Murphy USA (MUSA) 5 Nov 172017 Q3 Earnings call transcript

Good morning. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Murphy USA Third Quarter 2017 Earnings Conference Call. [Operator Instructions]. Thank you. Investor may of your Director Pikul, Relations, begin you conference. Christian

Officer; will of Thanks Christina. some overview some the the Clyde, results. open considered us XXXX. comments in Executive Smith, during Private defined Vice Vice we Good some a the XXXX after and be you, keep an of Controller. that portion, comments Financial for statements and President West, including Q&A of Chief President made And up morning, Chief discussion President Andrew to Thank mind our provide Donnie are Securities Please closing comments from Q&A. this Litigation financial call everyone. joining Andrew, call, as Act of Officer; will Executive forward-looking the me today. will and After guidance, and and Mindy opening in the With Reform Mindy

be or of will these no that events assurances such, exists that occur factors attained. can be results may cause will to As actual projections differ. given A the that variety

latest discussion the factors, duty filings. USA publicly statements. forward-looking no on risk revise Forms and or USA relevant any please update these Murphy takes XX-Q, see SEC to further other XX-K, For X-K Murphy

also today's accounting conform to measures principles provide generally or we During call, that may accepted performance certain do not GAAP.

release, call results We I of have press provided be the GAAP turn Andrew. will over can a on reported as website. to measures reconcile basis of our these the schedules that, investors earnings which to found with With part our the non-GAAP section on

here want Hurricanes and of El to and Dorado nationwide. Quarter morning, USA's Good Irma, whose call felt Florida by citizens and in and discussing Murphy Christian. Harvey Third Thank today's XXXX the and also I Conference Call. start to was to Texas impact devastation you, welcome

accounted of for was family And cashiers, Our of and members our quickly within All generally the and and hours. most XX XXX% Murphy XX% reopened were of closure. of USA store the hourly first our days to importantly, crises and to locations managers as retained ensure coordinate who managers these X our X our we of safe priority within to unfolded assistant store safety employees. of XX

safety whom role stores in determining on safely also of return threat played for property. was work; our reopen also employees culture faced appropriate Our customers, it a to of many when life and for and to

area, X the During operational closed Houston roughly Harvey, were in of we XX of days approximately passing. within stores which the XX% storm's

to equal to experienced within All stores Irma including prepared minimal the hit weather without were and better reopen we our as days, literally stores and of general XXX% were within When able our remaining X service impacted of X returned communities power. people weeks to stores storm, damage. Florida the in force, the both population

have generously Our preparation need through the onetime our storms, a for our and customers and supported. provide assistance reflects through retention to to which for our quickly suppliers company. values employees grants; people fund, We're the able of reopen employees need the and our for as and ability

anticipation We out and work routes outages the also generators staging to prioritizing areas. took of and first special affected supply evacuation in source in of steps including on responders, to with fuel power

to our respect the in several are no impacted on As with I to to your There release, comps points you have results. doubt by draw noticeably events. third seen impact quarter like these per-store were attention the would

per-store disruption and themselves First, impacted materially storms volumes. the the of destruction our

landfall, followed very to there supply was following of experiencing substantial noticeable the the prior September took a of a the orders, high emergency differed noticeably most month stores evacuation for very behavior most that the refinery prebuying response by little number of X to we was lack to around know conditions departure. of especially consumer given preparation Irma, Harvey, the burn With the normalize. given storms. Second, demand and there and With storm's shutdowns rates

normalized the the shipping to of positions. created many function customer the also Third, coinciding pipeline throughout only impact the with of we of due recently and these the optimizing impacted down to traffic and subdued business Carolinas standpoint mitigate of remains the our C-store which was Tennessee of from colonial in These cited delays able September. month industry temporary sources. storms, levels. a by The several X the shortages shipments a far volumes seasonal demand markets, traffic through the of to have lower line aftermath into impacted returned some side Last, merchandise were inventory volumetric storms, markets period in softer to as

EBITDA were even impacted per in the per-store prior magnitude improvement first a levels strong margin response retail the extent and followed both on margins. higher The well rising of on prices shipments year. I moved wholesale due a associated was retail that and per quarter as the than share also visibly with to of versus higher wholesale given the for This higher results. a made out these of we refinery shutdowns, number in $X.XX from one sequentially online, to higher $X.XX ensuing and, we $X.XX of pipeline negative is Initially, basis and low XXXX. events, per spot business, a these this margin while as versus benefits year impactful the from per financial QX volume environment, of point in numbers equivalent including timing supply refineries perspective. resumed in very product this of fuel prices This earnings supply the above course, QX period. up generating generated on in by than as to the days was million, back of weakness year-over-year second in basis coupled were of $X.XXX in proprietary retail came year-ago the retreated. of expect the might with and RINs, suffered gallon the volumetric metrics period Results were inventory $XXX.X and $XXX.X up of to prices gallon a margins. storms However, direct chain earned wholesale more million, our positions, the the and quarter gallon want a $X.XXX margins lesser sharply $X.XX sometimes

