Valvoline Inc. (VVV) stock plummeted 5.08% in pre-market trading on Tuesday, November 19th, after announcing plans to refranchise 38 of its existing company-operated service centers to a new franchisee, Velocity Auto Care.

The move is part of Valvoline's strategic priority to accelerate network growth through franchising. According to Lori Flees, Valvoline's President and CEO, "We are pleased to have franchisees that can expand select markets more rapidly than the company was planning. More service centers, whether owned and operated by the company or a franchise, deliver more convenience for our customers, more opportunities for our team members, and more value to our shareholders."

The 38 Valvoline Instant Oil Change service centers being refranchised are located in Austin, San Antonio, El Paso, and west Texas. This transaction marks the third refranchising initiative by Valvoline, following the conversion of 28 company stores to franchises in Las Vegas and Denver during fiscal year 2024.

The company also reported its fiscal fourth-quarter and full-year 2024 financial results, which exceeded Wall Street expectations. For the quarter, Valvoline reported adjusted earnings per share of $0.46, beating the consensus estimate of $0.42. The company's revenue rose 11.7% year-over-year to $435.5 million, driven by system-wide same-store sales growth of 5.4%.