Murphy USA (MUSA) 2 Feb 182017 Q4 Earnings call transcript

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

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

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

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

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

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

will keep morning, our allow. addressing full comments much make I four XXXX you quarter and There discuss we regarding time in take fourth Q&A want I ample press Good have guidance results, will do and all remarks as and full-year to performance. want my and to to welcome main Thank sure fourth takeaways quarter call. through I time Murphy as the assume XXXX I quarter and with. XXXX release brief have our so read year conference you, USA's Christian. to are start

business the our it’s I’m overcoming first us remains and year the stores, with a employees, pleased how over severe quarter guidance impacted demonstrated we business serve. through of very to model First, our and past that and our difficult very our the events revise then persevering the communities resilient. that caused resilience

shown while and but can million XXXX that be In margin range balance and of generating revised we not As results our also per showing quarter $XXX million, market wholesale perform within get model in-line margin $X.XX million EBITDA the our to buyers in of with contribution Further, To resilience. in towards is from help why pressure variety million, as to categories. built subject environments. total our regulatory strategy to our around prove delivered only again and headwinds per operating XXXX $X.XX $X.XX have strong business once results $XXX the will always contribution, we long-term original million. to within $XXX the sheet that prove $XXX uncertainty, we second from a supply a of range which year-end to we QX XXXX, first as annually our our the to merchandise fuel continue delivering our $XXX disruptions, business well ability guided capture to gallon product and margin This results, fuel of our got guidance. gallon between half guidance of in there activities under

initiatives contribution to began the year-long of from to around as was to to benefits recognize business. Total despite categories million find Notably, per fuel our to $XX the ways we in merchandise, key this quarter the continue store supporting margins shows traffic Second, improvement comes average up X.X% value drive merchandise in and optimizing which our fourth we value increase lower add month offers in better in and a results. promotional XXXX transactions.

balance We unique on can is indicator offer formats, wider about a our so all also growth about positive We want sustainable are a in we all impact Murphy We I QX uptake, for impressive the and momentum metric up bringing the categories, believe participants showing the to contribution margins of XXXX. showed customer and which specifically and strong operating in are the cut USA million as requirement tobacco our to and very trends as frame across with continue we registered excited time fuel our level into remain track X-week bought rates end drive store breakeven generate. store we loyalty further speak promotion industry are generated QX. an over results This customer expanded same-store engagement that per from X%. X response of of kind help of net pilot expenses. we

shown on $XX,XXX station X, operating $XX periods From perspective, XXXX for volume average was a competitive price down of $XX,XXX million XXXX excluding a disruption month XXXX, marketplace. credit a fuel a in we as fees benefit. relatively maximize contribution to for fuel As margins card X.X% table financial in in versus expenses, from especially or healthy the resulting year in improvement of pricing the in approximately Page per in

our for pressure. compete customers with under be are continue we larger to number of to low As volumes going price operators,

to point. service, for visits and customer an the stores, program our We our with will outstanding customers customer our stores, enhanced third brings offer in fight refresh with our loyalty and which me

rate We while are estate new real of strategy. transforming our moderating store growth, our a

and build XXXX, factors. several function new stores We is of in expect this really to fewer a

manner. with disciplined land highly made, continue same of First, hurdles difficult to of more will fewer and cost. escalating have Even generate meet returns return to the acceptable in building type higher is locations the it cost, as some capital our improvements we with allocate a we

must growth record saying new finite rate on been and providing a XXXX. deliberate choose in and XXXX, is and remain business still where B in build customers. we while since of are we this to lower very a Plan early the was attractive we growth of I’ve spun outcome announced there we always we Second, and markets are offer stores to build that

mortar our the Walmart continued see dogmatically the left. execution staying attractive the put view generate in good and world-class take As for assets retailer collocating right our retooled to in and stores more set. longer-term have we but Walmart The within real versus Centre. locations Walmart estate and final to profile visits, brick we while are we free stores, the marketplace, pursuing our value is, the they the returns to to are strategy compete capability of and and their not fewer customer and continue allocation sheet within cash Thus, locations markets positioned right our fourth and exclusive strategy. traffic of well as with are building we to customers takeaway balance there better flow we right draw to and a locations a strong aggregator capital infield remains the strategies XXXX enter halo a of stronger Super with

lower investments reduced more to as on effective free assets. very share value focused to network of a of which includes course continue capital a new flow, of capital is with strong driving our our coupled cash the outcome repurchases, in we as internal budget support best allocating position well are to corporate existing initiative direct tax additional rate returns, Our from

to guidance. things comfortably leverage I over us And XXXX. times, Our conclude will a we that, turn giving reality remains yonder as and option XXXX X.X with discussion then Mindy, our with flexibility financial into of head and