within So, we the risk year, and And wholesale the over at range the of albeit expect the between we per generate long probably to ourselves, product and closer $X.XX supply gallon lower this expect repeating to term. business end. fall to that now $X.XX

discuss today's in metrics We guidance performance our will call. when that address later against we more

the store count to the new As quarter-end we X,XXX quarter, bringing think about sites. organic XX in growth. We opened stores

October, the opened X the and X year-to-date in XXXX. raze raze we stores may to with XX rebuilds quarter, with underway, Also, total bringing Additionally, land during ended. new-to-industry quarter more some which since we along and rebuilds, X in of completed the

on gallon from created We contribution were business, per-store volumes XXX,XXX month half breakeven, gallon, merchandise wholesale the average the year by averaged unit more were XX% gallons and of $X.XXX results the fuel a margins. hurricanes. XX the quarter For a close direct for store our estimated the a XX.X% results. were Including than these year retail that start we per with margins in basis Average about year-ago per look well product Retail XX.X%, disruption ago. RINs, fuel points all-in year $X.XX let's merchandise of gallons, ago. $X.XXX margins ago. margins If fuel $X.XXX than our higher an XXX,XXX a per decline to impact versus supply, from the the up fuel were at basis declines

compression impact M&A the on than from retail recent customer Despite remains and down category from total activity with Our Tobacco that that, is to the traffic and contribution the to market, We mix. slightly with moderate on seen margin in but per decline look a these store more $XX,XXX the quarter category price and a year tobacco competitive incremental we've prior price ago. per-store the softness pace at but through intensity in basis to and rates lenses, merchandise the decreased promotional largest sales product persistent associated downtime the to in years. a margin was to the from continued at due headwinds, expand X attributable course in our optimization, tobacco. activity continued month, of $XX,XXX storms resulting

in year and nontobacco typically an the our at as are lower with sales In see the from largest particular sale, than to category, absolute look drinks. at came carbonated impact in weakness we fact, add-on benefit beverages, manufacturer before. soft a traffic QX is disproportionate in a rate we seen price the a in of it likely beverage earlier higher increase both that When quarter, have

on in activity look we also store sales we to an excluding per of trend as growth we at the of month driving larger margins drive store continuing of quarter, correlated store seeing formats more of store and see and center Center are segments sales are average up positive. were our will coolers. However, basis beverages, margin is Center both super When continue the with in margin builds to invest in is per-store X.X%. growth and larger-format and much third the the higher. XX.X% we activity, sales noncarbonated

loss, the declining up This store nontobacco Operating Taken softer, X.X%, and before continued to of resulting merchandise fuel on credit improvement, margins with per card results. fuel were $X,XXX expenses declining flat category show a fees X.X% in year-ago gallon, the was volume $X.XXXX but basis. sales together, compression essentially margins year-over-year. month bit a offsets to breakeven per X.X%

expected to then second get of an which going modest more that, in benefits we place prior guidance. As the with things we took improvements mentioned our I to quarter, as metric With labor to model half. over do annual difficult comps Mindy on turn a cycle OpEx We in will the and little break-even start XXXX, the to expect in largely update forward. our conclude these we our

$XXX XX.X%. as Total $XXX ago. on for consisting balance as The on XXXX; million, of line our million due XXXX; carrying and quarter the remaining of gasoline EBITDA, effective follows, September our attributable debt out billion everyone. the before rate Andrew. the the Adjusted interest, merchandise Average third And $X.XX previously was versus as gallon in million to totaled $X.XX Thank million a amortization of versus and gallon to a extent $X in taxes, you, X% notes $XXX million, million retail X loan. $XXX sheet were broken year-ago lesser of year-ago of our was XX prices quarter $XXX $XXX.X quarter $XXX.X value per prices million long-term mentioned, of versus or term due good with tax was million carrying largely for and year largely the $XX XX.X%, billion sales. value XXXX. of debt higher depreciation $X.X notes in earnings higher a X.XXX% Revenue period, product morning, rate the for

also We X.Xx, quarter our that quarter. end expected on leverage are under carrying of ratio now results, loan approximates Using at balance second million in which figures on term liabilities the these current the the of the amortization strong $XX of X.Xx from sheet. down is back X

in ABL $XXX subject undrawn. is Cash present with the and time, at cap $XXX determinations, that debt place to and cash And million. in borrowing periodic end. Our limiting a resulting equivalents million, facility $XXX of approximately totaled is at us million remains million approximately base currently quarter net $XXX to facility

