capital needs has generated profitable share growth and strong discretionary free cash flow over the past several years, and we expect this to continue into the future.

Next slide please. Our Global Products business is well positioned to increase its market share globally, by leveraging our leading Valvoline brand, extensive distribution network and robust technology, all of which helped drive top line growth in fiscal 2021.

We expect this momentum to continue in fiscal 2022. Adjusted EBITDA margins were close to 19% for the year.

Margins were impacted by price/cost lag in the second half of 2021 and as expected, particularly in Q4, due to significant raw material cost increases this past spring. Although we expect lingering price/cost lag in supply chain bottlenecks to impact the first half of fiscal 2022, we are making good progress passing these cost increases through.

Even with pressure on margins, Global Products delivered another year of over $200 million in discretionary free cash flow. Across regions and channels, we are encouraged by our volume performance and strength of demand for our preventive maintenance products.

North America's DIY volume has been healthy at auto parts retailers, mass merchandisers and has benefited from new distribution in the convenience store channel. We saw volume growth in all international markets, both year-over-year and versus 2019, despite COVID-19 and supply chain challenges.

We expect volume growth to continue in both North America and international markets in fiscal 2022. The fundamentals of the Global Products business are [Technical Difficulty] as is the long-term outlook.

Now, I'll turn things over to Mary to review our financial results in more detail.

Thanks, Sam. Our Q4 results are summarized on slide 11.

We saw robust top line growth both year-over-year and versus the pre-pandemic period in Q4 of 2019, which is a testament to the ongoing strong demand for our products and services. Sales growth was primarily driven by Retail Services including more than 300 basis points from store acquisitions.

Year-over-year growth in adjusted EBITDA due to significant price cost lag impacts, particularly in Global Products as raw material costs were declining in fiscal 2020 and the past year. Our adjusted effective tax rate in Q4 came in lower than expected due to a favorable discrete tax item, which benefited adjusted EPS.

Let's take a closer look at segment EBITDA margins on the next slide. Retail Services' adjusted EBITDA growth in the quarter was driven by exceptional same-store sales and strong unit additions.

EBITDA margin declined compared to last year due to investments we made in labor during the quarter, along with the impact of passing through pricing to cover higher raw material costs. As expected, price cost lag was the primary driver of declines in adjusted EBITDA results in margin in Global Products.

Sales grew faster than volume, highlighting progress in passing through cost increases. However, our sales growth will not translate into margin rate expansion as unit price increases generally offset unit cost increases.

Focusing on EBITDA dollars and cash generation, more appropriate metrics than percentage margins in a volatile rate raw material environment. Our full year 2021 results are summarized on slide 13.

Both segments made contributions to the substantial growth in sales and gross profit compared to last year versus fiscal 2019. Retail Services led the way with top line and margin improvement driven by leveraging outstanding same-store sales and unit growth.

Acquisitions added 300 basis points to overall sales growth and roughly 260 basis points to adjusted EBITDA growth. SG&A was impacted by several key factors year-over-year.

First, we reinstated advertising spending that we [Technical Difficulty] prior year due to the severity of the pandemic. Second, we saw increases in variable compensation driven by our record results.

Third, we made investments to drive future growth including acquisitions and investments in IT and sales support. And finally, we saw increases due to FX impacts and inflation.

As you can see on slide 14, the cash generative nature of the business remains strong. Maintenance capital was roughly 1% of sales for the year while discretionary and free cash flow were 12% and nearly 9% respectively.

Growth CapEx was modestly lower than we expected due in part to supply chain-driven delays in new company store openings. In fiscal 2021, we returned $218 million in cash to holders via dividends and share repurchases, including $27 million in share repurchases made in Q4 under our recent $300 million three-year share repurchase authorization.

We believe our capitalized business model will continue to drive significant cash flow to fund growth and returns to shareholders. Let's review our fiscal 2022 guidance on the next slide.

We expect the top line momentum we saw in fiscal 2021 to continue in fiscal 2022 driven by strong same-store sales growth of 9% to 12%, the addition of more than 100 new stores, continued top line growth in Global Products. We anticipate overall adjusted EBITDA to be in the range of $675 million to $700 million, representing 7% to 10% year-over-year growth.

Retail Services is expected to generate mid to high teens growth and contribute segment EBITDA of $440 million to $455 million while Global Products is projected to contribute segment EBITDA of $315 million to $330 million. Unallocated corporate expenses comprise the balance.