for and and prior totaled $X.XX largely for and fourth $XXX Net lesser billion prices million mentioned in the to gallon prices amortization period. sales. versus fourth and extent, retail Average benefit for in Thanks or This $X.XX This rate. XXXX was and full-year. full-year interest, $XX required respectively, revaluation as earnings fourth $X.XX accordance hi million our an tax depreciation, million the $X.X result attributable versus and to existing higher liability a significantly $X.XX federal higher deferred to the to before quarter in million fourth respectively, Andrew, Adjusted the product everyone. the quarter, up $X.X gasoline for income were of and quarter and full-year. due of $XX.X compares full in and per income tax quarter XXXX. taxes, a the was Revenue billion in billion quarter lower tax deferred during $XX.XX merchandise and of million $XX.X $XXX was billion with new as the year and $XXX.X the the EBITDA the previously

in million, broken XXXX, $XXX the of As due a and million was $XXX XXXX. negative as a tax as Long-term Total million follows. of was $XXX carrying XX on expected EBITDA and amortization, quarter. leverage which amortization balance under million as the Using in are $XXX roughly $XXX on addition value consisting our the for full-year effective our value of of current our the notes is our these liabilities it ratio versus $XXX in approximates XX.X% million term notes, X.X% XXXX, X% December million, was of million loan, on of million rate balance X.XXX% XXXX sheet that of term X.XX, result, in due debt debt out remaining $XX XXXX carrying sheet. same $XX figures we the loan last in

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

end with timeframe. million repurchase stated million the completion plan quarter, fourth the per share million price our we shares an repurchases. around quarter means, the approximately in in repurchased approximately continue at we the shares market, repurchase upon for That quarter announced that $XX completing million to previously the open within $XXX average of During worth to XXX,XXX $XX program common in share, of two-year $XX $XX

We million on have additional so since XXXX. spent in far repurchases an $XX

release, amounts in said conduct by with of and value as model, repurchases XX.X our we expect quarterly we framed our shares and December the shareholder past to common history for disciplined repurchases same available to outstanding earnings committed our XX, we cash on balances course and remain of way, consistent million demands to XXXX. There capital. subject were other share As in future

million us million. brings to for CapEx $XXX CapEx the CapEx. $XX quarter, year-to-date that bringing So to

for call, spending for will the update. in million. of financial million $XX our guidance a $XXX within address approximately other portion capital with capital As investments, we That retail remaining million home completion approximately to various That $XXX of expected fall and in million range will corporate of the further including the $XXX this XXXX our concludes maintenance of growth, initiatives funds remodel. for earmarked office consists

over to back it turn Andrew. So, will I

Thanks, Mindy.

we’re components review and let’s our as value guide to a our that. So, creation XXXX guidance formula to going use

So, stores new starting with points XX organic in XX up our better in versus And only This stores early XXXX. outcome you build and growth express dialogue and new Plan are XXXX. I there around stores branded we’re fewer store new and of raise January to rebuilds decision is our in the and is Building make XX XX XXXX. a recall rebuild to up back in targeting to direct if locations several want activity. raise B intended to around of sites

and markets. continued at there our return Midwest investment took those within markets in for the stores that We many look new in not cases geographically build judicious just also and is a decided

lot activity with remain disciplined to over We in industry X% growth's capital unit-growth successful past believe has disciplined new mortar strategies focus our that grow years, will and other we and we several X% build not with quantity. our Third, sake. remain a seen for the is on with quality an brick line investment that in retail in just of and

right which of both are by many the near generate we program. the As a the bit means put assets network returns to our year activity. We good location before investing generate market of will to in continue to real and XXXX continue upgrade and a through in and will with estate want we strongest not square is be transition raise sue right our the can rebuild that on the our we such, stores of in the right activity to returns fill X,XXX locations, strategy we in previous acquired be markets largest locations focusing proximity to may than foot outcome limited or to build size close high-quality that Logical cases Walmart. were lots to a the may in in Walmart. respect

that into to square-foot are square-foot our modularly can stores offer in a We still more a and merchandise the floor X,XXX format, of product optimizing in our be efficient larger efficiently. provide X,XXX plan box roughly that’s XX% built

and team larger building XXXX beyond. as begin the and will these real for We some our XXXX in pipeline develops estate XXXX of stores

over allocation our as shareholder all will to As of growth to continue lever strategy and with we about one investment maximize designed mortar be disciplined brick decisions, value. our capital

adding to guidance is which on contribution, our dollars, range metric at contribution new fuel product Moving fuel this margins. of fuel a range of we total are simply total year, expected volumes of a the

we $XXX necessarily million from in help to margin full-year, provided of operates. of which a function outcomes $XXX the have volatile For but won't wide a your business environment million, modelling, as the which our range