growth, Approximately the expenditures maintenance During the million. the concludes were for included And $XX million period Capital remains approximately repurchase million, I and prices for other under the within additional remaining of $XXX to capital shares Andrew if end announced will Andrew. we to previously elect the guidance $XX price by million are shares outstanding under retail company million million to XXXX. back shares $X cash for our corporate update, average at approximately expenditures. After the Year-to-date of million. be million, completed per were will million. And quarter XX.X end repurchase may expect million which how expenditures the $XX $XX X.XX up capital quarter, million an existing balances for share to favorable. of for existing CapEx, do XXX remain to initial repurchased versus range over tracking next. the for of our were to we financial that $XXX we we it and available now program turn guidance the $XX That common utilizing $XXX are Common address the authorization. program, this of believe completing at

guidance QX which XXXX segue Thanks, year, It's to our announced we February of great Mindy. prior revised in our a to annual discuss that results April million in offering. and subsequently $XXX following this bond we weak

fuel. with So, start let's

of range volumes both our fall fuel projected annual are year below XXXX billion of to as billion gallons guided gallons. volumes X.X billion X.XXX well Our as to X.X full

the the guidance in will month from storms, of total an fall of the retail gallons XXX,XXX year. range basis, X.XX forecasting gallons. short XXX,XXX billion to With average gallons for store On are per we fuel impact our

currently are to the from forecasting We decrease X% XXX,XXX in volumes around gallons average XXXX. approximate full year XXX,XXX an or gallons

of wholesale and on and a $X.XX do which or from note, October, Florida at the math high that guidance XXX,XXX RINs $X.XX includes above in the the demand our your gallon, certain between come in storm-impacted and Texas, business. XXX,XXX brighter impact retail per month, product margins of retail of areas gallons QX to X% you year-over-year includes month And are On biggest markets. a If supply October volumes expected models, original basis. down the in suggests in our approximately and X of per our in the end volumes which fuel to were subdued

We target are to results contribution will coupled retail including and of forecasting we short on about we several billion, first despite total an than our issued $X.X Notably, in fall case. difficult quarter late will this $X.XXX April margins RINs, October, $X.XX in basis. us our a very year margins gallon the likely with guidance of the in In wholesale guided to cents following $X.X run-up product $X.XX exceed all-in get a from full sales average merchandise, to supply prices $X.XX, be in for ago. pretty we revised which industry. close year of merchandise higher a these October And about of billion will and per will $X.XX crude

billion sales, impact with also in X% merch at from end year in track customer due On attributable on or are full $X.XX of merchandise are approximates just $XXX which our to results XXXX come and guidance We partially for softer margin of improvement storms low the also to contribution, figure the million, to a traffic. of closer still we the million to lower a $XXX likely $XXX below contribution to conjunction million. over

For retail to benefit guidance are And to savings. X% land excluding credit operating we to staying range. and fees, expense, of of we side flat track X% card close provided closer station that the

well improvements traffic. to are We year-over-year continued impact labor labor areas, other from as for benefits adjusting see continuing with in the hours the store-level of model, lower as coupled

and $XXX guidance our G&A, million. million administrative to was For on $XXX a general expense selling,

to end the at likely are end range, quarter. below incurred including or charge low the in year the that We of the $X.X million first

guidance we those midpoint year million, XX both of likely to to expect a revised million million will pushed a within we stores for more growth, the to track are under-spend productivity $XXX While of of $XXX G&A the range. initiatives is this on Net improve and provided but in provided targets. of this likely initial and the XX business, so we new we end range guided we of million, in the XX April lower to our million remain timing we into income, was XXXX. we year, as continue slightly range $XXX million above $XX which executing a provided we to issue On store range technology-related investments are of $XXX increase XX to On on some new and to to $XXX million. rebuilds, and $XXX of an an raze do as long-term CapEx, XXXX

range. the are back $XXX $XXX within million which we However, to initial million, guided forecasting now is

subsequently April. For $XXX million million in million million, adjusted $XXX to revised initial to was $XXX lower was to $XXX EBITDA, guidance which

while into profits the the been conditions; remains disruptions guidance; QX. the business capture weak low high pressure, market of experienced positioned end results. closer still advantaged impact resonating XXXX of the expect model of the plays in has we Nevertheless, end to $XXX remaining challenging which million, metrics to a As guidance hurricane-related line year our during the about all, All competitively conditions. while QX in to market are variety and adjusted showing gravitate or we per-store towards out, is QX, underlying original the exceptionally some of given year in a with XXXX

quarter core is our investments the plan responsible improvements allocating rebuilds, the value raze manner priorities operational As while for focus improving summary, projects, stores, we our continuing capital In shareholders. and on highest-return share XXXX, technology-related will business to mindset long-term a strategic including around new our around towards continued clarity and and in repurchases, all maximizes that call this they we'll the in capital this while thank for maintain we allocate resilience highly interest family challenges circumstances. of Q&A. support And USA. showed would faced And the I your the USA open in all for for our difficult disciplined Murphy like a Murphy in to they during on up call and thank I to manner. their and of you