We expect improved profitability as we progress through fiscal 2022 in Global Products with projected second half EBITDA and margin exceeding the first half due to the near-term impact of price cost lag. Below the line, we anticipate our growth-focused capital investments to increase depreciation and amortization next year to between $105 million to $110 million.

Based on current rates, interest expense should level out to roughly $18 million per quarter. We continue to expect our adjusted effective tax rate for the year to be in the 25% to 26% range, leading to adjusted EPS in the range of $2.06 to $2.18 per share for fiscal 2022.

With carryover capital from fiscal 2021, including new company store build, we expect an increase in CapEx in fiscal 2022 leading to free cash flow of $260 million to $300 million. With that, I'll turn things back over to Sam.

Thanks, Mary. We want to spend a few minutes discussing our recent decision to pursue a separation of our Global Products and Retail Services segments.

We believe that this is the right time because Valvoline's transformation has progressed to the point where both parts of the business can stand on their own and fund their individual strategic priorities for continued success. With the significant growth of the Retail Services segment the two businesses are now each of considerable scale and contributed in excess of $300 million in adjusted EBITDA.

Just four years ago, our Retail Services business contributed 34% of segment EBITDA. It's important to note that this transformation reflects the strong growth of Retail Services, as Global Products has continued to generate strong stable cash flows.

The Board and executive team are confident that the separation will create significant and sustainable value for our shareholders, employees and other stakeholders and will best position both outstanding businesses for continued long-term success. Turning to slide 18.

This is a strategically compelling step for the company and its stakeholders. Both businesses are strong with robust financial and operational performance and scale.

They are leaders in their respective markets. We have built a brand that stands for great products and great services.

We have invested in our teams and digital capabilities and have developed an intense customer focus that sets both businesses up for long-term success. In addition, the separation will best position each segment to evolve its business model as needed to effectively and sustainably compete in an evolving powertrain environment.

The separation will allow each business to focus on its own distinct customer base and business model and deploy capital where needed to enhance the respective services and product lines as the car park continues to evolve. With the separation, we see a clear path to unlocking significant shareholder value.

On slide 19 we look at Retail Services and its attractive opportunities for continued growth. Auto aftermarket services is a $300 billion addressable market that is highly fragmented growing and resilient.

Our Retail Services segment is well positioned to continue to increase its market share by leveraging its world-class service model and executing on our three-pillar growth strategy consisting of: one, expanding the footprint through new company-owned locations, acquisition opportunities and franchise development; two, leveraging proprietary data analytics technology to effectively market and a best -- and drive best-in-class customer experience; and three, evolving our service offerings to capture growing opportunities in the market. For example, we are pursuing fleets service solutions to address medium- and heavy-duty vehicles, which will require comprehensive maintenance needs.

Additionally, we are exploring relationships with EV OEMs for both products and services including our joint intent to partner with a rival to service their future fleet of electric vehicles in the US. Our nearly 1,600 locations, our customer-centric brand and leading operating model best positions Valvoline to expand service offerings and delivery in the future.

Moving to slide 20. We have compared our Retail Services segment against a few publicly traded peers on several sales growth and profitability metrics.

As you can see, our business outperforms the peer group on most of these segments -- most of these metrics. The peer multiples underscore the compelling opportunity we believe we have to unlock shareholder value.

What should be the opportunity in Global Products on the next slide. Global Products is a market-leading strong cash-generating automotive solutions provider.

Preventive maintenance products like lubricants are nondiscretionary, which provides market resilience, while the shift towards synthetic premium lubricants drives the potential for margin expansion. The addressable market for lubricants internationally is estimated to be 3.5 times larger than North America.

Global Products is well positioned to continue delivering profitable share growth driven primarily by international growth markets such as India, China, Latin America and EMEA. Our industry-leading research and development capabilities, strong growing distribution network and powerful brand are key competitive strengths in a changing market.

We are partnering with technology leaders, OEMs and researchers to address the needs of both current and future vehicles. Let's move to the next slide.

As we just did with retail services, here we compare Global Products against a few publicly traded companies with similar business models on sales growth and profitability metrics. As you can see Global Products performed in line or favorably against the peer group on these metrics.

Again, we believe that peer trading multiples show the compelling value creation potential from a separation. On slide 23, we describe next steps.

As noted in our October 12 announcement, we are working with outside advisers to determine the best way to accomplish the separation. While we are diligently evaluating possible transaction and capital structures for each business, no timetable has yet been established for the completion of the separation.

Irrespective of how the separation is executed, we anticipate that Retail Services and Global Products will enter into commercially beneficial product supply and brand use agreements that will position both businesses for continued success. We will approach all upcoming decisions with the goal of minimizing these synergies for both businesses and maximizing shareholder value.