providing output volume our guidance $X.X of $X.X of is a to year, volume per month. which billion month guidance gallons are annual gallons store direct retail to We fuel XXX,XXX per per billion XXX,XXX of average

pressure over industry as we continues years. last the at of downward volumes month on in store activity to continue have newbuild the per volumes, seen several average actual XXXX pace as expect just long Given XXX,XXX, we

notable and new neighborhood some reduced and other dramatically their in investment areas While private stores operate. continue at like mortar public in we operators markets Walmart have Supercenters, competitors to convenience open brick store both

versus pressures a highly position. have three enhancing as the result of From average into activities $X.XXXX initiatives per including with while lower delivered $X.XXX competitive and saturated underway, a to have but diminish perspective, do competitive factored forward, expect we all-in gallon $X.XX XXXX. XXXX PS&W a a volumes market, per low-price per our number RINs, we some going cents those in gallon to generating margin the we not volume expect industry yet expect gallon we of Although of still the guidance. of We range times plus our we an

believe market continued we With balanced the well periods as cooperation U.S. and factors. other OpEx opportunity seesaw as prices prices, more for as expansion, run-up oil Shale the of presents in between volatility

to fuel breakeven on with merchandise. Moving and starting

of equation, we side merchandise see contribution in will to that the On growth continue dollars.

sales pressure category We are XXXX, due tobacco as perspective. topline guiding downward ranges to from same to the a the on

that from margins with tobacco $X.X $XXX products guiding to pricing, a However, non-tobacco to of. new have we to sales to promotional stable, we margins, million remained margin million take of and sales $XXX billion manufacturing were coupled contribution when advantage due higher $X.XX programs billion. and And range

do complexity made couple difficult in we As caveat The gift final heightened exited XXXX, prepaid our point a in sell product before. of categories unnecessary sell around customer the security blended bit no certain I at offer, performance comp were and discussed longer a merchandise we of merchandise in cards additives we little that reduce a haven't fraud. susceptible fuel will out more we that the that pump, that to brands nor XXXX

year-over-year the the the non-tobacco such, performed better of comp actually side suggest. than business As even

supporting at retail The breakeven in of the station second component fuel OpEx incurred level equation expenses fuel the the certain functions is store store network. the

of support the our make the we with faced pressure, facing competitive fuel by increased operating inflation to on will beet retail form the but same and goal on increase be benefit creation on we more improvement, X% are technology in areas will meaningful remains still needle opportunities by operating escalating long-term We operators consistently. move ahead executing and day a cost. which brackets inefficiency, and of cost higher to X% sets and range cornerstone other of to is challenges have continue guided leveraging assured, a the the us, at expense, we able discipline investments, of Rest more value the focusing of wage smaller higher end cost. a executing our of to number, stated remaining philosophy in Our are the business the still

guidance as the cost, to expense corporate same SG&A XXXX the remain for million $XXX and will range. onto million our $XXX Moving

time in million do over SG&A to end opportunity We ultimately million invest of into will improve the community profile future made a accelerating home have at Tax Jobs a to cash strategies of Cuts the through periods. XXXX continue expense this our consistent the $X.X at IT in in couple and would charitable other The included the improvement infrastructure that XXXX related year. our after-tax office investment by our of we $XX capabilities created tax in and Act's pace. passage gifts that

suggested, range for taxes, $XXX growth, XXXX. XX% be XX%, state effective to a expected to and upper fall capital previously CapEx is This store between in in a we from expenditures and our prior As us our XXs expect moderate million brings down of function million range the rate including the tax of to from as years. allocation, capital $XXX to standpoint

within EBITDA coupled provided For as million a to the this of ranges items $XXX in ranges other $XXX of with offsets supplemental income After net above our interest net to $XXX adjusting million income, guided depreciation, disclosure, translates expected million. million. for combination a $XXX of range and the guidance in results to

We to will all from long-term in make shareholders. to the business tax freed how benefit the people of investments reform approach for of our be thoughtful in or funds redeploy up appropriate our incremental our

market subject and open in opportunistically continue a flow up We return maximize With disciplined opportunities cash shareholder to on remain will committed consistently will release, call in the towards capital. manner we to free our as in to the available balances earnings to that, and order the announced I Our highest expect share returns. repurchases demands to other be cash to in gravitate Q&A. and