Instructions]. [Operator

from question comes Wells Fargo. first Your Herzog Bonnie from

on It's for Bonnie. actually Adam

Just a to quick the related traffic. question

contribution, I you still into in have you X% through quarter where obviously And about which imply it's a bit with decline in the the being huge seems remarks, about it to about touched would think focus volume. prepared and was in I mid-single-digit big know on carried the decline. of half your decline gallon that the this which believe said a it I October, - volume;

generally as I So, X is a your run what below would say I point running that classify or rate. would

to just hoping is also, whether where that? anything there a low what are to on, think that's recently? QX you've it's was been factors if then that So, can a, b, closer that year, QX contributed back, you trending have or And I decline if to the comment And could you that bring single-digit true. maybe you next do

importance pricing out give acquisition. quarter traffics from the clearly, And intensity stronger activity, than right differently prior where What about question moving systemic competitive how a the lot talked in volume about tease We've I'll loyalty of we that. in on anticipated its priced impacts storm of pricing. has to of they We even parts a number about level a about to were were periods impact. the what's industry customers. I you QX you've Good in the I the precision last around the how a margins, versus we've where that behaviors call, also question. and trying their will talked and of storms and sort you of back where to traffic to there certain got I do We talked to M&A of, expanded talked players. brands the are can't a about pricing we they trend and were what's now people acquired; think And draw you is brands after segment tell weaker of are We continued how aggressive in talked new and when terms seeing.

so, there. And you market you underlying those continue I structure out do ongoing think, storm, seasonal impact, see and to any those have trends

we what part thinking about we second think, this really the your how forward, - as which are under I'd think of going question, about X categories. I is put it

is and or important loyalty from merchants buy program. underserved about stores a customers to gasoline talked mass how segments. loyalty from demand had how before The is that first have not we grocery to one capture have and we we know We've who

an segment. So, it's important

capturing important in contributor towards of loyalty a of to we QX underserved segment customers. and be distinctive, that's think that an pilot program unique XXXX; the launching be will We of highly going

During the insights how we single to smaller much as for fact our in the X QX, loyalty much program where might programs into it customers that on got scale to tobacco, a digital our about orientation million that customers And out a up some through like something a you respond customers we value close just of tells month. others. and seek they loyalty signing something got as

of were so, do short encouraged getting customers many a back we incredible has to Day were an the X we and are highly be also incremental there. talked and our in There retailers And some those improving while important everyday about our get million force able that. that's able there's been effective do the the We've where it's time. what have certain of in for out a Renee focus with some period for year, customer, their on to very at niche fleet for we things that some by low expect model a divert sales. walk and pat Analyst towards around Their to not stores. got like attention products price competitive themselves to a in that excellence of our can go-to-market share improvements segment also markets. know segments million sales do to on offer. we the discount And And X We segments we optimize

point underserved is and of segments, first opportunities out a see the we capturing So, lot on there. this just

projections the than brands. stores talked in when and in acquiring of those of we in be the M&A front and out model brands their rapid fuel supercenters adding supercenters largely so know around certainly going impact front is is announced just It's CST year-over-year-over-year, those XXX QuikTrip's while in will our or areas And additions; in markets for one XXXX. market, like, in in impact trends And XXXX is it the new much impacted years Austin and can but you impacted, though, are those to less seeing who Day have markets go deceleration We when neighborhood think those the Analyst new markets. this the many they is we traffic second be those stores builds simply about we had impact and The Stripe optimizing look talked prior into others, prior positioning. competitive and The XX We and San acquired about clearly of always of former us competition. others an we've had in of us competitors. those and a by of look for about laid have markets. over. to years process What Antonio. not on deceleration that, Walmart's at a neighborhood a the in impacted are And our are

we thing have store And volume. it and - other when just at can where And the you put go is just street erode you price very get we that look of The falling the has is is environments these on opportunities price activity carefully I by and where and of sum down? competitive fewer. chase over the immediately think market matched, just made you those some time store