In closing, I want to thank our Valvoline team for delivering a great year. Our teams have never been stronger and continue to do an outstanding job of taking care of customers and driving the business.

We are focused on delivering results in the new fiscal year, as we work to capture the compelling value that we see from the separation of our two excellent businesses. And with that, I'll hand things back to Sean to open the line for Q&A.

Thanks, Sam. Quick reminder to limit questions to one and a follow-up so that we can get to everybody.

With that Sam, please open the line.

Hey, guys. This is Michael Kessler on for Simeon.

Thank you for taking our questions. First, I wanted to ask about Retail Services.

I think you mentioned the ticket growth was around 10% in the quarter. It's been strong.

That alone is above your -- the kind of longer term 6% to 8% same-store sales algo for the business and then you also have general throughput increases and traffic increasing. So I guess, I'm curious, how you guys are thinking about, if that is a sustainable level of ticket growth for the business given the tailwind with mix and other factors.

And how much upside could there be to same-store sales given these tailwinds? And I guess given the way you've guided 2022 being well above that algo it looks quite strong?

Yes, we were certainly impressed with our performance this year in same-store sales growth, both on the transaction side, which was the primary driver, but also on the ticket side too as you pointed out. And the big ticket drivers this year were the synthetic penetration, which is a nice driver for us.

So we saw a few hundred basis points improvement in our synthetic oil change penetration, but also moves on pricing too that helped us cover some of the increased costs. So we've been able to make effective price adjustments this past year, and I think that will continue to be important next year, as we do have some rising costs particularly on the labor front.

But with regard to expectations for next year, we do see same-store sales growth moderating somewhat still above our guidance that we gave back in May, but we are expecting to be closer to that with a 9% to 12% guidance for next year. And I expect that to be a pretty good balance between both transaction and ticket performance.

But to your point though on just the long-term opportunity, the synthetic trend is going to continue at a good steady rate. So that's a nice driver.

But the penetration of the non-oil change services is another big opportunity for us. And so the team is very much focused on that.

And so we feel that, ticket has got a long way to run in terms of its continued performance. But I got to say I got to come back to the growth that, we had in transactions and the market share growth that, we're seeing with tremendous growth in car counts.

And that is a great driver of future performance of this business, when we're seeing this kind of growth. So it provides just really strong leverage to the bottom line too as we bring in more customers and we drive that loyalty through the capabilities that we have both in store and through our digital marketing capabilities.

And Sam, I would add to that. We have seen improvements in miles driven as they're seeing some recovery from the pandemic and so that's provided some tailwinds as well.

Certainly in the fourth quarter, and going into the new fiscal year we expect to continue to see some benefits from the miles-driven recovery versus prior periods.

Definitely.

Okay. Great.

And my follow-up is on margins and maybe on both segments. The Retail Services maybe would have expected a little bit better margin performance given the top line growth, if it was down a little bit on EBITDA margin.

So just kind of, what drove that? Was it through the labor issues and the position there?

And then on the Global Products side, I know, the margin can be very volatile in these environments. It does look like for 2022, we're going to end up probably below the 17% to 19% target range.

Is there any reason to think, we won't get back there once we get to kind of normalized base oil pricing, which it feels like we are at least stabilizing, and we can get back to that maybe in 2023?

So, on the second half of your question, I do think that longer term, we will see return in terms of the EBITDA margins, once we've stabilized and have been able to see full pass-through of price increases. I do think that base oils today are trading at unusually high margins, because of the refining capacity limitations and my expectation is there'll be some reversion to more normal levels as we see some of the supply chain issues to take out longer term.

So I think the guidance, the longer-term guidance we gave is still a reasonable to think about as we think about 2023 and beyond. On the margins for the Retail Services business, we're still seeing nice leverage in our same-store sales margin.

We had some impact in the quarter, and for the full year related to labor. We've made some incremental labor investments in fourth quarter that created some deleverage.

And interestingly, we saw some deleverage related to price increases that were being passed through on products to our franchisees. So as you know, we sell, all of our products to the franchisees.

And that in fact, passing through those cost increases caused some deleverage in margins. Unit margins as noted on profitability for oil chains, were still quite strong and – but because of the pass-through of that pricing we did see some transient margin deleverage to franchisees.

And then finally, we've got some mix impacts as we've mixed – seen our mix weigh a little bit more heavily to company stores from franchise that results in a modestly lower margin impact as well. So – but I think the important thing for you to know and for investors to know is that as it relates to our core performance in our same-store businesses, we're continuing to see our margin rates leverage as we're seeing these strong same-store sales performance.

