Same-Store Sales Guidance
Q: How confident are you in the 6-9% comp sales target?
A: Management acknowledged that comps were light in Q4 due to external factors like the Crowdstrike event and hurricanes, impacting franchise stores more than company stores. " They expect to regain some of that business in Q1 fiscal '25 and anticipate strong comps overall. " However, they are evaluating the longer-term 6-9% comp sales guidance due to uncertainties, including a changing political administration, potential tariffs, and competitive pressures. "

Margin Pressure and EBITDA Growth
Q: Why is adjusted EBITDA growing less than revenue?
A: Adjusted EBITDA is expected to grow at a lesser pace than total revenues due to investments in technology modernization and talent. " The company is making significant G&A investments in updating their ERP and HRIS systems, which were outdated and not fit for retail. " There's also uncertainty around underlying costs, including potential reductions in used oil collection reimbursements and labor inflation impacting COGS. "

Competitive Environment
Q: How is increased competition affecting growth?
A: Management noted increased competitiveness from players outside the Quick Lube segment, with other automotive channels promoting oil changes to drive traffic. " This makes new customer acquisition more challenging and could impact same-store sales growth. " They expect to outperform the industry, which has been trending at 3-4% growth post-COVID, but are adjusting expectations accordingly. "

Refranchising Strategy
Q: What's the rationale behind refranchising stores?
A: The company is refranchising stores to accelerate market share growth in a more capital-efficient way. " By partnering with well-capitalized franchisees committed to higher unit development, they achieve faster network expansion and improved long-term returns, despite short-term dilution. " They've completed transactions involving 66 stores with $24 million EBITDA, focusing on long-term value creation. "

Gross Margin Outlook
Q: What's the expectation for gross margins next year?
A: Gross margins are expected to be relatively flat year-over-year. " While they benefited from lower product costs in Q4 " , uncertainties such as potential changes in used oil collection reimbursements and continued labor cost increases may impact margins. " Labor inflation is expected to moderate but still affect COGS. "

Tariff Exposure
Q: How could tariffs impact your costs?
A: Tariffs could indirectly affect costs through suppliers. " Base oils for lubricants are often imported, and tariffs could increase their cost. " Some ancillary products like filters and wipers sourced from China could also be impacted. " The company is exploring mitigation strategies like alternative sourcing and inventory management. "

Non-Oil Change Revenue Growth
Q: How is non-oil change revenue performing?
A: Non-oil change revenue was the biggest contributor to ticket growth in 2024. " Improvements came from all services, driven by staff training and increasing the speed of service. " There's variability across stores, influenced by staff experience, but all quartiles improved year-over-year. "

Share Repurchase Plans
Q: What are your share repurchase plans for FY '25?
A: The company guided to total share repurchase activity of $40 million to $70 million for fiscal year 2025, subject to market conditions and investment opportunities. " They believe distributing a significant portion of free cash flow to shareholders is essential for long-term value creation. "

Fleet Business Growth
Q: What are your expectations for Fleet business growth?
A: The Fleet business has grown transactions at a 14% CAGR over the last 3 years. " Management expects the Fleet business to continue growing faster than the Consumer business in FY '25 and beyond, supported by investments in business-to-business sales teams. "

Store Opening Cadence
Q: How many new stores are you opening in FY '25?
A: The company plans to open 160 to 185 new units in fiscal 2025, with approximately 100 company-operated stores and the balance franchised. " They aim for a more even opening cadence throughout the year, with efforts to improve consistency across quarters. "

Consumer Behavior Trends
Q: Are customers deferring services or trading down?
A: Management has not observed customers deferring services or trading down. " Demand for preventative maintenance remains resilient, and non-oil change revenue per transaction increased year-over-year in Q4. " While higher-income customers tend to spend more on added services, all income levels showed growth. "

Impact of Promotional Activity
Q: How is promotional activity affecting you?
A: Increased promotions in the market could impact new customer acquisition, as other channels offer discounts or bundled pricing on preventative maintenance. " " While the company holds its pricing, heightened promotional activity may require more effort to attract customers, potentially affecting same-store sales growth. "

Waste Oil Collection Reimbursements
Q: How will changes in waste oil reimbursements affect you?
A: The company received notification that collection reimbursement payments for used oil will substantially decrease. " " While historically, collection revenues hedged product costs, it's unclear if this will hold true going forward. " There's uncertainty about the short-term impact, but longer term, lower base oil costs may benefit margins. "

Labor Cost Inflation
Q: How is labor cost inflation affecting margins?
A: Labor is the largest component of COGS, and continued wage increases and minimum wage hikes are impacting costs. " The company expects labor inflation to moderate but still influence margins. " Investments in technology and tools are being made to mitigate labor cost increases. "

Same-Store Sales Calculation Impact
Q: What's the impact of the new comp calculation on FY '25?
A: Changing the method for calculating same-store sales to include stores after 12 months instead of 15 months will have an impact of over 50 basis points on FY '25 comps. " This impact will grow each quarter throughout the year. "