[Operator comes Carla the first Instructions] from question of line of JPMorgan. Our Casella

open. is line Your

for is this [indiscernible] Hi, Carla. on

calling you Just looking [ph] have XXXX August? on structure, any bonds perhaps at do on thoughts come capital the your refinancing

notes, pay to a we at that’s on, that what all that of those depend to we something first environment well as is. take the premium to will rate call and have going as It’s look in would the

a take not this it, at time. will look we but made a at we have discussion So,

thoughts both what your second, thoughts Great. while base cost are point-of-view you consumer are the wage on, on from And forward? as your the and increases, going labor

to and of cost markets, competitive to labor on wage want make use sure in we geographic all our we’re we so so Yes, there. aligned rates and be wages, and benchmarks

turnover in a and starting at but in might adjust accordingly is maintain don't see be turnover, entry in of So, the wages rate, able allows those when we the the wages as Certainly, the of markets pressures business challenges convenience versus significantly the business. to we’re change high the also lower especially that industry then you that year competitive. lower to lot year-over-year have store one cash the

something to that’s carefully and the so manage because carefully. And right watch markets we that have competitive we just want remain employees those and

Oh yes, any people from and purchase and changes voice in how you about their and additionally, that the that the point-of-view, behavior consumer way such? are seeing

anything If the lot more down to isolate hard across if or is, in our that that on. it the less going to of factors at that traffic question in I’d other attribute higher too point, to is be the from stores are has that see trickled would it frankly we can early to U.S. and consumers wages traffic, say a

lastly, [ph]? And it. can markets color us on have been any general how performing Texas in you Got your give

Texas Okay, so markets? Our I couldn't you. understand

Texas markets. Our of strongest some markets our remain

We beginning have of QX QX challenged position we the I in performed, They the of And they a very there. guess located stores XX% our to and always strong had with XX% storms. there. have were

continued That’s we post has the very competition build activity, raise very And those where beget markets activity have and and performance so seen solid. pre-opening a competitors. of from lot markets remains proposition been and seen so, coming done and rebuild strong. That of typically value that. our said, raise in new of a rebuild you’ve more our the recovery Good variety out we’ve

a see very continue Texas market, So, market. as very to a also strong competitive we but

Okay, thanks.

line next the from of question Stephens. [Operator Ben Instructions] comes from Your Bienvenu

open. is line Your

taking morning, Good questions. for thanks my

Good morning, Ben.

reform, intend of Mindy the you start on to perhaps CapEx the with guidance that little share majority tax proceeds is terms you’ve color CapEx, within then you bit buckets in more to use to from tax for of that the in relation the in wanted repurchase? first the or and anything could user it is to provide to relates proceeds there I a CapEx, CapEx, reform passing as earmarked inference

XX-formal additional to about plan your going get use cash will think and or to so impact share and may, was repurchases Well, the we reform does choose that be first that that other pass, to together in before second thoughtful optionality put provide if how tax is, way us investments gives some we for make. that. we that I the optionality a we We to and provides knew it freeboard may that obviously, and additional question the to that

I we’re guiding cover as as some sites XXXX CapEx XX industry we that’s up XXX construct new And to and to rebuilds. growth, XX million of under to will as retail that the said, and additional so to around up raise well

future a here bucket be for to also land purchasing we we sites build as have bank aggressive that for will a in years. We in continue in land

it’s last done. For it’s of although a from mostly the as little bit comprised maintenance, say same a of usually things I our program is, refresh that result year down will as

We locations to than so will a about will $X the for touch roughly in million million it’s we that. but much have this be touching year, $X previously, budget XXX lighter

continue XXX investments program. super to Our going touch will we roughly sites finish out there. We're as that cooler

then the our classified of the and roughly amount. and under completion that And in that is the investment million and then for corporate remainder of that’s the rest, initiatives comprises maintenance portion. $X building capital other So, remodel have we

some ever tight to Yes, is Ben benefits looser. It’s created to flexibility. all discipline as in tax get capital the one about reforms allocation remain thing it’s as the been. well, say certainly at I our going is nothing would going There that’s

discussion, baked if help recognizing all might time that EBITDA so wondering getting the take EBITDA assumptions off-line you not low be even mid-point provided, be into question what the linear? the if have mid-point sort Okay. do understand you guidance assumptions suited range the of of are for this but that could to guidance I of the Great, guidance hard your end they provided, I’ me of you thanks better that. And I for then could better a an a

in allocated other with and good that. fuel and as other so discussions costs business. went payment some SG&A that’s it just operating that standpoint, Now, will took is off-line you other his promotional we to margins of relationships on suspect the reality independent if we then a variable difficult is for cost you're us and metrics between value a There improve is, look one may relationship not lot pull point that. offsets staff that the levers I lower If The challenged only volume lower team we who stores there there is with demonstrated or between we’re activity on, so merchandise our we is underperformance in the we labor Certainly, have or associated QX and in be and see the there. on. in transactions can and whether fees because the with environment, from from compensation we business, may hours of underperform it’s Christian specific our is there earnings