Thank you.

Hi. Good morning.

Good morning, Mike.

Was wondering, if you can talk about the 110 to 130 system-wide store additions affecting for the year. How do those break out between franchise and company operated?

And have you seen any of the costs for constructing a new location go up? Maybe talk a little bit about how inflation has impacted your new store economics or returns?

As far as the growth plan for next year, about half of those stores are going to be new ground-up stores. So we've got a good pipeline of new stores that will be coming out of the ground in fiscal 2022.

We do expect solid franchise growth too and that would be the second largest contributor, of I would say roughly a-third of the growth, of those new stores. And then, we have a good pipeline of small acquisitions that would add – to put us in that range.

So, another solid year of unit growth for Valvoline. Regarding inflationary pressures in construction those are real.

I don't have a percent increase that we're seeing. I would say, our biggest challenge this past year has been just some of the builds taking a little bit longer with some of the contractor labor issues that they've had.

All right. Thanks.

And then was hoping maybe you could provide a little more color on what you're seeing in terms of overall inflation within your business. A lot of us focus on the base oil tricks, but you're also spending on additives packaging, freight and logistics as well as labor.

Can you talk about what your expectations are for each of those areas in terms of inflation and maybe any availability issues that you've faced?

Sure. I can take that Mike.

We certainly have been seeing some inflationary pressures in the other key aspects of our cost of sales, which really are early in the additives and logistics freight area. We have certainly been factoring that into our pricing when we're looking at how we're pricing to our customers so that ultimately we believe we'll be able to see recovery from those costs.

But there have been continued cost pressures probably more significantly than the cost pressure has been. In some areas the availability and some of the pressure on the additive side that's created some supply chain pressure.

Our supply chain team has just done an outstanding job of managing those challenges with our important suppliers and that's really allowed us -- provide us with a competitive advantage in the marketplace because of that performance. But we still are seeing some pressure in the additive space that frankly goes back to some of the damage that was done in those -- in the freeze down in Texas and along the Gulf Coast impacting many chemical providers down in that area that have created some constraints in the additive space.

And that's been a bigger challenge for us. The demand signals have been very, very strong and so we've been working very diligently to make certain that we're able to provide products across our customer base during this time.

But that's been probably the bigger challenge that we've seen than the actual cost increases. Sam, anything you'd add to that?

I think Mary covered it well with the fact that we're adjusting prices accordingly to protect our unit margins. But we are feeling that price/cost lag impact because the costs are hitting us a bit faster than pricing.

The DIY channel where we tend to have the most significant price/cost lag is always an issue for us, but we've got pricing that we're implementing here in our first quarter. We expect to see another price adjustment executed another price adjustment in Q2.

And then as some of the tightness in the market resolves itself we think we'll be in a nice position for the second half of the year. But the key takeaway is that we are having success in passing through pricing first of all and the demand is very strong in our business.

So some of the marketing initiatives that we've been investing in the partnership that we have with our key retail accounts is really producing strong fruits for the business both this past year this summer, but well-positioned with our line reviews and store sets merchandising plans for fiscal 2022. So the business is in a strong position fundamentally.

And that's why you hear the confidence in our forecast for the Global Products side of the business in fiscal 2022.

All right. Appreciate the color.

Thanks.

Hi. Good morning.

My question has to do kind of longer term and sort of bigger picture on the Global Products business. If I look at the chart on Figure 9, sales by region the North America business has been largely flat plus or minus over the last four years, which is fine, but the growth is coming from outside the US.

And just again sort of bigger picture over the next let's call it two, three years do you think that North America business will grow? I know you talked about incremental distribution in the C-store channel meaningful.

And related to that can you talk about the margin impact of the growth coming from the international business? Is that international business going to be higher margin, lower margin?

Just net of all of the commodity costs and all of that. I'm just looking for sort of longer-term outlook.

Thanks.

Yes. But so just breaking down that North America versus international growth.

The North American business over a multiyear period you say looks pretty flat. But if you recall we had some significant pressure back in 2018 into 2019 in the DIY channel.

We have had really good success stabilizing that business and our share. And now with some of the investments that we've been making in some of our new programs we're beginning to see real growth in that channel as I pointed out both in retail auto parts and maps and some of the new distribution that we've had.

So we're feeling more confident about North American growth than we have in quite a while. And the fundamentals on the installer side have been solid too.