shifts and a And so, immediate system associated every at had periods. still an around XXX,XXX with store better you a line. That's with And variable you've the card industry fuels you'd doing of I'll XX% we've new when in that, faced on gallons, to our some industry dollars. fees running above our taking one gallons XXX,XXX pricing you that Xx store you improvement in stores, margin. gross our strip up that and insights frankly, and tools in see, aggressive us see got average. pricing. was of gallon well those We matching give example, and it's $X.XX optimize was prices Monday. and the And aggressively in Memphis a the over well and over our others in per We've that out earning less in data I margin just as with down XXXX, got average and $X.XXX. And credit optimized XXXX low making

doing stores. volume we're performance that some but our will things some volume reduce performance also both at there our may there improve So, are

in the increasing outages; those going drop to carrier for our talked they we're product radar really wrong is started the do smaller means situations? we excellence. focus our the questions volume, incident to minimize thing How some on uptime you trends has. spec what year, wide-scale to lead third something on operational just been to and in about we're the that basis, not underlying tank; know day outages that. had minimize We XXXX the but perspective everyone uptime better think outages the where that has around for the at how better those. over but February our Adam, have for and we've QX but address I we in card a improve Maintenance I And center that stores. call, we'll to But supply I addresses on will issues. regional can initiative do day has about looking product at in And screen that an the we what just about that important and store do guidance for cross-drops, on and support was and hope our That network also management credit XXXX who in question. our a impact

Your next question comes Witkowski from & Damian from Gabelli Company.

had below neighborhood talk they Just you? they to they - A, now the remaining Are same but do your pricing gas competition for it you are you competition, are that to pricing for in increased and actually of also And gap between continue? is you just they actually below the Walmart follow are are what up actually - there. And And pricing when you M&A competition fuel state, front competition, they goes obviously them? and doing. on stores, they the about about Or bigger volumes. think and where opening the you? are in closing you states stations expect some

Yes, so unique with cost the specialty our lowest I club say would be seek below the in or we matched of that operations of requirements. some membership the exception to markets, have

or their somebody price. us, who another type at of be of front a or below in if big store will has box offer we So, grocery or a

first that answers think the dynamic. I competitive

On a and With I stronger charges, price-volume were fixed differential. break-even about margin. requirements, the think mean, one, structure, high they're ownership they that clearly high that you pricing brands optimize second to if for going like The before Pantry, cash financial

the going priced gap to those us. the that. that closed be And to competing a not market stores with in as top cases, are rare of But result are of of with are they So us? have be we market-to-bottom going below will somewhat

the differential so, at low time look to of market. competitors the to price actually a slightly the have to relative your of at low period you in market. wide to markets, are to you And the aggressive look differentials the we to more actually the continue more other but the to absolute of have price that the the all across our state higher. overall our markets. or lower-price And also that you just got When of competitors, It's across look in top same you've

So, they in to become go more actually to those have convenient markets.

some who see You the major program those store significantly per pricing to where with through then some gallon maybe or high/low off of brands either do some cents customers some program grocery programs, not of loyalty from their have their program. also loyalty them affiliated get the their prices to raise

afford to differentially example we So, volume, I requirements in them to competitors. just price a taken as brands - are, they now merchandise cases pressure put M&A in whether out. lose will. low brands think impacted competitors those competitors come like new up can on weaker down; That be or of That they those that more part significantly who what to break-even impacted you, hindsight differentially said, our significant depending on of into end at in stores have will Damian, than cause then they is the where than the because different gave Texas you're and more continued I will it new being and those weaker volume to the think, then their about saturation price some the those even more as of markets impact will those those look decisions day, some store, need seeing of just it the will price the

sort better about similar driver? at the that of competition category talk you looking it when then Is that increased in cigarettes, is and... operators And a

that gives new us who can in it's we've the stores, but programs, of deceleration saturated with entries And various manufacturer and that. the on that that and on competitors some offer, now participate seen versus an is. not C-stores, the of to in those have Many It lot loyalty the with competitors who programs some that markets prior a in offers number coming are where these are programs you advantage. years I technology and dollar so larger-scale the the in. other are the saturated also markets invest manufacturers and loyalty of new the into able of a digital see mean sort of come competitors

is So, and existing have-nots. kind to continuation competition. fact technology make winners haves this the is that's in continue industry I to our see going a stores where losers, across going in to new why the think given highly disciplined continue of and we of allocation going see be And what an you're sector stores around to persistent to and we're capital investments

CSDs out called third you Any continuing Andrew, just, that is weak in lastly, And quarter then quarter. you why as that here? And the the think reason is? Okay. fourth into

write lot I for and the certainly as was an saw as as these add-on that can down and I about you sales. just water well. in soft you a add-on storms. Bonnie category carbonated more people think it noted, we preparing you her Certainly, tell of sold we were team traffic a when overall than a piece it's trend. their drinks as - that lot bottled whole, lose

the larger and So of be products there. What advantage stores innovation in carbonated are major categories is and our take our that the to QX that impressive soft drink partnerships have and continues terms new super coolers able unique was companies introducing of. to

in or of around manage able whether how how carbonated so, are soft opportunities It's And to the there is you to fuel those manage headwinds or those model business categories. around it's your and take tobacco advantage those. drinks,