a business total kind quarter can have there. whole So, there wanted to we there, year, set is fell quarter of offsets a may that when underperform, the parameters first we our over model, of tighter think from though the still within I overall earnings resilience demonstrated dealing with range, to range an that bring, build think in set approach in even I guidance any and we that so much our we

very excellent think in QX way. XXXX that, challenged started of an was off So, example I a

numbers. still deliver the to are able We

of of left it on we in potential, the felt I we like we our in can example but money performance think versus resilient. total how stay an we gives you terms table XXXX, believe

and that mid-point in but way There hope there EBITDA. no take out overall all kind feel some the just the midpoint. that of interrelationships be of range we we those is going you give things of is when for guidance can to helps, you So, come that confident

know the that Understood resetting quarter, improvements here the some then in that business, put of on estimate the just I indicators sequentially that PS&W clock one that fourth one, our help, discuss in hard on bluntly, that light pressure business factors, if sneak we but and kind and can we of some last why CS&W whipped in I’m suggested the does year-over-year, and monitor of should was under you XQ it wondering the in line to see could is on profitability us this in the pretty the describing all backdrop. we I

you continue think I to if of back out to showed utilization up, coming of at you market the storms, its refining look Well, resilience the go and kind know, that.

started uncertainty towards I think you standpoint, as off came regulatory the more RIN while higher it the in quarter, down had backend. from RIN

have are price some the seen. you the we’d know a if see market same RINs, year pressures rising $X.XX think the while the than lower and environment, Certainly, there general it around the [indiscernible]. uncontrollable I there at I so within arise you range, we side last lot benefits with standpoint, of value out guess it, look months, three know inventory at of say, all-in, we clearly was just including a it’s that’s much kind our didn’t of that from you

the and queue. enough. get in back Fair I’ll so Thanks much,

comes Raymond from James. line Brownlow Ben from question next of Your the

is line Your open.

for around kind can of the model morning. are at, a touch metrics you on retooling the adjacent still radius that in And on looking Andy, are strategically foot opportunity, square taking the there? can be you good and the to and Thanks retooling any you or give you question. Hi XXXX that builds of touched targeting on Walmart? the going just kind XXXX new real on the of estate all focused filling

Yes.

little to of of the and the to then larger traditional in those the Walmart’s So, X,XXX up XX are close proximity new to be going to probably stores, kind X,XXX square-foot couple of will than in X,XXX two-thirds remainder third stores. industry stick stores stores. already the foot. those build of for the X,XXX We be stores, square we plans and foot modular believe actually some of a format the square square had That’s larger foot XX more

some sales go that and within of merchandise XX, gallons, you prepared of they are well get the we you you the fact limited merchandise sales to more well through performance added them have get [indiscernible] We’ve the for the in our stores. because really at different have over because the isn't into big larger And modular over built we’re and sample running GP, network is in so the because you We couple less, cooler grab volume stay are and of have of said like month those in some the in them XXX,XXX from models, build stick before, additional that largely and offers, new for their today as of not the We we than that capability those quickly and our performance past. square-footed a food all markets. doors, some you’ve have higher up want $XXX,XXX a - build way I getting set this. but food at per fuel

it believe attractive we and generates very after levered tax So, returns.

fewer in in deployment of stores where as some capital. this Supercenters a with foot the put stores are the you think going great many the we’d markets where is a that be higher it is so, and stores to a if we to more it just the you better can And refinement fewer Halo the get left already and so strategy are with infill compared foot square available, compare We foot stronger And we and of to a just X,XXX Walmart to Arkansas you really the for of locations less that would a to that do X,XXX X,XXX how store kind X,XXX go and square square better forward. function believe and of the bank strongest in you started same I getting Louisiana. is faster, we return, the or more in buck, Colorado with believe

the little like you through earlier to a color in rate first in and continuing can margins on seems guiding XXXX? why give the the through And had call, referenced margin that it’s helpful. you're and just quarter I That’s merchandise like Tobacco better loyalty the improvement lot it came you on than from, bulk the the came it was significantly of It of program that run growth a on moderations it that, from what modelled. looks

So, to over products. periods we through competitors run to other consumers it, participation had QX this so think is and running of us, was competitors those a word fewer of running in and had prior so awareness with find tobacco in were with program our it value mouth know we XX% where where manufacturing I that consumer other

at And so, unique very we attracted that there, able with the level. fuel ability, of best with I we that program high think a traffic, result deals of we as traffic and independent out were of a said, execute our distinctive higher as a disproportionately to and upselling on level

others program. standpoint, some that off doing a as into were anomaly recall we QX so an part because running saw the XXXX in competitors when in of level, we’re program, to and at time, that have same high third bit enter our be and from was pressure you execute our if think a that at many program that’s can XXXX, quarter we So, going we will this amongst be very while competitors the XXXX, and we it

you moderation So as see XXXX. we that’s guide throughout why the

think, I get associates at had to gives our upselling about of new as store as key introduced program new something that’s ready at pilot And sales that the end is that loyalty confidence encouraged point this lot something were that We us ability it. QX. to through a unique that our to we and extremely of program the attributes different. by we

Thank you.