We've signed re-signed our largest national accounts to multiyear contracts and some of our digital initiatives are really paying off with some of the smaller regional accounts too. So feel very good about North American's volume being able to grow in that low single-digit range.

And on the international front, boy, we were really seeing strong volume momentum pre-COVID before the spring of 2020. We're definitely impacted in 2020 in our growth rates.

But as this past year has shown we're really back on track with international growth. And so performing at a level measurably higher than 2019 volume performance and we feel like we're very well-positioned for 2022 growth particularly as we move beyond the lingering effects of COVID in the markets.

So growth rate obviously a lot of confidence there. On the margin front the international business we've been able to move pricing up appropriately within -- with some of the inflationary pressures.

But you're correct in that the international business carries a lower margin than North America. And that's factored into our guidance that we provided in terms of what we expect overall from the Global Products business.

The key thing that's holding Global Products' profit growth back is really this price/cost lag effect in the first half of the year and most of that is in the North American business.

Got it. Fair enough.

Thanks so much.

Sure.

This is Dan Rizzo, on for Laurence. You mentioned minimizing synergies in the split.

I was just wondering where you see the largest dissynergies and if you have a relative ballpark, on what stranded costs or synergy cost would be.

So we don't have a ballpark yet. There's a lot of work that we've provided and understanding.

We're the product of a separation ourselves. We separated from our former parent Ashland 5.5, years ago.

And so we're well aware that there can be cost dissynergies created through a separation. Certainly, the costs associated with standing up two businesses, often involve some dissynergy in the support areas like IT and HR finance and legal.

We're working through to better understand those. We do think there are some opportunities within the structuring of the product support and the brand arrangements to minimize dissynergies and we're working with our Board as well to better understand strategically, how to best structure a commercially reasonable commercially beneficial approach between the two separated businesses.

But we're in very early days, so more to come on that as more work is completed.

Thank you for the color. And then in the past you mentioned that the installer channel, I think was kind of lagging the rebound that you've seen in other subsegments.

I was wondering if that's kind of accelerated at all or if it's still somewhat of a lagger.

It's -- we've seen improvement as the year has progressed in miles driven has improved but I would say it's still lagging versus where we'd expect it to be longer term. And so we've seen some of the -- like the oil change penetration rates at some of our installer accounts being -- tracking a little bit lower than historical rates.

And some of that cause, based on conversations with our largest customers, it has to do with some of the labor challenges in their stores and being able to provide all the services that they typically have done in the past. But we are seeing improvement because they were -- the installer side of it was definitely the hardest hit back in 2020.

Thank you very much.

Hi. Good morning.

Thank you for the question.

Good morning..

I wanted to touch on a little bit. Good morning.

I wanted to touch on as you kind of think long-term strategy on the Retail side. You obviously, provided some data but it's a large total addressable market and you just said, you're having these discussions with the strategic review.

Where would you view might be some viable alternatives or options to extend the Retail Services? What type of retail categories would you consider supports the high margin and the strong brand that you currently have?

Yes. So when we think about the long-term strategies for retail services we're thinking about an evolving car park new powertrains servicing more hybrid and electric vehicles and servicing more fleet vehicles, too.

And so we mentioned that in today's presentation. So at the core of the strategy, is making vehicle care easy, for car owners, for fleet owners and we believe it's not easy today.

And so we're looking to create a stronger approach via both what is offered in our stores, and in our network and through our digital platforms to make vehicle care a lot easier than it is today. And we think that creates a number of longer-term growth opportunities.

But at its core we're going to be growing out from what we call preventive maintenance services. In other words those services that don't require appointments that we can do in a fast and convenient way and build trust with our customers and keep both car owners' and fleet owners' vehicles on the road.

And that's been our core strength is our ability to deliver that consistently. So, it's -- our capabilities have to do with, our process the technology behind the process the digital capabilities and especially the teams in the stores to attract the right type of talent to retain talent to train them and develop their capabilities.

These are the things that have built an incredibly strong business. And we think that these core capabilities will leverage into a broader range of services.

And the one that we're highlighting right now is of course, our fleet initiative where we see a big opportunity to grow our current fleet business into something much bigger than that. And that includes making sure that our stores are prepared to handle even some of the larger vehicles Class 3 and 4 vehicles.

So a lot of work going on right there in that area. And I think it will be a good indication, of what we're capable of as we grow our fleet business too.

Specifically, like new categories we're not calling out any specific moves at this point in time, but it will grow out over time from our core preventive maintenance services. And because our focus right now is just creating tremendous leverage in our system with relationships, with more and more car owners.

Great. That’s very helpful.

Thank you so much.

You bet.