Mandeville Jefferies. Chris from comes Your from next question

you far, to wholesale, Andrew, the a nearer that to dynamics understand And from space trying the product just year, what be that supply to least on we've as and about for with seem at allocate I'm the it arbs do bit, quite today? as can seen finally as there respect of $X.XX thus - while them started relates to little colonial. to quarter-to-date full being line talk seeing the the just guide open we

there just potentially fall maybe high to I'm So, the mid- should trying versus low we end ultimately understand the out end? to why on

Yes, contribution reasoning really That's low make really, the fall in the hard just to to well, X.X think into is I up. end biggest QX. the

And really offset Q, made $X.XX so, it's a $X.XX, QX quarter. where like hard quarters we've we've had but to other

we about dynamics talk back to QX, X number. that core the If you kind impact of of that kind go

have than were trading of was $X.XX, a as We number. spot-to-rack long space negative, And $X.XX. or Crack RINs greater just the market were negative. it positive spot-to-rack favorable the positive. extended be at on to structure. our period. spreads transfer Line you is just of The first to or is And were let's an kind for retail, is around oversupplied And assume positive the closed. for going negative colonial arbs as

these if X In that money very would QX. and at for the clearly And product model. out conditions product in everywhere rack. get just Southeast, very, low we've we have so, all And product more the right, QX, of have you we at discount the people OPIS very, the or been said, through had bought in at rack OPIS all would to rack, low our made that product to we favorable

long, chain be the improve. So, conditions over advantaged. in to refinery Gulf the QX U.S. line. concentrated environment. showed in is of coming in go actually country, largely the We a those the saw inventory long We run, we saw refinery to the in supply long, our tightness exports resilience, continue with proprietary capacity going We be its XX% off the Coast country marketplace out saw unconstrained the of as but halt,

looking of QX we around that's advantage our think as that optimize you're that Otherwise, a year, is And QX business supply have over have had time been hurt the of So, I we it I business. year how our ratable, pressure off. see employed scale. our shut a spot-to-rack knowing said we of some how for but in last model team is not going and at And to to low-cost been we advantage would this that our contract, continue to and world secure, in distinctive and would on we where to mix, take business. having allocated

we say depressed. RINs. didn't of the regulatory I The around regulatory lot outcome a outcome, prices the being other RIN in said to led which of speculation thing QX speculation was saw in that speculation in I RINs.

I in the see think RIN between high spot are prices earning that the and regulatory refinery is now. clearly refiners as equilibrium equilibrium. and RIN very are at prices, that RIN on you spot-to-rack crack embedded in spreads have price, there's that clarity the some And today. we that back

so, just how environment your And variances and stay do offset what we that in does is equilibrium on resolution now falling has more timing that you to those And matters. and are third inventory price expect in the or that a your position. that and we some rising on have part retail

just that's with of so fluctuate And to going kind time.

So, $X.XXX we're year. $X.XXX X-month but at kind year-to-date, per gallon, to last of that compares

time $X.XX very we're think above but lot short of a happen going supply product can be the we this in a to side. So, on year, period

so, out, but continue that's we per to see think this we'll where we an shake And overall $X.XX, basis. on all-in going a to is earn that gallon $X.XX business $X.XX,

far for thus being yes. Right, QX less year-to-date, just simply quarter-to-date what just - in November? with appreciate or that to PS&W we in so market conservative excuse are is here, summation conditions October, but maybe maybe me, are versus And assume I that, just QX? observing $X.XXX in you're you favorable the or really that

the themselves, retail certainly I back but think up. resolve to favorable, built more supply gets conditions started inventory transfer as

outcome. moderate. drove There positions, probably see short had people some a was equilibrium. who prices buying as anticipating were perhaps that extra RINs You'll up to come that certainly have cover different back to

going big pricing. I think though, the be wild is to around card,

you higher crude So, $X.XX the the off enough that run end some some as way, you "Do you about latter then closer at fall the $X.XX, talked margin we've be is or typically October, part that that that the I I for would say, well. of year. $X.XXX?" offsets to end going in to as that at prices than $X.XXX normalized think see to do the of And think things of year. margin prices And retail up kind swing could saw of

are so, picking our up rack And a at buying retail margin, that barrels rack, bit more way we're to prices those the little and in. get we're the extent priced benefit subdued, in

around to the the everybody not come to fact in encourage the solidly $X.XX, hair to just think we're going about if would and we I that $X.XX higher. So, $X.XX; a think

lines me, Great, that was again to decelerate along on - going appreciate impact and nontobacco per-store hurricane if tobacco $X.XX a seems are number so, those Is looking the year. great. color per-metric said assuming then on think QX, trends I at trends If just the the the it full that was maybe into merch gallons accurate? imply the last And expectations you correct going billion QX, for that heard, I'd or guide, it to then but similar one the for the And from I on to that basis, sequentially. revenue a somewhere why?