Your Fargo. next comes of the line Bonnie question Herzog Wells from from

line Your open. is

Good morning, Thanks. Andrew.

morning. Good

Hi.

trying curious guess volumes, but considered wanted you I the facing would your effect the fuel be any just know be more a you And have better and realistic touched volumes? Amazon fuel on I’m I color way? impacting you to outlook helpful, your bit, I long-term understand pressure you’re then about of how to business, your may what’s ask and here. partnering So, guys retail in seeing retail them for a with any some

Yes.

industries ones sort So, that the let of like other and retail common sell mean and are same they me we pressures. and goods I see our start fuel competitors that tobacco like see. those with the that the and see,

margin we we some period kind the pricing out, biggest see. from major aftermath events, Texas QX putting we do of pretty we And the to a time, of a QX, prices price itself as we into as started margin would response towards you volume. street quickly unique to markets in getting to saw expect the that QX. remainder environment volume of of a supply of saw for would we shifted crude situation think and of falling our in October kind Unfortunately, run-up for aggressive and sorted persisted more the Florida. for on I two that to in And in the the hit

in aggressive place, point year those a always prices price off during during that pricing can X% be going expect aren't bleed periods so rising see falling price we can up X% periods when margin X% the And that more we in if we X% the every and just volume all as prices, some that’s we pressure those rising to to prices, conditions aggressively pick and given to compression when sharply, and at Similarly, happens. in are fall volume. to we in

and year XXX%. competitive where remain we at prices of from significant In at be the monthly and and drilling we will run-up following one will expansion we’re to have maybe prior XXXX, down the point-in-time in back volume just benefit close would and at as about a a pressures able and right when or crude The to you we So, were be XXX% shale just environment come now ongoing, that. in in level prices periods of higher price XXX%. those a will some see over positives the

of kind per so, we competition had a prior areas. to years to kind our And to in decline of X%, being number store seen X% competition. structurally from kind of average We increase X% but closer see did month anticipated in volumes have that a we X% of in

of we the had program newbuild in the expectations. certainly just the that didn’t XXX of Walmart XXXX of things earlier and XXXX, and the remainder program, of was ongoing One markets the classes build the our performance XXXX hoped that and offset to our Midwest some with perform and meet

with as think they did. larger express I format our stores,

of hoped. Spencer’s, store, of course take wasn’t getting five to we that continue of some rebound bigger when as impress there, or we’re months, bring them in rebuilds then offset would you you as the terms four adding we’re say raise the adding in out for So, to but had and commission those I us of stores the meaningful back on.

but the U.S., have what say a have store, fuel in so for got and You XX the they the I And and three Walmart that as their got repeat think impacted the now would moderated impact more do there. pressures prior right XXXX’s meaningful built ongoing number the that to Supercenter’s have in to you were falling and shopping from competition. they’ve one-off Day in you’ve but the significantly. we would start portfolio, has the their immediate year-over-year. will would say not occasions away differ have in took some don't visits at certainly occasions markets our see of shopping got more saw it there, I number, to that total pressure as of But years prices. those I was see rising meaningful those the neighborhood that events guided are We competitive the and of entire Analyst impact been, events in a we type you stores and want believe impact We then itself.

drop to we about I’m foresee how it changing, and plans any That’s to anything there or just or is you, really and you love to helpful. fashion? any you're hear traffic from And thinking then, be would could are work helpful? do seeing that you whether thinking effect with touch on them consumer just would locations in related behavior the Amazon

up packages segmentation. have day home, customer look I'm the are showing I a I to that is, all up on still as the really as get got other doors office, picking making Depot mean, just my and convenience I to our next from show this average Home up adds at demographics, of but packages many us not it call, you and Amazon my and think Mindi's our every of I in and is where places. still that’s if at you’ve from the but some not same but you Amazon, as my I’m drive at. really this Walmart myself trips on door belief I office, ever certainly all many to look of what their standpoint, I hate from know items, lot customer, think how to there.

it mile a trips cetera, the et it a of be different delivers bottled trip. for of lot, water, points especially food, pickup dog number the the reducing heavy last may these dry think I solution, at Walmart the Supercenters of necessarily just isn't in-and-out parking goods, type but

we can't use or Metro America the So, our generalize just to something perspective our it’s own I apply think of perspectives or business. over to

different the Pay, there customer are in different more unique are a a a market Look, more more that maybe was in and creates solution cetera between and EMV something number set it's our will all advantage our a certainly think systems us to Pay, et metropolitan suggest payment impact from segment Walmart in. someone with continue we accept where retailers mechanisms, we co-located, the different of. roll-out has Apple including I Google standpoint as that I who segments whole we fully for that loyalty than rural even we’re opportunities of to customer things payment try our that with of of to markets of Amazon it experiences types Cash, those program kind day-to-day. will a going take shopping different and that

if as we cost but consumers towards those, So, as look many as what very payment partnerships is methods in and more more to there out it’s to early business. some very, and move of too but payment those down, can, we've those want drive especially our there say, high accept like, cards

there. our it’s out gallon and You for biggest almost the cost cost business, $X.XX per of know, it’s one

improvements So, hopefully some could on front. be that there

right. All I appreciate. you. Thank

Mandeville line next question the of from from Chris comes Your Jefferies.

is line open. Your

expansion. may quarter. majority back Hi, points that That not in good merchandise the or uplift piloted my one that’s guidance basis XXXX, bit loyalty earlier but of itself, just QX, necessarily when on the in of the to on to the at as to end going of Andrew, with provides to regards embedded up reason promotion somewhat be and expectation? been follow totality Vast should in have moderation guidance the see margin more guys. margins we answered, already into it’s why comes of is it and program a questions how tobacco unique help launched as XXX what Ben's questions morning merchant your

pilots outcome of of given to customers is really We of - initiatives, have to including volume move [ph] sort program, traffic baked that today but as those none at the the known loyalty behavior, have you’ve highly mentioned two guidance, into loyalty got changing and of or in areas starting my loyal going and you’re of any notes, QX, I enhancing we’re seeking an consumer market that major in end behavior. their our

the the we’ve to for different their sure given very it’s attractive to way to got that thoughtful and economically customers today look us. the starting low unique behavior, it of and and change going is direct which to trying of this customers, wallet sure their meaningful trying You’ve you've share got an their at platform designed share make we’ve wallet we’re and need that you’re built time to take segments in change be going which zero to on so to point we make way going program this in unique of this, and viable behavior way in to a customers some

ability those many price who that for We programs customer As everybody, that low items. to of core and of do we convenience low that to loyalty the raised an the because play do prices price our other don't cannot tobacco fuel retailer, day they us for have them lowered the and part where and have so pricing of then everyday low discrimination and existing comes have every for high price program. are

to and with going we going light be so and have that that unique time me-too to behaviors customer right. This work the some to our not the that it need come time but to we're to sure that’s have We’ve it something designed customer the up generate make the is we’ve behaviors. always work changing said We going solution, are do needed make those to to solution. economics we’re So, and give unique it we’re are take economics, and understand to economics

you not Okay. allocation buyback discussion I formal around result the on to a you lines? it to to going having something be to provide be XXXX a tax was that there, program cash, then establishment necessarily is know fact wanted dividend clarify, that just along what plan that is and you reform the need out whether of your didn’t need established when or of cognizant there of or about, capital we something out those And just accelerating if a free pivot thoughts the simply

Exactly.

release. ability is a cash our describe confident I to the bracket would to the in not to a we but just remain That do announcement. good is capital of Here announcement language other the over way of and that, the we market decided in till conditions. cancel continue is conventional way and and and period, formal time our It uses to big subject number a

cancel. is consider So, till that formal our announcement good

us, what financial what’s this but little could all for a just then out I well. bit at remind last just me, brought to us Got and release update regards it, of guys wondering alluded implications your or it and today, press and earlier not you that uncertainty could morning, with in up was Andrew, you it to there this Marathon of one regulatory statement if if as [indiscernible]? at least also type

other and specific uncertainty. sort area areas you the regulatory or are RFS about like thinking that of the Yes, of our

this what had your release what that’s under so specified fact you I are in morning, as well? the just presumption and was Marathon referencing that that’s in Well,

because think is some last certainly year Look, I impact, across how line responded. that right. around think uncertainty of impact there the FSLA uncertainty we us board We did bottom and regulatory a with didn’t it started competitors had

you margin perceptions are prices, cap prices, the are of the on about is gone all that, I one the and putting of relationship propose crewed from became come a kind or when it, cap RIN news groups supply think and opposed the out up back, say that and they on exist through exists thing and what same the, certain that did I behavior RIN and to from the have market going have on it type EPA we as of a refiners how information spreads price disconnected gets blaming firms without supply advantaged to refineries, when of able cap it, echo QX know RIN matters we all-in and and crack market participant, for When assets bankruptcy, on RIN are but this on this that that what just filing imports deny certain rumors the earn, the with just a like. spread time stranded and RIN uncertainty because cost as the say show way you between a specifically the to know get expect. improve margin that creates you and is like no over has petitions interrelation EPA lot to someone built the There crack the the noise and the price that doesn't would prices think and matter.