in the that. the versus Yes, tobacco the so side kind in one, we're loyalty; from digital the of QX, the QX of mean seeing side competitive a I on actually of kind decline deceleration storm; the traffic, the

traffic I attribute so, that fuel overall per of kind QX wouldn't it's subdued that and of that side generally and on to through. just flowing it se. And to part the It's kind of

still loyalty programs, the on side, that XXXX, tobacco optimization, of of longer-period store are of store lot team and there's announced impact sharper the the in on a some merchandise working pricing in terms Rob programs in think, participate the I to on ability the newly next his our center year.

on category. certainly what anything front. we've bearish not accelerating expecting So, on I'm versus that I'm not the seen

we that's Just some September guidance. continued just traffic that of a that as impact, October, reflected from in into is move

Your from comes from next question JPMorgan. Casella Carla

your expense. operating that - Or looked One - minus per-average-store a you the - question is on basis? guidance that expense to guided the on overall you station operating about, X% one of Is you items one station total? at of just have of your talked

on That's basis. a per-store

Okay.

store how much of is driven cost... size the format the just overall that then so by And versus of mix more

are newer stores a Yes, so so they all the about the improvement, bigger, if it, have you think cost. higher

So, are those a in smaller kiosk basis, the and looked on it mix. if getting at smaller you

actual of greater the these than a on real costs, And you building headwind stores higher operational if incur you're the is actually same-store So, is basis will, bigger right? are improvement that. savings. fact that sort So, that the

great. That's

for I builds give a give, rate for future? an of gave And you you did you the new beyond, year. then know of run it? number good raze idea miss you or And store this did I helpful. did rest 'XX what's Okay, Did and that's the the builds or rebuilds? -

it about we've We Analyst of to kind range. We Day, may sort XX our be if it XX you have. And and talked of in more rebuilds. be more some raze years, of other kind may new the ranges in years, look builds; in said,

from putting market you Certainly, that for new is we're months, and a rebuild discipline you so, be it to certainly take right? going the and store standpoint and the raze same around very challenge standpoint raze stores, the million the and rebuild. value off, in really new commission on you that X we're write thoughtful little of for capital a And where out to it. and capital And then has on all you add take it that book left $X a

of the that. sales, the of also and volume, we on the the better those. portfolio the from So, fuel total when the at do all impact mindful love you on level outcome capital offer We're returns

that on in February of guidance that the in mix. providing terms we're So, specifics

Instructions]. [Operator

Bienvenu Stephens Inc. question Ben comes from last from Your

Daniel Imbro for is This on Ben.

we guys the nice end are think to margin the comparison. merchandise how showed called out-years? difficult going despite year but those of leverage of should some this and in think trajectory through I you about kind quarter Andrew, coming out somewhat you forward where that So, improvements from,

Yes.

more dollars great able better significantly there. so promotions, rate sales, at grow programs side like job manufacturer able around the comes to if some the our done I you're look tobacco through a the of of where we're but margin we're some to to team has improve categories see the The on from, continue the because margin So, clearly, we optimized promoted seeing candy, increases. improvement also

center then store dispensed having we're And store Some bigger is better managing the beverages, margins, of higher our areas of there. mix. like have and mix portion our improving a just better the of and

those of going sales. of continue there's I've place margins. We're you're to our always to will to so that can some So, have again, business going before, a optimization lot our to in think as base still tobacco, I expand year-over-year. And said to more the never factors a take a does improve larger unit of this to shift Core-Mark lot XX% It's us but continue able retailer categories. that in to improvements from ago, onetime be we a impact be across make there's to got kind we the get year to of XX%, hard can the tobacco going incremental compare

color. existing about the of How helpful new as that unit markets, kind of long you under And more Or ended markets? Kind infills a Okay. or are you transitioning think growth, of construction. at to are planned It's should they the quarter pipeline we stores there? full with mix in come pretty these what's until online? planning