for change prices is result in QX would probably that disconnected same have markets but and got impact QX own to there wouldn't a We I they’ve RIN of but to which a it’s than RIN gets - the paper over is have what market, we market, market outcome, or got the we which perceptions there it I a because off. could relatively should no interrelationship, term periods its like will that the could if of impact to disconnected, supply what it and saw get longer say are with. you I Those will expect spinning we’re of noise see independent our be structurally as think, that things you as overinflated from get and business. could relationship the been. XXXX the different

is short-term long-term we been there or get would could the have typically noise be other be of So, the dynamics RINs bit, our think that has I around that we one of not It’s a that’s can it going relative here. of we beneficiary kind topic that effort in a relationships prices expect. could to but brings we down impacted lot those business to impact

just reality of the that perception mandate at regardless is a $X.XX $X.XX Right, what program, expects end and summarize a and the net is to an day, RFS with and the Murphy happens there so still of basis? the maybe then annual RINs as of to between whole there, there contribution on way of PS&W

the about involved market if their capital not That’s you're who a capital anyone you the if we other return proprietary of you supplies working barrels, didn’t capital benefit the if on correct. of value space, that. act should a very capital the that, line you’re Because and not employee that the getting working have that, then getting home around in or and that think efficiently that

remunerated have be will how as others and So, will we we who the positions long believe that term well. similar over that’s

Alright. Thanks for the luck best refresh and in of Andrew XXXX.

Thank you.

from from you And question next Ryan line of Blair. the Domyancic William comes

is line Your open.

my Hi, taking good for morning and thanks question.

there the differently? you So, sharper the typical fuel price too anything above margin in high-end XXXX, way much, retail to you is is for or that? XXXX but a read guidance, guidance, long-term not of the Are bit adjusting guidance are into anything doing getting the

look, cumulatively of on the say add we're think of more kind say a Ryan. I to things potential the years X, it’s that so we’ve and just revising and nothing X made No, improvements really up, can business number to would last fronts than over that our and I this those so business just of generate, that’s what

when many investments of it investments you about I fall then release projects, guidance off, that further year, investments following is kind the we are, the the Incorporated are they mentioned to can amount years year as expected think those good. for IT on on? second next Very of And how Thanks. the could question, includes talk or what and those your SG&A in press persist, dollar

details specific any provide Mindy on let I’ll that. Yes.

CapEx as in Some well. that’s of the

have that. to which fuel our homegrown upgrades just roll right, successful a out. especially at looking of two at some year for another are business company. loyalty foundational PDI refining our that of I our exploration you at latest is past say you think frankly company with hadn't get enhancements, had at secure looking spin-off and so in. involve Office, just There others continued is there things for some system consumer some a that the under right IT we point, systems at we’ve start then that opportunities subsidiary across could are version replaced just the about our just program then PCI series and like and areas, and software, providing really capabilities is that is the and the to that standard, company, compliance marketing invested I’d to provide spend, foundational We’ve be stores there of the committed think, if of an kind that you a of XXXX, to some build retailing so system pricing the and others up standalone around accounting our the spend. production other and In of getting and we be or to field a environments that our certainly we Home outcome rolled various there of we’re and out we’re and and data standards even board switches enterprise, enhancing, and of to up go more out safe due, of subsidiary And

You data be customer better the and able tools start to the target environment around more marketing to the focusing segments and and like. analytics

the the than expect nature change to enhancing spend. of more of amount foundational total And business would I spend the to to so, from

per of from out I to store scale make that and SG&A going mindful of benefits key note think, scale we’re sure is we’re spend. one the our a that’s that the getting to is down things something standpoint

your about answer quantities about talking the And question Ryan we’re to here.

guidance year, this projects, type of bigger to those are are and the side, $XX away comments, the larger and the spending so expenditures these would that additive in will all because never go echo and G&A Andrew's that going over embedded bulk the part some But to that and expect this for to you’re layer somewhere So, to our in we or projects here turn and roughly be to at of we of not type. talking have budget it million we the of is CapEx, always replace enhancing look time. us expense value will will both to of labor need for CapEx be SG&A over we’re to enhancing, this of the things in $XX able of frankly projects, have business able to foundation, more on $X because you it capitalize lot in of I so impact we a of is always million, quite some that attention million is of but expense expect CapEx a would type

Got it. That’s really helpful commentary. Thank you both.

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

up all questions XXXX. as very We much. you the we’ve certainly wrapped appreciate Thank

and exciting in XXXX, forward all much. with you visiting Thank forward to future. very We’re to you an looking near we look the of

And this call. concludes today's conference

disconnect. now may You