bit we're had year. starts, in a Yes, the and delays area. right been in that in high-traffic are be et off but we to format. power high-traffic to of but that little to and good for important; these to due delivered so wouldn't in. before point existing a that's be loyalty in think, success Walmart, most that to the continue a we connections but be mostly areas. a build just 'XX into certain but with The couldn't have pushed it is continue where we 'XX time, start material. go cetera from markets away front with necessarily There larger we you're fact a couple stores going to that - as in typically them we stores markets I we storms, construction get a But of continues have those can to to to few always of due more that about concentration those setbacks forward, doesn't permitting, talked We up this proxy existing see scale, expect that go our from And construction, in that even we to expect a

within levered we've that capability set. our talked with markets, attractive returns would I our continue as and in areas format a expect staying modest So, to about, growth see, generates high-traffic core in to

how are can learnings one year some performed utilize the continue this you've of relative the Okay, great. forward kind learned topic, on as have going rebuilds from your what so to to that me, growth the expectations? base? And this then continuing last far, maybe And your you from those this of you store raze year and to do

Yes.

expectations. dispenser. XXXX. I kiosks pumps, XXX- these remember diesel start So, you exceeded they've the maybe XXX-square-foot kiosks. didn't were these met to doing or really had Many mean X we got to of X mean larger absolutely I XXX until

prior performance volume I so, exceeds the And performance. mean volume the

were All of stores. these high-performing

very in love to where state we it. new the customers can't but the and that we've because The tobacco think go customers somewhere in very was you as for raze down, impacted their there by would close period, minimum go a But of the have high your store tend little We X- certainly, you've feedback earn large, the X-month great be built been that format get pleased that. got to, they states bit back, a nonstate they get have states so to mix differentiated else we're like only And that did that's frequency back. came whether are entire was that was to I with there in where X volume that it's from rebuild minimum not. categories harder them able store or and store overall, to out where pricing. them but them,

of $X in have it's capital on with right a book fight term top said, the but weak some million that increased remaining the As the you're you're on you business I long versus that's writing that, thing trying do and investing asset the off adding to ground. for competition to of value

to do those is plan, to overall at continuing of pipeline continues be modest pace remaining. a and there those our So, part of good

from William comes Domyancic next Ryan from Your question Blair.

a their business. recently announced alternatives So, competitor they're C-store hypermarket for exploring strategic that

states, footprint in I a of largest one have Florida. think they your decent-size

mean, a the forward? into hands those compete those on what go that would then have to do competitor easier hand, if going And be I what know against So, you competitor sold, assets with is happens is? they asset off overlap new it under depending assets whose you and to the

we are you markets the on from closer I the unique A some the And some the that Coast. along their where And to percentage Florida market high XXX,XXX do lot supply where other at Alabama overlap. stores proprietary guys precisely in of I the a markets, per similarly, we're standpoint actually they West lot is XXX,XXX. of And know market panhandle, so of California public all say, attractiveness than border, it's in stores gallons can not average ones that are - the as data, how the A have pursuing. there would about a is we in well. look assets. of X the is rest Pennsylvania, there ones Yes, overlap. the a month, the in around think, that's

expect branding they're pricing after, that it stores different And a kind hand. consistent are how offer kind so, sense undifferentiated tobacco categories of fuel these that in that will but in of versus that will pay you little been others undifferentiated to I and pricing food of than margins for convenience a in else's have they selling. cash terms the see would someone question a described would what challenges. unlike largely to getting have market, around whole in try networks say I not had not, difference or with financial These I of other from lot of lot I the someone high with are that makes with so it's operated check. in And really Damian's if go dynamic for people really, synergies to get multiple a or It that a some the have who's a from have go will or someone naturally standpoint acquired high bit been think of be

fuel think probably these optimally start and and pricing are tobacco in to with. I stores other things,

to questions over And presenters. I are back the this the no turn further there at time. call

USA's challenges model? that time equity quarter share costs. Great. of underlying and that year-over-year This one-off I the a is is Murphy And positioned regards top and headwind the to of is demonstrate, in we've attracting is and call very generating free I sharing that a end continue are address ROIC around attention business with, in around sustain on that is we and industry and transactions optimize as stores to there look machine provide a of participation. for on is to et flow though, working any played about but like USA for line on on spin. high-return in on more lot as market in well mindset reinforcement call, cash XX% retailers returns. of questions And to this focus we're our a There's of for new of to categories are sort new lot between appreciate our the same the faces very guidance your to QX. and the today there. there as And on and happen the volume competitive performance What the lot out continuing lots when like forward would your repurchases; the talking continuing that cetera. to number we model a your to the and questions capital focused kind allocating What business. number we of like our highlighted without our of There discipline to that of segments drive XX% since well EPS Listen, unlevered, XXXX things just that out for headwinds customer generated of today. focused will range capital demonstrated lots retailers you regard return And that model. a there's and are There's thank food, adding that's units quarter to without Murphy we'll February this that maybe a our

call. conference today's concludes This

disconnect. You now may